China
China’s complicated relationship with Central Asia
Author: Raffaello Pantucci, RUSI
The closure of a mine in Kyrgyzstan, protests on the streets in Kazakhstan. The grand guignol of menacing Chinese investment into Central Asia appears to be rearing its head in public discourse. Both fearful and grateful, the region is a paradox for China at the beginning of its Belt and Road. Hardly a week goes by without a senior Chinese visitor appearing somewhere in Central Asia, revealing a long-term influence game that Beijing is winning.
But the situation in Central Asia goes beyond foreign investment. People want to connect with China. In Ashgabat, queues of eager young Turkmen wait outside the Chinese Embassy seeking visas. For the young in Dushanbe, learning Mandarin is in vogue. In Uzbekistan, Chinese investment is the talk of the town, as the city celebrates the Chinese autumn festival and the China Expo showcases Uzbekistan as key to China’s Central Asia vision. And while Kazakhstan and Kyrgyzstan may have protests, Kazakh leader Kassym-Jomart Tokayev has just visited Beijing talking of strategic partnerships and Kyrgyzstan awarded Chinese President Xi Jinping their highest national award when he visited earlier in the year.
We have seen anti-Chinese protests in Kazakhstan and Kyrgyzstan before. Back in 2009 and 2016 there were large-scale protests focused on reports that the government was going to allow China to rent land for agricultural purposes. In 2011, fighting broke out between oil workers and the Kazakh state in Zhanaozen leading to a number of deaths — Chinese company CITIC was among the investors and received some blame for the bad pay which appeared to underpin the protests. Smaller scale brawls between Kazakh and Chinese workers are frequent. As seen currently in Kazakhstan, protests are usually linked to bad working conditions, clashes between workers or environmental damage. There is also usually a strong undertone of local politics.
Central Asians have watched as Chinese money, workers and influence have shaped the regional economic geography with the open support of local authorities. This is a lever that political opponents can sometimes use. Building on an elemental sort of racism towards Han Chinese that can often be found in the region, the protests can actually often be complaints aimed at local authorities. People are often protesting against their own government, with China becoming a target by proxy. This confluence was most clearly on display recently in Kazakhstan where protestors’ public anger was targeted at the Chinese, but the protests were clearly instigated by governmental political opponents.
In Kyrgyzstan, paranoia towards foreign mining investors has repeatedly led to locals scaring away foreign investment. The massive Kumtor mine in Kyrgyzstan has faced environmental issues and other problems for its Canadian owner. Chinese projects are smaller, but beset with similar problems. Stories of pollution, bad pay and local corruption blend with a general fear of Chinese investment which is sometimes stirred up by local potentates seeking to extract more money or score points against political rivals.
And there have been some dramatic failures by Chinese firms in the region. In January 2018, Bishkek lost power from its main power station after refurbishment by Chinese firm TBEA failed at exactly the wrong moment. There are questions surrounding corrupt and pollutive practices of Chinese companies working in the region. Chinese firms tend to lower their standards in the region, ignoring requirements they usually adhere to back home.
What is less visible are the expressions of sympathy and concern about the plight of Uighurs in Xinjiang. US State Secretary Pompeo may have heard polite noises during his comments to Central Asian foreign ministers in New York but there is little public sympathy for their plight. Concerns tend to focus on co-ethnics and family members caught up in China’s camps system and fears that their governments might seek to purchase similar technology to use against them. When people do express fear about how events in Xinjiang might impact them, it is at a very personal level focussed on their own personal safety, rather than the broader cause of abuse of Muslims in China.
But very little of this matters to Beijing. Central Asian leaders remain eager for Chinese investment. The once closed Uzbekistan is the most obvious example of this, where the surge of Chinese investment is openly welcomed. Beijing is increasingly holding large portions of debt and becoming the main trading partner across the…
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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- Guide for Foreign Residents: Obtaining a Certificate of No Criminal Record in China
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