China
Vietnam hedges its bets on the BRI
Authors: Viet Dung Trinh, University of Queensland and Huy Hai Do, Hanoi University
The Belt and Road Initiative (BRI), launched in 2013 by Chinese President Xi Jinping, is considered an ambitious long-term strategy to promote the expansion of Chinese influence by providing countries in the region with aid and infrastructure investment. But in contrast with some Southeast Asian states which have largely embraced the BRI with open arms, Vietnam has adopted a hedging approach.
Hedging is characterised by three contradicting yet complementary features — avoiding opposition against and dependence on a rising power, engaging in both deference and defiance with a threatening power, and diversifying relations with other major powers.
Vietnam’s strategy towards China’s BRI displays all three of these features of hedging. While Vietnam’s endorsement of the BRI shows its desire to avoid confrontation with China, Hanoi is cognisant of the risk of economic dependence on Beijing and the opacity of BRI projects. Vietnam has proactively constrained its engagement in this initiative.
The only BRI project implemented in Vietnam has been Chinese investment in the Cat Linh–Ha Dong tramline, which encountered condemnation due to its ballooning cost and stagnating progress. The project was signed in 2008 and was due to be completed in 2016. But it was not completed until the end of 2021 and the cost of the project suddenly rose from US$552.86 million to nearly US$11 billion in 2018.
Vietnam has also started distancing itself from China out of fear of falling into a Chinese ‘debt trap’ and because of intensifying tensions in the South China Sea. For example, Hanoi denied Chinese funding for the Van Don–Mong Cai highway due to national security concerns. The highway connects Van Don, which was set to be a specialised economic zone in 2018 with Mong Cai, a city near the border with China.
Similarly, the cancellation of the North–South railway, which would have connected Vietnam’s two largest cities, and the Hanoi–Lao Cai highway, which would have run from the capital to a province near China, were both due to fear that Chinese capital provision would be interrupted. And Vietnam has opted out of Huawei involvement in developing 5G telecommunications infrastructure due to concerns about threats from Chinese intelligence agencies, and has instead endeavoured to develop its own 5G model.
In its hedging approach to the BRI, Hanoi has also diversified its relations with other powerful states. Sovereignty disputes with China in the South China Sea have fostered a closer relationship between Hanoi and Tokyo, which was highlighted in 2014 by the two sides’ efforts to upgrade their relationship to an extensive strategic partnership, grounded on shared goals of peace and prosperity. Vietnam has welcomed Japan’s Partnership for Quality Infrastructure Investment more warmly than the BRI and has received substantial infrastructure investment from Tokyo.
Vietnam has even enhanced its relations with its previous foe, the United States, to restrict China’s attempts at broadening its influence in the region. Vietnam and the United States have boosted their bilateral economic ties and improved defence cooperation. Vietnam has also supported the United States’ Free and Open Indo-Pacific Strategy by welcoming US contribution to regional peace and stability. During the Trump administration, two US aircraft carriers visited Vietnam.
Vietnam’s hedging strategy towards the BRI could provide valuable lessons for other ASEAN states when dealing with a rising and more ambitious China. Vietnam has partially succeeded in fostering cooperation with other major powers instead of depending on an unreliable neighbour. Less developed countries like Laos, Cambodia and Myanmar which have actively engaged in the BRI should consider adopting such a strategy in order to avoid falling into a Chinese ‘debt trap’ or becoming ‘chess pieces’ in China’s geopolitical game.
Restricting economic dependence on China could also help to forge closer bonds among ASEAN members. China has weaponised its economic power to break ASEAN’s unity and ability to form consensus. This is exemplified by the increasing aid and investment that China provided to Cambodia after Phnom Penh blocked ASEAN’s joint statement on tensions in the South China Sea. Cambodia seems to be accepting political dependence on Beijing in return for economic development. During the time that it has undermined ASEAN consensus on the South China Sea problem, Cambodia has…
China
China Unveils Measures to Enhance Hotel Accommodation for Foreign Workers
China’s new measures aim to simplify hotel accommodations for overseas travelers by removing qualification barriers and improving service standards, payment convenience, and registration processes. This addresses challenges faced by foreign guests and supports China’s goals of high-level openness and inbound tourism growth, following complaints from foreign travelers.
China introduced new measures aiming to simplify hotel accommodations for overseas travelers by removing qualification barriers and enhancing service standards, payment convenience, and registration processes. These changes address previous challenges faced by foreign guests and support China’s broader goals of high-level openness and inbound tourism growth.
On July 25, 2024, the Ministry of Commerce (MOFCOM) and six other departments jointly issued the Notice on Several Measures to Facilitate Accommodation for Overseas Personnel in High-Level Service and Opening Up (The Notice), to address the difficulties faced by inbound overseas travelers regarding hotel accommodation.
This follows up on several foreign travelers from Nigeria and the United Kingdom who left messages on the Chinese government website, reflecting that they were refused when attempting to check in at hotels in China.
To solve the issues flagged by overseas travelers, the Notice proposed accommodation facilitation measures in the following eight aspects: operating in compliance with the law, enhancing reception capacity, strengthening industry self-discipline, leveraging platform roles, optimizing registration management, ensuring smooth service channels, improving payment convenience, and fostering a friendly atmosphere.
We summarize the details of the proposed measures below:
Foreign travelers often encounter difficulties when attempting to check into hotels in China. Reasons for hotel refusals include not having the necessary qualifications for foreign guests or not knowing how to input information into the system.
In China, there used to be a rule that only foreign-related hotels, or “涉外酒店” (shè wài jiǔdiàn) can accommodate foreigners. Such hotels refers to accommodation facilities such as hotels, guesthouses, apartments, and resorts that have been approved by various levels of business administration and public security departments to accommodate foreigners, overseas Chinese, Hong Kong and Macau compatriots, and Taiwanese.
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
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 Unveils Measures to Enhance Hotel Accommodation for Foreign Workers
- 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
