China
China in the middle ground between Middle Eastern rivals
Author: Guy Burton, Brussels School of Governance
In December 2021, United States intelligence claimed China was helping Saudi Arabia develop ballistic missiles. Washington feared the Saudis were abandoning them in pursuit of a closer partnership with China. For some US policymakers, this pointed to the growing threat of China displacing the United States as the principal external power in the Middle East.
Such fears were — and still are — overblown. Saudi Arabia and other Arab Gulf states account for a larger proportion of China’s economic relations in the Middle East than Iran. In 2020, China’s trade with Saudi Arabia was worth US$65.2 billion — compared to its trade with Iran of US$14.36 billion — and that gap is growing. But this has not led to any change in Chinese efforts to displace the United States as the dominant global power in the region.
Yet even if China wishes to remain aloof from tensions in the Middle East, it has found it difficult to do so. Non-alignment will only get harder if the underlying rivalries are exacerbated to the point where a regionwide conflict takes place. China has pursued commercial relationships with states across the region, while also recognising the tensions between them, which it has acknowledged mainly through the use of rhetoric.
China notably used the Global Security Initiative to encourage Middle Eastern countries to create their own regional security architecture — making it clear that it favoured any security initiative to come from inside the region without the involvement of outside forces. This was a tacit rejection of the United States’ presence, but there is little indication that China wants to take on a more active role as a conflict mediator between Saudi Arabia and Iran, or use the position of one against the other.
Though there is a disparity between China’s influence in Saudi Arabia and Iran, China’s involvement in the Saudi missile program does not represent a substantial shift that could destabilise the Middle East. A longer-term perspective is needed when it comes to evaluating China’s relations with the Gulf.
The missile trade between China and Saudi Arabia is not new, having started as early as the 1980s. When the United States refused, China sold Saudi Arabia 25 medium-range ballistic missiles in the wake of the Iranian revolution and the Iran–Iraq war. As Saudi Arabia has not used the missiles, the purpose of the current Saudi missile program may be for deterrence rather than offensive use.
Whether Saudi Arabia chooses to use the missiles is arguably separate from China’s involvement. Beijing has historically been an arms supplier, albeit a secondary one, for countries in the Middle East, including Iran. China’s more recent assistance to Iran has included missiles and Unmanned Aerial Vehicles — some of which have been deployed against Saudi Arabia by the Houthis in Yemen.
Chinese assistance has not adversely affected developments on the ground, and China also appears to be priced in by both the Saudis and Iranians. Chinese sales of weapons to Iran and Arab Gulf states may have been factored in by the opposing sides as the price of doing business with Beijing. While China’s current support for the Saudi missile program might dissatisfy some in Iran, Saudi Arabia is also not satisfied with the signing of the 25-year cooperation agreement between China and Iran in March 2021.
While both Saudi Arabia and Iran broadly accept China’s engagement with the other side, there may be limits. Both sides seem to accept that China will cooperate militarily with their rivals, so long as that engagement does not extend to anything more formal, like a defensive entente.
Yet Saudi Arabia has an advantage that Iran does not. If threatened, Riyadh can reboot its fading alliance with the United States. Iran’s situation is more precarious. Tehran lacks a similarly powerful global patron and so is more exposed to US threats and pressure. Iran’s leaders have looked to both Russia and China for diplomatic and military support in recent years but it cannot rely on them to the same extent the Saudis can rely on the United States.
China has so far refused to adopt a more involved posture as a regional security provider or guarantor that could replace the United States. It is unlikely to do so at the anticipated China-Arab summit scheduled to take place when China’s President Xi Jinping visits Saudi Arabia next week. There, the focus will largely be on boosting trade ties and reaching agreements on energy and investments….
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.
China
New Report from Dezan Shira & Associates: China Takes the Lead in Emerging Asia Manufacturing Index 2024
China has been the world’s largest manufacturer for 14 years, producing one-third of global manufacturing output. In the Emerging Asia Manufacturing Index 2024, China ranks highest among eight emerging countries in the region. Challenges for these countries include global demand disparities affecting industrial output and export orders.
Known as the “World’s Factory”, China has held the title of the world’s largest manufacturer for 14 consecutive years, starting from 2010. Its factories churn out approximately one-third of the global manufacturing output, a testament to its industrial might and capacity.
China’s dominant role as the world’s sole manufacturing power is reaffirmed in Dezan Shira & Associates’ Emerging Asia Manufacturing Index 2024 report (“EAMI 2024”), in which China secures the top spot among eight emerging countries in the Asia-Pacific region. The other seven economies are India, Indonesia, Malaysia, the Philippines, Thailand, Vietnam, and Bangladesh.
The EAMI 2024 aims to assess the potential of these eight economies, navigate the risks, and pinpoint specific factors affecting the manufacturing landscape.
In this article, we delve into the key findings of the EAMI 2024 report and navigate China’s advantages and disadvantages in the manufacturing sector, placing them within the Asia-Pacific comparative context.
Emerging Asia countries face various challenges, especially in the current phase of increased volatility, uncertainty, complexity, and ambiguity (VUCA). One notable challenge is the impact of global demand disparities on the manufacturing sector, affecting industrial output and export orders.
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
Is journalist Vicky Xu preparing to return to China?
Chinese social media influencers have recently claimed that prominent Chinese-born Australian journalist Vicky Xu had posted a message saying she planned to return to China.
There is no evidence for this. The source did not provide evidence to support the claim, and Xu herself later confirmed to AFCL that she has no such plans.
Currently working as an analyst at the Australian Strategic Policy Institute, or ASPI, Xu has previously written for both the Australian Broadcasting Corporation, or ABC, and The New York Times.
A Chinese language netizen on X initially claimed on March 31 that the changing geopolitical relations between Sydney and Beijing had caused Xu to become an expendable asset and that she had posted a message expressing a strong desire to return to China. An illegible, blurred photo of the supposed message accompanied the post.
This claim was retweeted by a widely followed influencer on the popular Chinese social media site Weibo one day later, who additionally commented that Xu was a “traitor” who had been abandoned by Australian media.
Following the publication of an ASPI article in 2021 which exposed forced labor conditions in Xinjiang co-authored by Xu, the journalist was labeled “morally bankrupt” and “anti-China” by the Chinese state owned media outlet Global Times and subjected to an influx of threatening messages and digital abuse, eventually forcing her to temporarily close several of her social media accounts.
AFCL found that neither Xu’s active X nor LinkedIn account has any mention of her supposed return to China, and received the following response from Xu herself about the rumor:
“I can confirm that I don’t have plans to go back to China. I think if I do go back I’ll most definitely be detained or imprisoned – so the only career I’ll be having is probably going to be prison labor or something like that, which wouldn’t be ideal.”
Neither a keyword search nor reverse image search on the photo attached to the original X post turned up any text from Xu supporting the netizens’ claims.
Translated by Shen Ke. Edited by Shen Ke and Malcolm Foster.
Asia Fact Check Lab (AFCL) was established to counter disinformation in today’s complex media environment. We publish fact-checks, media-watches and in-depth reports that aim to sharpen and deepen our readers’ understanding of current affairs and public issues. If you like our content, you can also follow us on Facebook, Instagram and X.
Read the rest of this article here >>> Is journalist Vicky Xu preparing to return to China?
- 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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