China
China’s non-confrontational assertiveness in the South China Sea
Author: Li Mingjiang, RSIS
The past few years have been particularly eventful for the South China Sea dispute.
The tensions and related diplomatic pressures exerted on China have prompted unprecedented debate among China’s foreign-policy community. Policy makers and analysts have undertaken serious reviews of other countries’ policies and deliberated on appropriate responses and future policy options. These internal debates offer insight into China’s likely future policy in the South China Sea.
Although China is increasingly criticised for its growing assertiveness, very few Chinese analysts consider the country to have been at fault for the recent tensions and disputes over the South China Sea. They firmly believe that China’s actions were necessary, to protect their country’s legitimate interests, and were predominantly justified reactions to ‘provocations’ by other claimant states.
The prevalent view among Chinese analysts is that the tensions of the past few years can be attributed to collusion between the US and regional claimant states. It is popularly believed that, without Washington’s backing and high-profile policy of ‘returning to Asia’, regional states would not be able to challenge China’s interests in the South China Sea. Many believe that Washington has been simply using the South China Sea issue to pursue a soft containment of China. They argue that supporting countries that have territorial disputes with China is part of Washington’s ‘returning to Asia’ or ‘strategic re-balancing’ strategy in the Asia Pacific. Chinese perceptions and policy pronouncements during the recent stand-off between China and the Philippines illustrate this kind of thinking.
Many Chinese analysts believe that US rhetoric about the freedom of navigation in the South China Sea is a strategy to preserve Washington’s freedom to conduct military surveillance activities in China’s exclusive economic zone. Analysts writing about the USNS Impeccable incident in 2009 have suggested that Washington only uses the freedom of navigation argument for strategic and diplomatic gains.
The implication here is that Beijing believes that the South China Sea is as contentious an issue between China and the US, as between China and other claimant states. The fact that China appears to blame other parties for problems in the South China Sea indicates that Beijing is unlikely to seriously reflect on its own policy and actions, or significantly change its South China Sea policies. Most likely, China will continue to be tough on the actions of regional claimants and will attempt to limit the US’s role, but it remains to be seen whether China can in fact have this type of leverage over the US.
In recent years, Chinese commentators have frequently argued that China should abandon its reactive posture in favour of a more proactive stance in exploring and exploiting resources in the South China Sea. Chinese analysts argue that the country cannot indefinitely maintain its low-profile (tao guang yang hui) approach to natural-resource exploitation. With the growth of China’s deep-water oil and gas exploration technologies and its rapidly growing law-enforcement capabilities, these proposals may soon become reality.
The tensions and disputes of recent years have also fostered nationalistic sentiments in China. Chinese netizens have often expressed extremely harsh views about other countries, particularly Vietnam, the Philippines and the US. Social media channels have also been awash with criticism of the Chinese government for its weak stance in the South China Sea issue. A recent Global Times survey indicates that nearly 80 per cent of the Chinese public supports the use of military means to deal with the ‘provocations’ of other states.
None of this bodes well for a moderate Chinese security policy in the South China Sea. But, other factors may very well prevent actual confrontation from breaking out. China’s concerns over its relations with Southeast Asia, its disadvantaged position in its strategic rivalry with the US, and its prioritisation of domestic economic development will likely constrain China from becoming openly confrontational. Beijing seems to understand that the strategic dynamics in East Asia do not favour China and that an overly assertive posture will only further generate suspicion toward China in many regional states. In fact, the majority of Chinese analysts and officials believe that the disputes of the past few years have led to the worsening of China’s regional security environment. Adopting a confrontational posture would only lead to further enhancing the US’s political and security role in the region and the increased involvement of other major powers, such as Japan and India.
This combination of non-confrontation and assertiveness is likely to continue to dominate China’s behaviour in the South China Sea. The rest of the region may see inconsistencies in China’s policy, ranging from constant rhetorical reassurance to heavy handedness towards other claimants’ actions. Despite periodical displays of assertiveness, Beijing will refrain from allowing tensions and conflicts to escalate into a major confrontation. And, under the right conditions, China will not hesitate to undertake damage control by mending fences with relevant parties in ways that are justifiable to its domestic audience.
Li Mingjiang is Assistant Professor and Coordinator of the China Program at the S. Rajaratnam School of International Studies, Nanyang Technological University.
A version of this article first appeared here as a RSIS Working Paper No. 239.
- China’s new security posture: non-confrontational assertiveness
- Vietnam and the Philippines: Assertiveness in the South China Sea
- ASEAN: a united front to tackle the South China Sea issue
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China’s non-confrontational assertiveness in the South China Sea
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.
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