China
Xi demands respect at the US–China virtual summit
Author: Olivia Cheung, SOAS University of London
On 15 November 2021, Chinese President Xi Jinping and US President Joe Biden held their first virtual meeting. According to the White House’s readout, Biden told Xi that the two countries should establish ‘common sense guardrails to ensure that US–China competition does not veer into conflict and to keep lines of communication open’. Judging from the press release published by Xinhua, the Chinese state news agency, which is over six times the length of the White House’s readout, the precondition for any ‘common sense guardrails’ appears to be that Washington must treat China with ‘respect’.
Treating China with respect is the first of the three principles that Xi mentioned to Biden during their meeting. The other two were peaceful coexistence and win-win cooperation. This means that China not only wants the United States to not criticise or subvert its one-party system. It wants the United States to go a step further: to recognise, in words and in deeds, that China’s one-party system is morally on par with, if not superior to, a liberal democratic form of government.
That would mean Beijing wants Washington to accept that if there are elements of the rules-based international order that the Chinese leadership deems incompatible with its domestic political system, it is legitimate for China to diverge from them. For example, the rules-based international order defines human rights as inalienable individual rights; but China’s political system subordinates human rights to an absolute interpretation of national sovereignty and state (implying regime) security. There is little scope for Xi to respond to the criticisms against the Chinese government’s human rights performance with the sort of changes that Washington would like to see. China under Xi has become more adept at using international platforms, especially those in which it has the upper hand, like the Shanghai Cooperation Organization and the South-South Human Rights Forum, to show that its state-centric notion of human rights already enjoys widespread acceptance.
In another telling example of what putting China’s domestic political system above the rules-based international order looks like, Biden complained to Xi that China’s trade and economic practices are unfair to US workers and industries. The unfairness Biden alluded to originates in China’s top-heavy, party-led and state-centric economic system that makes use of national industrial policies, including massive subsidies and preferential policies, to groom state-owned enterprises and domestic private companies as globally competitive ‘national champions’. This distorts the playing field for foreign companies in China, and, as Chinese companies increasingly expand their global footprints, for companies outside China too.
But in Xi’s view, China’s top-heavy economic system is a part of its political system, where the Chinese Communist Party ‘superintends the whole situation and coordinates all sides’, mobilising resources from state and private sectors alike to achieve the strategic national goal of making China strong. This implies, in Xi’s view, that respecting China’s political system requires the United States to respect that China should not be held to account to the rules and norms of a free market economy, even if it is discriminatory toward non-Chinese companies.
Xi’s requirement for Biden to exercise self-restraint in relation to Taiwan should also be read in light of his expectation that the United States should treat China with respect. Xi told Biden that the way China pursues its core interests is utterly ‘defensive’. By implication, this includes China’s repeated military intimidation over Taiwan, which China sees as a part of its ‘sacred territory’.
The Xinhua press release states that Biden supports the ‘one China’ policy and opposes Taiwan’s independence. But it conspicuously leaves out any reference to the relevant statement, directed at China’s intimidation over Taiwan, in the White House’s readout: ‘the US opposes unilateral efforts to change the status quo or undermine peace and stability across the Taiwan Strait’. In lieu of it, the Xinhua release states that Xi warned Biden to ‘handle the relevant issues’ surrounding China’s sovereignty with ‘prudence’. This conveys Xi’s expectation of Biden to distance the United States from Taiwan diplomatically and militarily.
Besides respecting what China deems as its domestic affairs, Xi made it clear that…
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
