China
Japan walks on a tightrope with its China policy
Author: Rumi Aoyama, Waseda University
Over the past decade, Japan has actively promoted cooperation among Quad countries under the ‘Free and Open Indo-Pacific’ framework to counter China’s rising influence. It has also played a leading role in promoting high-quality trade rules through concluding the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the Japan–EU Economic Partnership Agreement and the Regional Comprehensive Economic Partnership. Importantly, Japan has maintained a delicate balance to ensure security tensions do not hold back economic cooperation.
Prime Minister Yoshihide Suga’s visit to the United States in April demonstrated the success of Japan’s balanced diplomacy. Both countries sent strong messages of common values and unified action, addressing ‘the importance of peace and stability’ across the Taiwan Strait. They also highlighted ‘serious concerns’ over human rights violations in Hong Kong and Xinjiang and emphasised their resolve for the security and openness of 5G networks.
The joint statement also reflected Suga’s intention to promote a peaceful resolution and avoid provoking China blindly, in addition to a firm approach to contingency planning regarding the Taiwan Strait.
The success of Japan’s China policy so far depends largely on two factors: Japan’s prudence in not overly provoking China and China’s tolerance of Japan’s hedging policy. After Suga’s trip, stable relations with China may no longer be a given, as Japan will have to develop concrete policies later in 2021 regarding its commitment to the US economic and security strategy in Asia.
Japan’s economic security policies are already in motion. Tokyo has introduced regulations to phase out Huawei and ZTE products in equipment procurement by government agencies and implemented subsidies to shift manufacturing out of China. Japan and the United States agreed to invest US$4.5 billion in the joint development of 6G telecommunications, with the aim of commercialising it in the 2030s, as well as cooperate in the supply chain for semiconductors and other strategically important products. The Suga administration is also taking a leadership role in facilitating a supply chain between India, Australia and Japan that does not rely on China.
But security cooperation can be much more complicated. Based on Japan’s current security legislation, if an emergency occurs in the Taiwan Strait, Japan’s Self-Defense Forces can provide logistic support or exercise a limited right of collective self-defence before Japanese territory is invaded. Akira Amari, a key figure behind the second Abe administration in charge of economic and trade policy, called for readiness to cooperate with the United States in exercising its right to collective self-defence.
While the Japanese government is still considering possible scenarios, these discussions may spur further debate on the role of Japan as a ‘shield’ and the United States as a ‘spear’ in US–Japan security relations. The possibility of deploying land-based conventional intermediate-range missiles in Japan to complement the US Pacific Deterrence Initiative raises concerns about it being drawn more deeply into tensions between the United States and China.
Japan’s economy is increasingly dependent on China, which is now Japan’s largest export destination, replacing the United States. In fiscal year 2020, China accounted for 22.9 per cent of Japan’s total exports, exceeding 20 per cent for the first time. But with 74 per cent of respondents in a poll conducted by The Nikkei in favour of Japan’s intervention in the Taiwan Strait, the Japanese government is more likely to expand its role in deterring China.
China is now adopting a wait-and-see approach. On the one hand, China is sensitive about cooperation among Quad nations and harshly denounced it as an ‘Asian NATO’. For China, Japan’s commitment to Taiwan and the deployment of missiles are alarming and unacceptable. Chinese Foreign Minister Wang Yi warned as much to Japanese Foreign Minister Toshimitsu Motegi over the phone.
On the other hand, with the hope of driving a wedge between Japan and the United States, China is still refraining from launching a national propaganda campaign against Japan. Most importantly, Japan has a pivotal position in China’s strategy of confrontation with the United States. Just as the United States is pursuing a targeted decoupling strategy, China is determined to establish a self-centred supply chain in Asia and among Belt and Road Initiative…
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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