The Guangdong Science and Technology Department of the Chinese Communist Party plans to revoke the high-tech qualifications of 101 companies, with the cancellation resulting in the recovery of tax incentives and awards. This news has sparked public doubts about corporate packaging fraud and the approval mechanism of the CCP. A company executive in Guangdong believes that the lack of technology funding has prompted the authorities to conduct this investigation. The approval, review, and funding processes of these companies, as well as any potential misconduct or responsibilities of relevant departments, have become the focus of scrutiny.
On September 29, the Guangdong Science and Technology Department announced that, upon verification, companies like Anchang Security Technology (Guangdong) Co., Ltd. do not meet the stipulated criteria and are therefore set to lose their high-tech enterprise status. Due to the inability to deliver advance notices to the companies based on the provided addresses, the authorities resorted to public announcements for notification. Companies are allowed to submit statements and defense opinions within 30 days from the date of the announcement. The announcement includes a list of companies and relevant attachments detailing the situation of each.
Company executive Cheng Liang (pseudonym) in Guangdong stated that the authorities are cracking down strictly on false declarations and fraudulent behavior in the designation of high-tech enterprises. He believes that this investigation is related to the insufficient technology funding, stating, “Many companies in the past used third-party intermediaries to package their research and development costs, falsify expenditure accounting, fictitious technology personnel, and falsely report intellectual property to obtain tax incentives fraudulently. Now, with severely insufficient technology funding, the authorities cannot support all these companies, hence the need to rectify the situation.”
Cheng Liang further expressed, “Especially for technology companies engaged in financial fraud, once confirmed, there is a high likelihood of involvement in criminal activities. Those so-called pseudo-high-tech enterprises engaged in deceitful practices to swindle subsidies should be ousted and required to refund the funds.”
Qualification as a Chinese high-tech enterprise requires careful evaluation and approval, rather than simply self-reporting to obtain it. The 2026 Guangdong accreditation work notice demands companies to submit materials for review by local departments. If any company is found to have falsified documentation or if intermediary organizations have tampered with the reporting materials, their qualifications will be revoked, and the improperly obtained tax relief and financial rewards will be reclaimed.
The authenticity of company-reported materials and the strictness of the review process by the departments involved directly impact the distribution of public funds. Cheng Liang linked the investigation to the insufficient technology funding, although the official announcement did not explicitly clarify the relationship between the two.
Comments on mainland Chinese social media platforms reflected criticisms of falsification and collusion with intermediaries to obtain subsidies. The media report did not disclose the specific reasons why each of the 101 companies failed to comply with regulations nor did it mention the exact amounts to be recovered, the years involved, or whether the reviewing personnel would be held accountable. Allegations of fraud and intermediary packaging from netizens are not conclusive evidence against these companies.
Commentator Mr. Lei, who closely follows Guangdong’s economy, criticized the Chinese Communist Party’s resource allocation through administrative approvals. He stated that local authorities treat the quantity of high-tech companies as a political achievement, creating a loop where companies revolve around qualifications and subsidies.
Mr. Lei criticized the severe corruption within China’s technology system, mentioning large sums of money obtained through bribery. He emphasized that many companies engage in bribery to secure high-tech qualifications, suggesting a reciprocal relationship between money and qualifications. This problem was not newly discovered by the CCP, he claimed, but investigations were not initiated due to financial benefits. As the national treasury faces financial constraints, measures like reclaiming tax incentives are now being enforced.
Mr. Lei’s critique highlighted the issue of approval and resource allocation controlled by the CCP. Companies acquiring qualifications through false information may face financial repercussions, while the departments responsible for reviewing, endorsing, and approving these qualifications need to be scrutinized for potential negligence or malpractice.
Guangdong has previously taken similar actions of bulk revocations of high-tech qualifications. In June 2024, Guangdong authorities notified companies such as Guangdong Business Culture Technology Co., Ltd., among 26 companies, of the cancellation of their qualifications. In August 2025, the Jiangmen Science and Technology Bureau forwarded a provincial notice involving 62 companies, including Guangzhou Dachuang Xiehe Technology Co., Ltd. Both notifications required the recovery of relevant tax incentives and awards.