Export Controls, Foreign Reinvestment and More

The Ministry of Commerce (MOFCOM) and the Ministry of Science and Technology issued a new revision of the Chinese Catalogue of Technologies Prohibited or Restricted from Export. These amendments add export controls on certain technologies for producing battery cathode materials and lithium and gallium extraction technologies, as well as remove export bans or restrictions involving traditional Chinese architectural techniques.

As global trade tensions rise, China is strengthening its oversight of strategic minerals and dual-use goods exports. These measures could significantly impact global battery supply chains, particularly in the Lithium Iron Phosphate segment critical to the New Energy Vehicle industry. German companies in automotive, battery manufacturing, and renewable energies should closely monitor implementation to adapt their supply chains accordingly.

We called for comments from our members in January when the draft catalogue was released and submitted feedback to MOFCOM. Although the export control requirements remain nearly unchanged, their technical specifications have become slightly more precise and targeted compared to the previous draft.

The National Development and Reform Commission and six other departments issued the Measures on Encouraging Foreign-Invested Enterprises to Reinvest in China. Reinvestment is defined as using retained or repatriated profits to establish new entities, expand existing ones, or acquiring shares, equity, and property interests. This includes benefits such as flexible land use options, benefits for importing equipment in encouraged industries, streamlined foreign exchange fund transfers within China or a "green channel" for Panda bonds.

Recently, the central government introduced a batch of policies focusing on foreign reinvestment such as the tax credits for foreign reinvestment. This reflects China's ongoing efforts to attract foreign capital and guide it toward encouraged industries.

The State Council General Office issued opinions on providing regular "One-Stop Government Services" for key matters to improve administrative efficiency. The opinions require that relevant local departments establish an annual list of key matters. For each key item, the required application materials from companies and individuals, the review criteria, and the approval procedures must be clearly specified. Besides, a newly released batch of key matters includes tax refunds for overseas tourists, customs procedures for mail, and company services such as recruitment and financing. For example, services like credit and tax rating checks, financial service matching, export verification, and patent pledge registration will be available on a one-stop basis.

This is another guideline to improve the so-called "One-Stop Government Services", a government initiative aimed at fulfilling complex administrative tasks efficiently through a single, coordinated process. While this policy helps streamlining administrative processes, the business environment for German companies is influenced more by structural issues like fair market access, equal treatment, and stronger intellectual property protection.

The State Council General Office issued a notice to strengthen employment stabilization policies. Companies that retain their workforce will receive higher rebates on unemployment insurance contributions - 90% rebate for small and medium enterprises (SMEs) and 50% rebate for large companies. In addition, SMEs in specific sectors that sign at least one-year contracts with individuals from key employment groups like recent graduates will receive a subsidy equivalent to 25% of the employee's individual social insurance contribution.

China is rolling out employment support measures just in time ahead of the summer graduation season. However, complex eligibility requirements and the 25% social insurance subsidy directly paid to employees, instead of employers, may reduce the incentives for employers to participate.