China
Japan leans forward on China–Taiwan tensions
Author: Sheila A Smith, CFR
Today Beijing has far greater military resources to bring to bear on its relations with its neighbours and increasing pressure on Taiwan’s defences by the Chinese People’s Liberation Army (PLA) has many in Washington and Tokyo worried about Beijing’s intentions. China is now the top priority for the US–Japan alliance, as the foreign and defence secretaries and cabinet ministers of both nations made clear in their joint statement for the Japan–US Security Consultative Committee (2+2) in March 2021.
A month later, Japanese Prime Minister Yoshihide Suga and US President Joe Biden also called out China for its behaviour, raising concerns about human rights issues, maritime challenges across the region and economic coercion imposed on trading partners. Their statement suggests renewed allied concern about rising tensions there.
Japan will have no choice but to prepare to defend itself in the case of a conflict across the Taiwan Strait. Proximity to Taiwan — only a hundred or so kilometres separate Taiwan from Japan’s southernmost islands — makes the possibility of conflict there of deep interest to Japan’s Self-Defense Forces (SDF). In addition, Okinawa hosts a considerable array of US military forces, making it a likely staging area for any US assistance to Taiwan’s defences.
Japanese Deputy Prime Minister Taro Aso testified to the Diet on 5 July that a military crisis across the Taiwan Strait would threaten Japan’s survival. This was a nod to the 2015 security laws that laid the groundwork for the SDF to join with other national militaries in case of a conflict.
But the consequences of Tokyo’s decision-making on Taiwan will be grave. China remains one of Japan’s largest trading partners and the PLA regularly operate in and through Japan’s waters and airspace.
The regional military balance around Japan has been shifting in China’s favour. The clash between Beijing and Tokyo over a long-dormant sovereignty dispute over islands in the East China Sea a decade ago suggested that China was willing to use its maritime forces, both coast guard and navy, in support of its territorial claims.
Military action by China against Taiwan would provoke the United States into a military response. Many experts argue that China has little to gain from a direct attack on Taiwan. Yet, outgoing Indo-Pacific commander Admiral Philip Davidson told the US Congress that he thought the PLA would be able to launch such an attack within the next six years. A US response to Chinese aggression against Taiwan would be calibrated to the nature of that threat. Chinese pressure on Taiwan could present itself as grey-zone tactics or as cyberattacks. Both could create unprecedented challenges to Taiwan’s economic vitality and territorial integrity.
Regardless of the intensity of such a confrontation, Tokyo would be faced with difficult decisions about how Japanese and US forces would cooperate in response. Japan’s role would likely involve two distinct actions. First, Japan would be asked to provide support for US operations. Second, Japan’s Self-Defense Forces would need to consider how best to defend Japanese territory during a conflict.
Not surprisingly, opinion within Japan is divided. There are those who believe that Japan must play a role with the United States should China use force against Taiwan. Defence ministry officials clearly see a need to develop more clarity on how the alliance would respond.
Minister of Defence Nobuo Kishi’s political deputy, State Minister of Defence Yasuhide Nakayama, has repeatedly declared to the media that it is time to ‘wake up’ regarding Taiwan. The newly released 2021 Defence White Paper — which drew considerable attention for its anime-inspired samurai on the cover — clearly stated that cross-Strait tensions were an important factor in considering Japan’s security.
Political leaders, even those within the Liberal Democratic Party, are unsure of what steps to take next. Prime Minister Suga has taken a more reserved stance than his deputy. Sharing fully US and Japanese assessments of Chinese behaviour across the Taiwan Strait and in the vicinity of Japanese territory is indispensable, but care must be taken to ensure the politics of the moment take a back seat to the need for alliance readiness.
Alliance consultations will move ahead by year’s end, and Japan should be prepared to develop its options in three areas: which bases and facilities would be available to US forces in a Taiwan contingency; what priorities and principles for…
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
