Author Archives: China Briefing

Bilateral Investment Treaties: What They Are and Why They Matter

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The United States and China—the world’s two largest economies—agreed at the 2013 Strategic and Economic Dialogue to restart negotiations on a bilateral investment treaty (BIT). But what are bilateral investment treaties (BIT)? Why do we need them? Who benefits from them? And how will the United States benefit from a BIT with China? Here’s what you need to know.

What is a BIT?

A BIT is an agreement between two countries that sets up “rules of the road” for foreign investment in each other’s countries. BITs give US investors better access to foreign markets—and on fairer terms. The United States currently has BITs with 42 countries.

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Scotland’s Lack of Foreign Investment Infrastructure With China

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Op-Ed Commentary: Chris Devonshire-Ellis

As September 18th, the date on which Scotland will undergo a referendum on whether to remain part of the United Kingdom, draws ever closer, debate has been raging throughout the UK as to the economic viability of such a split. However, research conducted by Dezan Shira & Associates on foreign investment between Scotland and China has revealed a paucity of related statistics, suggesting that the country is not mature enough in its institutions to go it alone when looking to attract FDI. The northern country has little available data on investments with China, one of the largest recipients of FDI in the world.

Searches conducted online revealed no immediate data made publicly available on the extent of Scottish investment into China, and little on Chinese investment into Scotland. While it is likely that these figures are collated and recorded as part of the overall data pool for the United Kingdom, Scottish institutions themselves appear to have been remarkably lax in seeking to attract FDI from what has become the world’s second largest economy. Continue reading…

Golden Years: The Coming Investment Boom in China’s Elderly Care Industry

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By Rainy Yao

SHANGHAI — Today, there are more than 200 million senior citizens in China. Fifty percent of them are “empty-nesters” living alone in rural areas, and more than 30 million are disabled. Meanwhile, the number of beds in nursing homes throughout the country was only 3.9 million in 2012. It is estimated that by 2050, the elderly population will total 400 million, accounting for one-third of the country’s total population. As a result, nursing homes are poised at the frontier of emerging investment opportunities in China.

Alberto Vettoretti of Dezan Shira & Associates comments, “I believe that in several years, the health care sector and its related industries (from hospitals to elderly care centers, and from ambulance services to post-injury rehabilitation treatments) will be one of the largest business sectors of the Chinese economy – possibly even larger in size than property. While property investment dictated the last 10 years of whopping development in the Chinese economy, perhaps in the next 10-15 years, health care will take up the helm, or certainly be one of the top 3 drivers of China’s economy.” Continue reading…

Optimizing Employee Take-home Pay in China through Annual Bonuses (Part 1)

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By Zhou Qian and Rainy Yao

SHANGHAI — According to a survey conducted by China Youth, 36.2 percent of employees considered their annual bonus to be a major factor in whether or not they will change jobs in the next year. When determining bonuses, it is critical that employers pay close attention to the calculation of individual income tax (IIT), as this can considerably diminish employee take-home pay. In this two-part article, we detail how employers can reduce the overall tax burden of their employees through carefully balancing salaries and bonuses, and thereby retain valuable talent.

According to the State Administration of Taxation’s Announcement No. 9, 2005 (Guo Shui Fa [2005] No.9), IIT on annual bonuses should be calculated as explained below. Continue reading…

China Regulatory Brief: Tax Exemptions on New Energy Vehicles and Cross-Border Services

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Catalog of Purchase Tax Exemptions on New Energy Vehicles Released

China’s Ministry of Industry and Information Technology (MIIT) recently released the “Catalog of Vehicle Purchase Tax Exemptions on New Energy Vehicles (First Batch)”. The Catalog covers two kinds of locally-produced and imported electric cars, namely new energy vehicles and plug-in hybrids vehicles. Seventeen types of passenger vehicles, 75 types of coaches and five types of special vehicles are included in the category of new energy vehicles; while six types of passenger vehicles and ten types of coaches are included under plug-in hybrids vehicles. Starting on September 1, 2014, China cancelled the 10 percent vehicle purchase tax on new energy vehicles (i.e. electrical vehicles) in a bid to boost related demand and address pollution problems. The complete Catalog can be found here. Continue reading…

Xi’s Visit to India & Sri Lanka Promises Infrastructure, Shipping & Tourism

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Op-Ed: Chris Devonshire-Ellis

India is in the spotlight following the decision to cancel the Pakistan leg of Chinese President Xi Jinping’s South Asia tour to India and Sri Lanka. In an unusual move, China postponed Xi’s visit to Pakistan, one of China’s closest allies, due to political uncertainty in Islamabad. This puts on hold the development of proposed trade corridors between Xinjiang and Pakistan—part of a long-term Chinese strategic plan to combat restlessness in the region by creating wealth through trade—and refocuses the trip largely on Chinese ties with India.

Xi will now visit Sri Lanka first, the small island nation that has already had much of its infrastructure improved by Chinese investment. As Indian worker demographics are ensuring that a large percentage of future global manufacturing will move to India, China needs to secure huge amounts of high-capacity Indian production to keep its own population supplied with affordable and inexpensive daily products. India is the only country with the workforce and proximity to China to be able to provide this; however, security and other concerns between the two nations have not always made cooperation easy. Continue reading…

Investing in China’s Financial Services Industry

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By Roy K. McCall

Up until 2013, China’s inbound investments exceeded outflows. But that’s about to change. In 2014, China is becoming a net outbound investor. This trend signals an increasing opportunity to expand outbound investment choices and services for Chinese investors – already well understood by bulge bracket M&A advisors, law firms and Big 4 accountants. For China’s domestic strategic investors, this trend will continue to improve the country’s understanding of foreign markets and technology. But strategic product company investments are long-term in nature, lacking liquidity. This leads to additional implications for financial markets.

China FDI ratio Continue reading…

Revisiting the Shanghai Free Trade Zone: A Year of Reforms – New Issue of China Briefing Magazine

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CB_2014_09_cover_250x350The newest issue of China Briefing Magazine, titled “Revisiting the Shanghai Free Trade Zone: A Year of Reforms,” is out now and available as a complimentary download in the Asia Briefing Bookstore through the month of September.

In this issue:

  • Updated Reforms in the Shanghai FTZ 2014
  • Logistics in the Shanghai FTZ
  • Cross-Border Forex Cash Pooling in the Shanghai FTZ
  • Case Study: Using the FTZ to Access the Outbound Tourism Industry

These are times of great change in China, with new opportunities and challenges confronting foreign investors. As the country moves from an export-driven economy toward increased domestic consumption, many foreign-invested manufacturers have transferred their operations to elsewhere in Asia. This is putting pressure on the Chinese government to offer new incentives for FDI and thereby sustain economic growth.

As one such measure, the Shanghai FTZ’s unique package of preferential policies is creating fresh opportunities for mature businesses in China, and opening new avenues into industries that have heretofore been restricted to foreign investment. Continue reading…

Asia Briefing Bookstore Catalogue 2013