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
Exploring the Revamped China Certified Emission Reduction (CCER) Program: Potential Benefits for International Businesses
Companies in China must navigate compliance, trading, and reporting within the CCER framework, impacting operations and strategic objectives. The program focuses on afforestation, solar, wind power, and mangrove creation, offering opportunities for innovation and revenue streams while ensuring transparency and accuracy. The Ministry of Ecology and Environment oversees the program.
As companies navigate the complexities of compliance, trading, and reporting within the CCER framework, they must also contend with the broader implications for their operations, finances, and strategic objectives.
This article explores the multifaceted impact of the CCER program on companies operating in China, examining both the opportunities for innovation and growth, as well as the potential risks and compliance considerations.
Initially, the CCER will focus on four sectors: afforestation, solar thermal power, offshore wind power, and mangrove vegetation creation. Companies operating within these sectors can register their accredited carbon reduction credits in the CCER system for trading purposes. These sectors were chosen due to their reliance on carbon credit sales for profitability. For instance, offshore wind power generation, as more costly than onshore alternatives, stands to benefit from additional revenue streams facilitated by CCER transactions.
Currently, primary buyers are expected to be high-emission enterprises seeking to offset their excess emissions and companies aiming to demonstrate corporate social responsibility by contributing to environmental conservation. Eventually, the program aims to allow individuals to purchase credits to offset their carbon footprints. Unlike the mandatory national ETS, the revamped CCER scheme permits any enterprise to buy carbon credits, thereby expanding the market scope.
The Ministry of Ecology and Environment (MEE) oversees the CCER program, having assumed responsibility for climate change initiatives from the National Development and Reform Commission (NDRC) in 2018. Verification agencies and project operators are mandated to ensure transparency and accuracy in disclosing project details and carbon reduction practices.
On the second day after the launch on January 23, the first transaction in China’s voluntary carbon market saw the China National Offshore Oil Corporation (CNOOC), the country’s largest offshore oil and gas producer, purchase 250,000 tons of carbon credits to offset its emissions.
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
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.
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- 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
- Is journalist Vicky Xu preparing to return to China?
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