China
Trump risks pushing Iran into China’s orbit
Author: Simon Theobald, ANU
A downed drone, attacks on oil tankers, and calls for oblivion by US President Donald Trump — Iran and the United States are closer to war than at any other time since the inception of the Islamic Republic. But it is China that looks set to benefit as Iran searches for more regional partners in response.
Attempts to mitigate conflict are being spearheaded by European signatories to the Iran nuclear deal (the Joint Comprehensive Plan of Action or JCPOA), who remain desperate to keep Iran in the deal even as they struggle to find routes around US sanctions. Russia promises moral support to Iran, if little in the way of material backing. The other signatory, China, has remained relatively quiet over the past few weeks, but the question remains: what does the growing risk of conflagration between the United States and Iran mean for China, and what — if anything — can Beijing do about it?
Iran lies at the heart of Beijing’s geostrategic vision for the 21st century. The Belt and Road Initiative, as it is currently planned, runs through a nearly 2000 kilometre stretch of Iranian territory, linking Central Asia, West Asia, and Eastern China. Chinese infrastructure projects are dotted across Iran, from major programs like the development of the South Pars gas field to more minor projects like public transport schemes in regional cities. Iranian bazaars are awash with Chinese goods.
And even as restrictive US sanctions are reducing Iran’s capacity to sell petrochemical resources, China quietly continues to buy Iranian oil, albeit in reduced quantities and with little public fanfare.
And yet, despite the relative importance of Iran in China’s grand plans for West Asia, Beijing has limited room to manoeuvre. The relationship with the United States — for all its problems including the ongoing trade war — is simply far too important to sacrifice on the altar of a relatively small player in China’s economy like Iran. China is also deepening trade ties with other regional powers — notably Israel and Saudi Arabia, two of Iran’s local arch nemeses and staunch US allies.
It is not surprising then that the extent of Beijing’s response to the shooting down of the Global Hawk drone was to call for ‘restraint’, reiterating China’s ongoing commitment to the JCPOA and to fret about the danger of ‘opening Pandora’s box’.
If the unthinkable did happen, what would it look like and what could Beijing do? At this stage, the most likely pattern of any hostilities between Iran and the United States would be a surgical strike on Iranian defence capabilities — a move that was apparently confirmed before being abruptly called off at the last minute. Despite the presence of hawks like John Bolton in his administration, Trump seems to have little interest in putting boots on the ground. Nor does the US public have any appetite for a major conflagration.
Of course, Iran would strike back — whether directly or through proxies — and there is always the risk of a conflict spiralling out of control. Iran has threatened to close the Strait of Hormuz, a move with negative consequences for all countries shipping oil out of the Persian Gulf — although strangling such a vital route would probably result in a swift response from the United States.
That said, it is unlikely that the regime in Iran will be overthrown. Its system of theocratic governance is deeply entrenched and commands a level of popular support that, while certainly not universal, is more significant than the advocates of regime change in Washington imagine.
So what could Beijing do? As with the last few weeks, its role will likely to be to call for peace from the sidelines. Little more can be done. And yet, if anything, a strike on Iran is likely to push the wounded country ever further into the arms of China. Constricted by US sanctions, hurting from a potential air attack, and with limited effective help from Europe, the appetite for conciliation with the United States favoured by reformists in Tehran is like to evaporate — if it hasn’t already.
Forging the path ahead would then be handed over to the regime’s own conservatives and more hawkish factions who — always distrustful of the nuclear deal — will likely issue an ‘I told you so’ rebuke to reformists. With few alternatives, closer engagement with Iran’s more ‘reliable’ authoritarian partners like Russia and China is likely. Perhaps then the ultimate beneficiary of Trump’s hard-line stance against Iran will be China.
Simon Theobald is a…
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.
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- 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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