China
Getting real about US–China cooperation
Author: Jacob Stokes, CNAS
One of the toughest questions in the current frosty era of relations between Washington and Beijing is whether and how to pursue cooperation amid ‘extreme’ geopolitical competition. Despite its importance, the practice of cooperation rarely receives the type of rigorous analysis necessary for devising effective strategy.
A close look reveals US legacy rationales for pursuing cooperation with China are not producing the desired results. But adopting a few principles can better integrate the competitive and cooperative elements of the relationship while making future attempts to coordinate with Beijing more effective and sustainable, even if the overall agenda will be much narrower in scope and ambition.
Cooperation is theoretically meant to serve two purposes in US–China relations.
First, to work together in areas where the two powers have nominally overlapping interests. These include global health, nuclear nonproliferation, counterterrorism, fighting climate change and international economic development.
Second, to provide stability for the relationship that can even out tensions stemming from areas where the two powers disagree. The thinking has been that working together on shared aims helps create a more constructive setting for dealing with disputes.
But right now, both rationales for US–China cooperation face significant headwinds. Nearly every ostensibly cooperative area needs to overcome major obstacles before the two sides can work together in a meaningful way. In other words, the two sides are struggling to cooperate even on ‘cooperative’ issues.
Events surrounding the COVID-19 pandemic have upended global health coordination. Working together on nuclear issues is complicated by China’s support for North Korea and its expanding arsenal. Beijing’s genocide against the Uyghurs has tainted joint counterterrorism. China’s support for coal power is a stumbling block in the battle against climate change. And its rejection of established standards on lending and the social and environmental impact of Belt and Road infrastructure projects have created problems for international economic development.
Further, US policymakers are questioning what additional value cooperating with China provides relative to devoting the same energies to building cooperation with allies and partners, or simply improving US implementation. They are asking what, specifically, is the upside — beyond the fuzzy notion that cooperation is nice?
As a result, the steadying effects previously provided by areas of cooperation, which were always modest, are now almost totally gone. Habits of cooperation are turning into habits of competition. This dynamic has been accelerated by US policymakers’ view that China has sought leverage during disputes by threatening to withdraw its support for cooperative undertakings.
A few principles should shape US thinking about whether and how to cooperate with China going forward.
First, both sides should lower expectations in recognition that bilateral relations are at their worst point in nearly half a century. Both sides need to acknowledge that the space for true cooperation is relatively narrow pending substantial improvements in the atmosphere between the two countries. Paradoxically, expecting less could enable both sides to approach issues with more realism and thereby produce better results than would have been possible if either side were holding out for a return to the previous ‘engagement’ era.
The wording of US official statements, which shows a hesitance to even use the term ‘cooperation’, suggests that the shift is already underway. This includes the mention of ‘practical, results-oriented engagements’, Secretary of State Antony Blinken’s statement that the relationship will be ‘collaborative when it can be’ and State Department spokesman Ned Price’s reference to ‘rather narrow areas of tactical alignment’. Relatedly, policymakers should not assume that any issue fits neatly into the category of competition or cooperation; almost every issue will have elements of both.
Second, future collaborative efforts should focus on concrete rather than symbolic actions. Symbolism can be a useful tool in diplomacy, but for the next few years the onus will be on producing tangible benefits. Generating positive optics or suggesting future potential will not be enough. In addition, outcomes cannot be linked to other areas in ways that make them susceptible to backsliding by Beijing. Compartmentalisation, rather than linkage,…
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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