China
Why China wants to power Argentina’s air force modernisation
Author: Loro Horta, Dili
In early May, several media outlets reported that a Chinese delegation visited Argentina to discuss a major arms deal. The agreement could be a game changer for Argentina and South America’s arms market.
According to reports, the two governments discussed the possibility of selling Argentina Sino–Pakistan JF-17 fighter jets. If the deal goes ahead, this will be the most advanced fighter jet offered by China to the region and could pave the way for future arms deals with other South American countries.
This is not the first time that a major arms deal between China and Argentina has been announced. In 2015, the two countries signed a deal for Argentina’s purchase of several weapons systems. Estimated at US$1 billion, the deal included warships, armoured vehicles and fighter jets. That same year, Argentina’s Defence Minister Agustin Rossi announced that the JF-17 was among the items to be purchased from China.
These agreements were signed during the presidency of Cristina Fernandez de Kirchner (2008–2015), the left-wing and Peronist leader who built close ties with China. The election of right-leaning president Mauricio Macri in December 2015 led to the cancellation of these projects. But since 2019, with the return of a Peronist government and with Kirchner as Vice President, these arms deals are being resuscitated.
Argentina’s financial crises and lack of currency with which to acquire expensive weapon systems have long been an obstacle for China selling defence equipment to Argentina. Yet several factors have emerged that increase the likelihood of success for Chinese weapons companies.
The Argentine Air Force has reached a critical point in its fighter jet inventory. For decades, the French-built Dassault Mirage III interceptor aircraft was the backbone of the Argentinian fighter jet force. In 2015, due to aging aircraft and budget constraints, the Argentine Air Force was forced to retire its fighter jets.
For six years now, Argentina has not possessed fighter interceptors, despite neighbouring countries Brazil and Chile owning modern fighter jets. Argentina has tried to buy new jets from several Western nations, but the UK government has kept an effective arms embargo on the country since the 1982 Falklands War.
The United Kingdom is particularly sensitive to acquisitions of fighter jets, remembering that most UK casualties in the Falklands War were inflicted by the Argentine Air Force. In 2015, Argentina tried to acquire Swedish JAS 39 Gripen fighter jets, but Sweden backed down from the sale due to pressure from London. South Korea also withdrew its offer to sell Argentina fighter jets due to pressure from the United Kingdom. Even the fact that the ejector seat on the JF-17 is built by a UK company has been a point of contention.
Not only are Western arms markets highly restricted in Buenos Aires, but Argentina remains on the verge of bankruptcy. Chinese fighter jets are cheaper than Western ones. China also provides flexible modes of payment and periods of good will, where recipients are not required to pay for several years or can pay in instalments. With Venezuela, US sources claim that China sold weapons on generous terms in exchange for oil at low prices.
The fact that China is willing to jointly produce the JF-17 and share its technology with Argentina further sweetens the deal. Argentina has long preferred agreements that allow for technology transfers in an effort to strengthen its defence industry. Both nations are also negotiating licensing for Argentina to produce Chinese helicopters and armoured vehicles.
While some Argentinian politicians and some sectors in the military have objected to close military cooperation with China, they have not come up with any alternatives. All branches of the Argentinian military, not just the air force, are in urgent need of modernisation.
If the deal goes ahead, the JF-17 project could lay the ground for China’s emergence as a major weapons supplier in a region once dominated by the United States. Yet Beijing’s strategy of financial flexibility with Argentina goes beyond weapons.
Argentina is the second-largest country in Latin America and a member of the G20. The country’s large and sparsely populated territory is rich in natural resources. In March, Argentinian media, citing sources in the President’s office, reported that China and Argentina were negotiating 15 infrastructure projects worth US$30 billion. Chinese companies have invested an estimated US$15 billion in the country’s oil sector. Argentina is…
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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