China
India’s China choice
Author: Editorial Board, ANU
The border clash between China and India on 15 June in the harsh Himalayan terrain of the Galwan Valley resulted in deaths, including at least 20 Indian soldiers, and casualties on both sides. Clashes along the disputed border had become more common in the last few years but this was the most serious conflict since 1962.
Leaders on both sides have avoided escalation but there is little ballast in the relationship that gives confidence in calming tensions. The Himalayas that separate the two countries are a big buffer, with the terrain making it difficult to drive tanks over or assemble large forces, as Hugh White reminds us. But that won’t stop the relationship from deteriorating further.
This conflict may mark a critical turning point in Sino-Indian relations. It may further drive the world’s two most populous countries apart or it could be a catalyst for a more constructive future.
With both countries dealing with the health and economic crises from COVID-19, the climate is ripe for stoking nationalism and raising the tensions. Prime Minister Modi has walked India back from the brink but is still under huge pressure to retaliate somehow.
For India to achieve the vision of its rightful place in a multipolar world, Delhi will have to find a way to accommodate China and this border clash may yet force the action that’s needed.
The presumption of hostility towards China casts the Chinese economy as a massive threat to India’s. It is five times the size of the Indian economy and as India’s trade deficit continues to grow, much of it appears to derive from China’s competitive power. The real cause, of course, is India’s appetite for foreign savings to finance growth. But trade deficits, including that with China, have become in the new Indian nationalist conception — articulated after Modi and his Bharatiya Janata Party’s electoral victory in May that brought in a rare absolute majority — the central reason for the shift back to a ‘self-reliant’ India after three decades of gradual opening up.
The Indian economy is almost the same size as the 10 ASEAN economies combined and, although the Southeast Asian grouping is far from acting in unison, their economies have embraced and benefited from China’s rise. India appears cowed by it. Yet to be internationally competitive, Indian firms need to compete, not to be sheltered from embracing integration with the international economy including that of China.
In this week’s lead essay, Suman Bery and Alicia Garcia-Herrero argue that ‘India has the scale and sophistication to recalibrate its economic relationship with China such that deeper interdependence reduces, rather than increases, New Delhi’s economic vulnerability’.
The path to power, prosperity and security is not economic retreat and ‘economic retaliation’ that costs the Indian people and makes them poorer and India smaller. It requires proactive engagement, alongside Australia, Japan, Vietnam and the rest of Southeast Asia with China, not isolation from it.
The Regional Comprehensive Economic Partnership (RCEP) agreement is politically radioactive in India, just as the Trans-Pacific Partnership (TPP) was for many countries in the East Asia and Pacific, and ultimately for its central proponent, the United States itself. Many in India believe that RCEP is China-led and signing up to it will decimate Indian industry. But RCEP is an Indonesian and ASEAN-led agreement that was created to manage Southeast Asia’s relations with their large neighbouring economic powers.
The conception of RCEP as a China agenda is a totally incorrect perception of its origins and strategic purpose — RCEP is and was from the beginning an ASEAN agenda for dealing with China and the regional economic powers in a multilateral setting.
It was political pressure, including riots, that forced Modi to walk away from the deal in Bangkok last November at the 11th hour after his negotiators had done pretty much all the hard work and the agreement was there for the taking.
Retreat from RCEP due to fear of the Chinese economy is a missed opportunity. Failure to engage in RCEP foregoes the opportunity to leverage regional weight in economic dealings with China and the opportunity to balance and engage with China with the support of ASEAN, Japan, China, Korea, Australia and New Zealand.
RCEP or no RCEP, India still has to deal with China. Without RCEP, India will have to deal with China alone, bilaterally. In asymmetric bilateral economic dealings, the smaller power, as for…
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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