China
Containing the virus and restarting the Chinese economy
Author: Cai Fang, CASS
In February 2020, World Health Organization Director-General Tedros Adhanom Ghebreyesus urged countries around the world to use the window of opportunity provided by China’s quick action, on realising the nature of the problem, to ramp up preparedness for the arrival of COVID-19. Many sadly missed the opportunity and the disastrous pandemic gathered force As Henry Kissinger points out in his recent Wall Street Journal essay, to argue now about the past only makes it harder to do what has to be done. Moving forward, there are lessons from China’s response COVID-19 that can still be learned.
The first key step for containing the spread of COVID-19 requires locking down the epicentres of the virus — localities where the density of infected persons is much higher than elsewhere. Quarantining those suspected of contracting COVID-19 or as much of that population as is possible is an inevitability and needs to be the first rule if the pandemic is to be contained.
The Chinese government imposed a lockdown in Wuhan on 23 January 2020 when confirmed cases of the virus were all still confined to China. After the lockdown, the epidemiological curve peaked within 20 days and then declined. Beginning from day one of the lockdown, it took China roughly 40 days to pass through the entirety of the reverse V-shaped epidemiological curve.
China’s strategy during this period came at the expense of most commercial and social activities, with the introduction of lockdowns, social distancing measures and the shutdown of almost all economic activities. The government has since begun to encourage the resumption of economic activities, citing the curve’s entering its thin tail in early March as justification.
Second, with the reignition of the Chinese economy, policymakers are encountering a series of difficulties primarily caused by the trade-offs made between containing the virus and rebooting the economy. There are credible reasons to hesitate before fully resuming economic activity. Sporadic cases still occur around the nation, meaning that local governments and businesses still tend to err on the side of caution. As the pandemic continues to spread worldwide, the risk of COVID-19 cases flowing back into China is also on the rise. Containment measures implemented by other countries have cut off supply chains with China, so now Chinese producers are losing a lot of buyers.
Third, although economic recovery may come sooner for some countries and later for others, the recovery of any of the world’s major economies still relies on others recovering too. While the Chinese economy is poised to start its economic recovery, the rest of the world is still climbing the global epidemiological curve, the peak of which will be much higher than it was in China. The worldwide shutdown of businesses, manufacturing, sales and trade will all continue to be a major obstacle to China’s making a full economic recovery.
As Confucius said, one should not impose on others what you yourself do not desire. Every country has its own epidemiological curve and forms part of the global epidemiological curve. Most countries will experience a similar path of recovery to the one experienced by China. The experience of recovery in China indicates that cooperation — not obstruction — and connection — not decoupling — are the only ways to ultimately defeat the pandemic.
Fourth, there are also second-mover advantages for those countries that come to restart their economies further along the global epidemiological curve. For one thing, these economies have the opportunity to take advantage of the spill-over effects from the recoveries of frontrunners. As China restarts its growth engine, it will contribute to other countries by supplying urgently needed medical equipment and services. Its recovery will help to maintain global supply chains, safeguard economic globalisation and generate demand for the importation of consumer goods, materials and investment equipment from other countries.
The most important second-mover advantage for recovering economies is the ability to modify the Chinese model of simultaneously trying to contain the virus and restore the economy at a much faster pace. Countries should test as many people as possible so that populations can be divided into two groups — the secured and the contagious risky. While the secured group can return to business, the risky group needs to remain in quarantine. As testing increases, a two-track system like this will see the secured group expand and the group at…
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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