China
Myanmar’s unsteady exit from China’s orbit
Author: Thomas Bernhardt, Vienna
When Myanmar’s military regime began opening up the country politically and economically in 2010, one motive was to alleviate the country’s overreliance on China. Ten years down the road, in the context of China’s Belt and Road Initiative (BRI) and the threat of new Western sanctions triggered by human rights violations against the Muslim Rohingya minority, China’s influence appears hardly diminished.
When the quasi-civilian government under former president Thein Sein took over from the military junta in 2011, it launched a plethora of reforms to liberalise Myanmar’s economy and its political system. Driven partly by the desire of rapprochement with the West, the new administration introduced free elections, restored civic and political rights and released political prisoners. In response, Western nations started to re-engage with Myanmar — lifting sanctions, writing off debt and disbursing development aid again.
On the economic front, signature reforms included the Foreign Investment Law of 2012, which facilitated the flow of foreign capital into Myanmar. The state’s monopoly in the telecom sector was ended and licenses issued to three foreign providers. In 2014, the Special Economic Zone (SEZ) Law was introduced to spearhead business environment improvements. The government also liberalised international trade by lifting state controls, easing licensing requirements and opening previously closed sectors to private sector trading.
The economic reform momentum slowed down when a new government led by the former opposition party, the National League for Democracy (NLD), took over in 2016. Under the leadership of State Counsellor Aung San Suu Kyi, its initial focus was on peace, national reconciliation and cementing the democratic transition. In October 2016, the humanitarian crisis in Rakhine State pushed economic policy-making further to the back seat, disenchanting the business community.
That same month, though, the parliament enacted the revamped Myanmar Investment Law, creating a level playing field between domestic and foreign investors. The Myanmar Companies Law followed in 2018. It allows foreigners to have stakes of up to 35 per cent in domestic enterprises without prior approval from the regulator while maintaining local status.
More recently, the insurance industry opened up and the wholesale, retail and banking sectors were further liberalised. In 2019, four new laws were passed to improve protection of intellectual property rights, addressing a key concern of Western investors.
Many of these reforms were partly driven by the desire to lure Western companies into investing in or doing business with Myanmar enterprises. Step by step, Myanmar was re-integrated into the international community and global economy. Its external trade took off and foreign capital started to flow in. Between 2010 and 2018, cross-border trade expanded by almost 20 per cent a year. Exports to the West grew even faster — by around 40 per cent annually to the European Union and more than 80 per cent annually to the United States.
But after the atrocities against the Rohingya became public, Western politicians turned sceptical. Both the European Union and the United States imposed sanctions against Myanmar military and police commanders and threatened to withdraw preferential market access. Germany suspended its development cooperation with Myanmar.
Yet the mood changed more slowly among Western businesses. Myanmar exports to the West continued to increase after 2016, although export growth to the United States decelerated. Western foreign direct investment (FDI) also kept flowing in, albeit in smaller amounts.
Despite this rapid trade surge, EU and US shares in Myanmar’s total merchandise exports — 17 and 3.2 per cent, respectively — pale in comparison to China’s, which accounts for around 30 per cent. China also supplies a third of Myanmar’s imports, compared to merely 4 per cent for the European Union and 2 per cent for the United States.
Myanmar’s tourism sector — which contributes 7 per cent to GDP — increasingly relies on Chinese visitors. Up until the outbreak of COVID-19, arrivals from China were booming thanks to relaxed visa rules. In 2018, as the number of European and North American tourists declined, Chinese travellers were the largest group to visit the country.
Moreover, over the last decade, close to a third of FDI into Myanmar came from China compared to only 6.6 per cent from the European Union and 0.63 per cent from the United States. Since…
China
China Unveils Plan to Upgrade Industrial Equipment
China unveiled a comprehensive action plan for upgrading industrial equipment, with a focus on driving technological innovation and economic growth. The plan, released on April 9, 2024, aims to enhance competitiveness and sustainability within the manufacturing sector through extensive investment and regulatory support.
China announced an ambitious action plan for industrial equipment upgrading, which aims to drive technological innovation and economic growth through extensive investment and regulatory support.
On April 9, 2024, China’s Ministry of Industry and Information Technology (MIIT) and six other departments jointly released a notice introducing the Implementation Plan for Promoting Equipment Renewal in the Industrial Sector (hereafter referred to as the “action plan”).
Finalized earlier on March 23, 2024, this comprehensive action plan addresses critical issues related to technological innovation and economic development. It reflects China’s proactive stance in enhancing competitiveness and sustainability within its manufacturing sector. The initiative underscores the recognition of industrial equipment upgrading as a top policy priority.
The scope of China’s action plan to upgrade industrial equipment in manufacturing, is extensive, covering various aspects such as:
In line with China’s ambitious goals for industrial modernization and sustainable development, the action plan outlines several key objectives aimed at driving substantial advancements in the industrial sector by 2027.
These objectives encompass a wide range of areas, from increasing investment to enhancing digitalization and promoting innovation, including:
The objectives and key actions proposed in the action plan are summarized below.
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
China deepens engagement with new Indonesian president as top diplomat visits Jakarta
China’s top diplomat met the outgoing Indonesian president and his successor in Jakarta on Thursday, as Beijing deepened its engagement with future leader Prabowo Subianto, amid a competition for regional influence with the United States.
The meeting with Chinese Foreign Minister Wang Yi was part of a joint commitment to advance the partnership between the two countries, said Prabowo, who visited Beijing in early April after his landslide win in the February general election.
“It is a great honor for me to welcome him [Wang] today. Thank you for the kind reception I received in Beijing a few weeks ago,” Prabowo said, according to an Indonesian defense ministry statement.
Chinese President Xi Jinping had invited Prabowo to visit, and the latter accepting the invitation raised eyebrows in Indonesia because no president-elect had made a foreign visit such as this one without being sworn in. China is Indonesia’s largest trading partner.
Wang, too, mentioned Prabowo’s Beijing trip, according to the same statement.
“We really appreciate and welcome Defense Minister Prabowo’s visit to China,” he said.
“We are committed to continuing to increase bilateral cooperation with Indonesia, both in the defense sector and other fields such as economic, social and cultural.”
Wang is scheduled to go to East Nusa Tenggara province on Friday to attend the China-Indonesia High-Level Dialogue Cooperation Mechanism, a process to support more effective bilateral cooperation. His Jakarta stop was the first of a six-day tour that also includes Cambodia and Papua New Guinea.
Prabowo and Wang discussed cooperation in the defense industry and sector, with potential measures such as educational and training collaboration, as well as joint exercises, said Brig. Gen. Edwin Adrian Sumantha, spokesman at the Indonesian defense ministry.
In fact, the ministry statement said that “China is Indonesia’s close partner and has had close bilateral relations, especially in the defense sector, for a long time.”
Of course, China has also invested billions of U.S. dollars in infrastructure projects in Indonesia, including as part of Beijing’s Belt and Road Initiative – the Jakarta-Bandung high-speed train, which began commercial operations in October 2023, is one such BRI project.
The two countries have drawn closer during outgoing President Joko “Jokowi” Widodo’s two terms, and Beijing would like that to continue as the U.S. tries to catch up with China’s gargantuan influence in Southeast Asia, analysts have said.
Indonesia, China call for ceasefire in Gaza
Both Indonesia and China shared the same position on Israel’s devastating attacks on Gaza, said Wang’s Indonesian counterpart, Retno Marsudi.
Israel’s air and ground strikes have killed more than 33,000 Palestinians following the Oct. 7 attack on the Jewish state by Palestinian militant group Hamas, which killed around 1,100 Israelis.
“We … have the same view regarding the importance of a ceasefire in Gaza and resolving the Palestinian problem fairly through two state solutions,” Retno told reporters in a joint press conference after meeting with Wang.
“Indonesia will support full Palestinian membership in the U.N. Middle East stability will not be realized without resolving the Palestinian issue.”
For his part, Wang slammed Washington for repeatedly vetoing resolutions calling for Israel to end the attacks on the Palestinian territory it occupies.
“The conflict in Gaza has lasted for half a year and caused a rare humanitarian tragedy in the 21st century,” Wang told the media at the same press conference, according to the Associated Press.
“The United Nations Security Council responded to the call of the international community and continued to review the resolution draft on the cease-fire in Gaza, but it was repeatedly vetoed by the United States.”
The conflict in the Middle East offered a strategic opportunity for China to further expand its influence in Southeast Asia, said Muhamad Arif, a lecturer in international relations at the University of Indonesia.
“China is trying to strengthen its position as a key player in the region,” Arief told BenarNews.
China could present an alternative approach to the conflict in Gaza, he said, which may find approval in Southeast Asia’s largest country, Indonesia, and other Mulism-majority states in the region, such as Malaysia and Brunei.
BenarNews is an RFA-affiliated online news organization.
Read the rest of this article here >>> China deepens engagement with new Indonesian president as top diplomat visits Jakarta
China
New Publication: A Guide for Foreign Investors on Navigating China’s New Company Law
The sixth revision of China’s Company Law is the most extensive amendment in history, impacting foreign invested enterprises with stricter rules on capital injection and corporate governance. Most FIEs must align with the New Company Law by July 1, 2024, with a deadline of December 31, 2024 for adjustments. Contact Dezan Shira & Associates for assistance.
The sixth revision of China’s Company Law represents the most extensive amendment in its history. From stricter capital injection rules to enhanced corporate governance, the changes introduced in the New Company Law have far-reaching implications for businesses, including foreign invested enterprises (FIEs) operating in or entering the China market.
Since January 1, 2020, the Company Law has governed both wholly foreign-owned enterprises (WFOEs) and joint ventures (JVs), following the enactment of the Foreign Investment Law (FIL). Most FIEs must align with the provisions of the New Company Law from July 1, 2024, while those established before January 1, 2020 have bit more time for adjustments due to the five-year grace period provided by the FIL. The final deadline for their alignment is December 31, 2024.
In this publication, we guide foreign investors through the implications of the New Company Law for existing and new FIEs and relevant stakeholders. We begin with an overview of the revision’s background and objectives, followed by a summary of key changes. Our in-depth analysis, from a foreign stakeholder perspective, illuminates the practical implications. Lastly, we explore tax impacts alongside the revisions, demonstrating how the New Company Law may shape future business transactions and arrangements.
If you or your company require assistance with Company Law adjustments in China, please do not hesitate to contact Dezan Shira & Associates. For more information, feel free to reach us via email at china@dezshira.com.
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.
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