China
A Biden presidency’s impact on the Asia Pacific
Author: Robert A Manning, Atlantic Council
It may be weeks before the US presidential election is fully settled, though the trajectory suggests a divided government of President Joe Biden and a Republican Senate. Regardless, expect more continuity than change in US policy toward the Asia Pacific, even with a marked shift in tone.
A Biden presidency would not erase the past four years, nor the deepening embedded populism in the United States, but would go a long way towards stopping the bleeding. Biden’s desire to heal the dysfunction will be constrained by a lack of control over the Senate.
A Donald Trump victory would likely have led to more tension within, if not fracturing of, US alliances. The Washington rumour mill suggests Trump contemplating withdrawing from NATO and reducing troops in both South Korea and Japan. Meanwhile, Biden, with a veteran set of Asia hands in his administration, would embrace and seek to strengthen alliances, including with Japan, South Korea and Australia. That bodes well for deterrence.
Biden will promote US values, showcasing an alliance of democracies at a global summit of democracies in 2021 as a fulcrum to counter authoritarian trends and reshape a fraying world order. But some Asian countries may view it as pressure to choose against China.
Regarding US policy toward China, there is a bipartisan consensus that China is a ‘strategic competitor’. That would not change under Biden. But there are important differences about exactly what that means. The Trump administration has not defined the terms, bounds and limits of competition. Instead it has demonised China, pursued economic decoupling and crusaded against the Chinese communist party in speeches by top US officials. Secretary of State Mike Pompeo argued ‘if we don’t change the Communist party, it will change us’. One could be forgiven for concluding, as Beijing apparently has, that the intent is regime change.
In contrast, Biden would likely seek to halt the downward spiral of US–China relations, hoping to craft a framework for competitive coexistence. Two top Biden advisors, Kurt Campbell and Jake Sullivan, wrote in Foreign Affairs that ‘the goal should be to establish favourable terms of coexistence with Beijing in four key competitive domains — military, economic, political and global governance’. This will require sustained and agile diplomacy, domestic support and a curbing of China’s assertive behaviour. Biden would almost certainly move away from the solely United States versus China bilateral approach and forge multilateral coalitions on shared concerns. Beijing seeks stability and is likely to offer a window to test Biden’s wherewithal to reset the US–China relationship.
On US–China economic and technological issues, expect a more prudent approach under Biden. Democrats are no less leery of free trade than Republicans, but a Biden administration would likely work closely with the European Union, Japan and Australia to press China on redressing shared trade grievances in the World Trade Organization, which Biden will work to reform. Such grievances include state subsidies, forced technology transfer, intellectual property rights, and rules and standards for emerging technology like artificial intelligence and 5G.
Expect a more measured and selective economic de-integration rather than half-baked decoupling. On technology, the United States has quietly forged a bipartisan move toward an industrial policy to better compete on semiconductors, 5G and other emerging technology that Biden is comfortable with. Beijing has selectively opened markets, principally finance and automotive vehicles, and Biden may seek to renew talks on a bilateral investment treaty.
A less volatile US–China relationship would impact the wider Indo-Pacific strategy. While the US military footprint expanded under Trump, effectively realising the pivot promised by Obama, it is unlikely to be diminished under Biden. But a strengthening of US alliances and partnerships in the region and expanding the informal network of security cooperation, including the Quad, may be likely.
Biden is likely to be less one-dimensional with regard to an Indo-Pacific strategy, putting more emphasis on regional diplomacy to address security issues and economic ties. Without robust economic underpinnings, an Indo-Pacific strategy may be hollow and unsustainable. With the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) set to expand under Tokyo’s leadership, and the Regional Comprehensive Economic…
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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