Doing Business 2019 China Economy Profile China Page 1 Doing Business 2019 China Economy Profile of China Doing Business 2019 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as post-filing processes Trading across borders Time and cost to export the product of comparative advantage and import auto parts Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency Labor market regulation Flexibility in employment regulation and aspects of job quality Page 2 Doing Business 2019 China About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of labor market regulation. Although Doing Business does not present rankings of economies on the labor market regulation indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business offers detailed subnational reports, which exhaustively cover business regulation and reform in different cities and regions within a nation. These reports provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The first Doing Business report, published in 2003, covered 5 indicator sets and 133 economies. This year’s report covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. More about Doing Business (PDF, 5MB) Page 3 Doing Business 2019 China Ease of Doing Business in Region East Asia & Pacific DB 2019 Rank 190 1 China Income Category Upper middle income 46 DB 2019 Ease of doing business score Population 1,386,395,000 0 100 City Covered Shanghai, Beijing 73.64 DB 2019 Ease of Doing Business Score 0 100 84.22: Hong Kong SAR, China (Rank: 4) 82.75: United States (Rank: 8) 77.37: Russian Federation (Rank: 31) 73.64: China (Rank: 46) 67.23: India (Rank: 77) 63.41: Regional Average (East Asia & Pacific) Note: The ease of doing business score captures the gap of each economy from the best regulatory performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s ease of doing business score is reflected on a scale from 0 to 100, where 0 represents the lowest and 100 represents the best performance. The ease of doing business ranking ranges from 1 to 190. Rankings on Doing Business topics - China 1 6 14 28 27 28 55 64 65 61 73 82 Rank 109 114 121 136 163 190 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Ease of Doing Business Score on Doing Business topics - China 100 93.52 92.01 80.80 82.59 78.97 80 67.53 65.16 60.00 60.00 Score 60 55.82 40 20 0 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Page 4 Doing Business 2019 China Starting a Business This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and formally operate To make the data comparable across economies, several assumptions about the a company (number) business and the procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. • Preregistration (for example, name verification or reservation, notarization) The business: • Registration in the economy’s largest business - Is a limited liability company (or its legal equivalent). If there is more than one type city of limited liability company in the economy, the most common among domestic firms • Postregistration (for example, social security is chosen. Information on the most common form is obtained from incorporation registration, company seal) lawyers or the statistical office. - Operates in the economy’s largest business city. For 11 economies the data are • Obtaining approval from spouse to start a also collected for the second largest business city. business or to leave the home to register the - The entire office space is approximately 929 square meters (10,000 square feet). company - Is 100% domestically owned and has five owners, none of whom is a legal entity; • Obtaining any gender specific document for has a start-up capital of 10 times income per capita and has a turnover of at least company registration and operation or national 100 times income per capita. identification card - Performs general industrial or commercial activities, such as the production or sale of goods or services to the public. The business does not perform foreign trade Time required to complete each procedure activities and does not handle products subject to a special tax regime, for example, (calendar days) liquor or tobacco. It does not use heavily polluting production processes. • Does not include time spent gathering - Leases the commercial plant or offices and is not a proprietor of real estate and the information amount of the annual lease for the office space is equivalent to the income per capita. • Each procedure starts on a separate day (2 - Does not qualify for investment incentives or any special benefits. procedures cannot start on the same day) - Has at least 10 and up to 50 employees one month after the commencement of • Procedures fully completed online are recorded operations, all of whom are domestic nationals. as ½ day - Has a company deed that is 10 pages long. • Procedure is considered completed once final The owners: document is received - Have reached the legal age of majority. If there is no legal age of majority, they are • No prior contact with officials assumed to be 30 years old. Cost required to complete each procedure (% of - Are sane, competent, in good health and have no criminal record. income per capita) - Are married and the marriage is monogamous and registered with the authorities. - Where the answer differs according to the legal system applicable to the woman or • Official costs only, no bribes man in question (as may be the case in economies where there is legal plurality), the • No professional fees unless services required by answer used will be the one that applies to the majority of the population. law or commonly used in practice Paid-in minimum capital (% of income per capita) • Funds deposited in a bank or with third party before registration or up to 3 months after incorporation Page 5 Doing Business 2019 China Starting a Business - Shanghai Standardized Company Legal form Limited Liability Company Paid-in minimum capital requirement CNY 0 City Covered Shanghai Indicator Shanghai East Asia & OECD high Best Regulatory Pacific income Performance Procedure – Men (number) 4 6.8 4.9 1 (New Zealand) Time – Men (days) 9 25.9 9.3 0.5 (New Zealand) Cost – Men (% of income per capita) 0.7 17.8 3.1 0.0 (Slovenia) Procedure – Women (number) 4 6.9 4.9 1 (New Zealand) Time – Women (days) 9 26.0 9.3 0.5 (New Zealand) Cost – Women (% of income per capita) 0.7 17.8 3.1 0.0 (Slovenia) Paid-in min. capital (% of income per capita) 0.0 4.0 8.6 0.0 (117 Economies) Figure – Starting a Business in Shanghai and comparator economies – Ranking and Score DB 2019 Starting a Business Score 0 100 98.15: Hong Kong SAR, China (Rank: 5) 93.70: Beijing 93.37: Shanghai 93.04: Russian Federation (Rank: 32) 91.23: United States (Rank: 53) 80.96: India (Rank: 137) Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 6 Doing Business 2019 China Figure – Starting a Business in Shanghai – Procedure, Time and Cost Time (days) Cost (% of income per capita) 9 0.7 8 0.6 Cost (% of income per capita) 7 0.5 6 Time (days) 5 0.4 4 0.3 3 0.2 2 0.1 1 0 0 1 2 3 4 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 7 Doing Business 2019 China Details – Starting a Business in Shanghai – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Register the company and apply for a Business License Certificate 5 days no charge Agency : SAIC (Single window) In order to start and operate a new business, an entrepreneur must register the company and obtain a Business License (工商营业执照) from the State Administration of Industry and Commerce (SAIC) through its local branch in Shanghai. The applicant must prepare and submit an application online at the website of the Shanghai Administration of Industry and Commerce (at http://yct.sh.gov.cn/portal_yct/webportal/portal). The availability of the company name can be verified during the filing of the application form. Previously, five other licenses were required, the Business License, the Organization Code Certification, the Tax registration, the Statistics Registration and the Social Welfare Insurance Registration. These have been combined into one license. Upon receipt of an application, SAIC will circulate the application materials to the relevant bureaus mentioned above for registration. After filing the application, the entrepreneur must visit the Single window at SAIC to collect the Business License and to present the following documents: (1) Application form; (2) Articles of association; (3) Shareholders’ personal IDs; (4) Authorization Letter; (5) Copy of real estate certificate for the office (Signed by the property owner); (6) Supplementary information registration form. 2 Make a company seal 1 day CNY 400 on average Agency : Seal maker To make the company seal, the company shall designate a company possessing a Shanghai Special Industry Permit (company seal carving) (《上海市特种行业许 可证》公章刻制业). This process costs from CNY300 to up to CNY1,000 depending on the design and the quality of the seal. 3 Apply for an authorization to print or purchase financial invoices 2 days no charge Agency : Tax Authority The company must obtain an approval to print or purchase financial invoices. The company must apply to the relevant authorities (that is, the state and local taxation offices) for approval to purchase and issue financial invoices/receipts. The application can be submitted online at https://www.tax.sh.gov.cn/xbwt/. The taxation authority will issue the invoice purchasing book, if it agrees to grant the company such qualification. The applicant must visit the Shanghai Municipal Office of the State Administration of Taxation to collect the approval and present the following documents: • Tax registration certificate (one copy); • Identity card of taxation personnel (one copy); • Application forms; • Models of invoice seal; • Company seal. The Shanghai State Tax Bureau and the Shanghai Local Tax Bureau have co- issued a circular (""Tax Circular"") on February 25, 2013 providing that since January 2012, micro and small size companies no longer need to pay fees in respect of the purchase of invoices. 4 Register employees with the Social Welfare Insurance Center 1 day no charge Agency : Social Welfare Insurance Center Within 30 days of recruiting employees, the company must register them with the Shanghai Municipal Human Resources and Social Security Bureau, which is the local social insurance office under the Ministry of Human Resources and Social Security. The registration purpose is to establish the obligation of payment of the employee social insurance. The company must apply for employment registration for qualified personnel and for social insurance coverage registration. Relevant application forms can be electronically downloaded or obtained from the local offices, and these documents shall be filled and submitted through the following website: https://zzjb.12333sh.gov.cn/zzjbdl/jsp/login.jsp. Companies can register online if they have already obtained a code from the Human Resources Management Department. After the application, supporting documents must be submitted at the relevant agency. Upon receipt of an application for employee registration, the relevant authorities will issue a notice to open a social insurance account for the company. The company must then apply to open a special account at the designated bank or use the existing one. The local social insurance office will issue the social insurance registration card for the company upon receiving a bank notification of account opening, so that the company can start paying social security contributions to its employees. Page 8 Doing Business 2019 China Takes place simultaneously with previous procedure. Page 9 Doing Business 2019 China Starting a Business - Beijing Standardized Company Legal form Limited Liability Company Paid-in minimum capital requirement CNY 0 City Covered Beijing Indicator Beijing East Asia & OECD high Best Regulatory Pacific income Performance Procedure – Men (number) 4 6.8 4.9 1 (New Zealand) Time – Men (days) 8 25.9 9.3 0.5 (New Zealand) Cost – Men (% of income per capita) 0.0 17.8 3.1 0.0 (Slovenia) Procedure – Women (number) 4 6.9 4.9 1 (New Zealand) Time – Women (days) 8 26.0 9.3 0.5 (New Zealand) Cost – Women (% of income per capita) 0.0 17.8 3.1 0.0 (Slovenia) Paid-in min. capital (% of income per capita) 0.0 4.0 8.6 0.0 (117 Economies) Figure – Starting a Business in Beijing and comparator economies – Ranking and Score DB 2019 Starting a Business Score 0 100 98.15: Hong Kong SAR, China (Rank: 5) 93.70: Beijing 93.37: Shanghai 93.04: Russian Federation (Rank: 32) 91.23: United States (Rank: 53) 80.96: India (Rank: 137) Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 10 Doing Business 2019 China Figure – Starting a Business in Beijing – Procedure, Time and Cost Time (days) Cost (% of income per capita) 8 1.2 7 Cost (% of income per capita) 1 6 0.8 Time (days) 5 4 0.6 3 0.4 2 0.2 1 0 0 1 *2 3 4 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 11 Doing Business 2019 China Details – Starting a Business in Beijing – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Register the company and apply for a Business License Certificate 5 days no charge Agency : State Administration of Industry and Commerce (SAIC Single window) In order to start and operate a new business, an entrepreneur must register the company and obtain a Business License (工商营业执照) from the State Administration of Industry and Commerce (SAIC) through its local branch in Beijing. The applicant must prepare and submit an application online at the website of the Beijing Administration of Industry and Commerce (at http://ect.baic.gov.cn). The availability of the company name can be verified during the filing of the application form. Previously, five other licenses were required, the Business License, the Organization Code Certification, the Tax registration, the Statistics Registration and the Social Welfare Insurance Registration. These have been combined into one license. Upon receipt of an application, SAIC will circulate the application materials to the relevant bureaus mentioned above for registration. After filing the application, the entrepreneur must visit the Single window at SAIC to collect the Business License and to present the following documents: (1) Application form; (2) Articles of association; (3) Shareholders’ personal IDs; (4) Authorization Letter; (5) Copy of real estate certificate for the office (Signed by the property owner); (6) Supplementary information registration form. The applicant can also request a company seal through the same online platform offered by the Beijing Administration Administration of Industry and Commerce. An approval for invoices can also be applied for online and collected with the seal and the business license at the Single window at SAIC. 2 Apply for a company seal 1 day (simultaneous no charge Agency : Sealmaker (through SAIC Single window) with previous A company seal can be requested free of charge through the online platform procedure) offered by the Beijing Administration Administration of Industry and Commerce (http://ect.baic.gov.cn). After applying for the seal online, the seal can be collected with the business license at the Single window at SAIC. Business founders also have the option of making a company seal directly at a sealmaker, for an average cost of CNY 200-500. 3 Apply for an authorization to print or purchase financial invoices 1-2 days no charge Agency : Beijing Municipal Tax Service, State Administration of Taxation An approval for financial invoices must be obtained. The entrepreneur can apply for the approval through the website of the Beijing Municipal Tax Service, under the State Administration of Taxation (http://www.bjsat.gov.cn). The invoice purchasing book can be collected with the business license at the Single window at SAIC or at an office of the State Administration of Taxation. 4 Register employees with the Social Welfare Insurance Center 1 day no charge Agency : Social Welfare Insurance Center Within 30 days of recruiting employees, the company must register them with the local social insurance office, under the Ministry of Human Resources and Social Security, for payment of the employee social insurance. The company must apply for employment registration for qualified personnel and for social insurance coverage registration. Employee registration can be completed online at the Beijing Social Insurance Online Service Platform (http://www.bjrbj.gov.cn/csibiz/home/index.html#) or at the online service platform for start-up companies offered by the Beijing Administration of Industry and Commerce (at http://ect.baic.gov.cn). Supporting documents must be then submitted at the relevant agency. Upon receipt of an application for employee registration, the relevant authorities will issue a notice to open a social insurance account for the company. The company must then apply to open a special account at the designated bank or use the existing one. The local social insurance office will issue the social insurance registration card for the company upon receiving a bank notification of account opening, so that the company can start paying social security contributions to its employees. Takes place simultaneously with previous procedure. Page 12 Doing Business 2019 China Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2018. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse To make the data comparable across economies, several assumptions about the (number) construction company, the warehouse project and the utility connections are used. • Submitting all relevant documents and obtaining The construction company (BuildCo): all necessary clearances, licenses, permits and certificates - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest business city. For 11 economies the data are also collected for the second • Submitting all required notifications and receiving largest business city. all necessary inspections - Is 100% domestically and privately owned; has five owners, none of whom is a • Obtaining utility connections for water and legal entity. Has a licensed architect and a licensed engineer, both registered with sewerage the local association of architects or engineers. BuildCo is not assumed to have any other employees who are technical or licensed experts, such as geological or • Registering and selling the warehouse after its topographical experts. completion - Owns the land on which the warehouse will be built and will sell the warehouse Time required to complete each procedure upon its completion. (calendar days) The warehouse: • Does not include time spent gathering - Will be used for general storage activities, such as storage of books or stationery. information - Will have two stories, both above ground, with a total constructed area of • Each procedure starts on a separate day— approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 though procedures that can be fully completed meters (9 feet, 10 inches) high and will be located on a land plot of approximately online are an exception to this rule 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the • Procedure is considered completed once final warehouse is valued at 50 times income per capita. document is received - Will have complete architectural and technical plans prepared by a licensed architect. If preparation of the plans requires such steps as obtaining further • No prior contact with officials documentation or getting prior approvals from external agencies, these are counted as procedures. Cost required to complete each procedure (% of - Will take 30 weeks to construct (excluding all delays due to administrative and income per capita) regulatory requirements). • Official costs only, no bribes The water and sewerage connections: Building quality control index (0-15) - Will be 150 meters (492 feet) from the existing water source and sewer tap. If there • Quality of building regulations (0-2) is no water delivery infrastructure in the economy, a borehole will be dug. If there is no sewerage infrastructure, a septic tank in the smallest size available will be • Quality control before construction (0-1) installed or built. • Quality control during construction (0-3) - Will have an average water use of 662 liters (175 gallons) a day and an average • Quality control after construction (0-3) wastewater flow of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and a peak wastewater flow of 1,136 liters (300 • Liability and insurance regimes (0-2) gallons) a day. • Professional certifications (0-4) - Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Page 13 Doing Business 2019 China Dealing with Construction Permits - Shanghai Standardized Warehouse Estimated value of warehouse CNY 2,976,602.60 City Covered Shanghai Indicator Shanghai East Asia & OECD high Best Regulatory Pacific income Performance Procedures (number) 19 15.1 12.7 None in 2017/18 Time (days) 169.5 133.5 153.1 None in 2017/18 Cost (% of warehouse value) 2.4 1.9 1.5 None in 2017/18 Building quality control index (0-15) 12.0 9.1 11.5 15.0 (3 Economies) Figure – Dealing with Construction Permits in Shanghai and comparator economies – Ranking and Score DB 2019 Dealing with Construction Permits Score 0 100 88.24: Hong Kong SAR, China (Rank: 1) 77.88: United States (Rank: 26) 74.61: Russian Federation (Rank: 48) 73.81: India (Rank: 52) 67.71: Shanghai 62.05: Beijing Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Figure – Dealing with Construction Permits in Shanghai – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 1.6 160 1.4 Cost (% of warehouse value) 140 1.2 120 Time (days) 1 100 0.8 80 0.6 60 40 0.4 20 0.2 0 0 1 2 *3 4 *5 *6 7 8 9 10 * 11 * 12 13 * 14 15 * 16 17 18 * 19 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 14 Doing Business 2019 China Figure – Dealing with Construction Permits in Shanghai and comparator economies – Measure of Quality 15 14.0 14.0 14.0 12.0 11.2 Index score 10.0 10 9.1 5 0 Shanghai Hong Kong SAR, China India Russian Federation United States Beijing East Asia & Pacific Details – Dealing with Construction Permits in Shanghai – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Register Construction Project with the Shanghai Development and Reform 1 day no charge Commission Agency : Shanghai Development and Reform Commission All construction projects must be registered with the Shanghai Development and Reform Commission. The following documents are required for the application: 1. Application form to register the project 2. Proof of land use rights 3. Project proposal 4. Project construction investment estimate 5. Topographic map of the project 6. Comments from relevant functional department 7. Proof of funds presented by the bank 8. A copy of the business license of the enterprise legal representative 2 Complete the Online Environmental Impact Registration 0.5 days no charge Agency : Bureau of Environmental Protection BuildCo must file a report through an online portal of the Shanghai Environmental Protection Bureau and submit relevant information regarding the environmental impact of the construction project. 3 Obtain a geo-technical study / soil test 30 days CNY 25,000 Agency : Private firms BuildCo will request a soil test for the structural calculations for the foundation. For the warehouse, as described in the case study, the standard penetration test is what would most likely be done, which is a simplified procedure for this type of study, since the warehouse is not a very complex project. Soil testing helps to determine the properties of the soil, which can vary from place to place. The soil investigation helps to determine the bearing capacity of the land, which in turn helps to determine the load capability, the type and depth of foundation, in order to make sure to select a suitable construction technique. 4 Obtain review of building drawings by a building drawing examiner 20 days no charge authorized by the Shanghai Construction Project Document Review Center (Construction Committee) Agency : Shanghai Construction Project Document Review Center As of 2012, the Shanghai District Construction Commission accepts the building drawings and coordinates the review among the various agencies, including the Fire Protection Bureau, the Shanghai Police and Traffic Police District Level Team and Shanghai City Appearance & Environmental Sanitation Administration Bureau. 5 Request and obtain construction project planning permit 17 days no charge Agency : Shanghai Bureau of Planning and Land and Resources The documents needed for a construction on self-owned land application include the following: - Application form - Construction project commitment letter - 1/500 or 1/1000 site-plan and 1/500 or 1/1000 (1/2000 for suburbs) terrain map - Working drawing - Form of strata area - Groundwork construction ichnographic map, groundwork detail drawing and piling plan drawing - Ichnographic sketch map used for public purposes - Construction budget plan - Preliminary design documents that are approved - Reply on planning design proposal and attached drawings - Opinion on review and filing of design documents and acceptance letter for drawing review Page 15 Doing Business 2019 China 6 Hire an authorized supervision agency 1 day CNY 44,649 Agency : Authorized Supervision Agency It is mandated by Ministry of Construction Decree No. 86 to hire an authorized supervision agency to inspect the construction in projects above RMB 30 million. For smaller projects it is common practice even if not legally mandated in order to comply with all relevant standards and regulations. 7 Request and obtain building permit 2 days no charge Agency : Shanghai Urban Construction and Communications Commission The building permit is obtained once the application is reviewed by the Shanghai Urban Construction and Communications Commission (SUCCC). The SUCCC will also register the project with the local Shanghai Construction Engineering Safety Quality Supervision Station. 8 Receive Scheduled Inspection by the Shanghai Construction Engineering 1 day no charge Safety Quality Supervision Station Agency : Shanghai Construction Engineering Safety Quality Supervision Station The Shanghai Construction Engineering Safety Quality Supervision Station undertakes its first inspection shortly after the project is registered in order to ascertain the conditions of the construction site and compliance to relevant regulations. 9 Receive Random inspection from the Shanghai Construction Engineering 1 day no charge Safety Quality Supervision Station- I Agency : Shanghai Construction Engineering Safety Quality Supervision Station The Safety and Quality Control Station conducts several unannounced, spot inspections during construction. 10 Receive Random inspection from the Shanghai Construction Engineering 1 day no charge Safety Quality Supervision Station -II Agency : Shanghai Construction Engineering Safety Quality Supervision Station The Safety and Quality Control Station conducts several unannounced, spot inspections during construction. Obtain water connection inquiry and request water and sewage connection 7 days no charge 11 Agency : Municipal Water Bureau BuildCo must first apply for a water connection inquiry (接水前期征询手续) from the Municipal Water Bureau who will approve the application within 7 days after receiving all required documents. Afterwards, BuildCo may apply for the water connection. Receive water and sewage inspection 1 day no charge 12 Agency : Municipal Water Bureau Upon receiving the water supply application, the water service crew conducts on- site surveys within 7 days. The completion of water supply is determined by construction conditions. As for sewage licensing, the Municipal Water Bureau needs 20 days after BuildCo submits the project approval and other documents on the sewage facility design to conduct a preliminary inspection. After completing the inspection and trial operation, the bureau requires 20 days to examine the results of the facility and grant approval. These timeframes are taken into account in the following procedure. 13 Receive fire department inspection upon building completion 15 days no charge Agency : Fire Department The application can be submitted directly to the Shanghai District Construction Commission which now coordinates all inspections. However, the inspections are still conducted by each individual agency. Receive "Four-Party" inspection 1 day no charge 14 Agency : Site Inspector, Designer, Builder, and Agency Supervisor This procedure is called a four-party inspection (四方验收). The four parties include the site inspector, the designer, the builder, and the supervisor. 15 Receive inspection of the completed construction from the Shanghai 21 days no charge Bureau of Planning and Land and Resources Agency : Shanghai Bureau of Planning and Land and Resources To request a final inspection, BuildCo must submit the following documents: - Report on completed construction (建设工程竣工测量成果报告书) - Planning permit for the construction project and attached drawings (plan, vertical view and cutaway view) - Qualified acceptance certificate of files of construction project (建设项目档案验 收合格证) - Qualified acceptance form of civil defense project However, this application can be submitted directly to the Shanghai District Construction Commission which now coordinates all inspections. However, the inspections are still conducted by each individual agency. Page 16 Doing Business 2019 China Receive inspection on construction completion (竣工备案) from the 1 day no charge 16 Shanghai Urban Construction and Communications Commission Agency : Shanghai Urban Construction and Communications Commission This procedure must be completed on the day of application, provided that the documents required for submission are complete. There is no charge for this procedure. 17 Obtain certificate of completion and certificate of final inspection from the 21 days no charge Shanghai Urban Construction and Communications Commission Agency : Shanghai Urban Construction and Communications Commission Within 15 days after the building passes the inspection, BuildCo must file the following documents with the Shanghai Urban Construction and Communications Commission: - Inspection report of the completed construction - Acknowledgement or authority from the planning bureau - Acceptance certificate or opinion on acceptance of fire-prevention inspection - Acknowledgement from the environmental protection bureau - Acknowledgement from the city construction dossier department - Opinion on acceptance of lightning-proof construction project issued by Shanghai Lightning Protection Center - Proof of payment of engineering section - Opinion on acceptance of completed civil defense project 18 Receive connection to water and sewage services 49 days no charge Agency : Municipal Water Bureau Register building with Real Estate Registry 5 days CNY 550 19 Agency : Shanghai District Real Estate Registry The warehouse considered here should fall into the category of nonresidential real property, in which case the registry procedure will take about 5 working days from receipt of the application. Pursuant to Notice on Relevant Issues on Calculating Methods and Fee Standards of the House Registration Fee (effective on Apr 25, 2008)《上海市物价局、上海市财政局关于规范本市房屋登记费计费方 式和收费标准等有关问题的通知》, for nonresidential real property, the registration fee is CNY 550. Before selling the building, the property must be registered and the certificate obtained. Takes place simultaneously with previous procedure. Page 17 Doing Business 2019 China Details – Dealing with Construction Permits in Shanghai – Measure of Quality Answer Score Building quality control index (0-15) 12.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; 1.0 Free of charge. Which requirements for obtaining a building permit are clearly specified in the building List of required 1.0 regulations or on any accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in Licensed 1.0 compliance with existing building regulations? (0-1) architect. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during construction? Inspections by 1.0 (0-2) external engineer or firm; Inspections at various phases. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a final inspection required by law to verify that the building was built in accordance Yes, final 2.0 with the approved plans and regulations? (0-2) inspection is done by government agency. Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 2.0 Which parties (if any) are held liable by law for structural flaws or problems in the building Architect or 1.0 once it is in use (Latent Defect Liability or Decennial Liability)? (0-1) engineer; Professional in charge of the supervision; Construction company. Which parties (if any) are required by law to obtain an insurance policy to cover possible No party is 1.0 structural flaws or problems in the building once it is in use (Latent Defect Liability Insurance required by law or Decennial Insurance)? (0-1) to obtain insurance ; Construction company. Professional certifications index (0-4) 2.0 What are the qualification requirements for the professional responsible for verifying that the Minimum number 2.0 architectural plans or drawings are in compliance with existing building regulations? (0-2) of years of experience; University degree in architecture or engineering; Being a registered architect or engineer. Page 18 Doing Business 2019 China What are the qualification requirements for the professional who supervises the construction Minimum number 0.0 on the ground? (0-2) of years of experience; Passing a certification exam. Page 19 Doing Business 2019 China Dealing with Construction Permits - Beijing Standardized Warehouse Estimated value of warehouse CNY 2,976,602.60 City Covered Beijing Indicator Beijing East Asia & OECD high Best Regulatory Pacific income Performance Procedures (number) 22 15.1 12.7 None in 2017/18 Time (days) 137.5 133.5 153.1 None in 2017/18 Cost (% of warehouse value) 3.7 1.9 1.5 None in 2017/18 Building quality control index (0-15) 10.0 9.1 11.5 15.0 (3 Economies) Figure – Dealing with Construction Permits in Beijing and comparator economies – Ranking and Score DB 2019 Dealing with Construction Permits Score 0 100 88.24: Hong Kong SAR, China (Rank: 1) 77.88: United States (Rank: 26) 74.61: Russian Federation (Rank: 48) 73.81: India (Rank: 52) 67.71: Shanghai 62.05: Beijing Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Figure – Dealing with Construction Permits in Beijing – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 3 120 2.5 Cost (% of warehouse value) 100 2 Time (days) 80 1.5 60 1 40 0.5 20 0 0 1 2 3 *4 5 *6 *7 *8 *9 10 11 12 13 14 15 16 * 17 * 18 * 19 20 21 * 22 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 20 Doing Business 2019 China Figure – Dealing with Construction Permits in Beijing and comparator economies – Measure of Quality 15 14.0 14.0 14.0 12.0 11.2 Index score 10.0 10 9.1 5 0 Beijing Hong Kong SAR, China India Russian Federation United States Shanghai East Asia & Pacific Details – Dealing with Construction Permits in Beijing – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Request and obtain land use and various planning conditions approvals 14 days no charge Agency : Beijing Urban Construction and Communications Commission As of 2011, the Beijing Urban Construction and Communications Commission obtains the approvals for the project proposal, project planning and design, notification on the review of the design plan, and two planning permits for using land on behalf of the applicant. The following documents are required to apply for these approvals: • Application form, planning and design project for construction • Topographical map（地形图 • Ichnographic map（平面图 • Scheme drawing (方案图）and instruction of design • Form, Area of layers (分层面积表) • Approval of the feasibility study report or other relevant approval • Approval of request of construction project planning and design (建设工程规划 设计要求通知单) • Other relevant documents and drawings required in the notice of request for construction project planning and design 2 Register Construction Project with the Beijing Development and Reform 1 day no charge Commission Agency : Beijing Development and Reform Commission All construction projects must be registered with the Beijing Development and Reform Commission. The following documents must be submitted: 1. Application form to register the project 2. Proof of land use rights 3. Project proposal 4. Project construction investment estimate 5. Topographic map of the project 6. Comments from relevant functional department 7. Proof of funds presented by the bank 8. A copy of the business license of the enterprise legal representative 3 Complete the Online Environmental Impact Registration 0.5 days no charge Agency : Bureau of Environmental Protection BuildCo must file a report through an online portal of the Beijing Environmental Protection Bureau and submit relevant information regarding the environmental impact of the construction project. 4 Obtain geotechnical study / soil test 11 days CNY 32,500 Agency : Private firms BuildCo will request a soil test for the structural calculations for the foundation. 5 Obtain review of building drawings by a building drawing examiner 20 days no charge authorized by the Beijing Construction Project Document Review Center (Construction Committee) and obtain a letter of notice Agency : Beijing Construction Project Document Review Center As of 2012, the Beijing District Construction Commission accepts the building drawings and coordinates the review among the various agencies, including the Fire Protection Bureau, the Beijing Police and Traffic Police District Level Team and Beijing City Appearance & Environmental Sanitation Administration Bureau. Page 21 Doing Business 2019 China 6 Request and obtain construction project planning permit 20 days no charge Agency : Ministry of Land Resources Documents needed for construction on self-owned land include the following: - Application form - Construction project commitment letter - 1/500 or 1/1000 site-plan and 1/500 or 1/1000 (1/2000 for suburbs) terrain map - Working drawing - Form of strata area - Groundwork construction ichnographic map, groundwork detail drawing and piling plan drawing - Ichnographic sketch map used for public purposes - Construction budget plan - Preliminary design documents that are approved - Reply on planning design proposal and attached drawings - Opinion on review and filing of design documents and acceptance letter for drawing review 7 Hire an authorized supervision agency 1 day CNY 74,415 Agency : Authorized Supervision Agency It is mandated by Ministry of Construction Decree No. 86 to hire an authorized supervision agency to inspect the construction in projects above RMB 30 million. For smaller projects it is common practice even if not legally mandated in order to comply with all relevant standards and regulations. 8 Register for direct contracting of design and construction 1 day CNY 1,679 Agency : District Tendering Office 9 File and publish contractor information with the Beijing Urban Construction 1 day no charge and Communications Commission Agency : Beijing Urban Construction and Communications Commission 10 Request and obtain building permit 14 days no charge Agency : Beijing Urban Construction and Communications Commission To request a building permit, BuildCo must file the following documents electronically: -Application form for building construction permit - Planning permit for the construction project - Land use permit for construction purpose or title certificates of land or property - Construction contract with contractor and Bid winning notice for construction, if applicable - Power of attorney letter - Legal representative’s commitment letter, which contains the promises of the drawing review and the construction unit’s commitment to the suppression work to the government. The commission will register on BuildCo’s behalf for quality and safety monitoring and issues a notice. 11 Receive Scheduled Inspection by the Beijing Construction Engineering 1 day no charge Safety Quality Supervision Station Agency : Beijing Construction Engineering Safety Quality Supervision Station Safety and Quality Control Station conducts several inspections during construction, which were not previously acknowledged by DB but as per DCP methodology, must be recorded as separate and distinct inspections. 12 Receive Random inspection from the Beijing Construction Engineering 1 day no charge Safety Quality Supervision Station- I Agency : Beijing Construction Engineering Safety Quality Supervision Station The local Beijing Construction Engineering Safety Quality Supervision Station conducts several inspections during construction as mandated by the "Measures on Beijing Municipality Construction Projects’ Quality Management Supervision", effective from Jan 1, 1992. 13 Receive Random inspection from the Beijing Construction Engineering 1 day no charge Safety Quality Supervision Station -II Agency : Beijing Construction Engineering Safety Quality Supervision Station -II 14 Obtain water connection inquiry and request water and sewage connection 7 days no charge Agency : Municipal Water Bureau BuildCo must first apply for a water connection inquiry (接水前期征询手续) from the Municipal Water Bureau who will approve the application within 7 days after receiving all required documents. Afterwards, BuildCo may apply for the water connection. Page 22 Doing Business 2019 China 15 Receive water and sewage inspection 1 day no charge Agency : Municipal Water Bureau Upon receiving the water supply application, the water service crew conducts on- site surveys within 7 days. The completion of water supply is determined by construction conditions. As for sewage licensing, the Municipal Water Bureau needs 20 days after BuildCo submits the project approval and other documents on the sewage facility design to conduct a preliminary inspection. After completing the inspection and trial operation, the bureau requires 20 days to examine the results of the facility and grant approval. These timeframes are taken into account in the following procedure. 16 Request and receive Fire Department inspection upon building completion 9 days no charge Agency : Fire Department The application can be submitted directly to the Beijing District Construction Commission which now coordinates all inspections. But the inspections are still conducted by each individual agency. Receive inspection of the completed construction from the Beijing Bureau 10 days no charge 17 of Planning and Land and Resources Agency : Beijing Bureau of Planning and Land and Resources To request a final inspection, BuildCo must submit the following documents: - Report on completed construction (建设工程竣工测量成果报告书) - Planning permit for the construction project and attached drawings (plan, vertical view and cutaway view) - Qualified acceptance certificate of files of construction project (建设项目档案验 收合格证) - Qualified acceptance form of civil defense project However, this application can be submitted directly to the Beijing District Construction Commission which now coordinates all inspections. But the inspections are still conducted by each individual agency. Receive "Four-Party" inspection 1 day no charge 18 Agency : Site Inspector, Designer, Builder, and Agency Supervisor This procedure is called a four-party inspection (四方验收). The four parties include the site inspector, the designer, the builder, and the supervisor. Request and receive inspection on construction completion from the 1 day no charge 19 Beijing Urban Construction and Communications Commission Agency : Beijing Urban Construction and Communications Commission This procedure must be completed on the day of application, provided that the documents required for submission are complete. There is no charge for this procedure. 20 Request and obtain certificate of completion and certificate of final 5 days no charge inspection from the Beijing Urban Construction and Communications Commission Agency : Beijing Urban Construction and Communications Commission Within 15 days after the building passes the inspection, BuildCo must file the following documents with the Beijing Urban Construction and Communications Commission: - Inspection report of the completed construction - Acknowledgement or authority from the planning bureau - Acknowledgement from the city construction dossier department 21 Receive connection to water and sewage services 49 days no charge Agency : Municipal Water Bureau Applicant should submit: 1. Service Application Form; 2. Administrative Permit Application Form; 3.Drawings and instructions for the location and size of the special inspection wells, sewage discharge outlets; 4. Relevant materials of sewage treatment facilities as required; 5. Water quality, water quantity testing report; 6. Applicant's business licence, legal representative certificate, POA; 7. Contracts or property ownership certificate; 8. Water Payment certificate; 9. Other documents required by the water authority. Register building with Real Estate Registry 5 days CNY 550 22 Agency : Beijing District Real Estate Registry The warehouse considered here should fall into the category of nonresidential real property, in which case the registry procedure will take 20 working days from receipt of the application. Pursuant to 北京市发展和改革委员会、北京市财政局 《关于房屋登记费计费方式和收费标准的函》 Beijing Municipal Development and Reform Commission, Beijing Municipal Bureau of finance " Letter on collecting methods and criterion of the housing registration fee", for nonresidential real property, the registration fee is CNY 550. Before selling the building, the property must be registered and the certificate obtained. Page 23 Doing Business 2019 China Takes place simultaneously with previous procedure. Page 24 Doing Business 2019 China Details – Dealing with Construction Permits in Beijing – Measure of Quality Answer Score Building quality control index (0-15) 10.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; 1.0 Free of charge. Which requirements for obtaining a building permit are clearly specified in the building List of required 1.0 regulations or on any accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in Licensed 1.0 compliance with existing building regulations? (0-1) architect. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during construction? Inspections by 1.0 (0-2) external engineer or firm; Inspections at various phases. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a final inspection required by law to verify that the building was built in accordance Yes, final 2.0 with the approved plans and regulations? (0-2) inspection is done by government agency. Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 2.0 Which parties (if any) are held liable by law for structural flaws or problems in the building Architect or 1.0 once it is in use (Latent Defect Liability or Decennial Liability)? (0-1) engineer; Professional in charge of the supervision; Construction company. Which parties (if any) are required by law to obtain an insurance policy to cover possible No party is 1.0 structural flaws or problems in the building once it is in use (Latent Defect Liability Insurance required by law or Decennial Insurance)? (0-1) to obtain insurance ; Construction company. Professional certifications index (0-4) 0.0 What are the qualification requirements for the professional responsible for verifying that the Being a 0.0 architectural plans or drawings are in compliance with existing building regulations? (0-2) registered architect or engineer. What are the qualification requirements for the professional who supervises the construction Minimum number 0.0 on the ground? (0-2) of years of experience; Passing a certification exam. Page 25 Doing Business 2019 China Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection To make the data comparable across economies, several assumptions about the (number) warehouse, the electricity connection and the monthly consumption are used. • Submitting all relevant documents and obtaining The warehouse: all necessary clearances and permits - Is owned by a local entrepreneur and is used for storage of goods. • Completing all required notifications and - Is located in the economy’s largest business city. For 11 economies the data are receiving all necessary inspections also collected for the second largest business city. • Obtaining external installation works and possibly - Is located in an area where similar warehouses are typically located and is in an purchasing material for these works area with no physical constraints. For example, the property is not near a railway. - Is a new construction and is being connected to electricity for the first time. • Concluding any necessary supply contract and - Has two stories with a total surface area of approximately 1,300.6 square meters obtaining final supply (14,000 square feet). The plot of land on which it is built is 929 square meters Time required to complete each procedure (10,000 square feet). (calendar days) The electricity connection: • Is at least 1 calendar day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed • Each procedure starts on a separate day capacity of 140-kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 • Does not include time spent gathering kilowatt (kW). information - Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution network and is either overhead or underground, whichever is more • Reflects the time spent in practice, with little common in the area where the warehouse is located and requires works that involve follow-up and no prior contact with officials the crossing of a 10-meter road (such as by excavation or overhead lines) but are all carried out on public land. There is no crossing of other owners’ private property Cost required to complete each procedure (% of because the warehouse has access to a road. income per capita) - Does not require work to install the internal wiring of the warehouse. This has • Official costs only, no bribes already been completed up to and including the customer’s service panel or switchboard and the meter base. • Value added tax excluded The reliability of supply and transparency of The monthly consumption: tariffs index (0-8) - It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 • Duration and frequency of power outages (0–3) p.m. (8 hours a day), with equipment utilized at 80% of capacity on average and that there are no electricity cuts (assumed for simplicity reasons) and the monthly energy • Tools to monitor power outages (0–1) consumption is 26,880 kilowatt-hours (kWh); hourly consumption is 112 kWh. • Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest supplier. • Regulatory monitoring of utilities’ performance (0–1) - Tariffs effective in January of the current year are used for calculation of the price of electricity for the warehouse. Although January has 31 days, for calculation • Financial deterrents limiting outages (0–1) purposes only 30 days are used. • Transparency and accessibility of tariffs (0–1) Price of electricity (cents per kilowatt-hour)* • Price based on monthly bill for commercial warehouse in case study *Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor the ranking on the ease of getting electricity. Page 26 Doing Business 2019 China Getting Electricity - Shanghai Standardized Connection Price of electricity (US cents per kWh) 14.0 Name of utility Shanghai Municipal Electric Power Company City Covered Shanghai Indicator Shanghai East Asia & OECD high Best Regulatory Pacific income Performance Procedures (number) 3 4.3 4.5 3 (25 Economies) Time (days) 34 65.0 77.2 18 (3 Economies) Cost (% of income per capita) 0 625.1 64.2 0.0 (3 Economies) Reliability of supply and transparency of tariff 6 4.0 7.5 8.0 (27 Economies) index (0-8) Figure – Getting Electricity in Shanghai and comparator economies – Ranking and Score DB 2019 Getting Electricity Score 0 100 99.34: Hong Kong SAR, China (Rank: 3) 94.00: Russian Federation (Rank: 12) 92.01: Beijing 92.01: Shanghai 89.15: India (Rank: 24) 82.15: United States (Rank: 54) Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Page 27 Doing Business 2019 China Figure – Getting Electricity in Shanghai – Procedure, Time and Cost Time (days) Cost (% of income per capita) 1.2 30 Cost (% of income per capita) 1 25 0.8 Time (days) 20 0.6 15 0.4 10 5 0.2 0 0 1 2 3 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Figure – Getting Electricity in Shanghai and comparator economies – Measure of Quality 8 8 8 7.2 7 6.5 6 6 6 Index score 5 4.0 4 3 2 1 0 Shanghai Hong Kong SAR, China India Russian Federation United States Beijing East Asia & Pacific Page 28 Doing Business 2019 China Details – Getting Electricity in Shanghai – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Submit application to utility and await approval 4 calendar days CNY 0 Agency : Shanghai Municipal Electric Power Company The first step is for customers to submit a new application. Documents to be submitted along with application include: copy of business license, tax registration certificate and the certificate of house property right (needs to be identical to the electrical address). After examining the application, the utility's staff will investigate the site the next day without involving the customer (i.e. inspection occurs outside the premises of the customer's property) to (i) assess the feasibility of the connection and (ii) determine the specific needs of the connection. Shortly thereafter, the application is accepted and the customer is notified automatically. The utility will then commence the external connection works. Since 2017, new connection applications can be lodged through a mobile application of the Shanghai Municipal Electric Power Company. 2 Await external connection works and meter installation 28 calendar days CNY 0 Agency : Shanghai Municipal Electric Power Company For power load at 160kW or below, the connection is now done through the low voltage network - which does not require a transformer. For commercial connections through the low voltage network, the Shanghai Municipal Electric Power Company funds and constructs the connection through a sub-contractor - which includes the material, the meter box and labor. The sub- contractor will be chosen by the utility through a bidding process where they then give the sub-contractor (i.e. winning-bidder) a time objective to respect. The client will not interact with the sub-contracting entity. Once the application is accepted, the Shanghai Municipal Electric Power Company will carry out through a sub-contractor the external connection works as well as the meter installation. During this process, the utility will take care of all the required permitting with the relevant authorities, including the excavation permit. 3 Sign supply contract and receive electricity turn-on 2 calendar days CNY 0 Agency : Shanghai Municipal Electric Power Company After the construction is done, the client needs to sign a supply contract with the utility. Among other things, the contract specifies the following items: 1. Address of warehouse and characteristic of contract (commercial v.s. household) 2. Voltage level 3.Property boundaries 4. Applicable electricity tariff and payment method The contract signing is a requirement ahead of the electricity turn-on. The contract is signed by the client on-site; a customer service representative will give customers an appointment time shortly after the meter installation. Once the contract is signed, the warehouse can be energized. Takes place simultaneously with previous procedure. Page 29 Doing Business 2019 China Details – Getting Electricity in Shanghai – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 6 Total duration and frequency of outages per customer a year (0-3) 3 System average interruption duration index (SAIDI) 1.0 System average interruption frequency index (SAIFI) 0.2 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 3.0 Mechanisms for monitoring outages (0-1) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 1 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of Yes supply? Financial deterrents aimed at limiting outages (0-1) 0 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages No exceed a certain cap? Communication of tariffs and tariff changes (0-1) 0 Are effective tariffs available online? Yes Link to the website, if available online http://www.shdrc.gov. cn/xxgk/cxxxgk/3054 9.htm Are customers notified of a change in tariff ahead of the billing cycle? No Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 30 Doing Business 2019 China Getting Electricity - Beijing Standardized Connection Price of electricity (US cents per kWh) 17.4 Name of utility State Grid Beijing Electric Power Company City Covered Beijing Indicator Beijing East Asia & OECD high Best Regulatory Pacific income Performance Procedures (number) 3 4.3 4.5 3 (25 Economies) Time (days) 34 65.0 77.2 18 (3 Economies) Cost (% of income per capita) 0 625.1 64.2 0.0 (3 Economies) Reliability of supply and transparency of tariff 6 4.0 7.5 8.0 (27 Economies) index (0-8) Figure – Getting Electricity in Beijing and comparator economies – Ranking and Score DB 2019 Getting Electricity Score 0 100 99.34: Hong Kong SAR, China (Rank: 3) 94.00: Russian Federation (Rank: 12) 92.01: Beijing 92.01: Shanghai 89.15: India (Rank: 24) 82.15: United States (Rank: 54) Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Page 31 Doing Business 2019 China Figure – Getting Electricity in Beijing – Procedure, Time and Cost Time (days) Cost (% of income per capita) 1.2 30 Cost (% of income per capita) 1 25 0.8 Time (days) 20 0.6 15 0.4 10 5 0.2 0 0 1 2 3 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Figure – Getting Electricity in Beijing and comparator economies – Measure of Quality 8 8 8 7.2 7 6.5 6 6 6 Index score 5 4.0 4 3 2 1 0 Beijing Hong Kong SAR, China India Russian Federation United States Shanghai East Asia & Pacific Page 32 Doing Business 2019 China Details – Getting Electricity in Beijing – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Submit application to utility and await approval 4 calendar days CNY 0 Agency : State Grid Beijing Electric Power Company The first step is for customers to submit a new application. Documents to be submitted along with application include: copy of business license, tax registration certificate and the certificate of house property right (needs to be identical to the electrical address). After examining the application, the utility's staff will investigate the site the next day without involving the customer (i.e. inspection occurs outside the premises of the customer's property) to (i) assess the feasibility of the connection and (ii) determine the specific needs of the connection. Shortly thereafter, the application is accepted and the customer is notified automatically. The utility will then commence the external connection works. Since 2017, new connection applications can be lodged through a mobile application of the State Grid Beijing Electrical Power Company. 2 Await external connection works and meter installation 28 calendar days CNY 0 Agency : State Grid Beijing Electric Power Company For power load at 160kW or below, the connection is done through the low voltage network - which does not require a transformer. For commercial connections to the low voltage network, the State Grid Beijing Electric Power Company funds and constructs the connection through a sub- contractor - which includes the material, the meter box and labor. The sub- contractor will be chosen by the utility through a bidding process where they then give the sub-contractor (i.e. winning-bidder) a time objective to respect. The client will not interact with the sub-contracting entity. Once the application is accepted, the State Grid Beijing Electric Power Company will carry out through a sub-contractor the external connection works as well as the meter installation. During this process, the utility will take care of all the required permitting with the relevant authorities, including the excavation permit. 3 Sign supply contract and receive electricity turn-on 2 calendar days CNY 0 Agency : State Grid Beijing Electric Power Company After the construction is done, the client needs to sign a supply contract with the utility. Among other things, the contract specifies the following items: 1. Address of warehouse and characteristic of contract (commercial v.s. household) 2. Voltage level 3.Property boundaries 4. Applicable electricity tariff and payment method The contract signing is a requirement ahead of the electricity turn-on. The contract is signed by the client on-site; a customer service representative will give customers an appointment time shortly after the meter installation. Once the contract is signed, the warehouse can be energized. Takes place simultaneously with previous procedure. Page 33 Doing Business 2019 China Details – Getting Electricity in Beijing – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 6 Total duration and frequency of outages per customer a year (0-3) 3 System average interruption duration index (SAIDI) 0.8 System average interruption frequency index (SAIFI) 0.2 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 3.0 Mechanisms for monitoring outages (0-1) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 1 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of Yes supply? Financial deterrents aimed at limiting outages (0-1) 0 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages No exceed a certain cap? Communication of tariffs and tariff changes (0-1) 0 Are effective tariffs available online? Yes Link to the website, if available online http://www.bj.sgcc.co m.cn/html/files/2017- 07/28/201707281611 38761510095.pdf Are customers notified of a change in tariff ahead of the billing cycle? No Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 34 Doing Business 2019 China Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on To make the data comparable across economies, several assumptions about the immovable property (number) parties to the transaction, the property and the procedures are used. • Preregistration procedures (for example, The parties (buyer and seller): checking for liens, notarizing sales agreement, paying property transfer taxes) - Are limited liability companies (or the legal equivalent). - Are located in the periurban area of the economy’s largest business city. For 11 • Registration procedures in the economy's largest economies the data are also collected for the second largest business city. business city. - Are 100% domestically and privately owned. • Postregistration procedures (for example, filling - Have 50 employees each, all of whom are nationals. title with municipality) - Perform general commercial activities. Time required to complete each procedure The property (fully owned by the seller): (calendar days) - Has a value of 50 times income per capita, which equals the sale price. • Does not include time spent gathering - Is fully owned by the seller. information - Has no mortgages attached and has been under the same ownership for the past 10 years. • Each procedure starts on a separate day - - Is registered in the land registry or cadastre, or both, and is free of title disputes. though procedures that can be fully completed online are an exception to this rule - Is located in a periurban commercial zone, and no rezoning is required. - Consists of land and a building. The land area is 557.4 square meters (6,000 • Procedure is considered completed once final square feet). A two-story warehouse of 929 square meters (10,000 square feet) is document is received located on the land. The warehouse is 10 years old, is in good condition, has no • No prior contact with officials heating system and complies with all safety standards, building codes and legal requirements. The property, consisting of land and building, will be transferred in its Cost required to complete each procedure (% of entirety. property value) - Will not be subject to renovations or additional construction following the purchase. - Has no trees, natural water sources, natural reserves or historical monuments of • Official costs only (such as administrative fees, any kind. duties and taxes). - Will not be used for special purposes, and no special permits, such as for • Value Added Tax, Capital Gains Tax and illicit residential use, industrial plants, waste storage or certain types of agricultural payments are excluded activities, are required. - Has no occupants, and no other party holds a legal interest in it. Quality of land administration index (0-30) • Reliability of infrastructure index (0-8) • Transparency of information index (0–6) • Geographic coverage index (0–8) • Land dispute resolution index (0–8) • Equal access to property rights index (-2–0) Page 35 Doing Business 2019 China Registering Property - Shanghai Indicator Shanghai East Asia & OECD high Best Regulatory Pacific income Performance Procedures (number) 4 5.4 4.7 1 (4 Economies) Time (days) 9 72.6 20.1 1 (New Zealand) Cost (% of property value) 4.6 4.5 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 23.5 16.3 23.0 None in 2017/18 Figure – Registering Property in Shanghai and comparator economies – Ranking and Score DB 2019 Registering Property Score 0 100 88.74: Russian Federation (Rank: 12) 82.18: Beijing 79.68: Shanghai 76.87: United States (Rank: 38) 73.55: Hong Kong SAR, China (Rank: 53) 43.55: India (Rank: 166) Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Figure – Registering Property in Shanghai – Procedure, Time and Cost Time (days) Cost (% of property value) 9 3.5 8 3 Cost (% of property value) 7 2.5 6 Time (days) 5 2 4 1.5 3 1 2 0.5 1 0 0 1 2 *3 4 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 36 Doing Business 2019 China Figure – Registering Property in Shanghai and comparator economies – Measure of Quality 30 27.5 26.0 25 23.5 24.0 Index score 20 17.6 16.3 15 10 8.7 5 0 Shanghai Hong Kong SAR, China India Russian Federation United States Beijing East Asia & Pacific Details – Registering Property in Shanghai – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Lawyer prepares the sale and purchase agreement and conducts due 4 days CNY 44,649.04; diligence on the property and the parties (Lawyer fees: Agency : Lawyer's office Between 1% and 2% Parties must prepare a sale and purchase agreement to transfer property. It is a of the property value) common practice to hire a Lawyer to advice, conduct due diligence and prepare the sale and purchase agreement. Lawyer's would normally download the standard templates offered by the Shanghai Municipal Real Estate Registration Bureau, amending some clauses to as needed for each specific case. Once the parties have properly identified the property, and verified all possible encumbrances that are attached to the property or the parties, the sale and purchase agreement is signed. The sale and purchase agreement must be submitted to the Real Estate Centers to proceed with the registration and obtain a new title certificate. During the due diligence phase, is it common for lawyers to: Verify whether the property is free of encumbrances at the Real Estate Centers of the Shanghai Municipal Real Estate Registration Bureau. The time to complete this task depends on the complexity of the property object to the transaction, but generally it can be completed within a day. Verify the zoning regulations affecting the property. This is normally checked online as it is public information at http://www.shgtj.gov.cn/ghsp/ Verify that the property is free of any outstanding debts with the tax authority and of any debts with utilities (electricity, water etc.). This is normally checked by reviewing the last tax receipts paid by the seller. Verify whether any of the parties is subject or has been subject to an insolvency proceeding. If the case was accepted by court, the information will be on the website, which includes if the business license was revoked or if the business is deregistered: http://pccz.court.gov.cn/pcajxxw/index/xxwsy. Page 37 Doing Business 2019 China 2 Parties file the application to register the property transfer and pay 4 days CNY 550 registration fee at the Real Estate Registry Agency : Real Estate Registry Private ownership of land is not permitted in China; all land is subject to either State ownership or collective ownership. However, a private party is entitled to obtain the right to use the land. Regarding the State-owned land, there are two types of land use rights, the “granted land use right” and the “allocated land use right”. The difference is that the granted land use right is limited in time against payment, whereas the allocated land use right is usually given for free with no time limit, but for specific purposes only. A private party also may transfer to another private party the granted land use right. The allocated land use right cannot be commercially transferable before being converted into granted land use right. In this case, the land is used for commercial purposes. Usually land for commercial use is owned by the State, and the relevant land use right is the State-owned land use right. As to the term of the land use right in this case the buyer, who will use the land for commercial purposes, will only get 40 years as the initial term (as maximum unless it extends the granted land use rights at the end of the 40-year period by paying to the State the additional land price) minus the period from the granting date from the State to the date of the transfer to ABC. If the land is zoned for industrial use or warehousing use rather than for commercial use, the maximum land tenure should be 50 years. The sale and purchase agreement needs to be printed at designated printers. Such printers are only available at licensed real estate brokers and the property registry offices. Property Ownership Certificate and Land Use Right Certificate are combined into one certificate in Shanghai, which is called "Real Estate Title Certificate". The officials in real estate registry will review the contract to make sure the price is generally in line with the market price, and the parties shall pay the taxes as mentioned above at the tax bureau window (the local tax authorities might have a window in most real estate registry offices in Shanghai) based on the reviewed purchase price. For online registration of contract : Measures on the Online Registration of Shanghai Municipality Existing Real Estate Broker Contract and Transfer Contract (http://www.fangdi.com.cn/News/ZCFG/200694164606.htm) The documentation shall include: The seller and the buyer should submit one original real estate sales and purchase contract (duly signed) and a writing representation of the seller and buyer regarding the title transfer. There is no standard form of the contract (except for newly constructed commercial residential properties) nor is the participation of a lawyer/notary required. The seller should submit the below documents: (i) The original copy of the Property Ownership Certificate and Land Use Right Certificate "Real Estate Title Certificate" (already in possession of the seller); (ii) The original copy of the Business License or Organization Code Certificate; (iii) The original copy of the Board resolution approving the sales of the real estate; (iv) District Branch-dedicated Form for proof of legal representative’s authority, and photocopy of the identification card (or passport) of the legal representative; and (v) Photocopy of the identification card of the individual authorized to handle the actual Procedures, and the original copy of Power of Attorney. The buyer should submit the below documents: (i) Real Estate Ownership Registration Form; (ii) The original copy of the Business License or Organization Code Certificate; (iii) The original copy of the Board resolution approving the purchase of the real estate; (iv) District Branch-dedicated Form for proof of legal representative’s authority, and photocopy of the identification card (or passport) of the legal representative; And (v) Photocopy of the identification card of the individual authorized to handle the actual Procedures, and the original copy of Power of Attorney. The Ministry of Finance and State Development and Reform Commission issued a notice, effective from May 1st 2008, to standardize the registration fees for real estate property. The registration fee is set at CNY 80 for one piece of residential housing and CNY 550 for one unit of non-residential building. The transaction handling fee of 0.5% of the transaction has been removed by Notice of the Ministry of Finance and the National Development and Reform Commission on the Relevant Policies on Suspending, Exempting and Adjusting Certain Administrative Charges of April 12, 2018. Page 38 Doing Business 2019 China 3 Parties pay taxes 1 day CNY 92,274.68; Agency : Real Estate Registry (Deed tax: 3% of Taxes to be paid by the seller and buyer while transferring a property. property value to be paid by the buyer; A. Tax to be paid by the buyer: Stamp duty: 0.05% of i. deed tax: 3% of property value; ii. stamp duty: 0.05% of the property value. property value to be paid by buyer and B. Tax to be paid by the seller: seller separately i. Value added tax: 11% of the difference between the purchase price and the (total 0.1%)) sale price (not counted in cost calculations); ii. stamp duty: 0.05% of the property value; Additional business tax to be paid by seller: iii. educational surtax, to be 3% of the levied business tax (not counted in cost calculations); iv. local education surcharge: 2% of the levied business tax (not counted in cost calculations); v. land appreciation tax: 30% to 60% (as the case may be) of the added-value of the land, [or 3% of property value subject to the tax office's instruction in practice] (not counted in cost calculations); vi. urban maintenance and construction tax to be 1% to 7% of the levied business tax (not counted in cost calculations) vii. construction and installation business tax: 3% on the transfer price (not counted in cost calculations); viii. river maintenance fee: 1% of the levied business tax (not counted in cost calculations). ix. enterprise income tax: 25% of the profit from the selling property (which may be levied on the financial year end); The legislation for the major taxes to be paid by the seller and buyer can be found here: 1. For Land Appreciation tax : Interim Regulations of the People's Republic of China on Land Appreciation Tax (http://www.mlr.gov.cn/zwgk/flfg/tdglflfg/200601/t20060119_642173.htm); 2. For business tax : Interim Regulations of the People's Republic of China on Business Tax (http://www.gov.cn/zwgk/2008-11/14/content_1149510.htm); 3. For Urban Maintenance Construction Tax : Interim Regulations of the People's Republic of China on Urban Maintenance Construction Tax (http://www.gov.cn/banshi/2005-08/19/content_24817.htm) 4. For educational surtax : Interim Provisions on Collecting the Educational Surtax (http://www.gov.cn/gongbao/content/2011/content_1860811.htm) In accordance with the Interim Administrative Measures for the Collection of Value-added Tax on Real Estate Transfers by Taxpayers (effective from 1 May 2016) the Business tax (5%) was replaced with the Value added tax (5% for property in business areas and 11% for property in rural areas). 4 Parties obtain new title certificate 1 day no charge Agency : Real Estate Registry After paying the corresponding taxes, along with the receipt, the buyer obtains the new Real Estate Title Certificate. In Shanghai the former Property Ownership Certificate and the Land Use Right Certificate have been combined into one certificate, the Real Estate Title Certificate. The title transfer Procedure will be complete upon the issuance of the new Real Estate Title Certificate. Takes place simultaneously with previous procedure. Page 39 Doing Business 2019 China Details – Registering Property in Shanghai – Measure of Quality Answer Score Reliability of infrastructure index (0-8) 8.0 What is the institution in charge of immovable property registration? Shanghai Real Estate Center (Office of the Shanghai Municipal Real Estate Registration Bureau) In what format are the majority of title or deed records kept in the largest business city—in a Computer/Fully 2.0 paper format or in a computerized format (scanned or fully digital)? digital Is there an electronic database for checking for encumbrances (liens, mortgages, restrictions Yes 1.0 and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Shanghai Real Estate Surveying and Mapping Administration Department In what format are the majority of maps of land plots kept in the largest business city—in a Computer/Fully 2.0 paper format or in a computerized format (scanned or fully digital)? digital Is there an electronic database for recording boundaries, checking plans and providing Yes 1.0 cadastral information (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral Single database 1.0 or mapping agency kept in a single database, in different but linked databases or in separate databases? Do the immovable property registration agency and cadastral or mapping agency use the Yes 1.0 same identification number for properties? Transparency of information index (0–6) 3.5 Who is able to obtain information on land ownership at the agency in charge of immovable Only 0.0 property registration in the largest business city? intermediaries and interested parties Is the list of documents that are required to complete any type of property transaction made Yes, online 0.5 publicly available–and if so, how? Link for online access: http://www.shgtj.g ov.cn/gsgg/bdc/y wgz/201803/t201 80322_827220.ht ml Is the applicable fee schedule for any property transaction at the agency in charge of Yes, online 0.5 immovable property registration in the largest business city made publicly available–and if so, how? Link for online access: http://www.shgtj.g ov.cn/gsgg/bdc/y wgz/201803/t201 80322_827220.ht ml Does the agency in charge of immovable property registration commit to delivering a legally Yes, online 0.5 binding document that proves property ownership within a specific time frame–and if so, how does it communicate the service standard? Link for online access: http://www.shgtj.g ov.cn/gsgg/bdc/y wlc/201802/t2018 0206_824656.ht ml Is there a specific and separate mechanism for filing complaints about a problem that Yes 1.0 occurred at the agency in charge of immovable property registration? Page 40 Doing Business 2019 China Contact information: Online through the following website link: http://wbjxf.sh.go v.cn/310000W00 16/let.getXZ.do? id=a07934a9- 20fc-4bef-a32e- 49809f2bdf92&T YPE_FLAG=22 Telephone hotline: 86-21- 962269 Are there publicly available official statistics tracking the number of transactions at the Yes 0.5 immovable property registration agency? Number of property transfers in the largest business city in 2017: 1040345.0 Who is able to consult maps of land plots in the largest business city? Only 0.0 intermediaries and interested parties Is the applicable fee schedule for accessing maps of land plots made publicly available— Yes, on public 0.5 and if so, how? boards Link for online access: Does the cadastral or mapping agency commit to delivering an updated map within a No 0.0 specific time frame—and if so, how does it communicate the service standard? Link for online access: Is there a specific and separate mechanism for filing complaints about a problem that No 0.0 occurred at the cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 4.0 Are all privately held land plots in the economy formally registered at the immovable property No 0.0 registry? Are all privately held land plots in the largest business city formally registered at the Yes 2.0 immovable property registry? Are all privately held land plots in the economy mapped? No 0.0 Are all privately held land plots in the largest business city mapped? Yes 2.0 Land dispute resolution index (0–8) 8.0 Does the law require that all property sale transactions be registered at the immovable Yes 1.5 property registry to make them opposable to third parties? Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5 Is there a specific compensation mechanism to cover for losses incurred by parties who Yes 0.5 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Does the legal system require a control of legality of the documents necessary for a property Yes 0.5 transaction (e.g., checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Does the legal system require verification of the identity of the parties to a property Yes 0.5 transaction? If yes, who is responsible for verifying the identity of the parties? Registrar; Notary; Is there a national database to verify the accuracy of identity documents? Yes 1.0 For a standard land dispute between two local businesses over tenure rights of a property District level worth 50 times gross national income (GNI) per capita and located in the largest business court city, what court would be in charge of the case in the first instance? Page 41 Doing Business 2019 China How long does it take on average to obtain a decision from the first-instance court for such a Less than a year 3.0 case (without appeal)? Are there any statistics on the number of land disputes in the first instance? Yes 0.5 Number of land disputes in the largest business city in 2017: 149.0 Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 42 Doing Business 2019 China Registering Property - Beijing Indicator Beijing East Asia & OECD high Best Regulatory Pacific income Performance Procedures (number) 3 5.4 4.7 1 (4 Economies) Time (days) 9 72.6 20.1 1 (New Zealand) Cost (% of property value) 4.6 4.5 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 24.0 16.3 23.0 None in 2017/18 Figure – Registering Property in Beijing and comparator economies – Ranking and Score DB 2019 Registering Property Score 0 100 88.74: Russian Federation (Rank: 12) 82.18: Beijing 79.68: Shanghai 76.87: United States (Rank: 38) 73.55: Hong Kong SAR, China (Rank: 53) 43.55: India (Rank: 166) Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Figure – Registering Property in Beijing – Procedure, Time and Cost Time (days) Cost (% of property value) 9 3.5 8 3 Cost (% of property value) 7 2.5 6 Time (days) 5 2 4 1.5 3 1 2 0.5 1 0 0 1 2 3 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 43 Doing Business 2019 China Figure – Registering Property in Beijing and comparator economies – Measure of Quality 30 27.5 26.0 25 24.0 23.5 Index score 20 17.6 16.3 15 10 8.7 5 0 Beijing Hong Kong SAR, China India Russian Federation United States Shanghai East Asia & Pacific Details – Registering Property in Beijing – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Lawyer prepares the sale and purchase agreement and conducts due 4 days CNY 44,649.04; diligence on the property and the parties (Lawyer fees: Agency : Lawyer's office Between 1% and 2% Parties must prepare a sale and purchase agreement to transfer property. It is a of the property value) common practice to hire a Lawyer to advice, conduct due diligence and prepare the sale and purchase agreement. Lawyer's would normally download the standard templates offered by the Beijing Municipal Commission of Urban Planning and Land and Resources Management, amending some clauses to as needed for each specific case. Once the parties have properly identified the property, and verified all possible encumbrances that are attached to the property or the parties, the sale and purchase agreement is signed. The sale and purchase agreement must be submitted to the Real Estate Centers to proceed with the registration and obtain a new title certificate. During the due diligence phase, is it common for lawyers to: Verify whether the property is free of encumbrances at the Beijing Municipal Commission of Urban Planning and Land and Resources Management. The time to complete this task depends on the complexity of the property object to the transaction, but generally it can be completed within a day. Verify the zoning regulations affecting the property. This is normally checked online as it is public information at http://www.shgtj.gov.cn/ghsp/ Verify that the property is free of any outstanding debts with the tax authority and of any debts with utilities (electricity, water etc.). This is normally checked by reviewing the last tax receipts paid by the seller. Verify whether any of the parties is subject or has been subject to an insolvency proceeding. If the case was accepted by court, the information will be on the website, which includes if the business license was revoked or if the business is deregistered: http://pccz.court.gov.cn/pcajxxw/index/xxwsy. Page 44 Doing Business 2019 China 2 Parties file the application and pay taxes at the Real Estate Registry 4 days CNY 92,274.68; Agency : Real Estate Registry (Deed tax: 3% of Private ownership of land is not permitted in China; all land is subject to either property value to be State ownership or collective ownership. However, a private party is entitled to paid by the buyer obtain the right to use the land. Regarding the State-owned land, there are two Stamp duty: 0.05% of types of land use rights, the “granted land use right” and the “allocated land use right”. The difference is that the granted land use right is limited in time against property value to be payment, whereas the allocated land use right is usually given for free with no paid by buyer and time limit, but for specific purposes only. A private party also may transfer to seller separately another private party the granted land use right. The allocated land use right (total 0.1%)) cannot be commercially transferable before being converted into granted land use right. In this case, the land is used for commercial purposes. Usually land for commercial use is owned by the State, and the relevant land use right is the State-owned land use right. As to the term of the land use right in this case the buyer, who will use the land for commercial purposes, will only get 40 years as the initial term (as maximum unless it extends the granted land use rights at the end of the 40 year period by paying to the State the additional land price) minus the period from the granting date from the State to the date of the transfer to ABC. If the land is zoned for industrial use or warehousing use rather than for commercial use, the maximum land tenure should be 50 years. The parties request the Online Appointment of Title Transfer Application in Chaoyang Housing Bureau 朝阳区过户申请手续的网上预约. This step is called the online contract execution(网签合同) or the Qualification Review (资格审查). The procedure should be handled only before the Agency. The online filing for the contract can be done at: http://210.75.213.188/shh/portal/bjjs/index.aspx. The parties should submit the following documents to the Real Estate Registry: (1) The original copy of the application form; (2) identification document of the applicant(s) (if a company is involved as the applicant, the business license should be submitted); (3) The original copy of the Real Estate Certificate; (4) The original real estate sales and purchase contract (duly signed); (5) Two copies of the Real Estate Registration form and the floor plan; (6) Documents indicate that deed tax is fully paid or documents to prove that a tax reduction or exemption is applicable; and (7) Other materials that are necessary for the application. The officials in real estate registry will review the contract to make sure the price is generally in line with the market price, and the parties shall pay the taxes as mentioned above at the tax bureau window (the local tax authorities might have a window in most real estate registry offices in Shanghai) based on the reviewed purchase price. Taxes to be paid by the seller and buyer while transferring a property. A. Tax to be paid by the buyer: i. deed tax: 3% of property value; ii. stamp duty: 0.05% of the property value. B. Tax to be paid by the seller: i. Value added tax: 5% of the shortfall between the purchase price and the sale proceeds. (not counted in cost calculations); Effective from May 1, 2016 the Business Tax on real estate transaction was replace with the Value added tax. This is in accordance with the Circular of the Ministry of Finance and the State Administration of Taxation. ii. stamp duty: 0.05% of the property value; Additional business tax to be paid by seller: iii. educational surtax, to be 3% of the levied VAT tax (not counted in cost calculations); iv. local education surcharge: 2% of the levied VAT tax (not counted in cost calculations); v. land appreciation tax: 30% to 60% (as the case may be) of the added-value of the land, [or 3% of property value subject to the tax office's instruction in practice] (not counted in cost calculations); vi. urban maintenance and construction tax to be 7% of the levied VAT tax (not counted in cost calculations) vii. enterprise income tax: 25% of the profit from the selling the property (which may be levied on the financial year end); The legislation for the major taxes to be paid by the seller and buyer can be found here: 1. For Land Appreciation tax : Interim Regulations of the People's Republic of China on Land Appreciation Tax (http://www.mlr.gov.cn/zwgk/flfg/tdglflfg/200601/t20060119_642173.htm); 2. For value added tax : Interim Administrative Measures for the Collection of the Value-added Tax on Real Estate Transfers by Taxpayers and Circular on Comprehensively Promoting the Pilot Program of the Collection of Value-added Tax in Lieu of Business Tax (http://www.bjsat.gov.cn/bjsat/bsfw/tzgg/201603/t20160324_252689.html) Page 45 Doing Business 2019 China 3 Parties submit the tax receipt, pay registration fee and obtain new title 1 day CNY 550 certificate Agency : Real Estate Registry The registration fee is paid at a separate window from that where one picks up the new title certificate. The Ministry of Finance and State Development and Reform Commission issued a notice, effective from May 1st 2008, to standardize the registration fees for real estate property. The registration fee is set at CNY 80 for one piece of residential housing and CNY 550 for one unit of non-residential building. The registration fee is decided by piece, not value of the property. After paying the registration fee, along with the receipt, the buyer obtains the new Real Estate Title Certificate. Takes place simultaneously with previous procedure. Page 46 Doing Business 2019 China Details – Registering Property in Beijing – Measure of Quality Answer Score Reliability of infrastructure index (0-8) 8.0 What is the institution in charge of immovable property registration? Real Estate Registration Center (Beijing Municipal Commission of Urban Planning and Land and Resources Management) In what format are the majority of title or deed records kept in the largest business city—in a Computer/Fully 2.0 paper format or in a computerized format (scanned or fully digital)? digital Is there an electronic database for checking for encumbrances (liens, mortgages, restrictions Yes 1.0 and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Beijing Municipal Commission of Urban Planning and Land and Resources Management In what format are the majority of maps of land plots kept in the largest business city—in a Computer/Fully 2.0 paper format or in a computerized format (scanned or fully digital)? digital Is there an electronic database for recording boundaries, checking plans and providing Yes 1.0 cadastral information (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral Different 1.0 or mapping agency kept in a single database, in different but linked databases or in separate databases but databases? linked Do the immovable property registration agency and cadastral or mapping agency use the Yes 1.0 same identification number for properties? Transparency of information index (0–6) 4.5 Who is able to obtain information on land ownership at the agency in charge of immovable Only 0.0 property registration in the largest business city? intermediaries and interested parties Is the list of documents that are required to complete any type of property transaction made Yes, online 0.5 publicly available–and if so, how? Link for online access: http://ghgtw.beijin g.gov.cn/col/col3 189/index.html Is the applicable fee schedule for any property transaction at the agency in charge of Yes, online 0.5 immovable property registration in the largest business city made publicly available–and if so, how? Link for online access: http://ghgtw.beijin g.gov.cn/col/col3 290/index.html Does the agency in charge of immovable property registration commit to delivering a legally Yes, online 0.5 binding document that proves property ownership within a specific time frame–and if so, how does it communicate the service standard? Link for online access: http://www.bjgtw. gov.cn/web/static/ articles/catalog_1 0/article_402853 575f0069b80162 37dffeec183e/40 2853575f0069b8 016237dffeec183 e.html Page 47 Doing Business 2019 China Is there a specific and separate mechanism for filing complaints about a problem that Yes 1.0 occurred at the agency in charge of immovable property registration? Contact information: http://rexian.beijin g.gov.cn/default/ web/introduce/as pirations_guide.js p Division of Complaints and Appeal under the Beijing Municipal Commission of Housing and Urban-Rural Development 59958811-0, 59958811-1 Also available: http://ghgtw.beijin g.gov.cn/col/col1 987/index.html Are there publicly available official statistics tracking the number of transactions at the Yes 0.5 immovable property registration agency? Number of property transfers in the largest business city in 2017: 1,539,000 square meters Who is able to consult maps of land plots in the largest business city? Only 0.0 intermediaries and interested parties Is the applicable fee schedule for accessing maps of land plots made publicly available— Yes, online 0.5 and if so, how? Link for online access: http://ghgtw.beijin g.gov.cn/col/col1 946/index.html Does the cadastral or mapping agency commit to delivering an updated map within a Yes, online 0.5 specific time frame—and if so, how does it communicate the service standard? Link for online access: http://ghgtw.beijin g.gov.cn/col/col1 947/index.html Is there a specific and separate mechanism for filing complaints about a problem that Yes 0.5 occurred at the cadastral or mapping agency? Contact information: http://ghgtw.beijin g.gov.cn/col/col1 987/index.html http://rexian.beijin g.gov.cn/default/# Geographic coverage index (0–8) 4.0 Are all privately held land plots in the economy formally registered at the immovable property No 0.0 registry? Are all privately held land plots in the largest business city formally registered at the Yes 2.0 immovable property registry? Are all privately held land plots in the economy mapped? No 0.0 Are all privately held land plots in the largest business city mapped? Yes 2.0 Land dispute resolution index (0–8) 7.5 Does the law require that all property sale transactions be registered at the immovable Yes 1.5 property registry to make them opposable to third parties? Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5 Is there a specific compensation mechanism to cover for losses incurred by parties who Yes 0.5 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Page 48 Doing Business 2019 China Does the legal system require a control of legality of the documents necessary for a property Yes 0.5 transaction (e.g., checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Does the legal system require verification of the identity of the parties to a property Yes 0.5 transaction? If yes, who is responsible for verifying the identity of the parties? Registrar; Notary; Is there a national database to verify the accuracy of identity documents? Yes 1.0 For a standard land dispute between two local businesses over tenure rights of a property District level worth 50 times gross national income (GNI) per capita and located in the largest business court city, what court would be in charge of the case in the first instance? How long does it take on average to obtain a decision from the first-instance court for such a Less than a year 3.0 case (without appeal)? Are there any statistics on the number of land disputes in the first instance? No 0.0 Number of land disputes in the largest business city in 2017: Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 49 Doing Business 2019 China Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of • Rights of borrowers and lenders through indicators. The depth of credit information index measures rules and practices collateral laws (0-10) affecting the coverage, scope and accessibility of credit information available • Protection of secured creditors’ rights through through a credit registry or a credit bureau. The strength of legal rights index bankruptcy laws (0-2) measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first Depth of credit information index (0–8) determined whether a unitary secured transactions system exists. Then two case • Scope and accessibility of credit information scenarios, case A and case B, are used to determine how a nonpossessory security distributed by credit bureaus and credit registries interest is created, publicized and enforced according to the law. Special emphasis (0-8) is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a Credit bureau coverage (% of adults) secured lender, BizBank. • Number of individuals and firms listed in largest In some economies the legal framework for secured transactions will allow only case credit bureau as a percentage of adult population A or case B (not both) to apply. Both cases examine the same set of legal provisions relating to the use of movable collateral. Credit registry coverage (% of adults) • Number of individuals and firms listed in credit Several assumptions about the secured borrower (ABC) and lender (BizBank) registry as a percentage of adult population are used: - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. Page 50 Doing Business 2019 China Getting Credit - Shanghai Indicator Shanghai East Asia & OECD high Best Regulatory Pacific income Performance Strength of legal rights index (0-12) 4 7.1 6.1 12 (5 Economies) Depth of credit information index (0-8) 8 4.2 6.7 8 (42 Economies) Credit registry coverage (% of adults) 98.1 16.9 21.8 100.0 (4 Economies) Credit bureau coverage (% of adults) 0 23.0 65.3 100.0 (25 Economies) Figure – Getting Credit in Shanghai and comparator economies – Ranking and Score DB 2019 Getting Credit Score 0 100 95.00: United States (Rank: 3) 80.00: India (Rank: 22) 80.00: Russian Federation (Rank: 22) 75.00: Hong Kong SAR, China (Rank: 32) 60.00: Beijing 60.00: Shanghai Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Figure – Legal Rights in Shanghai and comparator economies 8 9 9 11 8 7.1 7 6 Index Score 5 4 4 4 3 2 1 0 Shanghai Hong Kong SAR, China India Russian Federation United States Beijing East Asia & Pacific Page 51 Doing Business 2019 China Details – Legal Rights in Shanghai Strength of legal rights index (0-12) 4 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and No enforcement of functional equivalents to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without No requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a Yes specific description of collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and No replacements of the original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be Yes secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by No asset type, with an electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? No Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed No online by any interested third party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency Yes procedure? Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? Yes Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization No procedure? Does the law protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow No the secured creditor to sell the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Shanghai and comparator economies 8 8 8 8 7 7 7 7 6 Index Score 5 4.2 4 3 2 1 0 Shanghai Hong Kong SAR, China India Russian Federation United States Beijing East Asia & Pacific Page 52 Doing Business 2019 China Details – Credit Information in Shanghai Depth of credit information index (0-8) Credit Credit Score bureau registry Are data on both firms and individuals distributed? No Yes 1 Are both positive and negative credit data distributed? No Yes 1 Are data from retailers or utility companies - in addition to data from banks and No Yes 1 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries No Yes 1 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? No Yes 1 By law, do borrowers have the right to access their data in the credit bureau or No Yes 1 credit registry? Can banks and financial institutions access borrowers’ credit information online No Yes 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help No Yes 1 banks and financial institutions assess the creditworthiness of borrowers? Total Score ("yes" to either public bureau or private registry) 8 Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 0 950,000,000 Number of firms 0 25,100,000 Total 0 975,100,000 Percentage of adult population 0 98.1 Page 53 Doing Business 2019 China Getting Credit - Beijing Indicator Beijing East Asia & OECD high Best Regulatory Pacific income Performance Strength of legal rights index (0-12) 4 7.1 6.1 12 (5 Economies) Depth of credit information index (0-8) 8 4.2 6.7 8 (42 Economies) Credit registry coverage (% of adults) 98.1 16.9 21.8 100.0 (4 Economies) Credit bureau coverage (% of adults) 0 23.0 65.3 100.0 (25 Economies) Figure – Getting Credit in Beijing and comparator economies – Ranking and Score DB 2019 Getting Credit Score 0 100 95.00: United States (Rank: 3) 80.00: India (Rank: 22) 80.00: Russian Federation (Rank: 22) 75.00: Hong Kong SAR, China (Rank: 32) 60.00: Beijing 60.00: Shanghai Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Figure – Legal Rights in Beijing and comparator economies 8 9 9 11 8 7.1 7 6 Index Score 5 4 4 4 3 2 1 0 Beijing Hong Kong SAR, China India Russian Federation United States Shanghai East Asia & Pacific Page 54 Doing Business 2019 China Details – Legal Rights in Beijing Strength of legal rights index (0-12) 4 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and No enforcement of functional equivalents to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without No requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a Yes specific description of collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and No replacements of the original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be Yes secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by No asset type, with an electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? No Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed No online by any interested third party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency Yes procedure? Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? Yes Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization No procedure? Does the law protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow No the secured creditor to sell the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Beijing and comparator economies 8 8 8 8 7 7 7 7 6 Index Score 5 4.2 4 3 2 1 0 Beijing Hong Kong SAR, China India Russian Federation United States Shanghai East Asia & Pacific Page 55 Doing Business 2019 China Details – Credit Information in Beijing Depth of credit information index (0-8) Credit Credit Score bureau registry Are data on both firms and individuals distributed? No Yes 1 Are both positive and negative credit data distributed? No Yes 1 Are data from retailers or utility companies - in addition to data from banks and No Yes 1 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries No Yes 1 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? No Yes 1 By law, do borrowers have the right to access their data in the credit bureau or No Yes 1 credit registry? Can banks and financial institutions access borrowers’ credit information online No Yes 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help No Yes 1 banks and financial institutions assess the creditworthiness of borrowers? Total Score ("yes" to either public bureau or private registry) 8 Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 0 950,000,000 Number of firms 0 25,100,000 Total 0 975,100,000 Percentage of adult population 0 98.1 Page 56 Doing Business 2019 China Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions • Extent of disclosure index (0–10): Review and To make the data comparable across economies, a case study uses several approval requirements for related-party assumptions about the business and the transaction. transactions; Disclosure requirements for related- party transactions The business (Buyer): • Extent of director liability index (0–10): Ability - Is a publicly traded corporation listed on the economy’s most important stock of minority shareholders to sue and hold exchange. If there are fewer than ten listed companies or if there is no stock interested directors liable for prejudicial related- exchange in the economy, it is assumed that Buyer is a large private company with party transactions; Available legal remedies multiple shareholders. (damages, disgorgement of profits, fines, - Has a board of directors and a chief executive officer (CEO) who may legally act on imprisonment, rescission of the transaction) behalf of Buyer where permitted, even if this is not specifically required by law. • Ease of shareholder suits index (0–10): - Has a supervisory board in economies with a two-tier board system on which Mr. Access to internal corporate documents; James appointed 60% of the shareholder-elected members. Evidence obtainable during trial and allocation of - Has not adopted bylaws or articles of association that go beyond the minimum legal expenses requirements. Does not follow codes, principles, recommendations or guidelines that are not mandatory. • Extent of conflict of interest regulation index - Is a manufacturing company with its own distribution network. (0–10): Simple average of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two • Extent of shareholder rights index (0-10): directors to Buyer’s five-member board. Shareholders’ rights and role in major corporate - Mr. James also owns 90% of Seller, a company that operates a chain of retail decisions hardware stores. Seller recently closed a large number of its stores. - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand • Extent of ownership and control index (0-10): Buyer’s distribution of its food products, a proposal to which Buyer agrees. The price Governance safeguards protecting shareholders is equal to 10% of Buyer’s assets and is higher than the market value. from undue board control and entrenchment - The proposed transaction is part of the company’s principal activity and is not • Extent of corporate transparency index (0-10): outside the authority of the company. Corporate transparency on ownership stakes, - Buyer enters into the transaction. All required approvals are obtained, and all compensation, audits and financial prospects required disclosures made—that is, the transaction was not entered into fraudulently. • Extent of shareholder governance index (0– - The transaction causes damages to Buyer. Shareholders sue Mr. James and the 10): Simple average of the extent of shareholders executives and directors that approved the transaction. rights, extent of ownership and control and extent of corporate transparency indices • Strength of minority investor protection index (0–10): Simple average of the extent of conflict of interest regulation and extent of shareholder governance indices Page 57 Doing Business 2019 China Protecting Minority Investors - Shanghai Indicator Shanghai East Asia & OECD high Best Regulatory Pacific income Performance Extent of disclosure index (0-10) 10.0 5.6 6.5 10 (13 Economies) Extent of director liability index (0-10) 1.0 4.9 5.3 10 (Cambodia) Ease of shareholder suits index (0-10) 5.0 6.7 7.3 10 (Djibouti) Extent of shareholder rights index (0-10) 7.0 5.6 6.4 10 (Kazakhstan) Extent of ownership and control index (0-10) 4.0 4.0 5.4 None in 2017/18 Extent of corporate transparency index (0-10) 9.0 5.3 7.6 10 (6 Economies) Figure – Protecting Minority Investors in Shanghai and comparator economies – Ranking and Score DB 2019 Protecting Minority Investors Score 0 100 80.00: India (Rank: 7) 78.33: Hong Kong SAR, China (Rank: 11) 64.67: United States (Rank: 50) 61.67: Russian Federation (Rank: 57) 60.00: Beijing 60.00: Shanghai Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Figure – Protecting Minority Investors in Shanghai and comparator economies – Measure of Quality Shanghai 9 1 10 4 7 5 Beijing 9 1 10 4 7 5 Hong Kong SAR, China 8 8 10 5 7 9 India 8 7 8 8 10 7 Russian Federation 8 2 6 5 9 7 United States 5.4 8.6 7.4 4.4 4 9 OECD high income 7.4 5.5 6.5 5.2 6.3 7.4 East Asia & Pacific 5.7 4.6 6.2 4.2 5.8 6.2 0 10 20 30 40 50 60 Sub-Indicator Score Extent of corporate transparency index (0-10) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-10) Extent of shareholder rights index (0-10) Ease of shareholder suits index (0-10) Page 58 Doing Business 2019 China Details – Protecting Minority Investors in Shanghai – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-10) 5.3 Extent of disclosure index (0-10) 10.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Shareholders 3.0 excluding interested parties Must an external body review the terms of the transaction before it takes place? (0-1) Yes 1.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of 2.0 all material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Extent of director liability index (0-10) 1.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the Yes 1.0 transaction caused to Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0- Not liable 0.0 2) Can shareholders hold the other directors liable for the damage the transaction caused to Not liable 0.0 Buyer (0-2) Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by No 0.0 shareholders? (0-1) Must Mr. James repay profits made from the transaction upon a successful claim by No 0.0 shareholders? (0-1) Is Mr. James disqualified upon a successful claim by shareholders? (0-1) No 0.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Only in case of 0.0 fraud or bad faith Ease of shareholder suits index (0-10) 5.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the Yes 1.0 transaction documents? (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) No 0.0 Can the plaintiff request categories of documents from the defendant without identifying No 0.0 specific ones? (0-1) Can the plaintiff directly question the defendant and witnesses at trial? (0-2) Yes 2.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) Yes 1.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-10) 6.7 Extent of shareholder rights index (0-10) 7.0 Does the sale of 51% of Buyer's assets require shareholder approval? Yes 1.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of Yes 1.0 shareholders? Must Buyer obtain its shareholders’ approval every time it issues new shares? Yes 1.0 Do shareholders automatically receive preemption rights every time Buyer issues new No 0.0 shares? Page 59 Doing Business 2019 China Must shareholders approve the election and dismissal of the external auditor? Yes 1.0 Are changes to the rights of a class of shares only possible if the holders of the affected Yes 1.0 shares approve? Assuming that Buyer is a limited company, does the sale of 51% of its assets require No 0.0 member approval? Assuming that Buyer is a limited company, can members representing 10% call for a Yes 1.0 meeting of members? Assuming that Buyer is a limited company, must all or almost all members consent to add a No 0.0 new member? Assuming that Buyer is a limited company, must a member first offer to sell their interest to Yes 1.0 the existing members before they can sell to non-members? Extent of ownership and control index (0-10) 4.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of No 0.0 directors? Must the board of directors include independent and nonexecutive board members? Yes 1.0 Can shareholders remove members of the board of directors without cause before the end No 0.0 of their term? Must the board of directors include a separate audit committee exclusively comprising board Yes 1.0 members? Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Yes 1.0 Buyer? Must Buyer pay declared dividends within a maximum period set by law? Yes 1.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? No 0.0 Assuming that Buyer is a limited company, must Buyer have a mechanism to resolve No 0.0 disagreements among members? Assuming that Buyer is a limited company, must a potential acquirer make a tender offer to No 0.0 all shareholders upon acquiring 50% of Buyer? Assuming that Buyer is a limited company, must Buyer distribute profits within a maximum No 0.0 period set by law? Extent of corporate transparency index (0-10) 9.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? Yes 1.0 Must Buyer disclose information about board members’ primary employment and Yes 1.0 directorships in other companies? Must Buyer disclose the compensation of individual managers? Yes 1.0 Must a detailed notice of general meeting be sent 21 days before the meeting? No 0.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting Yes 1.0 agenda? Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Assuming that Buyer is a limited company, must members meet at least once a year? Yes 1.0 Assuming that Buyer is a limited company, can members representing 5% put items on the Yes 1.0 meeting agenda? Assuming that Buyer is a limited company, must Buyer's annual financial statements be Yes 1.0 audited by an external auditor? Page 60 Doing Business 2019 China Protecting Minority Investors - Beijing Indicator Beijing East Asia & OECD high Best Regulatory Pacific income Performance Extent of disclosure index (0-10) 10.0 5.6 6.5 10 (13 Economies) Extent of director liability index (0-10) 1.0 4.9 5.3 10 (Cambodia) Ease of shareholder suits index (0-10) 5.0 6.7 7.3 10 (Djibouti) Extent of shareholder rights index (0-10) 7.0 5.6 6.4 10 (Kazakhstan) Extent of ownership and control index (0-10) 4.0 4.0 5.4 None in 2017/18 Extent of corporate transparency index (0-10) 9.0 5.3 7.6 10 (6 Economies) Figure – Protecting Minority Investors in Beijing and comparator economies – Ranking and Score DB 2019 Protecting Minority Investors Score 0 100 80.00: India (Rank: 7) 78.33: Hong Kong SAR, China (Rank: 11) 64.67: United States (Rank: 50) 61.67: Russian Federation (Rank: 57) 60.00: Beijing 60.00: Shanghai Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Figure – Protecting Minority Investors in Beijing and comparator economies – Measure of Quality Beijing 9 1 10 4 7 5 Hong Kong SAR, China 8 8 10 5 7 9 India 8 7 8 8 10 7 Russian Federation 8 2 6 5 9 7 Shanghai 9 1 10 4 7 5 United States 5.4 8.6 7.4 4.4 4 9 OECD high income 7.4 5.5 6.5 5.2 6.3 7.4 East Asia & Pacific 5.7 4.6 6.2 4.2 5.8 6.2 0 10 20 30 40 50 60 Sub-Indicator Score Extent of corporate transparency index (0-10) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-10) Extent of shareholder rights index (0-10) Ease of shareholder suits index (0-10) Page 61 Doing Business 2019 China Details – Protecting Minority Investors in Beijing – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-10) 5.3 Extent of disclosure index (0-10) 10.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Shareholders 3.0 excluding interested parties Must an external body review the terms of the transaction before it takes place? (0-1) Yes 1.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of 2.0 all material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Extent of director liability index (0-10) 1.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the Yes 1.0 transaction caused to Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0- Not liable 0.0 2) Can shareholders hold the other directors liable for the damage the transaction caused to Not liable 0.0 Buyer (0-2) Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by No 0.0 shareholders? (0-1) Must Mr. James repay profits made from the transaction upon a successful claim by No 0.0 shareholders? (0-1) Is Mr. James disqualified upon a successful claim by shareholders? (0-1) No 0.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Only in case of 0.0 fraud or bad faith Ease of shareholder suits index (0-10) 5.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the Yes 1.0 transaction documents? (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) No 0.0 Can the plaintiff request categories of documents from the defendant without identifying No 0.0 specific ones? (0-1) Can the plaintiff directly question the defendant and witnesses at trial? (0-2) Yes 2.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) Yes 1.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-10) 6.7 Extent of shareholder rights index (0-10) 7.0 Does the sale of 51% of Buyer's assets require shareholder approval? Yes 1.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of Yes 1.0 shareholders? Must Buyer obtain its shareholders’ approval every time it issues new shares? Yes 1.0 Do shareholders automatically receive preemption rights every time Buyer issues new No 0.0 shares? Page 62 Doing Business 2019 China Must shareholders approve the election and dismissal of the external auditor? Yes 1.0 Are changes to the rights of a class of shares only possible if the holders of the affected Yes 1.0 shares approve? Assuming that Buyer is a limited company, does the sale of 51% of its assets require No 0.0 member approval? Assuming that Buyer is a limited company, can members representing 10% call for a Yes 1.0 meeting of members? Assuming that Buyer is a limited company, must all or almost all members consent to add a No 0.0 new member? Assuming that Buyer is a limited company, must a member first offer to sell their interest to Yes 1.0 the existing members before they can sell to non-members? Extent of ownership and control index (0-10) 4.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of No 0.0 directors? Must the board of directors include independent and nonexecutive board members? Yes 1.0 Can shareholders remove members of the board of directors without cause before the end No 0.0 of their term? Must the board of directors include a separate audit committee exclusively comprising board Yes 1.0 members? Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Yes 1.0 Buyer? Must Buyer pay declared dividends within a maximum period set by law? Yes 1.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? No 0.0 Assuming that Buyer is a limited company, must Buyer have a mechanism to resolve No 0.0 disagreements among members? Assuming that Buyer is a limited company, must a potential acquirer make a tender offer to No 0.0 all shareholders upon acquiring 50% of Buyer? Assuming that Buyer is a limited company, must Buyer distribute profits within a maximum No 0.0 period set by law? Extent of corporate transparency index (0-10) 9.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? Yes 1.0 Must Buyer disclose information about board members’ primary employment and Yes 1.0 directorships in other companies? Must Buyer disclose the compensation of individual managers? Yes 1.0 Must a detailed notice of general meeting be sent 21 days before the meeting? No 0.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting Yes 1.0 agenda? Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Assuming that Buyer is a limited company, must members meet at least once a year? Yes 1.0 Assuming that Buyer is a limited company, can members representing 5% put items on the Yes 1.0 meeting agenda? Assuming that Buyer is a limited company, must Buyer's annual financial statements be Yes 1.0 audited by an external auditor? Page 63 Doing Business 2019 China Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2018 covering for the Paying Taxes indicator calendar year 2017 (January 1, 2017 – December 31, 2017). See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in Using a case scenario, Doing Business records taxes and mandatory contributions a 2017 (number per year adjusted for electronic medium size company must pay in a year, and measures the administrative burden and joint filing and payment) of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of filing and payments, time taken to comply with tax • Total number of taxes and contributions paid or laws, time taken to comply with the requirements of postfiling processes and time withheld, including consumption taxes (value waiting. added tax, sales tax or goods and service tax) • Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: - TaxpayerCo is a medium-size business that started operations on January 1, 2016. Time required to comply with 3 major taxes It produces ceramic flowerpots and sells them at retail. All taxes and contributions (hours per year) recorded are paid in the second year of operation (calendar year 2017). Taxes and mandatory contributions are measured at all levels of government. • Collecting information, computing tax payable • Preparing separate tax accounting books, if The VAT refund process: required - In June 2017, TaxpayerCo. makes a large capital purchase: the value of the • Completing tax return, filing with agencies machine is 65 times income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are • Arranging payment or withholding equally expensed per month (875 times income per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred in June will be Total tax and contribution rate (% of commercial fully recovered after four consecutive months if the VAT rate is the same for inputs, profits) sales and the machine and the tax reporting period is every month. Input VAT will • Profit or corporate income tax exceed Output VAT in June 2017. • Social contributions, labor taxes paid by The corporate income tax audit process: employer - An error in calculation of income tax liability (for example, use of incorrect tax • Property and property transfer taxes depreciation rates, or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. • Dividend, capital gains, financial transactions discovered the error and voluntarily notified the tax authority. The value of the taxes underpaid income tax liability is 5% of the corporate income tax liability • Waste collection, vehicle, road and other taxes due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. Postfiling Index • Time to comply with a VAT refund (hours) • Time to obtain a VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks) Page 64 Doing Business 2019 China Paying Taxes - Shanghai Indicator Shanghai East Asia & OECD high Best Regulatory Pacific income Performance Payments (number per year) 7 21.2 11.2 3 (Hong Kong SAR, China) Time (hours per year) 142 180.9 159.4 49 (Singapore) Total tax and contribution rate (% of profit) 67.7 33.5 39.8 26.1% (32 Economies) Postfiling index (0-100) 50.00 56.42 84.41 None in 2017/18 Figure – Paying Taxes in Shanghai and comparator economies – Ranking and Score DB 2019 Paying Taxes Score 0 100 99.71: Hong Kong SAR, China (Rank: 1) 84.14: United States (Rank: 37) 79.77: Russian Federation (Rank: 53) 69.02: Beijing 66.30: Shanghai 65.36: India (Rank: 121) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Figure – Paying Taxes in Shanghai and comparator economies – Measure of Quality 98.85 100 94.04 80 73.14 Index score 60 56.42 50.00 49.31 50.00 40 20 0 Shanghai Hong Kong SAR, China India Russian Federation United States Beijing East Asia & Pacific Page 65 Doing Business 2019 China Details – Paying Taxes in Shanghai Tax or Payments Notes on Time Statutory Tax base Total tax Notes on mandatory (number) Payments (hours) tax rate and TTCR contribution contribution rate (% of profit) Employer 1.0 online 54.0 31.56%+7% gross salaries 49.12 paid - Social security and housing fund contributions Value added 1.0 online 48.0 17%, 6%, 5% value added 47.67 not included tax (VAT) Corporate 1.0 online 40.0 25% taxable profits 7.56 income tax Urban 0.0 jointly 7% VAT 3.37 maintenance tax Land 1.0 online 30% land value 3.00 Appreciation appreciation Tax Education 0.0 jointly 3% VAT 1.45 surcharge Real estate 1.0 online 1.2% 80% building 0.97 tax value Stamp duty 1.0 online 0.03% transactions 0.97 Local 0.0 jointly 2% VAT 0.96 education surcharge Land use tax 1.0 online RMB 6 per land area 0.15 square meter Levies for 0.0 jointly 1% VAT 0.12 construction and maintenance of river projects Stamp duty 0.0 online and 0.05% sale price of 0.03 on property jointly property transfer Employee 0.0 online and 10.5%+7% gross salaries 0.00 withheld paid - Social jointly security and housing fund contributions Totals 7 142 67.7 Page 66 Doing Business 2019 China Details – Paying Taxes in Shanghai – Tax by Type Taxes by type Answer Profit tax (% of profit) 10.6 Labor tax and contributions (% of profit) 49.1 Other taxes (% of profit) 8 Page 67 Doing Business 2019 China Details – Paying Taxes in Shanghai – Measure of Quality Answer Score Postfiling index (0-100) 50.00 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? No Restrictions on VAT refund process Restricted to international traders and others Percentage of cases exposed to a VAT audit (%) Not applicable Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) No VAT refund 0 per case study scenario Time to obtain a VAT refund (weeks) No VAT refund 0 per case study scenario Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 0% - 24% Time to comply with a corporate income tax correction (hours) 1.0 100 Time to complete a corporate income tax correction (weeks) No tax audit per 100 case study scenario Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 68 Doing Business 2019 China Paying Taxes - Beijing Indicator Beijing East Asia & OECD high Best Regulatory Pacific income Performance Payments (number per year) 7 21.2 11.2 3 (Hong Kong SAR, China) Time (hours per year) 142 180.9 159.4 49 (Singapore) Total tax and contribution rate (% of profit) 61.4 33.5 39.8 26.1% (32 Economies) Postfiling index (0-100) 50.00 56.42 84.41 None in 2017/18 Figure – Paying Taxes in Beijing and comparator economies – Ranking and Score DB 2019 Paying Taxes Score 0 100 99.71: Hong Kong SAR, China (Rank: 1) 84.14: United States (Rank: 37) 79.77: Russian Federation (Rank: 53) 69.02: Beijing 66.30: Shanghai 65.36: India (Rank: 121) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Figure – Paying Taxes in Beijing and comparator economies – Measure of Quality 98.85 100 94.04 80 73.14 Index score 60 56.42 50.00 49.31 50.00 40 20 0 Beijing Hong Kong SAR, China India Russian Federation United States Shanghai East Asia & Pacific Page 69 Doing Business 2019 China Details – Paying Taxes in Beijing Tax or Payments Notes on Time Statutory Tax base Total tax Notes on mandatory (number) Payments (hours) tax rate and TTCR contribution contribution rate (% of profit) Employer 1.0 online 54.0 31.16%+5% gross salaries 40.79 paid - Social security and housing fund contributions Corporate 1.0 online 40.0 25% taxable profits 9.67 income tax Urban 0.0 jointly 7.00% VAT 3.37 maintenance tax Land 1.0 30.00% land value 3.00 Appreciation appreciation Tax Education 0.0 jointly 3.00% VAT 1.45 surcharge Stamp duty 1.0 online 0.03% transactions 0.97 Local 0.0 jointly 2.00% VAT 0.96 education surcharge Real estate 1.0 online 1.20% 70% of 0.85 tax building value Land use tax 1.0 online RMB 12 per land area 0.29 square meter Stamp duty 0.0 online and 0.05% sale price of 0.03 on property jointly property transfer Employee 0.0 online and 10.2%+5% gross salaries 0.00 withheld paid - Social jointly security and housing fund contributions Value-added 1.0 online 48.0 17%, 6%, 5% value added 0.00 not included tax (VAT) Totals 7 142 61.4 Page 70 Doing Business 2019 China Details – Paying Taxes in Beijing – Tax by Type Taxes by type Answer Profit tax (% of profit) 12.7 Labor tax and contributions (% of profit) 40.8 Other taxes (% of profit) 7.9 Page 71 Doing Business 2019 China Details – Paying Taxes in Beijing – Measure of Quality Answer Score Postfiling index (0-100) 50.00 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? No Restrictions on VAT refund process Restricted to international traders and others Percentage of cases exposed to a VAT audit (%) Not applicable Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) No VAT refund 0 per case study scenario Time to obtain a VAT refund (weeks) No VAT refund 0 per case study scenario Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 0% - 24% Time to comply with a corporate income tax correction (hours) 1.0 100 Time to complete a corporate income tax correction (weeks) No tax audit per 100 case study scenario Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 72 Doing Business 2019 China Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: • Obtaining, preparing and submitting documents during transport, clearance, inspections and port Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are or border handling in origin economy recorded as 22×24=528 hours). If customs clearance takes 7.5 hours, the data are • Obtaining, preparing and submitting documents recorded as is. Alternatively, suppose documents are submitted to a customs agency required by destination economy and any transit at 8:00a.m., are processed overnight and can be picked up at 8:00a.m. the next day. economies The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours. • Covers all documents required by law and in practice, including electronic submissions of Cost: Insurance cost and informal payments for which no receipt is issued are information excluded from the costs recorded. Costs are reported in U.S. dollars. Contributors Border compliance are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. Contributors are private sector • Customs clearance and inspections experts in international trade logistics and are informed about exchange rates. • Inspections by other agencies (if applied to more Assumptions of the case study: than 20% of shipments) - For all 190 economies covered by Doing Business, it is assumed a shipment is in a • Handling and inspections that take place at the warehouse in the largest business city of the exporting economy and travels to a economy’s port or border warehouse in the largest business city of the importing economy. - It is assumed each economy imports 15 metric tons of containerized auto parts (HS Domestic transport 8708) from its natural import partner—the economy from which it imports the largest • Loading or unloading of the shipment at the value (price times quantity) of auto parts. It is assumed each economy exports the warehouse or port/border product of its comparative advantage (defined by the largest export value) to its natural export partner—the economy that is the largest purchaser of this product. • Transport between warehouse and port/border Shipment value is assumed to be $50,000. • Traffic delays and road police checks while - The mode of transport is the one most widely used for the chosen export or import shipment is en route product and the trading partner, as is the seaport or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 73 Doing Business 2019 China Trading across Borders - Shanghai Indicator Shanghai East Asia & OECD high Best Regulatory Pacific income Performance Time to export: Border compliance (hours) 23 54.7 12.5 1 (19 Economies) Cost to export: Border compliance (USD) 305 382.2 139.1 0 (19 Economies) Time to export: Documentary compliance (hours) 8 57.6 2.4 1 (26 Economies) Cost to export: Documentary compliance (USD) 70 109.4 35.2 0 (20 Economies) Time to import: Border compliance (hours) 48 69.2 8.5 0 (25 Economies) Cost to import: Border compliance (USD) 335 415.8 100.2 0 (28 Economies) Time to import: Documentary compliance (hours) 24 57.0 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 120 109.5 24.9 0 (30 Economies) Figure – Trading across Borders in Shanghai and comparator economies – Ranking and Score DB 2019 Trading Across Borders Score 0 100 95.04: Hong Kong SAR, China (Rank: 27) 92.01: United States (Rank: 36) 83.06: Shanghai 82.01: Beijing 77.46: India (Rank: 80) 71.06: Russian Federation (Rank: 99) Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Figure – Trading across Borders in Shanghai – Time and Cost Time (hours) Cost (USD) 60 400 48 335 350 50 305 Time (hours) 300 Cost (USD) 40 250 30 24 200 23 120 150 20 70 100 10 8 50 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 74 Doing Business 2019 China Details – Trading across Borders in Shanghai Characteristics Export Import Product HS 85 : Electrical machinery and HS 8708: Parts and accessories of motor equipment and parts thereof; sound vehicles recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles Trade partner Hong Kong, China Japan Border Shanghai port Shanghai port Distance (km) 31 31 Domestic transport time (hours) 4 6 Domestic transport cost (USD) 179 219 Details – Trading across Borders in Shanghai – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required 6.0 30.0 by customs authorities Export: Clearance and inspections required 0.0 0.0 by agencies other than customs Export: Port or border handling 23.1 275.0 Import: Clearance and inspections required 11.0 45.0 by customs authorities Import: Clearance and inspections required 0.0 0.0 by agencies other than customs Import: Port or border handling 48.0 290.0 Page 75 Doing Business 2019 China Details – Trading across Borders in Shanghai – Trade Documents Export Import Commercial invoice Contract Packing list Commercial invoice Bill of lading Packing list Customs power of attorney Import License approved by the Ministry of Commerce for Mechanical and Electrical Products Customs Export declaration Certificate of Origin Terminal handling receipt Bill of lading SOLAS certificate Telex release Customs import declaration Inspection declaration Terminal handling receipt Solas Certificate Page 76 Doing Business 2019 China Trading across Borders - Beijing Indicator Beijing East Asia & OECD high Best Regulatory Pacific income Performance Time to export: Border compliance (hours) 29 54.7 12.5 1 (19 Economies) Cost to export: Border compliance (USD) 325 382.2 139.1 0 (19 Economies) Time to export: Documentary compliance (hours) 10 57.6 2.4 1 (26 Economies) Cost to export: Documentary compliance (USD) 78 109.4 35.2 0 (20 Economies) Time to import: Border compliance (hours) 48 69.2 8.5 0 (25 Economies) Cost to import: Border compliance (USD) 315 415.8 100.2 0 (28 Economies) Time to import: Documentary compliance (hours) 24 57.0 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 125 109.5 24.9 0 (30 Economies) Figure – Trading across Borders in Beijing and comparator economies – Ranking and Score DB 2019 Trading Across Borders Score 0 100 95.04: Hong Kong SAR, China (Rank: 27) 92.01: United States (Rank: 36) 83.06: Shanghai 82.01: Beijing 77.46: India (Rank: 80) 71.06: Russian Federation (Rank: 99) Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Figure – Trading across Borders in Beijing – Time and Cost Time (hours) Cost (USD) 60 325 315 350 50 48 300 Time (hours) 250 Cost (USD) 40 29 200 30 24 125 150 20 78 100 10 10 50 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 77 Doing Business 2019 China Details – Trading across Borders in Beijing Characteristics Export Import Product HS 85 : Electrical machinery and HS 8708: Parts and accessories of motor equipment and parts thereof; sound vehicles recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles Trade partner Hong Kong, China Japan Border Tianjin port Tianjin Port Distance (km) 182 182 Domestic transport time (hours) 9 8 Domestic transport cost (USD) 365 395 Details – Trading across Borders in Beijing – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required 8.0 30.0 by customs authorities Export: Clearance and inspections required 0.0 0.0 by agencies other than customs Export: Port or border handling 29.5 295.0 Import: Clearance and inspections required 14.0 45.0 by customs authorities Import: Clearance and inspections required 0.0 0.0 by agencies other than customs Import: Port or border handling 48.0 270.0 Page 78 Doing Business 2019 China Details – Trading across Borders in Beijing – Trade Documents Export Import Commercial invoice Contract Packing list Commercial invoice Bill of lading Packing list Customs power of attorney Import License approved by the Ministry of Commerce for Mechanical and Electrical Products Custom Export declaration Certificate of origin Terminal handling receipt Bill of lading SOLAS certificate Telex release Guarantee Letter Custom import declaration Inspection declaration Terminal handling receipt SOLAS certificate Page 79 Doing Business 2019 China Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the The dispute in the case study involves the breach of a sales contract between 2 courts (calendar days) domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt • Time to file and serve the case enforcement. • Time for trial and to obtain the judgment To make the data comparable across economies, Doing Business uses several • Time to enforce the judgment assumptions about the case: Cost required to enforce a contract through the - The dispute concerns a lawful transaction between two businesses (Seller and courts (% of claim) Buyer), both located in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. • Attorney fees - The buyer orders custom-made goods, then fails to pay alleging that the goods are not of adequate quality. • Court fees - The value of the dispute is 200% of the income per capita or the equivalent in local • Enforcement fees currency of USD 5,000, whichever is greater. - The seller sues the buyer before the court with jurisdiction over commercial cases Quality of judicial processes index (0-18) worth 200% of income per capita or $5,000. • Court structure and proceedings (-1-5) - The seller requests the pretrial attachment of the defendant’s movable assets to secure the claim. • Case management (0-6) - The dispute on the quality of the goods requires an expert opinion. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. - The seller enforces the judgment through a public sale of the buyer’s movable • Alternative dispute resolution (0-3) assets. Page 80 Doing Business 2019 China Enforcing Contracts - Shanghai Standardized Case Claim value CNY 107,637 Court name Shanghai District People's Court City Covered Shanghai Indicator Shanghai East Asia & OECD high Best Regulatory Pacific income Performance Time (days) 485 581.1 582.4 None in 2017/18 Cost (% of claim value) 15.1 47.2 21.2 None in 2017/18 Quality of judicial processes index (0-18) 15.0 7.9 11.5 None in 2017/18 Figure – Enforcing Contracts in Shanghai and comparator economies – Ranking and Score DB 2019 Enforcing Contracts Score 0 100 79.12: Beijing 78.85: Shanghai 72.61: United States (Rank: 16) 72.18: Russian Federation (Rank: 18) 69.13: Hong Kong SAR, China (Rank: 30) 41.19: India (Rank: 163) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Figure – Enforcing Contracts in Shanghai – Time and Cost Time (days) Cost (% of claim value) 1600 47.2 50 Cost (% of claim value) 1445 1400 40 1200 Time (days) 31.0 30.5 1000 30 800 23.6 21.2 581.1 582.4 600 510 17.5 16.5 485 15.1 20 385 420 400 337 10 200 0 0 Beijing East Hong India OECD Russian Shanghai United Asia Kong high Federation States & SAR, income Pacific China Page 81 Doing Business 2019 China Figure – Enforcing Contracts in Shanghai and comparator economies – Measure of Quality Shanghai 3 4 3 5 Beijing 3 5 3 5 Hong Kong SAR, China 2.5 2 1 4.5 India 2.5 1.5 2 4.5 Russian Federation 2.5 4 0 3 United States 2.5 4.7 2.2 4.4 OECD high income 2.5 3.1 2.3 3.6 East Asia & Pacific 2.2 1.9 1.3 3 0 2 4 6 8 10 12 14 16 18 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Shanghai Indicator Time (days) 485 Filing and service 35 Trial and judgment 210 Enforcement of judgment 240 Cost (% of claim value) 15.1 Attorney fees 7.6 Court fees 5 Enforcement fees 2.5 Quality of judicial processes index (0-18) 15.0 Court structure and proceedings (-1-5) 5.0 Case management (0-6) 4.0 Court automation (0-4) 3.0 Alternative dispute resolution (0-3) 3.0 Page 82 Doing Business 2019 China Details – Enforcing Contracts in Shanghai – Measure of Quality Answer Score Quality of judicial processes index (0-18) 15.0 Court structure and proceedings (-1-5) 5.0 1. Is there a court or division of a court dedicated solely to hearing commercial cases? Yes 1.5 2. Small claims court 1.5 2.a. Is there a small claims court or a fast-track procedure for small claims? Yes 2.b. If yes, is self-representation allowed? Yes 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, automatic 1.0 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 4.0 1. Time standards 1.0 1.a. Are there laws setting overall time standards for key court events in a civil Yes case? 1.b. If yes, are the time standards set for at least three court events? Yes 1.c. Are these time standards respected in more than 50% of cases? Yes 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that can be No granted? 2.b. Are adjournments limited to unforeseen and exceptional circumstances? No 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a. 3. Can two of the following four reports be generated about the competent court: (i) time to No 0.0 disposition report; (ii) clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the Yes 1.0 competent court? 5. Are there any electronic case management tools in place within the competent court for Yes 1.0 use by judges? 6. Are there any electronic case management tools in place within the competent court for Yes 1.0 use by lawyers? Court automation (0-4) 3.0 1. Can the initial complaint be filed electronically through a dedicated platform within the no 0.0 competent court? 2. Is it possible to carry out service of process electronically for claims filed before the Yes 1.0 competent court? 3. Can court fees be paid electronically within the competent court? Yes 1.0 4. Publication of judgments 1.0 4.a Are judgments rendered in commercial cases at all levels made available to the Yes general public through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme Yes court level made available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 3.0 1. Arbitration 1.5 Page 83 Doing Business 2019 China 1.a. Is domestic commercial arbitration governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public No order or public policy—that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes 2. Mediation/Conciliation 1.5 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all their aspects? 2.c. Are there financial incentives for parties to attempt mediation or conciliation Yes (i.e., if mediation or conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 84 Doing Business 2019 China Enforcing Contracts - Beijing Standardized Case Claim value CNY 107,637 Court name Beijing District People's Court City Covered Beijing Indicator Beijing East Asia & OECD high Best Regulatory Pacific income Performance Time (days) 510 581.1 582.4 None in 2017/18 Cost (% of claim value) 17.5 47.2 21.2 None in 2017/18 Quality of judicial processes index (0-18) 16.0 7.9 11.5 None in 2017/18 Figure – Enforcing Contracts in Beijing and comparator economies – Ranking and Score DB 2019 Enforcing Contracts Score 0 100 79.12: Beijing 78.85: Shanghai 72.61: United States (Rank: 16) 72.18: Russian Federation (Rank: 18) 69.13: Hong Kong SAR, China (Rank: 30) 41.19: India (Rank: 163) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Figure – Enforcing Contracts in Beijing – Time and Cost Time (days) Cost (% of claim value) 1600 47.2 50 Cost (% of claim value) 1445 1400 40 1200 Time (days) 31.0 30.5 1000 30 800 23.6 21.2 581.1 582.4 600 510 17.5 16.5 485 15.1 20 385 420 400 337 10 200 0 0 Beijing East Hong India OECD Russian Shanghai United Asia Kong high Federation States & SAR, income Pacific China Page 85 Doing Business 2019 China Figure – Enforcing Contracts in Beijing and comparator economies – Measure of Quality Beijing 3 5 3 5 Hong Kong SAR, China 2.5 2 1 4.5 India 2.5 1.5 2 4.5 Russian Federation 2.5 4 0 3 Shanghai 3 4 3 5 United States 2.5 4.7 2.2 4.4 OECD high income 2.5 3.1 2.3 3.6 East Asia & Pacific 2.2 1.9 1.3 3 0 2 4 6 8 10 12 14 16 18 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Beijing Indicator Time (days) 510 Filing and service 30 Trial and judgment 240 Enforcement of judgment 240 Cost (% of claim value) 17.5 Attorney fees 10 Court fees 5 Enforcement fees 2.5 Quality of judicial processes index (0-18) 16.0 Court structure and proceedings (-1-5) 5.0 Case management (0-6) 5.0 Court automation (0-4) 3.0 Alternative dispute resolution (0-3) 3.0 Page 86 Doing Business 2019 China Details – Enforcing Contracts in Beijing – Measure of Quality Answer Score Quality of judicial processes index (0-18) 16.0 Court structure and proceedings (-1-5) 5.0 1. Is there a court or division of a court dedicated solely to hearing commercial cases? Yes 1.5 2. Small claims court 1.5 2.a. Is there a small claims court or a fast-track procedure for small claims? Yes 2.b. If yes, is self-representation allowed? Yes 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, automatic 1.0 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 5.0 1. Time standards 1.0 1.a. Are there laws setting overall time standards for key court events in a civil Yes case? 1.b. If yes, are the time standards set for at least three court events? Yes 1.c. Are these time standards respected in more than 50% of cases? Yes 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that can be No granted? 2.b. Are adjournments limited to unforeseen and exceptional circumstances? No 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a. 3. Can two of the following four reports be generated about the competent court: (i) time to Yes 1.0 disposition report; (ii) clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the Yes 1.0 competent court? 5. Are there any electronic case management tools in place within the competent court for Yes 1.0 use by judges? 6. Are there any electronic case management tools in place within the competent court for Yes 1.0 use by lawyers? Court automation (0-4) 3.0 1. Can the initial complaint be filed electronically through a dedicated platform within the no 0.0 competent court? 2. Is it possible to carry out service of process electronically for claims filed before the Yes 1.0 competent court? 3. Can court fees be paid electronically within the competent court? Yes 1.0 4. Publication of judgments 1.0 4.a Are judgments rendered in commercial cases at all levels made available to the Yes general public through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme Yes court level made available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 3.0 1. Arbitration 1.5 Page 87 Doing Business 2019 China 1.a. Is domestic commercial arbitration governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public No order or public policy—that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes 2. Mediation/Conciliation 1.5 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all their aspects? 2.c. Are there financial incentives for parties to attempt mediation or conciliation Yes (i.e., if mediation or conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 88 Doing Business 2019 China Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used: • Measured in calendar years • Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties. Cost required to recover debt (% of debtor’s - The value of the hotel is 100% of the income per capita or the equivalent in local estate) currency of USD 200,000, whichever is greater. - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s • Measured as percentage of estate value real estate. The hotel cannot pay back the loan, but makes enough money to • Court fees operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to • Lawyers’ fees judicial liquidation and reorganization proceedings and the extent to which best insolvency practices have been implemented in each economy covered. • Assessors’ and auctioneers’ fees • Other related fees Outcome • Whether business continues operating as a going concern or business assets are sold piecemeal Recovery rate for creditors • Measures the cents on the dollar recovered by secured creditors • Outcome for the business (survival or not) determines the maximum value that can be recovered • Official costs of the insolvency proceedings are deducted • Depreciation of furniture is taken into account • Present value of debt recovered Strength of insolvency framework index (0- 16) • Sum of the scores of four component indices: • Commencement of proceedings index (0-3) • Management of debtor’s assets index (0-6) • Reorganization proceedings index (0-3) • Creditor participation index (0-4) Page 89 Doing Business 2019 China Resolving Insolvency - Shanghai Indicator Shanghai East Asia & OECD high Best Regulatory Pacific income Performance Recovery rate (cents on the dollar) 36.9 35.5 70.5 None in 2017/18 Time (years) 1.7 2.6 1.7 0.4 (Ireland) Cost (% of estate) 22.0 20.6 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going 0 .. .. .. concern) Strength of insolvency framework index (0-16) 11.5 6.8 11.9 None in 2017/18 Figure – Resolving Insolvency in Shanghai and comparator economies – Ranking and Score DB 2019 Resolving Insolvency Score 0 100 90.91: United States (Rank: 3) 65.69: Hong Kong SAR, China (Rank: 44) 58.61: Russian Federation (Rank: 55) 55.82: Beijing 55.82: Shanghai 40.84: India (Rank: 108) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Figure – Resolving Insolvency in Shanghai – Time and Cost Time (years) Cost (% of estate) 4.5 4.3 25 22.0 22.0 4 20.6 Cost (% of estate) 3.5 20 Time (years) 3 2.6 15 2.5 2.0 2 1.7 1.7 9.3 1.7 10.0 9.0 9.0 10 1.5 5.0 1.0 1 0.8 5 0.5 0 0 Beijing East Hong India OECD Russian Shanghai United Asia Kong high Federation States & SAR, income Pacific China Page 90 Doing Business 2019 China Figure – Resolving Insolvency in Shanghai and comparator economies – Measure of Quality Shanghai 5 3 1 2.5 Beijing 5 3 1 2.5 Hong Kong SAR, China 3 2 1 0 India 4.5 2 1 1 Russian Federation 5 2.5 3 1 United States 6 3 3 3 OECD high income 5.3 2.8 2.2 1.9 East Asia & Pacific 3.6 2.3 1.2 1 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Shanghai and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 100 87.2 81.8 80 60 42.1 40 36.9 36.9 35.5 26.5 20 0 Shanghai Hong Kong SAR, China India Russian Federation United States Beijing East Asia & Pacific Page 91 Doing Business 2019 China Details – Resolving Insolvency in Shanghai Indicator Answer Score Proceeding liquidation (after Mirage initiates reorganization pursuant to art. 70 of the Enterprise Insolvency Law after the an attempt at default on payment. If the business operations and financial position continue to deteriorate and reorganization) there is no hope of revival, upon request by BizBank, the court shall rule that the reorganization procedure should be terminated and shall declare the debtor bankrupt and convert into liquidation proceeding. During the liquidation proceeding, the Court will appoint a bankruptcy administrator who will hold creditor's meeting, finalize the list of creditors' claims and draft a distribution plan. Once the distribution plan gets approved by the Court, Mirage's assets will be sold piecemeal in a public auction and the sale proceeds will be paid to BizBank. Outcome piecemeal sale No, the hotel will stop operating and Mirage assets will be sold piecemeal in a public auction, conducted by the insolvency administrator appointed by the Court, as a result of liquidation proceedings. Time (in years) 1.7 A reorganization procedure that is then converted into liquidation will approximately take 1.67 years in total. According to the PRC Enterprise Bankruptcy law, the reorganization plan must be approved by the creditors within 180 days from commencement of reorganization proceedings (this is the maximum period for which the individual actions are stayed). In practice, it will takes about 8 months to prepare the creditors list, draft and vote the plan, which would be rejected under our case study assumptions. The case will then be converted into liquidation, taking the formal conversion and the organization and execution of the sale 1 additional year (until the proceeds of the sale are finally distributed among creditors). Cost (% of 22.0 The costs associated with the case would amount to approximately 22% of the value of the estate) debtor's estate (CNY 3,500,688). The total cost include the court fees (0.5%), attorney's fees (5%-10%), cost of notification and publication (1%), insolvency representative fees (5-10%),fees of accountants, assessors, inspectors and other professionals (7%), fees of auctioneers (1-5%), and fees of service providers and/or government levies (5%). Recovery rate 36.9 (cents on the dollar) Page 92 Doing Business 2019 China Details – Resolving Insolvency in Shanghai – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 11.5 Commencement of proceedings index (0-3) 3.0 What procedures are available to a DEBTOR when commencing insolvency proceedings? (a) Debtor may 1.0 file for both liquidation and reorganization Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (a) Yes, a creditor 1.0 may file for both liquidation and reorganization What basis for commencement of the insolvency proceedings is allowed under the (a) Debtor is 1.0 insolvency framework? generally unable to pay its debts as they mature Management of debtor's assets index (0-6) 5.0 Does the insolvency framework allow the continuation of contracts supplying essential goods Yes 1.0 and services to the debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome Yes 1.0 contracts? Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after Yes 1.0 commencement of insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (c) No priority is 0.0 assigned to post- commencement creditors Reorganization proceedings index (0-3) 2.5 Which creditors vote on the proposed reorganization plan? (a) All creditors 0.5 Does the insolvency framework require that dissenting creditors in reorganization receive at Yes 1.0 least as much as what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, Yes 1.0 does each class vote separately and are creditors in the same class treated equally? Creditor participation index (0-4) 1.0 Does the insolvency framework require approval by the creditors for selection or No 0.0 appointment of the insolvency representative? Does the insolvency framework require approval by the creditors for sale of substantial No 0.0 assets of the debtor? Does the insolvency framework provide that a creditor has the right to request information No 0.0 from the insolvency representative? Does the insolvency framework provide that a creditor has the right to object to decisions Yes 1.0 accepting or rejecting creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 93 Doing Business 2019 China Resolving Insolvency - Beijing Indicator Beijing East Asia & OECD high Best Regulatory Pacific income Performance Recovery rate (cents on the dollar) 36.9 35.5 70.5 None in 2017/18 Time (years) 1.7 2.6 1.7 0.4 (Ireland) Cost (% of estate) 22.0 20.6 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going 0 .. .. .. concern) Strength of insolvency framework index (0-16) 11.5 6.8 11.9 None in 2017/18 Figure – Resolving Insolvency in Beijing and comparator economies – Ranking and Score DB 2019 Resolving Insolvency Score 0 100 90.91: United States (Rank: 3) 65.69: Hong Kong SAR, China (Rank: 44) 58.61: Russian Federation (Rank: 55) 55.82: Beijing 55.82: Shanghai 40.84: India (Rank: 108) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Figure – Resolving Insolvency in Beijing – Time and Cost Time (years) Cost (% of estate) 4.5 4.3 25 22.0 22.0 4 20.6 Cost (% of estate) 3.5 20 Time (years) 3 2.6 15 2.5 2.0 2 1.7 1.7 9.3 1.7 10.0 9.0 9.0 10 1.5 5.0 1.0 1 0.8 5 0.5 0 0 Beijing East Hong India OECD Russian Shanghai United Asia Kong high Federation States & SAR, income Pacific China Page 94 Doing Business 2019 China Figure – Resolving Insolvency in Beijing and comparator economies – Measure of Quality Beijing 5 3 1 2.5 Hong Kong SAR, China 3 2 1 0 India 4.5 2 1 1 Russian Federation 5 2.5 3 1 Shanghai 5 3 1 2.5 United States 6 3 3 3 OECD high income 5.3 2.8 2.2 1.9 East Asia & Pacific 3.6 2.3 1.2 1 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Beijing and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 100 87.2 81.8 80 60 42.1 40 36.9 36.9 35.5 26.5 20 0 Beijing Hong Kong SAR, China India Russian Federation United States Shanghai East Asia & Pacific Page 95 Doing Business 2019 China Details – Resolving Insolvency in Beijing Indicator Answer Score Proceeding liquidation (after Mirage initiates reorganization pursuant to art. 70 of the Enterprise Insolvency Law after the an attempt at default on payment. However, in accordance with article 75, during the restructuring period, the reorganization) exercise of the security rights enjoyed over specific property of the debtor shall be suspended. So, the reorganization plan will not be approved by BizBank since its security right will be affected the most during the reorganization. Such disapproval by BizBank will lead to the termination of the reorganization procedure by the court. The court will declare Mirage bankrupt and convert the reorganization into liquidation proceedings. During the liquidation proceeding, the Court will appoint a bankruptcy administrator who will hold creditor's meeting, finalize the list of creditors' claims and draft a distribution plan. Once the distribution plan gets approved by the Court, Mirage's assets will be sold piecemeal in a public auction and the sale proceeds will be paid to BizBank. Outcome piecemeal sale No, the hotel will stop operating and Mirage assets will be sold piecemeal in a public auction, conducted by the insolvency administrator appointed by the Court, as a result of liquidation proceedings. Time (in years) 1.7 A reorganization procedure that is then converted into liquidation will approximately take 20 months in total. The court shall rule on whether or not to accept the petition within 15 days from the date of receipt of the petition. In case the court accepts the petition, it shall serve its ruling on the petitioner within five days and notify the known creditors within 25 days from the date of ruling to accept the bankruptcy petition and make an announcement. (Article 10-14, Enterprise Insolvency Law). The reorganization plan must be approved by the creditors within 180 days from commencement of reorganization proceedings (this is the maximum period for which the individual actions are stayed) (art. 79, Enterprise Insolvency Law). In practice, it will takes about 8 months to prepare the creditors list, draft and vote the plan, which would be rejected under our case study assumptions. The case will then be converted into liquidation, taking the formal conversion and the organization and execution of the sale 1 additional year (until the proceeds of the sale are finally distributed among creditors). Cost (% of 22.0 The costs associated with the case would amount to approximately 22% of the value of the estate) Mirage's estate. The total cost include the court fees (0.5%), attorney's fee (5%-10%), cost of notification and publication (1%), insolvency representative fees (5%-10%), fees of accountant, assessors, inspector and other professionals (7%), fees of auctioneers (1%-5%), and fees of service providers and/or government levies (5%). Recovery rate 36.9 (cents on the dollar) Page 96 Doing Business 2019 China Details – Resolving Insolvency in Beijing – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 11.5 Commencement of proceedings index (0-3) 3.0 What procedures are available to a DEBTOR when commencing insolvency proceedings? (a) Debtor may 1.0 file for both liquidation and reorganization Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (a) Yes, a creditor 1.0 may file for both liquidation and reorganization What basis for commencement of the insolvency proceedings is allowed under the (a) Debtor is 1.0 insolvency framework? generally unable to pay its debts as they mature Management of debtor's assets index (0-6) 5.0 Does the insolvency framework allow the continuation of contracts supplying essential goods Yes 1.0 and services to the debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome Yes 1.0 contracts? Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after Yes 1.0 commencement of insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (c) No priority is 0.0 assigned to post- commencement creditors Reorganization proceedings index (0-3) 2.5 Which creditors vote on the proposed reorganization plan? (a) All creditors 0.5 Does the insolvency framework require that dissenting creditors in reorganization receive at Yes 1.0 least as much as what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, Yes 1.0 does each class vote separately and are creditors in the same class treated equally? Creditor participation index (0-4) 1.0 Does the insolvency framework require approval by the creditors for selection or No 0.0 appointment of the insolvency representative? Does the insolvency framework require approval by the creditors for sale of substantial No 0.0 assets of the debtor? Does the insolvency framework provide that a creditor has the right to request information No 0.0 from the insolvency representative? Does the insolvency framework provide that a creditor has the right to object to decisions Yes 1.0 accepting or rejecting creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 97 Doing Business 2019 China Labor Market Regulation Doing Business presents detailed data for the labor market regulation indicators on the Doing Business website (http://www.doingbusiness.org). The report does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions about the (i) whether fixed-term contracts are prohibited for worker and the business are used. permanent tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the The worker: probationary period; (iv) minimum wage. - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. Working hours - Is a full-time employee. (i) maximum number of working days allowed per - Is not a member of the labor union, unless membership is mandatory. week; (ii) premiums for work: at night, on a weekly rest day and overtime; (iii) whether there are The business: restrictions on work at night, work on a weekly rest - Is a limited liability company (or the equivalent in the economy). day and for overtime work; (iv) whether - Operates a supermarket or grocery store in the economy’s largest business city. nonpregnant and nonnursing women can work For 11 economies the data are also collected for the second largest business city. same night hours as men; (v) length of paid annual - Has 60 employees. leave. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the food retail sector and they apply even to firms that are not party to them. Redundancy rules - Abides by every law and regulation but does not grant workers more benefits than (i) whether redundancy can be basis for terminating those mandated by law, regulation or (if applicable) collective bargaining workers; (ii) whether employer needs to notify agreements. and/or get approval from third party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments due when terminating a redundant worker. Job quality (i) whether law mandates equal remuneration for work of equal value and nondiscrimination based on gender in hiring; (ii) whether law mandates paid or unpaid maternity leave; (iii) length of paid maternity leave; (iv) whether employees on maternity leave receive 100% of wages; (v) availability of five fully paid days of sick leave a year; (vi) eligibility requirements for unemployment protection. Page 98 Doing Business 2019 China Labor Market Regulation - Shanghai Details – Labor Market Regulation in Shanghai Answer Hiring Fixed-term contracts prohibited for permanent tasks? No Maximum length of a single fixed-term contract (months) No limit Maximum length of fixed-term contracts, including renewals (months) No limit Minimum wage applicable to the worker assumed in the case study (US$/month) 353.3 Ratio of minimum wage to value added per worker 0.3 Maximum length of probationary period (months) 6.0 Working hours Standard workday 8.0 Maximum number of working days per week 6.0 Premium for night work (% of hourly pay) 34.0 Premium for work on weekly rest day (% of hourly pay) 100.0 Premium for overtime work (% of hourly pay) 50.0 Restrictions on night work? No Whether nonpregnant and nonnursing women can work the same night hours as men Yes Restrictions on weekly holiday? No Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 5.0 Paid annual leave for a worker with 5 years of tenure (working days) 5.0 Paid annual leave for a worker with 10 years of tenure (working days) 10.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 6.7 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? Yes Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? Yes Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? Yes Priority rules for redundancies? Yes Priority rules for reemployment? Yes Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure 4.3 Notice period for redundancy dismissal for a worker with 5 years of tenure 4.3 Notice period for redundancy dismissal for a worker with 10 years of tenure 4.3 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 4.3 Severance pay for redundancy dismissal for a worker with 1 year of tenure 4.3 Page 99 Doing Business 2019 China Severance pay for redundancy dismissal for a worker with 5 years of tenure 21.7 Severance pay for redundancy dismissal for a worker with 10 years of tenure 43.3 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 23.1 Job quality Equal remuneration for work of equal value? No Gender nondiscrimination in hiring? Yes Paid or unpaid maternity leave mandated by law? Yes Minimum length of maternity leave (calendar days)? 128.0 Receive 100% of wages on maternity leave? Yes Five fully paid days of sick leave a year? Yes Unemployment protection after one year of employment? Yes Minimum contribution period for unemployment protection (months)? 12.0 Page 100 Doing Business 2019 China Labor Market Regulation - Beijing Details – Labor Market Regulation in Beijing Answer Hiring Fixed-term contracts prohibited for permanent tasks? No Maximum length of a single fixed-term contract (months) No limit Maximum length of fixed-term contracts, including renewals (months) No limit Minimum wage applicable to the worker assumed in the case study (US$/month) 291.9 Ratio of minimum wage to value added per worker 0.3 Maximum length of probationary period (months) 6.0 Working hours Standard workday 8.0 Maximum number of working days per week 6.0 Premium for night work (% of hourly pay) 0.0 Premium for work on weekly rest day (% of hourly pay) 100.0 Premium for overtime work (% of hourly pay) 50.0 Restrictions on night work? No Whether nonpregnant and nonnursing women can work the same night hours as men Yes Restrictions on weekly holiday? No Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 5.0 Paid annual leave for a worker with 5 years of tenure (working days) 5.0 Paid annual leave for a worker with 10 years of tenure (working days) 10.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 6.7 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? Yes Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? Yes Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? Yes Priority rules for redundancies? Yes Priority rules for reemployment? Yes Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure 4.3 Notice period for redundancy dismissal for a worker with 5 years of tenure 4.3 Notice period for redundancy dismissal for a worker with 10 years of tenure 4.3 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 4.3 Severance pay for redundancy dismissal for a worker with 1 year of tenure 4.3 Page 101 Doing Business 2019 China Severance pay for redundancy dismissal for a worker with 5 years of tenure 21.7 Severance pay for redundancy dismissal for a worker with 10 years of tenure 43.3 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 23.1 Job quality Equal remuneration for work of equal value? No Gender nondiscrimination in hiring? Yes Paid or unpaid maternity leave mandated by law? Yes Minimum length of maternity leave (calendar days)? 98.0 Receive 100% of wages on maternity leave? Yes Five fully paid days of sick leave a year? Yes Unemployment protection after one year of employment? Yes Minimum contribution period for unemployment protection (months)? 12.0 Page 102 Doing Business 2019 China Business Reforms in China In the past year, Doing Business observed a peaking of reform activity worldwide. From June 2, 2017, to May 1, 2018, 128 economies implemented a record 314 regulatory reforms improving the business climate. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. = Doing Business reform making it easier to do business. = Change making it more difficult to do business. DB2019 Starting a Business: China made starting a business easier by launching online company registrations and by simplifying social security registrations. This reform applies to both Beijing and Shanghai. Dealing with Construction Permits: China streamlined the process of obtaining the building permit, the certificate of completion and registering new buildings with the real estate registry. It also improved its building quality control by introducing stricter qualification requirements for professionals in the construction industry and improving public access to information. This reform applies to both Beijing and Shanghai. Getting Electricity: China made getting electricity easier in Beijing and Shanghai by expanding network capacity so that all connections of power loads of 160kW or less are now made directly to the low voltage network, for which the connection process is carried out entirely by the utility free of charge. The time to obtain an electricity connection was also reduced thanks to the rollout of a new mobile application for customers. Registering Property: China made registering property easier by streamlining administrative procedures and by increasing the reliability and transparency of its land administration system. This reform applies to both Beijing and Shanghai. Protecting Minority Investors: China strengthened minority investor protections by increasing shareholders' rights and role in major corporate decisions, clarifying ownership and control structures, and requiring reimbursement of legal expenses incurred by shareholders. Paying Taxes: China made paying taxes easier by abolishing the business tax, allowing for joint filing and payment of all stamp duties and by implementing several administrative reforms to lower the compliance time. These reforms apply to both Beijing and Shanghai. Beijing also made paying taxes less costly by reducing the housing fund rate paid by the employer. Trading across Borders: China reduced the time and cost to export and import by implementing a single window, eliminating administrative charges, increasing transparency and encouraging competition. These reforms apply to both Beijing and Shanghai. DB2018 Starting a Business: China made starting a business easier by streamlining registration procedures. This reform applies to both Beijing and Shanghai. Paying Taxes: China made paying taxes easier by introducing several measures for easing compliance. DB2017 Starting a Business: China made starting a business easier by introducing a single form to obtain a business license, organization code and tax registration. This reform applies to both Shanghai and Beijing. Getting Credit: China improved access to credit information by starting to report payment histories from utility companies and providing credit scores to banks and financial institutions. This reform applies to both Shanghai and Beijing. Enforcing Contracts: China made enforcing contracts easier by introducing an online platform that allows lawyers to manage cases electronically. This reform applies to Beijing. DB2016 Paying Taxes: China made paying taxes less costly for companies in Shanghai by reducing the social security contribution rate. DB2015 Starting a Business: China made starting a business easier by eliminating both the minimum capital requirement and the requirement to obtain a capital verification report from an auditing firm. This reform applies to both Beijing and Shanghai. Paying Taxes: China made paying taxes easier for companies by enhancing the electronic system for filing and paying taxes and adopting new communication channels within its taxpayer service, changes applying to both Beijing and Shanghai. In addition, China made paying taxes less costly for companies in Shanghai by reducing the social security contribution rate. DB2014 Getting Credit: China improved its credit information system by introducing credit information industry regulations, which guarantee borrowers’ right to inspect their data. Enforcing Contracts: China made enforcing contracts easier by amending its civil procedure code to streamline and speed up all court proceedings. Page 103 Doing Business 2019 China DB2013 Starting a Business: China made starting a business less costly by exempting micro and small companies from paying several administrative fees from January 2012 to December 2014. Dealing with Construction Permits: China simplified the process of obtaining a construction permit by streamlining and centralizing preconstruction approvals. DB2011 Paying Taxes: China’s new corporate income tax law unified the tax regimes for domestic and foreign enterprises and clarified the calculation of taxable income for corporate income tax purposes. DB2010 Trading across Borders: China made trading across borders easier by relaxing trade credit restrictions. DB2009 Getting Credit: China strengthened its secured transactions system through a new property law expanding the range of assets that can be used as collateral, now including accounts receivable and a changing pool of assets. Paying Taxes: China made paying taxes easier and less costly for companies by unifying the criteria and accounting methods for tax deductions and by reducing the corporate income tax rate. Enforcing Contracts: China strengthened its contract enforcement system by tightening the rules on enforcement of judgments so as to limit the ways in which debtors can hide assets and escape enforcement. Labor Market Regulation: China established paid annual leave and introduced priority rules for redundancy dismissals or layoffs. DB2008 Dealing with Construction Permits: China reduced delays in dealing with construction permits by introducing electronic processing of applications for building permits and allowing construction companies to apply for safety certificates online. Getting Credit: China strengthened its secured transactions system through a new law entitling secured creditors to priority in payment. Resolving Insolvency: China enhanced its insolvency process through a new enterprise bankruptcy law introducing reorganization procedures, allowing for the formation of creditors’ committees, granting rights to secured creditors and establishing a role for professional bankruptcy administrators. Page 104 Doing Business 2019 China Page 105