China
‘Gaituguiliu’ causes division in Hong Kong
Author: Baogang He, Deakin University
Millions of people have recently marched through the streets of Hong Kong in protest against proposed amendments to the city’s Extradition Law. The upheaval has attracted significant analysis, but Hong Kong–mainland relations could perhaps be better understood from the perspective of ‘Gaituguiliu’.
Gaituguiliu refers to the traditional Chinese policy where the central government replaces the local rulers’ inheritance system with a central direct appointment system — a Chinese model of integration and grand union. This was facilitated through the use of Confucian culture and education. Gaituguiliu was practiced across many dynasties — in particular during the Ming and Qing eras — and can be seen as a ‘gene’ of Chinese civilisation. Variants of the policy can be seen today in Hong Kong, Tibet, Xinjiang and Inner Mongolia.
Hong Kong is theoretically governed under the ‘one country, two systems’ principle. But Beijing has adopted the ‘Grand Union’ policy and has asserted its ‘overall jurisdiction’ — comprehensive power to manage and rule Hong Kong as per the official White Paper of June 2014. For over 22 years, Gaituguiliu has eroded the ideal of ‘one country, two systems’.
From the perspective of Gaituguiliu, Beijing’s resistance and opposition to direct elections is understandable. Gaituguiliu believers are sceptical about democratic autonomy and believe that China needs a new version of Gaituguiliu to accelerate the process of integration towards a single administrative system where the central government appoints local governors. Conversely, many Hong Kongers demand universal suffrage and believe in the value of democratic autonomy.
Gaituguiliu’s influence can be seen in numerous areas. For example, Beijing has set up various government institutions and agencies in Hong Kong and has increasing power and influence. The Liaison Office of the Central People’s Government in Hong Kong is heavily involved in the management of Hong Kong affairs. Even the Chinese Communist Party has established party branches and recruits members there.
China promotes patriotic education and Mandarin Chinese as requirements of Gaituguiliu. The five interpretations of the ‘Hong Kong Basic Law’ issued by the National People’s Congress Standing Committee have ensured unity within a diversified legal system. China’s military garrison in Hong Kong also guarantees a military base enforcing Gaituguiliu. The rise of China’s economy, especially following the recent construction of the Greater Bay Area region, integrates Hong Kong into the mainland economy.
At the social level, Beijing controls the entry quota of 150 mainland settlers into Hong Kong on a daily basis, with the number of mainland immigrants over the past 20 years having reached one million people — resulting in so-called ‘mainlandisation’.
Many Hong Kongers are disappointed and frustrated in the face of a continued intensification of Gaituguiliu and are defending their way of life and demanding democratic autonomy. In 2014, the 79-day Occupy Central Movement demanded the direct election of the chief executive. The election in September 2016 saw six young people without political experience elected as members of the Legislative Council.
Some of the younger generation that grew up in the period following Hong Kong’s return to China even advocate independence. From the democratic perspective, some Hong Kong youths do not see any hope of democracy under China’s authoritarianism.
The emergence and development of the Hong Kong independence movement is further accelerating the pace of China’s Gaituguiliu policy. Beijing is tightening its control over Hong Kong’s independence movement by elevating the ‘Grand Union’ as a core national interest and national security issue. The central government also intensified its Gaituguiliu process in response. The 2019 revision of the Extradition Law represents the legal process of expediting Gaituguiliu that inspired large-scale local protests.
The 2019 marches opposing amendments to the Extradition Law reflects the determination of the local movement to defend the autonomy of Hong Kong’s legal system and prevent Hong Kong from becoming another mainland city. One special characteristic of the demonstrations is the protest against symbols of China — the China–Hong Kong High Speed railway station and the Liaison Office of the Central People’s Government.
Among the Hong Kong local movement, there is a belief that new immigrants from…
China
China Provides Tax Incentives on Special Equipment for Green and Digital Development
China has introduced a new tax incentive for companies investing in digital and smart upgrades of special equipment to encourage environmental protection and safe production. Companies can enjoy a 10 percent deduction from their corporate income tax payable. Eligibility and requirements are outlined by the Ministry of Finance and State Tax Administration.
A new China tax incentive aims to encourage companies to invest in digital and smart upgrades of special equipment. Companies upgrading certain equipment that aids environmental protection and safe production can enjoy a deduction of the investment at a rate of 10 percent from their corporate income tax payable. We explain the requirements of the new tax incentive.
China’s Ministry of Finance (MOF) and State Tax Administration (STA) have issued a new preferential corporate income tax (CIT) incentive for companies investing in digital and intelligent transformations of certain types of equipment. To be eligible for the incentive, companies must invest in the digital and intelligent transformation of equipment related to energy and water conservation, environmental protection, and safe production.
The new tax incentive aligns with a State Council Action Plan, released in March 2024, which aims to accelerate the renewal of large-scale equipment and consumer goods, promoting high-quality development and driving investment and consumption for long-term benefits.
If the annual CIT payable is insufficient for the offset, it can be carried forward to future years for up to five years.
The CIT payable refers to the balance after multiplying the annual taxable income by the applicable tax rate and deducting the tax reductions and exemptions according to China’s CIT Law and relevant preferential policies.
Note that companies enjoying the tax incentives must use the transformed equipment themselves. If the equipment is transferred or leased within five tax years after the transformation is completed, the incentives must stop from the month the equipment is no longer in use, and the previously offset CIT must be repaid.
The “special equipment” eligible for the preferential tax treatment covers equipment purchased and used by companies listed in the Catalog of Special Equipment for Safe Production for Corporate Income Tax Incentives (2018 Edition) and the Catalog of Special Equipment for Energy Saving, Water Conservation, and Environmental Protection for Corporate Income Tax Incentives (2017 Edition).
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
Revealing the Encouraged Industries of Hainan in 2024: Unlocking Opportunities
The 2024 Hainan Encouraged Catalogue, issued by the NDRC, MOF, and STA, aims to boost industries in the Hainan Free Trade Port. It prioritizes sectors like tourism, modern services, and high technologies, offering incentives for foreign investment and market access expansion since 2020. The Catalogue includes 176 entries across 14 categories, with 33 new additions focusing on cultural tourism, new energy, medicine and health, aviation, aerospace, and environmental protection.
The National Development and Reform Commission (NDRC), in collaboration with the Ministry of Finance (MOF) and the State Taxation Administration (STA), has issued the Catalogue of Industries Encouraged to Develop in Hainan Free Trade Port (2024 Version), hereinafter referred to as the “2024 Hainan Encouraged Catalogue.” The updated Catalogue took effect on March 1, 2024, replacing the previous 2020 Edition.
Beyond the industries already addressed in existing national catalogues, the new entries in the 2024 Hainan Encouraged Catalogue are based on practical implementation experiences and the specific needs within Hainan, prioritizing sectors such as tourism, modern services, and high technologies.
The Hainan FTP has been providing incentives to draw investors to invest and establish businesses in the region, especially foreign investment. Alongside a phased approach to opening the capital account and facilitating free capital movement, Hainan has significantly expanded market access for foreign enterprises since 2020, particularly in sectors such as telecommunications, tourism, and education.
The Hainan Encouraged Catalogue comprises two main sections:
Similar to the approach adopted by the western regions, foreign-invested enterprises (FIEs) should always implement their production or operations in accordance with the Catalogue of Encouraged Industries for Foreign Investment.
On top of the industries already addressed in existing national catalogues, the 2024 Hainan Encouraged Catalogue encompasses 14 distinct categories and a total of 176 entries especially encouraged in the region, including 33 new additions compared to the 2020 Edition. These new entries predominantly span cultural tourism, new energy, medicine and health, aviation and aerospace, and ecological and environmental protection, among others.
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
Key Guidelines for Companies in Compliance Audits for Personal Information Protection Standards
China’s standards authority has released draft standards for personal information protection compliance audits, potentially making them mandatory for companies in 2023. The audits will require companies to undergo annual or biennial checks based on the number of people’s information they handle. The draft standards outline the audit process and requirements, seeking public feedback until September 11, 2024.
China’s standards authority has released draft standards for conducting personal information protection compliance audits. Regular compliance audits to ensure compliance with personal information protection regulations may become a requirement for companies in China under draft measures released in 2023. We explain the audit processes and requirements proposed in the draft standards.
The Standardization Administration of China (SAC) has released a set of draft standards for conducting personal information (PI) protection compliance audits. Under draft measures released by the Cyberspace Administration of China (CAC) in August 2023, companies that process the PI of people in China are required to undergo regular compliance audits.
Specifically, companies that process the PI of over one million people must undergo a compliance audit at least once a year, while companies that process the PI of under one million people must carry out an audit at least once every two years.
While the draft measures stipulate the obligations of the auditing body and the audit scope, the draft standards outline the specific audit process, including evidence management and permissions of the audit organization, as well as the professional and ethical requirements of auditors.
The Secretariat of the National Cybersecurity Standardization Technical Committee is soliciting public feedback on the draft standards until September 11, 2024. Public comment on the draft measures released in August last year closed on September 2, 2023, but no updated document has yet been released.
The draft standards outline five stages of the PI protection compliance audit: audit preparation, implementation, reporting, problem rectification, and archiving management.
Auditors are required to accurately document identified security issues in the audit working papers, ensuring that the records are comprehensive, clear, and conclusive, reflecting the audit plan and its execution, as well as all relevant findings and recommendations.
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 Provides Tax Incentives on Special Equipment for Green and Digital Development
- Revealing the Encouraged Industries of Hainan in 2024: Unlocking Opportunities
- Key Guidelines for Companies in Compliance Audits for Personal Information Protection Standards
- A Comprehensive Guide to China’s Expanded 144-Hour Visa-Free Transit Policy at 37 Ports
- Regulatory Changes in China Aim to Boost Service Sector Growth in Six Cities
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