China
The tenth Shangri-La Dialogue
Author: Sheryn Lee, ANU On 4-5 June, Singapore was once again awash with security and defence buzz amid the 10 th annual International Institute of Strategic Studies’ Shangri-La Dialogue. While in previous years attention has centred on the keynote address of the US Secretary of Defence, this year’s event was dominated by a first time attendant: the Chinese Defence Minister, General Liang Guanglie. The Chinese General’s appearance heralded the strategic importance of the dialogue as a forum for the world’s leading nations. It also recognised the reality that discussions of regional defence issues and multilateral security initiatives necessitate Beijing’s participation. It seemed fitting that a dialogue that begun with the US Secretary of Defence Robert Gates’ rejection of the notion that the US is in relative decline should end with General Liang proselytising on why the region should be assured that China’s expanding military capabilities are benign. In spite of their almost boilerplate attempts to reassure, the sum effect of these statements was to throw into relief the blunt concerns of regional defence ministers regarding the negative tangent of security developments in maritime Asia. South Korean Defence Minister Kim Kwan Jin stated that Seoul would not continue to show restraint in the face of North Korean aggression, while Russian Defence Minister Sergei Ivanov claimed that the Kuril Islands were not a ‘territorial dispute’ with Japan. By turns, the Vietnamese Defence Minister confirmed the acquisition of six Kilo-class submarines, and the UK Defence Minister Liam Fox outlined ‘greater plans’ for the Five Power Defence Arrangements, with the UK and Australia to conclude a bilateral defence agreement by 2012. In contrast to China’s talk of a desire for a ‘peaceful external environment’ for its ‘peaceful development’, and the pressure it is receiving to become a ‘responsible stakeholder,’ it has done little to moderate its push for overt militarised influence. Its increased presence in the region is having a destabilising effect, not only in the case of the South China Sea, but also in regards to dealing with Pyongyang’s intransigence. Similarly, despite Secretary Gates’ rhetoric, American power in the region cannot keep up the same tempo over the long term. Fiscal constraints and continuing extra-regional demands, in particular in the Middle East, have already begun to take their toll on Washington’s military edge, as China’s modernisation of the PLA rapidly continues. These challenges are largely ignored in the official narratives from formalised settings such as the East Asia Summit (EAS), which have tended to emphasise the possibilities for cooperative responses to regional threats. Even at the Shangri-La Dialogue there was an overwhelming focus on humanitarian aid and disaster relief. There is no question that collaborative efforts in these areas are significant, but the very real elephant of traditional security challenges is being downplayed, even as it threatens to trample regional stability. The question that is seldom asked publicly is: how can the region deal with the shifting power dynamics? Many nations are taking the answer into their own hands by turning towards military modernisation programs of their own, not only to counter China’s efforts but also to prepare for a future in which Washington may not be able to play the role of ‘offshore balancer’. As such, one of the key points that arose at Shangri-La was the desire to build a security architecture robust enough to reduce the likelihood of miscalculation and misunderstanding, and deal with such challenges as negotiating multilateral binding limits on military modernisation, or committing parties to an ‘Incidents at Sea’ agreement. At this point in time, the region lacks the institutions necessary to make such actions credible. While establishing new mechanisms like the ASEAN Defence Ministers’ Meeting Plus (ADMM+) and expanding existing ones like the EAS could potentially lead to a security architecture that produces tangible results, neither approach has yet borne fruit with regards to core strategic challenges. The challenge for policymakers is to respond to this demand for an architecture commensurate with the problems of competition and robust enough to bring both the US and China together to deal honestly with their military competition while providing security for smaller regional states. Increasingly, the political and strategic barriers to this challenge appear insurmountable. The region is confronting a contradiction at the heart of multilateral discussion: while talk helps, it only does so if it is frank. Empty talk reflects insincerity, which actually exacerbates distrust amongst participants and accelerates competition. With the failure of security dialogue to achieve the level of trust required for collectiveaction, regional parties are encouraged to take a self-help approach to security by themselves or with traditional partners. As a consequence, there is a risk that the region will descend into bickering and confrontation between highly armed blocs. Rather than contributing to a balance of power, such a scenario raises the risk that certain major extra-regional players, such as the United States, may decide to cut their involvement suddenly in response to domestic and economic pressures. The potential for regional strategic instability would be significant, with conflict triggers abounding from the DMZ to the Paracel Islands. As the region faces the possibility of a conflict spiral exacerbated by distrust, the need to overcome reticence and speak bluntly about regional strategic and economic realities is paramount. Unfortunately, the opportunity for honesty passed Washington and Beijing by at Shangri-La. Sheryn Lee is a research assistant and Robert O’Neill Scholar at the Strategic & Defence Studies Centre, the Australian National University. Assessing the Trilateral Strategic Dialogue East Asia Forum dialogue ADMM+8: An acronym to watch
Author: Sheryn Lee, ANU
On 4-5 June, Singapore was once again awash with security and defence buzz amid the 10th annual International Institute of Strategic Studies’ Shangri-La Dialogue.
While in previous years attention has centred on the keynote address of the US Secretary of Defence, this year’s event was dominated by a first time attendant: the Chinese Defence Minister, General Liang Guanglie. The Chinese General’s appearance heralded the strategic importance of the dialogue as a forum for the world’s leading nations. It also recognised the reality that discussions of regional defence issues and multilateral security initiatives necessitate Beijing’s participation.
It seemed fitting that a dialogue that begun with the US Secretary of Defence Robert Gates’ rejection of the notion that the US is in relative decline should end with General Liang proselytising on why the region should be assured that China’s expanding military capabilities are benign. In spite of their almost boilerplate attempts to reassure, the sum effect of these statements was to throw into relief the blunt concerns of regional defence ministers regarding the negative tangent of security developments in maritime Asia. South Korean Defence Minister Kim Kwan Jin stated that Seoul would not continue to show restraint in the face of North Korean aggression, while Russian Defence Minister Sergei Ivanov claimed that the Kuril Islands were not a ‘territorial dispute’ with Japan. By turns, the Vietnamese Defence Minister confirmed the acquisition of six Kilo-class submarines, and the UK Defence Minister Liam Fox outlined ‘greater plans’ for the Five Power Defence Arrangements, with the UK and Australia to conclude a bilateral defence agreement by 2012.
In contrast to China’s talk of a desire for a ‘peaceful external environment’ for its ‘peaceful development’, and the pressure it is receiving to become a ‘responsible stakeholder,’ it has done little to moderate its push for overt militarised influence. Its increased presence in the region is having a destabilising effect, not only in the case of the South China Sea, but also in regards to dealing with Pyongyang’s intransigence. Similarly, despite Secretary Gates’ rhetoric, American power in the region cannot keep up the same tempo over the long term. Fiscal constraints and continuing extra-regional demands, in particular in the Middle East, have already begun to take their toll on Washington’s military edge, as China’s modernisation of the PLA rapidly continues.
These challenges are largely ignored in the official narratives from formalised settings such as the East Asia Summit (EAS), which have tended to emphasise the possibilities for cooperative responses to regional threats. Even at the Shangri-La Dialogue there was an overwhelming focus on humanitarian aid and disaster relief. There is no question that collaborative efforts in these areas are significant, but the very real elephant of traditional security challenges is being downplayed, even as it threatens to trample regional stability. The question that is seldom asked publicly is: how can the region deal with the shifting power dynamics?
Many nations are taking the answer into their own hands by turning towards military modernisation programs of their own, not only to counter China’s efforts but also to prepare for a future in which Washington may not be able to play the role of ‘offshore balancer’. As such, one of the key points that arose at Shangri-La was the desire to build a security architecture robust enough to reduce the likelihood of miscalculation and misunderstanding, and deal with such challenges as negotiating multilateral binding limits on military modernisation, or committing parties to an ‘Incidents at Sea’ agreement.
At this point in time, the region lacks the institutions necessary to make such actions credible. While establishing new mechanisms like the ASEAN Defence Ministers’ Meeting Plus (ADMM+) and expanding existing ones like the EAS could potentially lead to a security architecture that produces tangible results, neither approach has yet borne fruit with regards to core strategic challenges. The challenge for policymakers is to respond to this demand for an architecture commensurate with the problems of competition and robust enough to bring both the US and China together to deal honestly with their military competition while providing security for smaller regional states.
Increasingly, the political and strategic barriers to this challenge appear insurmountable. The region is confronting a contradiction at the heart of multilateral discussion: while talk helps, it only does so if it is frank. Empty talk reflects insincerity, which actually exacerbates distrust amongst participants and accelerates competition. With the failure of security dialogue to achieve the level of trust required for collectiveaction, regional parties are encouraged to take a self-help approach to security by themselves or with traditional partners. As a consequence, there is a risk that the region will descend into bickering and confrontation between highly armed blocs. Rather than contributing to a balance of power, such a scenario raises the risk that certain major extra-regional players, such as the United States, may decide to cut their involvement suddenly in response to domestic and economic pressures. The potential for regional strategic instability would be significant, with conflict triggers abounding from the DMZ to the Paracel Islands.
As the region faces the possibility of a conflict spiral exacerbated by distrust, the need to overcome reticence and speak bluntly about regional strategic and economic realities is paramount. Unfortunately, the opportunity for honesty passed Washington and Beijing by at Shangri-La.
Sheryn Lee is a research assistant and Robert O’Neill Scholar at the Strategic & Defence Studies Centre, the Australian National University.
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The tenth Shangri-La Dialogue
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
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- Guide for Foreign Residents: Obtaining a Certificate of No Criminal Record in China
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