China
China’s property market sees some relief amid protests
Embattled Chinese property giant Country Garden has paid two overdue bond-coupon payments, which some hailed as good news for the sector, as Beijing moved to stimulate buying by relaxing rules on mortgages.
The lowered down-payment thresholds on properties resulted in a surge in home buying in at least Shanghai and Beijing over the weekend but social media reports and circulated videos showed protests by frustrated investors countrywide.
The protests come as real estate companies default, public servants go unpaid and teachers go on strike, with authorities finding the costs of maintaining stability ever harder to meet.
Few economic observers consider that Beijing has the will to attempt to bail out a debt-ridden system built on property assets, despite the risks, with one government insider telling the British press on the condition of anonymity that Beijing was simply trying to stay in control rather than stimulate the stagnant property sector.
“The central government is well aware that the real estate sector will inevitably shrink,” the source said, adding that Beijing’s goal was to shift growth away from property and infrastructure development.
Economists and China experts all say it will be a massive challenge.
“China’s attempt to deal with $9 trillion of off balance sheet government debt is exacerbating the gap between wealthier coastal provinces and poorer ones in the interior and risks setting off economic contagion,” noted Dexter Roberts, director of China Affairs at the Maureen and Mike Mansfield Center, University of Montana.
Michael Pettis, senior fellow with the Carnegie Endowment agreed, calling it “an important but little-appreciated point.”
“The large gap between developed China and undeveloped China will expand dramatically as the economy slows and Beijing wrestles with debt,” he said. “I’m not sure what the political consequences will be, but there will be consequences.”
As for Country Garden’s last-minute reprieve on interest payments on U.S. bonds last week, Pettis wrote, “This of course prevents a default today, but repayment still ultimately requires a revived property market, which few expect and Beijing doesn’t want.”
It’s widely considered that Beijing doesn’t only not want to revive the property sector; it can’t. The money is simply not there to do a repeat of the 2008 global financial crisis bailout, with local governments and the massive real estate sector saddled with debt and developers on the verge of total collapse.
The specter of unrest
Speaking to RFA Mandarin, Lawrence Wu, associate professor of the General Education Center at Taipei Marine Technology University, said that the Chinese public was becoming increasingly less patient in the face of continued economic hardship and financial losses.
“In the past, the public were somewhat ‘sheeplike,’ keeping their heads down as long as they were allowed to graze,” Wu said.
Recalling the Henan Province banking crisis in 2017, involving unfinished housing projects, frozen bank accounts and mortgage strikes, Wu said most of those affected quieted down after the government purged some token officials.
“Now, with [all of] China’s economy facing challenges, the slightest disturbance quickly sparks public resistance,” he said.
9月4日，北京朝阳区
受中植系暴雷影响，大批民众前往中植集团总部楼下维权，现场遭遇不明身份的白衣人殴打，并在过程中用白色挡板遮挡周围人拍照。
一旁围观的警察并未制止白衣人的暴力行为。 pic.twitter.com/kuPmyqSaxX— 李老师不是你老师 (@whyyoutouzhele) September 4, 2023
On Monday, a video circulating on Chinese social media showed investors protesting outside the headquarters of the Zhongzhi Group in Beijing being attacked by what appeared to be security personnel dressed in white who were holding white boards the size of police shields, trying to block people from filming the protest scene.
Zhongzhi Enterprise Group, China’s largest private financial holding conglomerate, is conservatively estimated to have defaulted on U.S.$54.3 billion due to real estate investments.
Those most affected by Zhongzhi shortfalls of liquidity are high-net-worth clients and businesses, including 150,000 individual investors and nearly 5,000 companies.
A Zhongzhi representative reached by RFA Mandarin declined to comment, claiming “I don’t have the authority to answer you,” before hanging up.
Enter nationalism
As further videos circulated Monday showing protests in the central province of Henan and in Xi’an in Shaanxi Province, both involving failed real estate companies and investors who have lost their money, Chinese President Xi Jinping is likely to fall back on nationalism, a reliable Chinese Communist Party crutch.
As everyone from tech billionaires to bankers and the masses are called upon to learn from Xi Jinping Thought, in a reminder of China’s Maoist past, Xi demands complete loyalty to himself and to the party.
In a recent interview, Chun Han Wong, author of “Party of One: The Rise of Xi Jinping and China’s Superpower Future,” said that Xi’s all-controlling projection of power is his weakness.
“Whereas Mao Zedong and Deng Xiaoping enjoyed prestige from their revolutionary pedigree and exploits in establishing the ‘New China,’ Xi has no personal legitimacy independent of the Communist Party,” the author said.
Edited by Mike Firn and Taejun Kang.
Read the rest of this article here >>> China’s property market sees some relief amid protests
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.
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 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?
- Guide for Foreign Residents: Obtaining a Certificate of No Criminal Record in China
- China Unveils Plan to Upgrade Industrial Equipment
