China
Chinese Property: The Most Important Sector in the World
Reuters A man talks on a mobile phone as he walks past a construction site near residential buildings in central Beijing. Mark another milestone for China’s ever-rising economic profile: UBS emerging-markets economist Jonathan Anderson has declared China’s property industry “the single most important sector in the entire global economy.” In a research note Wednesday, Mr. Anderson, a longtime China watcher, says that “real-estate and housing construction pervade the entire [China] growth model. They are the most important determinant of commodity demand, a very big marginal driver of China’s external surpluses, and indeed a crucial key to real understanding of household balance sheets, saving and investment behavior and the debate around Chinese rebalancing.” In other words, he says, “from a macroeconomic perspective if you don’t understand Chinese property, you probably don’t understand China.” Many global investors won’t find the declaration all that surprising, having seen shares in many companies buffeted over the past year by Beijing’s efforts to wrestle with soaring house prices while trying to avoid undercutting the construction industry. But it is remarkable sign of the times nevertheless. As Mr. Anderson notes, “until very recently” the proper response to the question of which sector is most important “would almost certainly have been U.S. financials and/or U.S. housing.” The numbers tell much of the story. China is the world’s largest consumer of steel, and Mr. Anderson notes that real estate directly accounts for 40% of Chinese steel usage. Add home appliances and automobiles—which he notes tend to directly follow new housing purchases in China–the share is more than 50%. Similar logic applies to other products like cement, iron ore, coal, and construction equipment. Property construction—75% of which in China is housing–accounted for more than 13% of China’s gross domestic product last year, UBS estimates—more than double the average of 6% in the 1990s. Mr. Anderson says that explains why investment overall accounts for such a large share of China’s economy—an estimated 47% to 48% of GDP last year, which “is an absolute record for any economy of significant size in the post-war era, and almost single-handedly explains China’s explosive real growth over the same period.” So is China’s property sector a bubble? And how long can the boom continue? Mr. Anderson temporarily punts on those all-important questions, saying colleague Wang Tao, UBS’s China economist, will weigh in next week. –Jason Dean
- Reuters
- A man talks on a mobile phone as he walks past a construction site near residential buildings in central Beijing.
Mark another milestone for China’s ever-rising economic profile: UBS emerging-markets economist Jonathan Anderson has declared China’s property industry “the single most important sector in the entire global economy.”
In a research note Wednesday, Mr. Anderson, a longtime China watcher, says that “real-estate and housing construction pervade the entire [China] growth model. They are the most important determinant of commodity demand, a very big marginal driver of China’s external surpluses, and indeed a crucial key to real understanding of household balance sheets, saving and investment behavior and the debate around Chinese rebalancing.” In other words, he says, “from a macroeconomic perspective if you don’t understand Chinese property, you probably don’t understand China.”
Many global investors won’t find the declaration all that surprising, having seen shares in many companies buffeted over the past year by Beijing’s efforts to wrestle with soaring house prices while trying to avoid undercutting the construction industry. But it is remarkable sign of the times nevertheless. As Mr. Anderson notes, “until very recently” the proper response to the question of which sector is most important “would almost certainly have been U.S. financials and/or U.S. housing.”
The numbers tell much of the story. China is the world’s largest consumer of steel, and Mr. Anderson notes that real estate directly accounts for 40% of Chinese steel usage. Add home appliances and automobiles—which he notes tend to directly follow new housing purchases in China–the share is more than 50%. Similar logic applies to other products like cement, iron ore, coal, and construction equipment.
Property construction—75% of which in China is housing–accounted for more than 13% of China’s gross domestic product last year, UBS estimates—more than double the average of 6% in the 1990s. Mr. Anderson says that explains why investment overall accounts for such a large share of China’s economy—an estimated 47% to 48% of GDP last year, which “is an absolute record for any economy of significant size in the post-war era, and almost single-handedly explains China’s explosive real growth over the same period.”
So is China’s property sector a bubble? And how long can the boom continue? Mr. Anderson temporarily punts on those all-important questions, saying colleague Wang Tao, UBS’s China economist, will weigh in next week.
–Jason Dean
The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978.
China continues to lose arable land because of erosion and economic development.
The country’s per capita income was at $6,567 (IMF, 98th) in 2009.
The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978.
Its mineral resources are probably among the richest in the world but are only partially developed.
A report by UBS in 2009 concluded that China has experienced total factor productivity growth of 4 per cent per year since 1990, one of the fastest improvements in world economic history.
The market-oriented reforms China has implemented over the past two decades have unleashed individual initiative and entrepreneurship, whilst retaining state domination of the economy.
Both forums will start on Tuesday.
In this period the average annual growth rate stood at more than 50 percent.
China is expected to have 200 million cars on the road by 2020, increasing pressure on energy security and the environment, government officials said yesterday.
Although China is still a developing country with a relatively low per capita income, it has experienced tremendous economic growth since the late 1970s.
Even with these improvements, agriculture accounts for only 20% of the nation’s gross national product.
China is the world’s largest producer of rice and wheat and a major producer of sweet potatoes, sorghum, millet, barley, peanuts, corn, soybeans, and potatoes.
China ranks first in world production of red meat (including beef, veal, mutton, lamb, and pork).
Oil fields discovered in the 1960s and after made China a net exporter, and by the early 1990s, China was the world’s fifth-ranked oil producer.
China’s leading export minerals are tungsten, antimony, tin, magnesium, molybdenum, mercury, manganese, barite, and salt.
China’s exploitation of its high-sulfur coal resources has resulted in massive pollution.
After the 1960s, the emphasis was on regional self-sufficiency, and many factories sprang up in rural areas.
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Chinese Property: The Most Important Sector in the World
China
China Implements New Policies to Boost Foreign Investment in Science and Technology Companies
China’s Ministry of Commerce announced new policy measures on April 19, 2023, to encourage foreign investment in the technology sector. The measures include facilitating bond issuance, improving the investment environment, and simplifying procedures for foreign institutions to access the Chinese market.
On April 19, 2023, China’s Ministry of Commerce (MOFCOM) along with nine other departments announced a new set of policy measures (hereinafter, “new measures”) aimed at encouraging foreign investment in its technology sector.
Among the new measures, China intends to facilitate the issuance of RMB bonds by eligible overseas institutions and encourage both domestic and foreign-invested tech companies to raise funds through bond issuance.
In this article, we offer an overview of the new measures and their broader significance in fostering international investment and driving innovation-driven growth, underscoring China’s efforts to instill confidence among foreign investors.
The new measures contain a total of sixteen points aimed at facilitating foreign investment in China’s technology sector and improving the overall investment environment.
Divided into four main chapters, the new measures address key aspects including:
Firstly, China aims to expedite the approval process for QFII and RQFII, ensuring efficient access to the Chinese market. Moreover, the government promises to simplify procedures, facilitating operational activities and fund management for foreign institutions.
This article is republished from China Briefing. Read the rest of the original article.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.
China
Q1 2024 Brief on Transfer Pricing in Asia
Indonesia’s Ministry of Finance released Regulation No. 172 of 2023 on transfer pricing, consolidating various guidelines. The Directorate General of Taxes focuses on compliance, expanded arm’s length principle, and substance checks. Singapore’s Budget 2024 addresses economic challenges, operational costs, and sustainability, implementing global tax reforms like the Income Inclusion Rule and Domestic Top-up Tax.
Indonesia’s Ministry of Finance (MoF) has released Regulation No. 172 of 2023 (“PMK-172”), which prevails as a unified transfer pricing guideline. PMK-172 consolidates various transfer pricing matters that were previously covered under separate regulations, including the application of the arm’s length principle, transfer pricing documentation requirements, transfer pricing adjustments, Mutual Agreement Procedure (“MAP”), and Advance Pricing Agreements (“APA”).
The Indonesian Directorate General of Taxes (DGT) has continued to focus on compliance with the ex-ante principle, the expanded scope of transactions subject to the arm’s length principle, and the reinforcement of substance checks as part of the preliminary stage, indicating the DGT’s expectation of meticulous and well-supported transfer pricing analyses conducted by taxpayers.
In conclusion, PMK-172 reflects the Indonesian government’s commitment to addressing some of the most controversial transfer pricing issues and promoting clarity and certainty. While it brings new opportunities, it also presents challenges. Taxpayers are strongly advised to evaluate the implications of these new guidelines on their businesses in Indonesia to navigate this transformative regulatory landscape successfully.
In a significant move to bolster economic resilience and sustainability, Singapore’s Deputy Prime Minister and Minister for Finance, Mr. Lawrence Wong, unveiled the ambitious Singapore Budget 2024 on February 16, 2024. Amidst global economic fluctuations and a pressing climate crisis, the Budget strategically addresses the dual challenges of rising operational costs and the imperative for sustainable development, marking a pivotal step towards fortifying Singapore’s position as a competitive and green economy.
In anticipation of global tax reforms, Singapore’s proactive steps to implement the Income Inclusion Rule (IIR) and Domestic Top-up Tax (DTT) under the BEPS 2.0 framework demonstrate a forward-looking approach to ensure tax compliance and fairness. These measures reaffirm Singapore’s commitment to international tax standards while safeguarding its economic interests.
Transfer pricing highlights from the Singapore Budget 2024 include:
This article is republished from China Briefing. Read the rest of the original article.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.
China
New Report from Dezan Shira & Associates: China Takes the Lead in Emerging Asia Manufacturing Index 2024
China has been the world’s largest manufacturer for 14 years, producing one-third of global manufacturing output. In the Emerging Asia Manufacturing Index 2024, China ranks highest among eight emerging countries in the region. Challenges for these countries include global demand disparities affecting industrial output and export orders.
Known as the “World’s Factory”, China has held the title of the world’s largest manufacturer for 14 consecutive years, starting from 2010. Its factories churn out approximately one-third of the global manufacturing output, a testament to its industrial might and capacity.
China’s dominant role as the world’s sole manufacturing power is reaffirmed in Dezan Shira & Associates’ Emerging Asia Manufacturing Index 2024 report (“EAMI 2024”), in which China secures the top spot among eight emerging countries in the Asia-Pacific region. The other seven economies are India, Indonesia, Malaysia, the Philippines, Thailand, Vietnam, and Bangladesh.
The EAMI 2024 aims to assess the potential of these eight economies, navigate the risks, and pinpoint specific factors affecting the manufacturing landscape.
In this article, we delve into the key findings of the EAMI 2024 report and navigate China’s advantages and disadvantages in the manufacturing sector, placing them within the Asia-Pacific comparative context.
Emerging Asia countries face various challenges, especially in the current phase of increased volatility, uncertainty, complexity, and ambiguity (VUCA). One notable challenge is the impact of global demand disparities on the manufacturing sector, affecting industrial output and export orders.
This article is republished from China Briefing. Read the rest of the original article.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.
- China Implements New Policies to Boost Foreign Investment in Science and Technology Companies
- Q1 2024 Brief on Transfer Pricing in Asia
- New Report from Dezan Shira & Associates: China Takes the Lead in Emerging Asia Manufacturing Index 2024
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