China
The Hong Kong crisis
Author: Editorial Board, ANU
Street protests that have gripped Hong Kong for over four months are becoming more violent. Some protestors have begun attacking police and police are firing live rounds at protestors. Last week a protestor was shot and a policeman stabbed in the neck. As tensions mount between the public and police, Hong Kong’s authorities are under increasing pressure to find a solution. If they fail, Beijing has threatened to intervene — a move that could bring to an end what remains of the ‘one country, two systems’ model that has preserved Hong Kong’s autonomy since the former British colony’s return to Chinese sovereignty in 1997.
The street protests began in June in response to an extradition bill proposed by Hong Kong’s executive. Under the terms of the bill, Beijing could request the extradition of Hong Kong residents accused of a crime in the People’s Republic of China. The extradition bill was widely seen as an attack on Hong Kong’s autonomy and freedom because it would enable China’s authoritarian government to get their hands not only on wanted felons, but theoretically on anyone who displeased it, including dissidents. It was also seen as confirmation that Hong Kong’s government cared more about its political masters in Beijing than the citizens of Hong Kong.
With Beijing’s backing, Hong Kong Chief Executive Carrie Lam at first stood firm, but eventually relented as protests swelled to hundreds of thousands of people and it became clear that opposition to the bill was widespread and deeply felt. Ms Lam agreed to shelve the bill. But the protest movement raged on, demanding that the bill be completely withdrawn, and that an independent inquiry be held into police responses to the protests. In July protesters stormed parliament. Ms Lam ultimately agreed to withdraw the extradition bill, but the gesture appeared to come too late to quell the protests, which soon gave voice to other grievances and demands.
As Tim Summers notes in one of two lead articles this week, Hong Kong’s protest movement ‘has ventured far beyond the original catalyst, the government’s extradition bill,’ to reflect ‘deep dislocations in Hong Kong’ including ‘identity politics and socio-economic problems’ that have been simmering since the territory’s return to Chinese sovereignty two decades ago. Summers notes protesters’ demands for universal suffrage and political reform (Hong Kong’s convoluted electoral system ensures that only Beijing-backed candidates can be selected as chief executive), but is sceptical about the prospects for such reform given that Beijing’s approval would be needed. Summers argues that politicians should instead turn their attention to ‘daily gripes’ about education, healthcare, public transport and housing affordability.
In her annual policy address to the Legislative Council (LegCo) on 16 October, Ms Lam attempted to do just that. In the address, which is similar to the State of the Union address delivered annually by the US President to Congress, Ms Lam sought to focus on economic grievances, proposing to reclaim more land and to build more public housing. But Ms Lam was heckled by councillors before she got to the podium. Someone played a recording of protestors’ screams as they were hit with tear gas by police. Outside, protesters gathered to demand her resignation. The reception was so hostile that, after two failed attempts to speak directly to councillors, Ms Lam was forced to retreat to a secure location to give her address via video.
Before it was delivered, the address was widely seen as a critical test for Ms Lam and her ability to manage the upswell of discontent. What happens next is unclear. More concessions are unlikely. The police have been given new powers and, since 4 October, protestors are prohibited from wearing masks which, along with umbrellas, had become a potent symbol of the protest movement.
In our other lead article this week, Ben Hillman writes that public opinion on the Chinese Mainland is strongly in favour of direct intervention in Hong Kong — something Beijing has threatened if Hong Kong’s political and business elite are unable to find a solution to the protests which are now in their 20th week. Hillman says that China’s state-run media have portrayed the protests as a pro-Hong Kong independence movement led by ‘criminals and terrorists’ and supported by ‘foreign black hands’. Hillman says that one-sided media coverage has left the mainstream Chinese public unaware of Hong Kongers’…
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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