China to grant overseas investors greater access to its financial market
On November 10, authorities unveiled new round of financial market liberalization rules to invigorate the finance sector and curb potential financial risks. Although authorities are still formalizing some aspects of the announcement, it is clear the reform will be a major boon for the financial market.
The government will allow foreign firms to hold a majority stake – up to 51 percent – of any joint ventures in the securities, fund management, and futures industries. This is up from the current cap of 49 percent. This cap will be totally removed after three years of implementation.
By Alexander Chipman Koty and Zhou Qian
China is cutting import tariffs on nearly 200 types of consumer goods in a bid to encourage domestic consumption. The new tariff rates will take effect from December 1, 2017, according to an announcement by the Customs Tariff Commission of the State Council.
After the reductions, the average import tariff for these products will drop from 17.3 percent to 7.7 percent. Among the changes, the tariff rates for milk powders and diapers, which are in high-demand in China, will be reduced from 20 percent and 7.5 percent, respectively, to zero percent.
Hannah Feng, Senior Corporate Accounting Service Manager at Dezan Shira & Associates, said, “Chinese parents will be more than happy about this change: milk powders and diapers are two of the hottest products that Chinese want to purchase from overseas”. More broadly, she noted that the tariff reductions can be “seen as a signal that Chinese leaders are deepening supply-side reform”.
The reduced tariff rates will greatly benefit foreign businesses looking to sell their products in China, as they will now be cheaper and more competitive compared to domestic alternatives. The development also marks another step in China’s restructuring from an economy based on manufacturing and exports to services and consumption.
By Alexander Chipman Koty and Vasundhara Rastogi
Hong Kong recently finalized a series of agreements that, taken together, shift Asia’s trade and investment landscape.
On November 12, Hong Kong and ASEAN signed the ASEAN-Hong Kong, China Free Trade Agreement (AHKFTA), and the ASEAN-Hong Kong Investment Agreement (AHKIA). Prior to this, on November 10, Hong Kong and India agreed to a double taxation avoidance agreement (DTAA) with India.
By Ines Liu
More and more high-level sporting events are being held in China. This year, the NHL and the NBA held exhibition events in China, while the country’s own sporting events – such as the Shanghai Masters tennis tournament and the Formula 1 Chinese Grand Prix – are gaining more prestige internationally. Beijing will hold the Olympic Winter Games in 2022 after successfully hosting the Summer Games in 2008.
Besides these high-profile events, there are innumerable smaller ones being held across the country. These events, however, are subject to unique tax treatment in China. This article explores the tax requirements of foreign sporting events companies and the taxation of foreign athletes in China.
Our weekly round up of other news affecting foreign investors throughout Asia:
Investing in Manila
Manila, the capital and main city of the Philippines, offers a variety of business possibilities in industries ranging from manufacturing to information technology (IT), and financial services. In this article, we provide a brief overview of the city’s investment climate.
Italian Investment into India
In the 2015 financial year, Italian companies invested US$334.7 million dollars into India. In this article, we explain how India’s Tier II cities are attracting Italian manufacturers while highlighting the active role Italy can play in India’s “Smart Cities” Initiative.
An editorial in the South China Morning Post this week has discussed the potential for a looming trade war between the China and the US. In the editorial, Scott Kennedy, a deputy director at the Freeman Chair in China Studies and director of the Project on Chinese Business and Political Economy at the Center for Strategic and International Studies, lays out how the US may be preparing itself to battle with China over what Washington DC and President Donald Trump have labelled “unfair practices”. Kennedy writes that the US is in the process of building regulatory mechanisms to support the US in the event of a major trade conflict.
This comes as China has removed Skype from the Chinese app stores, citing security and legal concerns. To be fair, given what we’ve learned over the past few years concerning US surveillance, that should hardly come as a surprise: if the US spies on its own citizens, it is sure to have infiltrated software used in global communications. Isolating American influence is a strategy increasingly being played out by both China and Russia, with Russia also about to block Facebook. LinkedIn is already restricted in both countries.
By Dezan Shira & Associates
China is getting very close to signing off a free trade agreement with the Eurasian Economic Union (EAEU), Russia’s First Deputy Prime Minister Igor Shuvalov said in an interview on Monday with the Moscow-based Rossiya24 TV channel.
Shuvalov’s comments will raise hopes that the agreement will see tariffs on Chinese goods either be significantly reduced or lowered to zero on thousands of items entering the EAEU, a trade bloc that includes Russia, Belarus, Armenia, Kazakhstan and Kyrgyzstan, as well as reductions for goods entering China.
By Ana Cicenia
Foreign direct investment (FDI) in China has changed significantly as wages continue to rise and the country’s economy matures from a heavy manufacturing base to one led by consumption and services. Foreign investors are taking a more cautious approach to investing in China than in years past, while Chinese outbound investors have been more bullish.
Naturally, the government has taken notice. Following a slowdown in inbound FDI, and a significant increase in outbound FDI, the government in August released the Notice on Promotion of Foreign Investment Growth (“the Notice”) to ease restrictions on inbound FDI and the Administrative Measures for Outbound Investment by Enterprises to regulate outbound FDI.