China
Central Asian elites choose China over Russia
Author: Jon Yuan Jiang
Since 2019, more than 40 protests were held against ‘Chinese expansion’ in Central Asia. Yet Central Asian elites have hardly had a bad word to say. On the contrary, they suppressed these protests, denied that China’s goal was expansion and even requested their publics be grateful to China. No wonder some Russian commentators are worried about Russia’s waning influence.
The rationale to explain these Central Asian elites’ choices is that they may be better off embracing China while subtly distancing themselves from Russia, as Beijing increasingly aligns with its Central Asian counterparts with greater success than Moscow. Despite Central Asian countries being independent for three decades, it is common to find Russian assertions that they still effectively own the region. Some Russian officials have even publicly claimed that the entire territory of Kazakhstan was a gift from Russia, which was denounced severely among Kazakh elites.
Arguments about expansion and loss of sovereignty are dubious in Central Asia. Nowadays, Central Asian elites enjoy full sovereignty to defend their national interests. When the legislation around long-term land leases by foreign countries stirred up massive protests against the Kazakhstan government and Chinese influence, the bill was ditched and Beijing did not react. Kazakh elites also rejected Russian President Vladimir Putin’s proposal to construct nuclear power plants there. When Turkmenistan closed Russian language courses, the local Russian embassy expressed regret, but nothing tougher.
Numerous ethnic Russians live in Central Asia and the annexation of Crimea looms as a precedent. Central Asian elites might never express their fear of Russian annexation freely, but it is certainly a concern. In contrast, very few ethnic Han Chinese reside in Central Asia. The cardinal interest of China in this part of the world is to eliminate terrorism and separatism, purchase resources and trade with Europe through Central Asia. None of these interests constitute any potential territorial threat to Central Asia.
The dubious benefits of alignment with Russia’s stagnating economy pale in comparison to China’s economic might. With the implementation of the Belt and Road Initiative (BRI), China was a larger trading partner than Russia for most Central Asian nations by 2019. As Alexander Grishin noted, Chinese investment has now surpassed Russia in almost all Central Asian countries. Russian investment in Kazakhstan in 2016 was just over US$12 billion, whereas Chinese investment, according to official data, exceeded US$20 billion. Unofficial figures of Chinese investment ranged from US$55 billion to US$80 billion.
As Benno Zogg argued, compared to the economic power of China, ‘particularly the volume of funds for infrastructure in the framework of the BRI, Russia and its rigid, protectionist, and politicised Eurasian projects pale’. Russia is a direct competitor to Central Asia’s natural resources exports to the Chinese market, which may push Central Asian elites to the Chinese side.
According to Adil Kaukenov and Bakhtiyor Ergashev, Moscow consulted minimally with Central Asian partners concerning Eurasian integration, preferring to offer feelings of kinship and shared history rather than practical benefits. This may be effective in winning over the public and some of the more sensationalist media in the region, but it is much less persuasive to Central Asian elites who see the relationship with China as more business-like.
This explains why Central Asian elites have endeavoured to ‘de-Russianise’ themselves to enhance their own national identity by promoting local languages. Uzbekistan and Kazakhstan deliberately implemented the latinisation of their national languages, eschewing the Russian Cyrillic alphabet. In this context, increasing cooperation with China — which also entails enhancing its influence — not only accords with the economic interests and diversity of Central Asian nations, but also indirectly promotes their nation-building efforts.
The leadership shift in Central Asia may reflect their willingness to negotiate more with Beijing. Kazakhstan President Kassym-Jomart Tokayev is a fluent Mandarin speaker with diplomatic experience and connections in China. Former deputy prime minister Dariga Nazarbayev, the eldest daughter of the first president of Kazakhstan, extolled the virtue of learning Chinese, arguing closer ties to China is Kazakhstan’s destiny. The incumbent Kyrgyzstan President, Sadyr Japarov, was purportedly…
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
