China
Leaders must commit to green finance at COP26 to avoid climate catastrophe
Author: Christoph Nedopil Wang, Fudan University
Greening finance will be front and centre at the 26th Conference of the Parties (COP26) to the United Nations Framework Convention on Climate Change this November in Glasgow. The main program features a finance day on 3 November, putting finance ahead of the other seven themed days. But there is a danger that leaders’ hopes for ‘mobilising finance’ in the fight against climate change are over-simplistic and over-optimistic. Leaders risk overpromising and underdelivering.
To improve green finance as a powerful tool for reducing climate emissions and increasing climate change resilience in Asia and beyond, leaders at COP26 must make tough choices. They must decide which commitments they will negotiate within the different workstreams and the leaders’ summit. The risk is that leaders will focus on topics that require lengthy discussions. These discussions may not yield (new) results or may produce underwhelming outcomes, such as global emission trading schemes or finance for developing countries.
While development finance is urgently required across Asia and the Pacific, the topic has become a quagmire consisting of different politically motivated initiatives, such as China’s Belt and Road Initiative, Europe’s Global Connectivity Strategy and the G7’s ‘Build Back Better World’ strategy. For development finance, leaders from developing countries should require their peers from developed countries to deliver on the already promised US$100 billion of annual development finance and green technology transfer. But they should avoid wasting time on possibly minor distribution questions, which risk diverting attention away from the broader issues.
Rather, for COP26, leaders should focus on three green finance priorities. Reaching commitments on these priorities could affect up to 70 per cent of global emissions.
First, leaders should negotiate a commitment that all government spending at home and abroad aligns with the Paris Agreement. Most governments of large economies in the West and in Asia finance more than 45 per cent of their national GDPs through direct government spending, subsidies, state-owned enterprises and public banks. Public finance has an obvious responsibility to lead the way in greening finance.
Phasing out the use of public money to pay for harmful projects, like subsidies for fossil fuel, is complex but should be implemented before 2025. World leaders should agree to more — all public funding and particularly overseas financing through policy banks must become climate neutral. It would be a great outcome to commit public banks to stop funding any new non-climate-aligned projects by 2025 and divest from all non-aligned projects by 2040. By accelerating investments in green technologies, greening public finance may also drive down the cost of green technologies, with massive benefits for emerging economies.
Second, leaders should negotiate a commitment to accelerate green commercial finance and cut greenwashing. Global frameworks are crucial for this. Two areas are particularly relevant: taxonomies and climate disclosure. Both have been discussed for a few years to reduce uncertainty for financial institutions and to create more efficient markets for greening finance — for example, in ASEAN or between China and the European Union.
For COP26, a big challenge will be the transition finance standards that will help firms in polluting industries, like gas companies, receive finance to inch towards carbon neutrality. The debate about whether to develop a transition standard — between the science-based green finance experts who worry about undercutting climate goals and incumbent industries and less developed economies who worry about being ‘phased-out’ too quickly — is heated. At COP26, leaders should develop a common, science-based ‘dirty’ finance taxonomy that signals the need for the immediate phase-out of harmful industries. The middle ground between the dirty and the harmonised green finance taxonomy could be the basis for transition finance.
Addressing the challenge of transparency is necessary to stop often bogus ‘net-zero’ promises and greenwashing. Ideally, leaders at COP26 would agree on a roadmap that requires the application of a standardised climate disclosure framework by 2025, which includes disclosing at least all the emissions necessary to produce a given good or service, including those produced by suppliers.
Third, leaders should negotiate a commitment on green trade finance — the highly complex…
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.
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 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
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