China
Containing China through the South Korea–US alliance
Author: Anthony V Rinna, Sino–NK
Washington appears to be using the South Korea–US alliance to advance its goal of containing China as part of the ‘free and open Indo-Pacific’ strategy. But US attempts to marshal South Korea in strategic competition with Beijing will ultimately run the risk of alienating its partner, even as both Washington and Seoul insist that the alliance remains ‘ironclad’.
This move comes at a time when the South Korea–US alliance is experiencing a level of strain unseen for nearly 20 years. The strain is coming from the White House’s exorbitant financial demands for the maintenance of United States Forces Korea as well as US pressure on South Korea not to withdraw from the GSOMIA intelligence-sharing pact with Japan.
The official purpose of the South Korea–US defence partnership has for decades been to deter a conventional attack on South Korea from North Korea, while pragmatically also preventing South Korea from undertaking the forceful unification of the Korean Peninsula under Seoul’s authority.
Yet in recent times the rise of China has given a new sense of purpose to the South Korea–US alliance. Recent polls from both the Chicago Council on Global Affairs and the Seoul-based Asan Institute indicate that support for the alliance remains strong — in part because the publics of both South Korea and the United States view it as a tool to counter China.
Proposals have also emerged aimed at modifying the alliance to have South Korea participate in contingencies involving the United States outside the Korean Peninsula, such as in the South China Sea. There is an interest in expanding the scope of the alliance from South Korea’s historically limited and ad hoc support of American military undertakings in other regions of the world to a more permanent role.
But South Korea will face the brunt of any deliberate repurposing of the alliance to position the United States against China. A rough parallel to this can be seen in the evolution of NATO’s purpose after the Cold War.
US policymakers in the 1990s believed that NATO expansion was best for European security, even as it went against promises Washington had previously made to Moscow. Russia’s aggressive actions against Georgia and Ukraine — and a looming threat in other neighbouring states — have been a direct response to an otherwise unprovoked geopolitical encirclement of Russia by the West.
The question policymakers in Seoul need to be asking is whether or not the maintenance of the current security arrangement with the United States is worth the risk of being entangled in Washington’s profound scepticism toward China’s rise. Likewise, Washington must consider the possibility of alienating South Korea by asking Seoul to extend the mandate of their alliance to a wider scope of balancing against China.
Conventional wisdom predicts that South Korea will eventually have to choose outright political alignment with either China or the United States. Still, South Korea is showing a propensity for taking its own stance when it comes to relations with China outside the framework of great power tensions.
Following the breakdown of China–South Korea relations in 2015–2016 due to the controversy over the US deployment of the Terminal High Altitude Area Defense (THAAD) missile defence system, South Korean President Moon Jae-in embarked on a ‘reset’ of relations with Beijing. This reset helped smooth the way for the 2019 China–South Korea strategic dialogue — the first such discussion between China and South Korea since 2014.
A military hotline between Beijing and Seoul that was opened in 2015 was also put to good use in October 2019 when the Chinese air force notified South Korea that its aircraft were approaching South Korea’s Air Defense Identification Zone.
While China’s retaliatory economic measures against South Korea in 2017 did not reverse Seoul’s decision to deploy THAAD, they did show that the United States will not necessarily come to the aid of an ally bearing the brunt of economic warfare. It seems this was the reason behind South Korea’s decision to issue the so-called ‘three noes’ to China regarding Seoul’s alignment with the United States — no additional THAAD deployment, no participation in US missile defence and no US-Japan-ROK trilateral military alliance.
Likewise, despite a shared threat from North Korea to Seoul, Tokyo and Washington, South Korea has placed what it considers to be its own national interest ahead of security multilateralism. South Korea’s decision to…
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
Is journalist Vicky Xu preparing to return to China?
Chinese social media influencers have recently claimed that prominent Chinese-born Australian journalist Vicky Xu had posted a message saying she planned to return to China.
There is no evidence for this. The source did not provide evidence to support the claim, and Xu herself later confirmed to AFCL that she has no such plans.
Currently working as an analyst at the Australian Strategic Policy Institute, or ASPI, Xu has previously written for both the Australian Broadcasting Corporation, or ABC, and The New York Times.
A Chinese language netizen on X initially claimed on March 31 that the changing geopolitical relations between Sydney and Beijing had caused Xu to become an expendable asset and that she had posted a message expressing a strong desire to return to China. An illegible, blurred photo of the supposed message accompanied the post.
This claim was retweeted by a widely followed influencer on the popular Chinese social media site Weibo one day later, who additionally commented that Xu was a “traitor” who had been abandoned by Australian media.
Following the publication of an ASPI article in 2021 which exposed forced labor conditions in Xinjiang co-authored by Xu, the journalist was labeled “morally bankrupt” and “anti-China” by the Chinese state owned media outlet Global Times and subjected to an influx of threatening messages and digital abuse, eventually forcing her to temporarily close several of her social media accounts.
AFCL found that neither Xu’s active X nor LinkedIn account has any mention of her supposed return to China, and received the following response from Xu herself about the rumor:
“I can confirm that I don’t have plans to go back to China. I think if I do go back I’ll most definitely be detained or imprisoned – so the only career I’ll be having is probably going to be prison labor or something like that, which wouldn’t be ideal.”
Neither a keyword search nor reverse image search on the photo attached to the original X post turned up any text from Xu supporting the netizens’ claims.
Translated by Shen Ke. Edited by Shen Ke and Malcolm Foster.
Asia Fact Check Lab (AFCL) was established to counter disinformation in today’s complex media environment. We publish fact-checks, media-watches and in-depth reports that aim to sharpen and deepen our readers’ understanding of current affairs and public issues. If you like our content, you can also follow us on Facebook, Instagram and X.
Read the rest of this article here >>> Is journalist Vicky Xu preparing to return to China?
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