China
China’s declining population and its new three-child policy
Author: Editorial Board, ANU
Family planning has for decades been one of China’s most controversial social policies. Mao Zedong was a strong advocate for population growth, believing it to be a source of strength for the fledgling People’s Republic. From 1949 to Mao’s death in 1976, China’s population increased from 540 million to 940 million.
When liberal economic reformers came to power in the late 1970s, China’s rapidly growing population was seen as an obstacle to economic development and improved living standards. Deng Xiaoping’s Politburo introduced new rules designed to ensure that population growth did not outpace economic growth: China’s so-called ‘one-child policy’.
From 1980 new rules set limits for births. Urban workers were limited to one child per family, but were often able to apply for permission for a second child if their first was a girl. Rural residents were generally permitted two children and ethnic minorities were often permitted three or more.
Although the one-child limit was only strictly applied in cities, the enforcement of birth limits everywhere was harsh. Violators were subjected to steep fines and forced abortions. To meet population targets, zealous local officials would often coerce sterilisations for women who had already given birth to the maximum number of children they were allowed.
Although many people suffered greatly from the birth restrictions, China’s citizens largely accepted the policies as necessary. As any visitor to China well knows, street-level conversations about China’s social and economic ills typically conclude with the observation that China’s population is too big (ren taiduo).
The problem now is that after spending decades convincing China’s citizens of the need to reduce the birth rate, China’s leaders now accept that the policy was either unnecessary or a mistake. Alarmed at the prognosis of an ageing population and a shrinking workforce, China’s policymakers have in recent years relaxed the restrictions. The central government abolished the one-child rule in 2015, allowing all married couples two children. Last week it announced they could have three.
So far the policy reversals have done little to arrest the fall in birth rates. Many Chinese families choose to have only one child because the perceived costs of raising children are too high. And many women are choosing not to have babies because structural inequalities at home and in the workplace make pregnancy and childrearing an unwelcome choice. This is a common trend across many societies. Twelve million babies were born in China in 2020, down from 14.65 million in 2019 — the lowest rate in six decades. With a fertility rate at 1.3, one of the lowest in the world, China’s population is expected to start declining by the end of this decade. Its working age population already peaked a decade ago.
The big question is what this means for China and what, if anything, policymakers should do about it?
Some analysts are concerned that China’s economy could become caught in an income trap if the population begins to decline before reaching high-income status. Others fret that the ageing population will become a huge burden on younger generations and on China’s fiscal resources. International relations specialists muse about the consequences of population decline for China’s superpower potential and for the balance of power with the United States, which is better positioned to harness immigration to compensate for its similarly low birth rate.
In our lead article this week, Bert Hofman provides an analysis of China’s population problem and options for policymakers. On the question of population impact on growth, Hofman notes that China’s workforce has been shrinking for years, and that demographics are no longer a contributing factor to economic prospects and that leaps in labour productivity are delivered by better educational outcomes and technological advances. He also says that, if needed, more workers could be mobilised by increasing the retirement age — currently 60 for men, 55 for women — and wonders whether technological advancement will make it easier to care for the elderly.
What matters for living standards is not the total population size but its structure. The dependency ratio is key: the number of dependants (below and above the working age population) relative to the working age population. With the working age population having peaked, the dependency ratio has been increasing rapidly. Increasing the retirement age will change that ratio…
China
2024 Tax Incentives for Manufacturing Companies in China
China offers various tax incentives to boost the manufacturing industry. The Ministry of Finance and State Tax Administration provide guidelines on eligibility and policies. VAT exemptions and refunds are available for companies producing specific goods or services, with a monthly refund option for deferred taxes.
China implements a wide range of preferential tax policies to encourage the development of the country’s manufacturing industry. We summarize some of the main manufacturing tax incentives in China and explain the basic eligibility requirements that companies must meet to enjoy them.
China’s Ministry of Finance (MOF) and State Tax Administration (STA) have released guidelines on the main preferential tax and fee policies available to the manufacturing industry in China. The guidelines consolidate the main preferential policies currently in force and explain the main eligibility requirements to enjoy them.
To further assist companies in identifying the preferential policies available to them, we have outlined some of the main policies currently available in the manufacturing industry, including links to further resources.
For instance, VAT is exempted for:
Companies providing the following products and services can enjoy immediate VAT refunds:
Companies in the manufacturing industry that meet the conditions for deferring tax refunds can enjoy a VAT credit refund policy. The policy allows companies to receive the accumulated deferred tax amount every month and the remaining deferred tax amount in a lump sum.
The policy is not exclusive to the manufacturing industry and is also available to companies in scientific research and technical services, utilities production and supply, software and IT services, and many more.
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
Exploring the Revamped China Certified Emission Reduction (CCER) Program: Potential Benefits for International Businesses
Companies in China must navigate compliance, trading, and reporting within the CCER framework, impacting operations and strategic objectives. The program focuses on afforestation, solar, wind power, and mangrove creation, offering opportunities for innovation and revenue streams while ensuring transparency and accuracy. The Ministry of Ecology and Environment oversees the program.
As companies navigate the complexities of compliance, trading, and reporting within the CCER framework, they must also contend with the broader implications for their operations, finances, and strategic objectives.
This article explores the multifaceted impact of the CCER program on companies operating in China, examining both the opportunities for innovation and growth, as well as the potential risks and compliance considerations.
Initially, the CCER will focus on four sectors: afforestation, solar thermal power, offshore wind power, and mangrove vegetation creation. Companies operating within these sectors can register their accredited carbon reduction credits in the CCER system for trading purposes. These sectors were chosen due to their reliance on carbon credit sales for profitability. For instance, offshore wind power generation, as more costly than onshore alternatives, stands to benefit from additional revenue streams facilitated by CCER transactions.
Currently, primary buyers are expected to be high-emission enterprises seeking to offset their excess emissions and companies aiming to demonstrate corporate social responsibility by contributing to environmental conservation. Eventually, the program aims to allow individuals to purchase credits to offset their carbon footprints. Unlike the mandatory national ETS, the revamped CCER scheme permits any enterprise to buy carbon credits, thereby expanding the market scope.
The Ministry of Ecology and Environment (MEE) oversees the CCER program, having assumed responsibility for climate change initiatives from the National Development and Reform Commission (NDRC) in 2018. Verification agencies and project operators are mandated to ensure transparency and accuracy in disclosing project details and carbon reduction practices.
On the second day after the launch on January 23, the first transaction in China’s voluntary carbon market saw the China National Offshore Oil Corporation (CNOOC), the country’s largest offshore oil and gas producer, purchase 250,000 tons of carbon credits to offset its emissions.
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
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.
- 2024 Tax Incentives for Manufacturing Companies in China
- Exploring the Revamped China Certified Emission Reduction (CCER) Program: Potential Benefits for International Businesses
- China Implements New Policies to Boost Foreign Investment in Science and Technology Companies
- 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?
