China
China wins the mediation medal
Author: Rahul Karan Reddy, Organisation for Research on China and Asia
Recent developments in the Middle East have cast China as a reliable intermediary and proponent of multilateral dialogue, signalling a departure from Beijing’s typical reluctance to participate meaningfully in conflict negotiations.
Saudi Arabia and Iran’s decision to restore diplomatic relations has raised Beijing’s diplomatic profile and political influence. The agreement between the hostile Middle Eastern powers, facilitated by China and other regional states, was followed by Saudi Arabia’s decision to become a dialogue member of the Shanghai Cooperation Organisation, furthering the perception of China as a peacemaker. The initial agreement was followed by a meeting of the Saudi and Iranian foreign ministers in Beijing on 6 April 2023 where the countries agreed to restore direct flights and deliberated the resumption of government and private sector visits.
Although the detente may not result in normalised relations, China’s diplomatic win signals its increasing willingness and capability to participate in conflict resolution and shape negotiation outcomes in its favour. Beijing’s conflict management approach remains largely driven by its economic interests and desire to project a favourable image. It is characterised by participation without deep involvement. But China is laying the groundwork for deeper involvement and a value and norm-based approach to conflict management.
China’s role as a mediator has become prominent over the last decade. Beijing is more willing and able to influence the outcome of negotiations. Since the announcement of the Belt and Road Initiative (BRI) in 2013, Beijing’s involvement in conflicts has expanded beyond its traditional approach of limited engagement. Before 2013, China rarely participated in international mediation initiatives, preferring to be a neutral onlooker and retain flexibility.
Beijing’s recent diplomatic involvement in the Middle East, Afghanistan, Myanmar and Ethiopia reveal its intention to play a more political and diplomatic role in conflict zones. Still, China’s quasi-mediation approach, where it primarily defends its commercial and political interests, is driven by economic interests and international image. China’s interests in the Middle East, Africa and Asia in the form of the BRI and other trade and energy flows encourage Beijing to participate more actively in shaping the outcome of major diplomatic negotiations.
Take China’s participation in the Saudi–Iran rapprochement, where its energy imports are significant. In 2021, Saudi Arabia supplied China with 18 per cent of its crude oil needs. Beijing is Saudi Arabia’s largest purchaser of oil. Mutual dependence in Saudi–China relations encouraged China to participate as an influential mediator. Similarly, China is Iran’s most important economic partner, compelling Tehran to engage meaningfully in diplomatic negotiations with Saudi Arabia. China’s outsized economic influence in both countries gives it leverage to regulate their political behaviour through quasi-mediation.
China’s lack of historical baggage in the Middle East has also endowed it with the image of being a neutral mediator. Beijing’s BRI ventures, energy dependence and trade relationships also ensure that it remains invested in the long run. Securing a stable Middle East is in China’s interest just like maintaining a stable relationship with Beijing is in Riyadh and Tehran’s interest.
Image-driven considerations also determine China’s participation in conflicts, evidenced by its peace proposals in Ukraine. China’s peace plan in Ukraine has less to do with ending the war and more to do with cultivating its peacemaker image. The plan presented China as a neutral mediator, a position that resonates strongly with developing countries.
French President Emmanuel Macron highlighted China’s potential peacemaker role in the conflict and urged President Xi Jinping to ‘bring everyone back to the negotiating table’. This underlines the growing perception that Beijing’s involvement in mediating conflicts is necessary to produce meaningful resolutions.
While unsuccessful, China’s attempts at mediating in the Middle East between the Taliban and Afghanistan governments and in South Asia between Bangladesh and Myanmar reaffirm its posture as a mediator and provide a contrast to US-led conflict mediation efforts. Beijing has also expanded its diplomatic engagement in Africa, most notably in Ethiopia — a central hub in the BRI….
China
Exploring the Revamped China Certified Emission Reduction (CCER) Program: Potential Benefits for International Businesses
Companies in China must navigate compliance, trading, and reporting within the CCER framework, impacting operations and strategic objectives. The program focuses on afforestation, solar, wind power, and mangrove creation, offering opportunities for innovation and revenue streams while ensuring transparency and accuracy. The Ministry of Ecology and Environment oversees the program.
As companies navigate the complexities of compliance, trading, and reporting within the CCER framework, they must also contend with the broader implications for their operations, finances, and strategic objectives.
This article explores the multifaceted impact of the CCER program on companies operating in China, examining both the opportunities for innovation and growth, as well as the potential risks and compliance considerations.
Initially, the CCER will focus on four sectors: afforestation, solar thermal power, offshore wind power, and mangrove vegetation creation. Companies operating within these sectors can register their accredited carbon reduction credits in the CCER system for trading purposes. These sectors were chosen due to their reliance on carbon credit sales for profitability. For instance, offshore wind power generation, as more costly than onshore alternatives, stands to benefit from additional revenue streams facilitated by CCER transactions.
Currently, primary buyers are expected to be high-emission enterprises seeking to offset their excess emissions and companies aiming to demonstrate corporate social responsibility by contributing to environmental conservation. Eventually, the program aims to allow individuals to purchase credits to offset their carbon footprints. Unlike the mandatory national ETS, the revamped CCER scheme permits any enterprise to buy carbon credits, thereby expanding the market scope.
The Ministry of Ecology and Environment (MEE) oversees the CCER program, having assumed responsibility for climate change initiatives from the National Development and Reform Commission (NDRC) in 2018. Verification agencies and project operators are mandated to ensure transparency and accuracy in disclosing project details and carbon reduction practices.
On the second day after the launch on January 23, the first transaction in China’s voluntary carbon market saw the China National Offshore Oil Corporation (CNOOC), the country’s largest offshore oil and gas producer, purchase 250,000 tons of carbon credits to offset its emissions.
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 Implements New Policies to Boost Foreign Investment in Science and Technology Companies
China’s Ministry of Commerce announced new policy measures on April 19, 2023, to encourage foreign investment in the technology sector. The measures include facilitating bond issuance, improving the investment environment, and simplifying procedures for foreign institutions to access the Chinese market.
On April 19, 2023, China’s Ministry of Commerce (MOFCOM) along with nine other departments announced a new set of policy measures (hereinafter, “new measures”) aimed at encouraging foreign investment in its technology sector.
Among the new measures, China intends to facilitate the issuance of RMB bonds by eligible overseas institutions and encourage both domestic and foreign-invested tech companies to raise funds through bond issuance.
In this article, we offer an overview of the new measures and their broader significance in fostering international investment and driving innovation-driven growth, underscoring China’s efforts to instill confidence among foreign investors.
The new measures contain a total of sixteen points aimed at facilitating foreign investment in China’s technology sector and improving the overall investment environment.
Divided into four main chapters, the new measures address key aspects including:
Firstly, China aims to expedite the approval process for QFII and RQFII, ensuring efficient access to the Chinese market. Moreover, the government promises to simplify procedures, facilitating operational activities and fund management for foreign institutions.
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
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.
- Exploring the Revamped China Certified Emission Reduction (CCER) Program: Potential Benefits for International Businesses
- China Implements New Policies to Boost Foreign Investment in Science and Technology Companies
- 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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