China
Can ASEAN centrality weather the US–China storm?
Author: Mark J Valencia, National Institute for South China Sea Studies
The US–China contest for regional domination was front and centre at the September round of ASEAN-hosted talks. In the run up to and at the meetings, China and the United States sharply criticised each other and appealed to Southeast Asian countries for support. In response, the ASEAN Regional Forum Chair bravely reaffirmed ASEAN’s centrality in regional security affairs.
But to some, this was whistling by the graveyard of high aspirations. Without unity, ASEAN is unlikely to achieve centrality — particularly in the face of burgeoning US–China confrontation in the South China Sea.
ASEAN ‘centrality’ in the maintainence of peace and stability between great powers in its region has always been aspirational. Its failures to manage intraregional conflict during the Cold War as well as out-of-control situations in Cambodia, Myanmar and now the South China Sea have demonstrated as much. As for maintaining unity, it is already split. Cambodia supports its economic benefactor China and others are similarly linked economically and leaning that direction. The United States has a military alliance with the Philippines and Thailand. They and Singapore and Malaysia facilitate US military operations including intelligence probes on China. Besides, ASEAN’s consensus-driven and non-confrontational culture limit its agency.
But ASEAN members do not want to choose between the two. They want to ‘remain the masters of their own destiny’. They do not want to become puppets or surrogates and risk great power interference in their domestic affairs, as during the Cold War.
A choice is also difficult because of competing individual national interests. While many may be more ideologically aligned with the United States and prefer its security protection, there are longer term economic and geopolitical reasons to avoid confrontation with China. Most states want to be neutral and benefit from both.
But the situation is dire and the opportunities for ASEAN to influence it are limited. The United States believes that it and China are engaged in ‘a geopolitical competition between free and repressive visions of world order’ in the Indo–Pacific. It has even framed their conflict in existential terms, saying ‘the world cannot be safe until China changes’.
China believes that the United States wants to contain its rightful rise to maintain regional hegemony. For China, the South China Sea is a ‘natural shield for its national security’. It hosts vital sea lanes of communication that China believes the United States could and would disrupt in any conflict. Even more importantly, it provides relative ‘sanctuary’ for its second-strike nuclear submarines. These are China’s insurance against a potential first strike — something the United States, unlike China, has not disavowed.
The ASEAN states recognise the situation may be beyond their control. Malaysia’s Foreign Minister Hishammuddin Hussein is particularly concerned that the China–US struggle could split ASEAN. Indonesia’s Foreign Minister Retno Marsudi urged her fellow ASEAN foreign ministers to remain ‘steadfastly neutral and united’.
But the recent ramped-up pressure is only a prelude of what is to come. So far China and the United States have been playing relatively ‘nice’. But this contest for regional domination may get nastier and more overt — especially in the run-up to the US presidential election. US Secretary of State Mike Pompeo’s statement on 13 June confronting China and its increasing military presence in the South China Sea are indicators of that.
The United States expected that its political, social and economic systems, and — more importantly — its values, will be enough to keep much of Asia in its camp. This is proving to be a false hope. So the United States is falling back on its tried and true advantage — military power and the threat of its use. With the mounting tension between the two big powers, it is not likely that ASEAN unity and centrality regarding the US–China contest to dominate the South China Sea will survive or be effective unless it changes its approach.
The ASEAN foreign ministers responded to Pompeo’s statement by repeating their oft-expressed intent to maintain Southeast Asia as ‘a region of peace, security, neutrality and stability’.But ASEAN can and must do more to prevent an adverse outcome. It could increase the tone, tenor and volume of its ‘unified’ voice urging China and the United States to show…
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.
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- 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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