China
Adapting to Hong Kong’s grim reality
Author: Mark S. Cogan, Kansai Gaidai University
Hong Kong residents are scrambling to pick up the pieces after the implementation of the draconian national security law of 30 June 2020. As China’s new Iron Curtain descended around Hong Kong, pro-democracy activists either fled or were arrested, including media tycoon Jimmy Lai and Demosisto co-founder Agnes Chow. What are the implications of Hong Kong’s gradual but dramatic autocratic transformation?
For China, national trauma helps explain the desire to implement this new law. President Xi Jinping’s ‘Chinese dream’ speech delivered after visiting the ‘Road of Rejuvenation’ exhibit in 2012 was illustrative of the national effort to reclaim what was lost from a series of national humiliations, including the Opium Wars, which led to the century-long lease of Hong Kong to the British, and the 1937 Nanking Massacre at the hands of the Japanese. These events form part of the ‘humiliation discourse’ that facilitates China’s preoccupation with hastening Hong Kong’s full return.
After the Sino-British Joint Declaration sealed Hong Kong’s stepped return, China immediately began to undermine it. China claims that the British have no sovereignty over or ‘moral obligation’ to Hong Kong beyond the 1997 handover. Beijing slowly went to work reintegrating the city beyond the scope of the declaration via political and judicial interference.
Hong Kong’s separate identity has played a role. The city became a haven for refugees after communists seized power in China in 1949. As decades passed, generations of Hong Kongers experienced little exposure to the mainland until its reopening from the 1970s. This created a distinct Hong Kong identity, based on capitalism, economic development and connection to the West.
This connectivity created an aura of superiority in Hong Kong. With the handover, anxiety and uncertainty gave way to localism and a distinct ‘peripheral nationalism’. Extreme varieties of localism became decidedly anti-mainland, voicing opposition to the influences of Beijing and placing a greater emphasis on self-determination, democratisation and independence.
China responded to Hong Kong’s expression of identity and growing nationalism by a carrot and stick approach. When attempts in 2003 to pass a national security bill failed due to overwhelming public opposition, China attempted softer approaches, such as the construction of the Hong Kong–Zhuhai–Macau Bridge link to mainland China. Hundreds of thousands of mainland Chinese now easily cross into Hong Kong. China also began advocating the cultivation of a national identity for Hong Kong and a greater connection to Chinese history.
Beijing became frustrated with not being able to implement the Fugitive Offenders Ordinance amendment bill, pursued by Hong Kong Chief Executive Carrie Lam. The law would have authorised the Hong Kong government to extradite criminal suspects to mainland China. The proposed legislation drew hundreds of thousands into the streets, presenting Xi with a serious challenge.
China portrayed protesters as separatists and accused Western powers of supporting their efforts. This inhospitable environment likely prompted Beijing to explore more dramatic means. China felt constrained by two important factors: the likelihood of additional chaos which would cause further embarrassment to Beijing and legislative elections that were set for September 2020. Without intervention, Hong Kong’s burgeoning democracy movement could have gained additional seats that would block future attempts to pass similar national security legislation.
Learning how to adapt to the new political environment today is complicated. Initial Western reactions were predictable. The European Parliament adopted a resolution condemning China and suggested that the European Union use its economic leverage to challenge China’s crackdown, while urging the passage of Magnitsky-style sanctions on Beijing. The United States ended preferential economic treatment for Hong Kong, and the United Kingdom announced a path to full citizenship for Hong Kong’s remaining pre-handover British National Overseas passport holders.
For China, the future is seated in the narratives of the past. Xi’s pursuit to reclaim lost prestige and control of lost territories by expanding China’s sphere of influence is relentless — evidenced by Beijing’s ongoing actions in the South China Sea.
The United States cannot base its responses on sanctions. States are willing to bear the brunt of sanctions and…
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?
- 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
- China deepens engagement with new Indonesian president as top diplomat visits Jakarta
