China
US defense bill spends big against China’s maritime claims
U.S. President Joe Biden on Friday signed into law an $886 billion defense bill that includes US$16 billion to deter China’s expansive maritime claims and approves exemptions for Australia and the United Kingdom to buy American defense technology without licenses.
The 2024 National Defense Authorization Act was passed by the Senate on Dec. 18 in a 87-13 vote and by the House on Dec. 19 in a 310-118 vote, after a compromise removed supplemental funding for Ukraine along with contentious abortion and transgender provisions.
Senate Majority Leader Chuck Schumer, a Democrat from New York, last week called the compromise “precisely the kind of bipartisan cooperation the American people want from Congress.”
Biden said on Friday that parts of the compromise “raise concerns” but that he was “pleased to support the critical objectives” of the bill.
The legislation “provides the critical authorities we need to build the military required to deter future conflicts, while supporting service members and their spouses and families,” Biden said.
Maritime deterrence
The bill includes $14.7 billion for the Pacific Deterrence Initiative, well above the $9.1 billion requested by the Pentagon. The project, defense officials say, will help bolster U.S. defenses in Hawaii and the Pacific territory of Guam to increase “deterrence” efforts against China.
Bryan Clark, a senior fellow at the Hudson Institute and expert in naval operations, said the “big increase” in funds would help by “improving the resilience and capability of U.S. and allied forces in the Indo-Pacific.”
“I expect the increased PDI spending authorized in the NDAA will focus on defense of Guam, improved networking and data integration for U.S. forces in the Indo-Pacific, and accelerated efforts to posture U.S. ground troops in the region,” Clark told Radio Free Asia.
A further $1.3 billion is earmarked specifically for the Indo-Pacific Campaigning Initiative, which a Senate Armed Services Committee statement said would fund “increased frequency and scale of exercises, freedom of navigation operations, and partner engagements” as China ramps up its claims of sovereignty.
The 2024 bill also authorizes the biggest pay boost to military personnel in two decades, with a 5.2 percent overall bump, and increases the basic allowance for troops and housing subsidies.
AUKUS
It’s not only U.S. military bases and personnel in the Indo-Pacific that are receiving a large funding boost next year, though.
The 2024 bill also approves the sale of nuclear-powered submarines to Australia and exemptions for Australian and British firms from the need to seek licenses to buy U.S. defense technology.
The two provisions – known as “Pillar 1” and “Pillar 2” of the AUKUS security pact between Australia, the United Kingdom and the United States – have proved controversial, with some Republicans in Congress questioning Pillar 1 and some Democrats opposing Pillar 2.
Republicans expressed concerns about the ability of shipyards to supply Australia with submarines by the 2030s amid massive building backlogs that have left the U.S. Navy waiting on its own orders.
Democrats, meanwhile, said they were worried that exempting Australian businesses from the need to seek licenses could open up an avenue for Chinese espionage to procure sensitive U.S. technology.
But in the end the provisions passed with bipartisan support – even if the important licensing exemptions remain conditional on Australia and the United Kingdom putting in place “comparable” export restrictions.
Rep. Raja Krishnamoorthi, a Democrat from Illinois and the ranking member of his party on the House Select Committee on China, said that the approval of both pillars of AUKUS would be a boon to U.S. efforts to counter the Chinese Communist Party’s maritime claims.
“By authorizing the sale of up to three Virginia-class submarines to Australia, and simplifying the process for sharing advanced technologies between our countries, we are taking an important step in strengthening key U.S. alliances and working to maintain a free and open Indo-Pacific region in the face of CCP aggression,” he said.
Australian Defense Minister Richard Marles said that the passage of AUKUS meant that Australia, the United Kingdom and the United States are “on the precipice of historic reform that will transform our ability to effectively deter, innovate, and operate together.”
Australia’s ambassador to Washington, Kevin Rudd, said earlier this year he foresees a “seamless” defense industry across the AUKUS member states in coming decades if the security pact succeeds.
Other measures
The bill also establishes a new program to train and advise Taiwan’s military, and funds the Biden administration’s new “Indo-Pacific Maritime Domain Awareness Initiative,” which also is aimed at deterring China’s vast claims of maritime sovereignty.
U.S. Assistant Secretary of Defense for Indo-Pacific Security Affairs Ely Ratner said earlier this month would equip American allies across Asia and the Pacific “with high-grade commercial satellite imagery that allows them to have much more visibility into their littorals.”
Rep. Mike Gallagher, a Republican from Wisconsin and the chairman of the House Select Committee on China, said the bill was suitably focussed on the biggest threats currently facing the U.S. military.
“We are in the window of maximum danger when it comes to a conflict with China over Taiwan,” Gallagher said after the House passed the bill. “Ensuring our military has the resources to deter, and if necessary, win such a conflict must be our primary focus in Congress.”
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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?
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