China
Canada–China relations remain on the rocks
Author: John Kirton, University of Toronto
The deepening diplomatic dispute between China and Canada that began in December 2018 marks a fundamental change in their longstanding and relatively benign relationship. The conflict is having a damaging effect on both countries. The dispute also compromises China’s claim to be the new champion of the open, rules-based multilateral order, at a time when the United States is retreating from the role.
In December 2018, Canadian police arrested Huawei executive Meng Wanzhou in Vancouver at the request of the United States. The United States is seeking her extradition to answer questions over alleged violations of sanctions against Iran. China, for its part, has called the move politically motivated. They view the arrest as baseless discrimination against China’s businesses and citizens.
During her public extradition hearing in Canada, expected to last another year, she has had access to her legal team, lives in her Vancouver home and travels freely in the city during the day. Her treatment supports Canada’s claim that it is following the rule of law, even if some accuse the Trump administration of taking advantage of Canada. While the US request came through in the midst of the US–China trade war and at the height of security concerns surrounding Beijing’s influence over Huawei, Canada has been steadfast in following proper and transparent legal procedure.
China’s arrest of two expatriate Canadians soon after Meng’s arrest has not involved the same transparency or treatment. Besides the legal process and reasons for detention being shrouded in mystery, they have also had difficulty accessing legal advice, contacting family members and the reading glasses of one were seized. China also re-tried and imposed the death penalty on a Canadian it had previously sentenced to 15 years imprisonment for drug smuggling. China then arrested another Canadian on drug charges, along with 15 other foreigners.
At the same time as demanding Meng’s release, China has initiated escalating, discriminatory trade sanctions against Canadian agricultural products. And Chinese fighters recently ‘buzzed’ Canadian warships in international waters in the East China Sea. While China has not overtly linked these actions to the Meng case, the timing and language suggests strong connection.
Despite mounting pressure from Canada’s opposition Conservative party, Prime Minister Justin Trudeau’s Liberal government has achieved little in resolving the dispute. With the elephant standing in the room, he also sent the Minister for Small Business to China to foster trade. Trudeau managed to enlist the support of partner countries over the dispute, securing backing by March from the United States, the European Union and NATO. The G7 foreign ministers meeting in France on 6 April publicly declared, ‘we are deeply concerned by recent arbitrary actions of Chinese authorities, including the arbitrary detention and sentencing of foreign citizens’.
Trudeau then had US President Donald Trump intervene with Chinese President Xi Jinping on Canada’s behalf at the June Osaka G20 summit. Trudeau also persuaded Xi to resume bilateral discussions over the issue. The dispute will likely continue and even deepen if further steps and dialogue on constructing a path forward are not developed.
China risks losing Canada as a serious and prospective free trade partner and Huawei customer. Before December 2018, 55 per cent of Canadians favoured concluding a bilateral free trade deal with China. But in February 2019, a University of British Columbia poll showed that only 22 per cent had a favourable image of China, down 14 points from the previous year. By July, a Research Co. poll showed that more than two-thirds of Canadians rejected closer ties with China. Almost three-quarters supported the Trudeau government’s management of the Meng case and wanted Huawei banned from Canada’s 5G networks. A long road now lies ahead in the recovery of relations and the improvement of perceptions between the two.
The Canadian government has for now delayed its decision on whether to allow Huawei to supply 5G network equipment in Canada until after the general election this October. But Canada will likely join its other security partners who have denied Huawei 5G network access — the United States, Japan, Australia and New Zealand. These countries are pressing for unanimity among intelligence partners in general and from the United Kingdom in particular — the other remaining Five Eyes partner. Should they…
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
- Is journalist Vicky Xu preparing to return to China?
- Guide for Foreign Residents: Obtaining a Certificate of No Criminal Record in China
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