China
Canada launches Indo-Pacific strategy that talks tough on China
U.S. ally Canada has launched its own Indo-Pacific strategy “to advance Canada’s regional peace and security interests” as a Pacific nation, with indications of a tougher stance against China.
Relations between the Canadian and Chinese governments have been strained after Canada arrested Meng Wanzhou, a senior executive at the Chinese telecommunications giant Huawei in 2018 at the request of the U.S.
The bilateral tensions were exposed recently on the sidelines of the recent Group of 20 Summit in Bali, Indonesia, when Chinese leader Xi Jinping appeared to be criticizing his Canadian counterpart Justin Trudeau over alleged media leaks.
The long-awaited 23-page document said “Canada’s evolving approach to China is a critical part of the Indo-Pacific Strategy,” clearly defining Beijing as “an increasingly disruptive global power.”
China has increasingly disregarded international rules and norms while having had “an enormous impact on the Indo-Pacific” and nurturing “ambitions to become the leading power in the region,” it said.
“Canada’s Indo-Pacific Strategy is informed by its clear-eyed understanding of this global China, and Canada’s approach is aligned with those of our partners in the region and around the world,” the paper said.
The new strategy pledges to push back “against any form of foreign interference on Canadian soil” and strengthen Canada’s cyber security systems, while dedicating more resources to “enhance Canadian competencies on China.”
New investments will be made in order to deepen “our understanding of how China thinks, operates and plans, and how it exerts influence in the region and around the world.”
The document said Ottawa was reviewing all mechanisms and structures, such as Memorandums of Understanding (MOUs) and Dialogues, across all federal departments “to ensure they advance Canada’s national interests.”
Economic interests
Canada began talks on a possible free trade deal with China in 2016 but abandoned plans four years later because Trudeau’s government faced increased domestic criticism for being too lenient and compromising towards Beijing.
The Indo-Pacific is Canada’s second-largest regional export market, after the United States, with annual two-way trade valued at CA$226 billion (U.S.$168 billion).
Over the next five years, Canada will invest nearly CA$2.3 billion (U.S.$1.7 billion) in different initiatives to boost its economic and strategic role in the region, according to the new strategy.
While protecting Canadian market access in China, the new Indo-Pacific Strategy acknowledged the importance of diversifying “within, and beyond, that market.”
The paper identified a number of “key partners” in the Indo-Pacific, including India, the North Pacific (Japan and South Korea), and the ten-nation Southeast Asian bloc ASEAN.
“India’s strategic importance and leadership – both across the region and globally – will only increase,” it said, adding that besides economic cooperation, Canada will seek to bolster ties with India in the fields of security, the promotion of democracy, pluralism and human rights.
Initiatives to foster economic ties with the region include establishing the Canadian Trade Gateway in Southeast Asia and Canada’s first agriculture office in the region.
Security ties
A major part of Ottawa’s new strategy in the Indo-Pacific is to promote Canada’s security interests in the region.
“The strategy will bolster our Canadian armed forces’ presence in the region, and will enhance Canada’s defense and security relationships with partners and allies,” said Canadian Defense Minister Anita Anand.
Canada will put over CA$720 million (U.S.$535.8 million) into new security projects with more than a half of the investment going to “reinforce Canada’s Indo-Pacific naval presence and increase Canadian armed forces’ participation in regional military exercises.”
A third naval frigate will be deployed to the region, according to Canada’s department of national defense.
A new multi-department initiative will also be created “to help develop cyber security capacity in select regional partners.”
The new strategy also pledges to further promote Canada’s long-standing collaboration with, and contribution to, the Five Eyes – the intelligence alliance comprising Australia, Canada, New Zealand, the United Kingdom, and the United States.
The Canadian government said it will continue to work with partners “to push back against any unilateral actions that threaten the status quo in the Taiwan Strait, as well as the East and South China Seas.”
Since 2021, Canadian warships have taken part in some U.S.-led Taiwan Strait transits that China denounced as “provocative.”
Beijing considers Taiwan a Chinese province and the Taiwan issue the “core of China’s core interests” and an “insurmountable” red line that should not be crossed.
China has yet to respond to the newly-launched strategy but Canada’s increased military presence will no doubt provoke criticism from Beijing and risk leading to confrontations, even conflicts.
Canadian aircraft taking part in U.N. missions in the region have been dangerously intercepted by Chinese warplanes on numerous occasions.
Since December last year Ottawa has reportedly lodged “multiple” diplomatic complaints with Beijing for what it called the “unsafe and unprofessional conduct” of the Chinese pilots who “buzzed” Canadian airplanes.
“Buzzing” means flying extremely close and fast, risking a mid-air collision.
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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
