China
How will Duterte’s successor deal with China?
Author: Richard Javad Heydarian, Manila
Over the past five years, bilateral relations between China and the Philippines, a United States treaty ally, have undergone a tremendous transformation. In the words of a top Chinese diplomat, what we have witnessed, especially under Philippine President Rodrigo Duterte, is a ‘golden age’ in bilateral relations.
But in his twilight months in office ahead of the May 2022 presidential elections, the Filipino president — who is constitutionally confined to a single six-year term in office — has adopted a dramatically divergent tone on China.
During the recent China-ASEAN Summit, Duterte abhorred purported harassment of Philippine resupply missions in the South China Sea by Chinese vessels. Amid the latest flare up in maritime tensions over the Second Thomas Shoal, Duterte openly warned, ‘this does not speak well of the relations between our nations and our partnership’ and called on the Philippines to utilise legal tools to maintain peace in the South China Sea.
The abrupt shift in Duterte’s tone may appear to be driven by contingent elements, namely public pressure at home amid the standoff over the disputed shoal. It’s clear that Duterte and his successor will come under growing pressure from the public and the defence establishment to take a more robust stance on China.
Following weeks of rollercoaster political manoeuvres, the line-up of Duterte’s potential successors is now effectively finalised. By all indications, neither presidential daughter Sara Duterte or long-time presidential aide Senator Christopher ‘Bong’ Go will be in the contention for the presidency this time. That has left Ferdinand ‘Bongbong’ Marcos Jr as the clear frontrunner in the 2022 presidential elections.
Bongbong Marcos is the only popular candidate to have openly backed continuity in Philippine foreign policy towards China by emphasising the futility of confrontation and the value of robust economic cooperation with the Asian powerhouse.
His father, the late dictator Ferdinand Marcos, was one of the first leaders among top US allies in Asia to open communication channels and formalise bilateral relations with Maoist China in the mid-1970s. Anticipating warm ties under a Marcos Jr presidency, Chinese Ambassador to the Philippines Huang Xilian has openly fawned over the current frontrunner.
Philippine Vice President Maria Leonor ‘Leni’ Robredo, the de-facto leader of the opposition, who has mostly ranked second in key surveys, has indicated a more radical departure from Duterte’s policy. She is emphasising robust defence relations with traditional Western allies and promoting the 2016 arbitral tribunal award at The Hague, which Beijing has rejected, as the ultimate basis for management of disputes with China in the South China Sea. As for boxer-turned-politician Emmanuel ‘Manny’ Pacquiao, the former Duterte ally has also adopted a far tougher stance on China and even gone so far as accusing Duterte of soft-pedalling on maritime disputes.
But to best understand the likely direction of Philippine policy, one should look at the position of more ‘centrist’ candidates, who are consciously tweaking their foreign policy messaging based on public opinion and the sentiments of the defence establishment.
Manila Mayor Francisco ‘Isko’ Moreno, who is placed third in most surveys, has advocated for a ‘middle course’ on practically every major issue, including the South China Sea disputes. In recent months, he has both emphasised the value of engagement with China and strengthening the Philippines’ defensive capabilities.
Moreno has backed potential joint energy exploration agreements in the South China Sea to de-escalate tensions and foster a cooperative relationship with China. At the same time, he has supported revitalised military ties with Washington, while warning of a swift and decisive response against any Chinese harassment of Filipino fishermen and vessels in the disputed areas.
The wisdom behind the foreign policy posturing of top centrist candidates such as Moreno, who is trying to win supporters from across the political spectrum, is based on the ebbs and flows of broader public opinion. The United States enjoys high favourability ratings among Filipinos, often among the highest in the world, while China has historically suffered from very low trust ratings.
According to the Social Weather Stations polling agency, China’s net trust rating among Filipinos was only positive in nine out of 53 surveys conducted between 1994 and 2020. In 2020,…
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
