China
China’s Xi to battle rising debt, economic woes and political rivals at congress
Ruling Chinese Communist Party leader Xi Jinping will be looking to eliminate high-profile rivals and other influential figures from the political scene, while taking a firmer grip of the country’s purse-strings at the forthcoming National People’s Congress annual session in Beijing, analysts told Radio Free Asia in recent interviews.
Xi is widely expected to announce thorough-going political restructuring that will give him still more concentrated power over the daily affairs of the country, including the downgrading of the State Council in favor of special committees controlled by the highest echelons of party leaders in Beijing.
He also presides over a flagging economy, a massive hole in public finances following three years of the zero-COVID policy and flatlining business confidence, amid an ongoing crackdown on private companies and prominent members of the financial elite.
Plans are underway to hive off the ministries of public security and state security from the government hierarchy, and run their portfolios under a party Central Internal Affairs Commission similar to the structure used by Moscow in the days of the Soviet Union, Hong Kong’s Ming Pao newspaper reported recently.
Other State Council functions could also migrate to direct party control, including the departments in charge of Hong Kong and Macau, and of managing ties with democratic Taiwan.
Independent political commentator Cai Shenkun said much of the expected restructuring, public details of which will likely emerge at the National People’s Congress, will be aimed at ensuring that no effective or popular political figure can rise to challenge Xi’s personal power and influence.
“Downgrading the State Council would actually make it impossible for anyone to rise to a place of prominence from within its ranks,” Cai said.
He said Xi may have succeeded in stacking the ruling party’s Politburo and its all-powerful, seven-member standing committee with officials loyal to him, but he still has a nagging worry that one of them could become powerful enough to bring him down.
“He won’t be totally trusting of those people, even of someone as loyal to him as Li Qiang,” Cai said, in a reference to the Politburo standing committee member widely expected to be made premier at the forthcoming National People’s Congress.
“This may now become the norm for China’s political structure, going forward.”
Financial challenges ahead
U.S.-based journalist Deng Yuwen, a former editor of Communist Party school publication, said Xi is likely more focused on gearing up for financial challenges, however.
“He has been in power for a long time now, so there isn’t anyone who could challenge his position,” Deng said. “Given the current environment, his top priority will be ensuring that certain problems don’t arise, such as in the financial sector.”
Deng said Xi had already taken much of the State Council’s power for himself during his last five-year term in office, taking the responsibility for running the economy away from his premier Li Keqiang, in a break with decades of collective leadership at the top of the party.
“The State Council is just an administrative department now,” Deng said, although he said Li Keqiang did have a seat on Xi’s powerful committees governing financial and economic affairs as well as state reforms, and that he expects that to continue under Li Qiang.
Scott Kennedy, senior adviser at the Center for Strategic and International Studies in Washington, said there are concerns that Xi is moving away from the tendency in recent decades to appoint economic technocrats to run the economy.
“For the last 30-plus years, China’s economic performance has depended on very smart, wise, economic bureaucrats who have [been] given political space to implement a whole variety of economic policies that are pragmatic,” Kennedy said.
“There’s a worry that this era is coming to an end, certainly because of the overall direction and trajectory Xi Jinping wants to take the country, his emphasis on political loyalty above expertise,” he said.
He said the officials currently heading the central bank, banking regulators and security market regulars are all scheduled for retirement or redeployment, with their more powerful political mentors also expected to step down at this parliament.
“Their replacements, who have not been named yet, may understand math, but they may not understand economies, and they may understand who their boss is even more,” Kennedy said. “The economy looks really problematic – short term and long term.”
Jude Blanchette, who holds the Freeman Chair in China Studies at the same institution, said Xi will likely build on the significant restructuring he began at the 2018 National People’s Congress.
“We saw significant transfer of power vertically from the State Council up into the Communist Party,” Blanchette said. “So we saw party organizations take over roles that had previously been held by state council ministries and bureaucracies. “
Mounting debt burden
He said Xi has a tendency to elevate party-led “working groups,” which used to play a coordinating role within the party hierarchy, to the status of commissions, or ministries, in a significant expansion of their power.
“The indications are that the reform plan that’s going to be announced this year will be, roughly, equal in its importance,” he said.
Cai agreed that the financial sector is going to be a key priority for Xi, noting the recent detention of China Renaissance private banker Bao Fan, who is “assisting the authorities with an investigation,” according to a company notice filed with the Hong Kong Stock Exchange.
“Xi Jinping wants to set up a new Central Financial Work Committee,” he said. “It may be that he thinks that Li…
Read the rest of this article here >>> China’s Xi to battle rising debt, economic woes and political rivals at congress
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
