China
Organising the post-COVID-19 world and technology
Authors: Heather Smith, Canberra and Allan Gyngell, ANU
In 1941, even before the Japanese attack on Pearl Harbour, Paul Hasluck, then a public servant and later an Australian Liberal Party foreign minister, recommended the establishment in the Australian Department of External Affairs of a Post-Hostilities Section.
That section helped coordinate Australia’s participation in the series of meetings from which emerged the multilateral institutions that have shaped the contemporary world.
These included the United Nations (UN), its specialist agencies like the World Health Organization (WHO) and the Food and Agriculture Organization (FAO) and international financial bodies such as the International Monetary Fund (IMF), the World Bank and the predecessor to the World Trade Organization (WTO).
Underpinned by American ideals and power, these institutions helped rebuild the world after World War II, manage Cold War strategic competition and facilitate a period of unprecedented global economic growth.
But even before the coronavirus struck, there were signs that the system was in trouble. Reaching global consensus has become increasingly difficult. Even the WHO has become a battleground for great power competition. From the Asian Financial Crisis of the late 1990s, China and other emerging economies wanted a greater stake in the system.
The pandemic has strengthened the reassertion of national sovereignty seen in the Trump administration’s America First policies and Brexit. Scott Morrison framed Australia’s response to the coronavirus as ‘protecting Australia’s national sovereignty’.
But in the 21st century, sovereignty is not enough.
Australia’s economic interests depend on a rules-based system that provides certainty as it works to preserve security, promote prosperity and deal with global challenges like climate change and pandemics.
As parts of the post-war order atrophied, Australian governments have helped shore up the mechanisms for international cooperation.
Australia’s Rudd government played an important role in establishing the G20 Leaders process; the Abbott government as G20 president focussed on global economic reform and resilience; the Turnbull government rescued the Trans-Pacific Partnership trade agreement; and the Morrison government has supported measures to keep the WTO’s rules-based system operating after the United States vetoed new appointments to the Appellate Body.
Australia needs to move towards a 21st century multilateralism, balancing its dependence on open markets with the rebuilding of global resilience in the wake of the socio-economic disruption caused by COVID-19.
Multilateral cooperation significantly takes place outside formal inter-governmental decision-making, in government agencies and research institutions. These contacts are important for countries like Australia, which is a price taker for both global capital and technology. As global technological competition and decoupling intensify, it is important for government to harness this informal multilateralism.
Still, international financial institutions are arguably the best performing elements of the multilateral system. Australia has credibility on IMF reform having pushed for two decades for emerging economies to have greater voting power in line with their economic weight. China has responsibly discharged the obligations that come with this greater role.
A greater reliance on trusted partnerships will likely need to underpin approaches to reform and restructuring. Institutions like the FAO and the WHO will require more attention given their central roles in dealing with problems that require global coordination. The WTO may need the straitjacket of consensus removed to avoid its fading relevance — 30 years without an effective global trade deal is a bad report card by any reckoning.
The glaring gap in global governance is the absence of rules governing the fourth industrial revolution — the digital economy. Governments have struggled to balance the benefits of technology with social licence and national security. Norms covering data, privacy and the regulation of digital platforms are already split between the European Union, the United States and China.
The chances of a new multilateral institution emerging — say a World Technology Organisation — that sets the rules for technology, similar to the Bretton Woods system, seems unlikely.
Australia should work with regional partners to agree on norms and standards that ensure openness to supply chains, as APEC has done for trade and investment…
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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