China
Stumbling blocks to ASEAN-China smart city cooperation
Author: Melinda Martinus, ISEAS-Yusof Ishak Institute
China is moving full speed ahead in the race for global technology leadership having promoted artificial intelligence, expanded venture capital and funded start-ups worldwide.
ASEAN countries have seen a surge in Chinese capital flows through massive infrastructure projects that have significant smart city elements, including Forest City Johor Bahru, New Clark City, New Manila Bay City of Pearl and Thailand’s Eastern Economic Corridor. China has also shown a great interest in the region’s newly planned township projects, including the Indonesia’s new capital city in East Kalimantan and New Yangon City.
To promote its investments in the region, China has emphasised the opportunity to leverage solutions based on the Internet of Things (IoT) while advertising projects as ‘smart’, ‘green’, and ‘liveable’. This includes the use of sensors, networks and data to optimise public services and enhance liveability through automated energy management, integrated traffic control and faster internet connections in newly built towns. Chinese-owned technology platforms like digital wallet by Alipay, AI adoption and 5G networks by Huawei, and communication platforms by Tencent have also become essential solution providers to enhance public services.
The Chinese government frequently promotes smart city cooperation under its Digital Silk Road Initiative, a significant component of the Belt and Road Initiative (BRI). In ASEAN, cooperation is enhanced through the ASEAN–China Strategic Partnership Vision 2030 where China has pledged to support ASEAN’s technology transformation initiatives, including the ASEAN ICT Master Plan 2020 and the ASEAN Smart City Network.
Despite lofty ambitions and political buy-in from ASEAN leaders, China still faces technical challenges. Huawei’s failure to win the bid to provide Singapore’s main 5G network demonstrates how aware policymakers are of security and data protection issues. Huawei has frequently faced accusations of enabling espionage by the Chinese government. Huawei’s loss to Nokia and Ericsson also shows how competitive and rigorous the process of bidding for critical infrastructure is in Singapore.
The Jakarta–Bandung High-Speed Rail was delayed by land acquisition barriers that have revealed challenges China must overcome to execute large-scale projects in a country that embraces the rights of individual ownership and fully adheres to the land market economy. This experience has also shown the limit of China’s development model even with its extensive experience building large infrastructure projects domestically.
China is yet to create a ‘green’ and ‘sustainable’ image from its BRI projects. Chinese-backed investment projects like Forest City Johor Bahru have received criticism for their detrimental impacts on the surrounding ecosystem by destroying marine biodiversity and polluting waterways. Similarly, the ongoing New Manila Bay City of Pearl project has been criticised for the potentially harmful impacts caused by the loss of both mangrove biodiversity and livelihoods of fisher communities.
There is also concern over trust. Malaysian civil societies frequently raise the issue of equity, questioning how Forest City Johor Bahru will bring employment and affordable housing to local people. The appointment of China Harbour Engineering to conduct reclamation work in Manila Bay has also sparked concerns as the company was involved in a bribery scandal in Bangladesh.
China may also face fierce competition from other players. Although Japan has not yet signed significant deals on large-scale smart city projects, it has recently announced a US$2.4 billion fund to pave the way for companies seeking smart city projects, particularly projects that help ASEAN cities to decarbonise. South Korea has also recently increased funds for ASEAN infrastructure projects through the Korea–ASEAN Global Infra Fund, and the Construction, Plant and Smart City Policy Fund.
Non-Chinese private investors have also started smart city projects in the region. Japanese company Mitsubishi recently announced a joint venture with Singapore’s state-backed investor Temasek Holdings to build a 100-hectare smart city in Jakarta. Amata Corporation, a Thai industrial estate developer, has also started to expand capital in the Mekong countries. The company also sealed deals to build industrial complexes in Myanmar (which has been halted due to the coup) and Laos in addition to its extensive portfolio in Vietnam.
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China
China Provides Tax Incentives on Special Equipment for Green and Digital Development
China has introduced a new tax incentive for companies investing in digital and smart upgrades of special equipment to encourage environmental protection and safe production. Companies can enjoy a 10 percent deduction from their corporate income tax payable. Eligibility and requirements are outlined by the Ministry of Finance and State Tax Administration.
A new China tax incentive aims to encourage companies to invest in digital and smart upgrades of special equipment. Companies upgrading certain equipment that aids environmental protection and safe production can enjoy a deduction of the investment at a rate of 10 percent from their corporate income tax payable. We explain the requirements of the new tax incentive.
China’s Ministry of Finance (MOF) and State Tax Administration (STA) have issued a new preferential corporate income tax (CIT) incentive for companies investing in digital and intelligent transformations of certain types of equipment. To be eligible for the incentive, companies must invest in the digital and intelligent transformation of equipment related to energy and water conservation, environmental protection, and safe production.
The new tax incentive aligns with a State Council Action Plan, released in March 2024, which aims to accelerate the renewal of large-scale equipment and consumer goods, promoting high-quality development and driving investment and consumption for long-term benefits.
If the annual CIT payable is insufficient for the offset, it can be carried forward to future years for up to five years.
The CIT payable refers to the balance after multiplying the annual taxable income by the applicable tax rate and deducting the tax reductions and exemptions according to China’s CIT Law and relevant preferential policies.
Note that companies enjoying the tax incentives must use the transformed equipment themselves. If the equipment is transferred or leased within five tax years after the transformation is completed, the incentives must stop from the month the equipment is no longer in use, and the previously offset CIT must be repaid.
The “special equipment” eligible for the preferential tax treatment covers equipment purchased and used by companies listed in the Catalog of Special Equipment for Safe Production for Corporate Income Tax Incentives (2018 Edition) and the Catalog of Special Equipment for Energy Saving, Water Conservation, and Environmental Protection for Corporate Income Tax Incentives (2017 Edition).
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
Revealing the Encouraged Industries of Hainan in 2024: Unlocking Opportunities
The 2024 Hainan Encouraged Catalogue, issued by the NDRC, MOF, and STA, aims to boost industries in the Hainan Free Trade Port. It prioritizes sectors like tourism, modern services, and high technologies, offering incentives for foreign investment and market access expansion since 2020. The Catalogue includes 176 entries across 14 categories, with 33 new additions focusing on cultural tourism, new energy, medicine and health, aviation, aerospace, and environmental protection.
The National Development and Reform Commission (NDRC), in collaboration with the Ministry of Finance (MOF) and the State Taxation Administration (STA), has issued the Catalogue of Industries Encouraged to Develop in Hainan Free Trade Port (2024 Version), hereinafter referred to as the “2024 Hainan Encouraged Catalogue.” The updated Catalogue took effect on March 1, 2024, replacing the previous 2020 Edition.
Beyond the industries already addressed in existing national catalogues, the new entries in the 2024 Hainan Encouraged Catalogue are based on practical implementation experiences and the specific needs within Hainan, prioritizing sectors such as tourism, modern services, and high technologies.
The Hainan FTP has been providing incentives to draw investors to invest and establish businesses in the region, especially foreign investment. Alongside a phased approach to opening the capital account and facilitating free capital movement, Hainan has significantly expanded market access for foreign enterprises since 2020, particularly in sectors such as telecommunications, tourism, and education.
The Hainan Encouraged Catalogue comprises two main sections:
Similar to the approach adopted by the western regions, foreign-invested enterprises (FIEs) should always implement their production or operations in accordance with the Catalogue of Encouraged Industries for Foreign Investment.
On top of the industries already addressed in existing national catalogues, the 2024 Hainan Encouraged Catalogue encompasses 14 distinct categories and a total of 176 entries especially encouraged in the region, including 33 new additions compared to the 2020 Edition. These new entries predominantly span cultural tourism, new energy, medicine and health, aviation and aerospace, and ecological and environmental protection, among others.
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
Key Guidelines for Companies in Compliance Audits for Personal Information Protection Standards
China’s standards authority has released draft standards for personal information protection compliance audits, potentially making them mandatory for companies in 2023. The audits will require companies to undergo annual or biennial checks based on the number of people’s information they handle. The draft standards outline the audit process and requirements, seeking public feedback until September 11, 2024.
China’s standards authority has released draft standards for conducting personal information protection compliance audits. Regular compliance audits to ensure compliance with personal information protection regulations may become a requirement for companies in China under draft measures released in 2023. We explain the audit processes and requirements proposed in the draft standards.
The Standardization Administration of China (SAC) has released a set of draft standards for conducting personal information (PI) protection compliance audits. Under draft measures released by the Cyberspace Administration of China (CAC) in August 2023, companies that process the PI of people in China are required to undergo regular compliance audits.
Specifically, companies that process the PI of over one million people must undergo a compliance audit at least once a year, while companies that process the PI of under one million people must carry out an audit at least once every two years.
While the draft measures stipulate the obligations of the auditing body and the audit scope, the draft standards outline the specific audit process, including evidence management and permissions of the audit organization, as well as the professional and ethical requirements of auditors.
The Secretariat of the National Cybersecurity Standardization Technical Committee is soliciting public feedback on the draft standards until September 11, 2024. Public comment on the draft measures released in August last year closed on September 2, 2023, but no updated document has yet been released.
The draft standards outline five stages of the PI protection compliance audit: audit preparation, implementation, reporting, problem rectification, and archiving management.
Auditors are required to accurately document identified security issues in the audit working papers, ensuring that the records are comprehensive, clear, and conclusive, reflecting the audit plan and its execution, as well as all relevant findings and recommendations.
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 Provides Tax Incentives on Special Equipment for Green and Digital Development
- Revealing the Encouraged Industries of Hainan in 2024: Unlocking Opportunities
- Key Guidelines for Companies in Compliance Audits for Personal Information Protection Standards
- A Comprehensive Guide to China’s Expanded 144-Hour Visa-Free Transit Policy at 37 Ports
- Regulatory Changes in China Aim to Boost Service Sector Growth in Six Cities
- Adhering to Updated Registered Capital Regulations in China’s Revised Company Law
