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The China Law News keeps you on top of business, economic and political events in the China.
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In the News
China: New measures for compulsory licensing in force

On 1 May 2012, new "Measures for Compulsory Licensing of Patent Implementation" entered into force in China. This document replaces two earlier regulations (from 2003 and 2005) and brings the current measures into line with the revised Chinese patent law, which has been in force since October 2009.
Background information can be found on the English "IPR in China" website. The official Chinese version of the measures can be found on SIPO's website. The corresponding chapter VI of the Chinese patent law deals with the subject of compulsory licenses.
Web link: http://www.epo.org/searching/asian/asia-updates/updates-2012/20120502.html

1-year power tariff plan favored

SHANGHAI held a public hearing on its graduated power tariff mechanism for residential users yesterday, with most participants preferring a plan that uses one year as a calculation period.

China has required all provinces and municipalities to introduce the progressive tariff system, which charges higher rates for heavier users, before the second half of the year. Any local plan should leave 80 percent of households unaffected.

Shanghai has set a "basic needs" category of 260 kilowatts-hours a month, the average consumption of 80 percent of the city's 7.72 million households last year. Increased charges will kick in once consumption is beyond the "basic needs."

City authorities have proposed several plans to implement the system. In the most-preferred one-year plan, a household pays what it currently pays for power until consumption hits 3,120 kwh (260 kwh a month times 12), and then pays higher rates during the rest of the year. This plan is considered easy to implement but it may also cause problems.

For example, residents may save power at the beginning of the year so that they can use more during summer time, which may result in very heavy power load.

"I'm deeply concerned about the security of the power grid if this happens," said Hu Guang, a lawyer and one of the 19 participants in yesterday's hearing.

Disadvantages surface

This option could cause problems in the lease market. For example, a tenant may have pricier power if he or she rents an apartment in the middle of the year.

To mitigate seasonal factors, Shanghai also proposed a plan under which the basic needs figure would be raised to 350 kwh per month in July and August and in December and January when people need air-conditioning to keep cool or heating to stay warm. For the rest of the year it would be reduced to 210 kwh. But this proposal is harder to implement because manual meter reading often is delayed by several days.

Also, some participants say Shanghai's basic needs category, the highest on China's mainland, is still low. "Unlike northern cities like Beijing which have heating supply in winter, we can only rely on air-conditioning," said Tao Ailian.

Lou Zhe, a policewoman, said households with five people or more should be granted higher quotas for the basic category. Such households account for 17.5 percent of the city's total, she said.

Huang Yingyuan, 48, said the city should also develop a system to ensure that under the graduated system 80 percent of the local households will stay unaffected in the years ahead, because overall power demand is always on the rise.

At present, the city's residential power price is 0.617 yuan (about 10 US cents) per kwh, and half that at night. The higher, above-baseline rates will be the same whether the power is used during the day or night, according to government proposals.

Web link: http://www.shanghaidaily.com/nsp/Business/2012/05/12/1year%2Bpower%2Btariff%2Bplan%2Bfavored/

Fewer underage convicts offend again in China

BEIJING - The number of underage recidivists in China dropped by 24 percent between 2007 and 2011 as the country upped its efforts to reform young offenders, according to a statement issued by the Supreme People's Procuratorate (SPP) on Wednesday.

More underage offenders have been helped to receive proper education and assistance and return to a normal social life instead of being sent to jails, said the SPP statement.

In addition, prosecutors have also tried not to put teenagers through judicial procedures, but transferred them to community education schemes.

From 2007 to 2011, prosecutors nationwide rejected arrests of more than 620,000 teenage suspects and dropped charges for around 17,800 of those arrested.

About 17.7 percent of teenage suspects were not arrested in 2011, up from 12.55 percent in 2007, while 4.44 percent of arrested suspects were not prosecuted, up from 3.45 percent, according to the statement.

Many local procuratorates have set up special divisions to handle cases involving teenagers so as to take care of their special needs, it added.

There are nearly 300 prosecutor offices specializing in underage offences across China.


New plan to reduce income inequality

State Council set to approve move to narrow gap between rich and poor

A new income-distribution framework is set for approval to redress the growing gap between rich and poor, government officials said.

The framework comes at a time when the most affluent 10 percent of the population make 23 times more than the poorest 10 percent.

In 1988 it was seven times.

The framework, eight years in the making, has been tabled for approval by the State Council and is likely to be introduced in the second half of this year.

"If low-income families cannot afford a decent standard of living, rich families will not enjoy any sense of security. That is a problem for the world, not just China," Yang Yiyong, director of the Social Development Research Institute under the National Development and Reform Commission, said in an interview with China Daily.

New plan to reduce income inequality

Yang has been closely involved in the framework's planning. Its overarching guideline, he said, is "for the government to give up a little tax revenue, for companies to give up a little profit and for rich people to give up a little interest."

Tax revenue grew from 7.3 trillion yuan ($1.12 trillion) in 2010 to nearly 9 trillion yuan in 2011, a 22.6 percent increase. It greatly outpaced urban income growth, 8.4 percent, and rural income growth, 11.4 percent.
Per capita income in China has just exceeded $4,000.

As part of income-distribution reform, government agencies, at both central and local levels, will be urged to pass legislation to cut taxes and regulate executive pay in high-profit monopoly industries and private companies, Yang said.

The framework will see an enlarged middle-income group and high earners will pay more in tax.

It is time for common prosperity, Yang declared, although one government plan is not going to provide all the answers to the thorny issue of income distribution in a society of 1.3 billion people.

This is not just about individual tastes or lifestyle, economists point out. It reflects a yawning gap between rich and poor that is hindering the world's second-largest economy from making further progress and perhaps eroding its very social fabric, Yang said.

Gini coefficient

The framework may use the Gini coefficient, an internationally accepted gauge of income inequality, or adopt a mix of indicators, such as urban-rural income disparity or wage differences among various industries.

Targets would almost certainly be more powerful than persuasion, he said.

The country’s Gini coefficient has already reached a high, if not dangerous level. It is close to 0.5, he said, a point that "is threatening" social security. Little room is left for the index to grow.

The last time the government reported the Gini coefficient was in 2000, when it stood at 0.412.

The National Bureau of Statistics said 2011’s Gini coefficient was "a little higher than 2010," without specifying either number. In January, the NBS said the main reason that China did not release the figure because data about high-income groups was still incomplete.


Lehman, Lee & Xu is a top-tier Chinese law firm specializing in corporate, commercial and intellectual property matters. For further information on any issue discussed in this edition of China Law Digest , or for all other enquiries, please e-mail us at mail@lehmanlaw.com or visit our website at www.lehmanlaw.com and Mongolia www.lehmanlaw.mn.

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© Lehman, Lee & Xu 2012.
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