China
Integrating Australia’s security and economic policy cultures
Author: Brendan Sargeant, ANU
The debate in Australia about China is intensifying and some of the optimism of a decade ago has dissipated. This is in part a result of Chinese actions, particularly concerning security, but also a result of shifts in US trade and economic policy towards China. Despite plenty of warning that China would become a major strategic and policy challenge, Australia is struggling to develop a framework that integrates different strands of policy to guide decision-making related to China in coming decades.
Policy is built on ideas about the world and how it works. A feature of the Australian policy environment is the separation of policy into different domains. In particular, there is a strong separation between economic policy and security policy.
One example is Australian policy towards the United States. Both Coalition and Labor governments have avoided linking the security and economic relationships, particularly in the areas of trade and investment. They have argued that the security relationship should be understood and managed separately from the trade relationship and that neither should be made hostage to the other. With China policy, both governments have also tried to separate security policy from economic policy.
The changing strategic order makes this approach unsustainable, not least because China generally does not operate this way. Much of the debate on China policy is concerned with trying to strike the right balance between Australia’s economic and security interests. Almost every issue concerning China brings these competing imperatives into play. This has been amplified by major shifts in US policy towards China and an increased willingness by the United States to use economic levers to challenge China.
In consequence, the coming decades are likely to witness increasing economic nationalism, greater coercion using economic instruments and reduced confidence in institutions that have underpinned the rules-based international order. In this environment there is a need to develop a strategic policy framework that integrates economics and security.
This is not only an intellectual challenge. It is also an institutional one. The structure of policymaking in Australia does not encourage a conceptual framework that integrates these imperatives. There is little focus on economic considerations from Defence and the Treasury’s contribution to the security debate is negligible. Coordination from the centre is weak, even if the Department of Foreign Affairs and Trade has worked to bridge the divide. The 2017 Foreign Policy White Paper introduced some different ways of thinking about Australia’s strategic environment and the policy instruments available, but this has not yet resulted in significant change in the policymaking culture.
Perhaps the challenge runs deeper. Security and economic policy cultures embody profoundly different ways of thinking about the world. They look at the same environment and see different patterns and forces at play. They may not necessarily agree on what the strategic problems are or their significance and order of importance.
The exercise of power through the use of economic instruments is quite different from the exercise of power using coercive instruments of the state, such as armed forces. Decisions in either sphere will engage different interest groups. Time as both a strategic reality and a resource is viewed differently. Both policy cultures tend towards totalising frameworks, with the result that hubris can lead them to believe that they have the complete solution to almost all problems.
The tools of both economic and security policy are a means to an end. States will use the instruments available to them to seek advantage and will integrate these different instruments to do so — subject to some constraints. China exercises coercive power through the use of economic levers, as well as more traditional means of coercion such as its claims to disputed territories and militarisation in the South China Sea. The United States is using tariff policy to achieve strategic ends in its relations with countries around the world, particularly China.
Australia was able to sustain the separation of these domains because the rules-based order allowed it to. Policy development took place in a strategic order that was stable where either the rules governing that order were generally agreed upon or guaranteed by allied military power. The rules-based order allowed the establishment of institutions through which economic policy could be conducted….
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
- China Unveils Plan to Upgrade Industrial Equipment
