Debt in China and Its Implications for the Private Sector

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By Harry Handley

China’s debt is reaching an unprecedented level; as a percentage of GDP, debt is at its highest ever level, and is expected to continue rising. The current debt situation shares worrying similarities with the conditions seen in the US, Japan, and Thailand before their respective financial crises.

At the beginning of April, S&P Global Ratings cut the credit rating of Jiangsu New Headline Development Group, a local government funding vehicle (LGFV) owned by Lianyungang City in Jiangsu province. This is the first instance of a downgrade for an LGFV, a financial institution used by local governments to procure credit for public investment projects.

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Shanghai Revises Minimum Wage, Social Insurance Contribution Rates

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By Dezan Shira & Associates
Editor: Alexander Chipman Koty

The Shanghai Municipal Bureau of Human Resources & Social Security recently released its annual minimum wage adjustments for 2017, as well as the associated changes to employee benefits.

The adjustments, which came into effect on April 1, affect minimum wages, medical insurance, social insurance, pensions, and other forms of employee compensation.

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Asia Investment Brief: Incentives in the Philippines, Franchising in India, and World Cup Opportunities in Russia

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Our weekly round up of other news affecting foreign investors throughout Asia:

ASEAN BRIEFING

The Philippine Economic Zone Authority – Incentives and Assistance

The Philippine Economic Zone Authority (PEZA) offers several fiscal and non-fiscal incentives for foreign investors looking to set up shop in the island nation. Our Philippines correspondent Bob Shead talks more about these incentives as well as the promoted business sectors under PEZA in this Op-ed.

INDIA BRIEFING

A Guide to Franchising in India

India offers enormous potential for foreign franchisors who tailor their brand to fit into the country’s dynamic consumer market. In this article, we highlight entry strategies and regulatory concerns for foreign franchisors looking to establish their brand in India.

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Individual Income Tax for Expats in China

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By Dezan Shira & Associates
Editor: Jake Liddle

China’s Individual Income Tax (IIT) Law stipulates that all individuals working and deriving income from within the territory of China are subject to IIT.

While Chinese nationals are taxed on all income sourced both domestically and overseas, non-Chinese nationals are only taxed on income deriving from within China.

An individual’s salary is taxed according to progressive rates, while other types of income are taxed at variable rates depending on their nature.

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Company Chops in China: What Are They and How to Use Them

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By Dezan Shira & Associates
Editor: Alexander Chipman Koty

An official company chop– sometimes referred to as a seal or stamp – is a necessity for doing business in China. In contrast to business places in the West, management and administrative teams in China use the chop to legally authorize documents, often in place of a signature.

Beyond the company chop, a business may need others. A company will likely need several chops – each for a different purpose and used on different types of official documentation – depending on its business scope. Regardless,  every business should consider diversifying their use of chops.

For some chops, any person simply in possession is deemed as authorized to use it. Given the implications, businesses should consider working with independent advisors, who can manage the application process and design internal controls for their responsible use once obtained. In this article, we explain the different chops in China and how businesses can use them.

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China’s Labor Law on Salary Reduction

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By Weining Hu

Unlike the US’ at-will employment system, China uses contract employment. This means employers must make formal written employment contracts with all of their full-time employees. Further, during any term of contract, employers can only terminate employees’ contracts under certain circumstances in accordance with China’s Labor Contract Law (LCL).

China is highly protective of employees’ employment rights. When it comes to salary reduction, employers will encounter many legal restraints when making a potential unilateral pay cut. Employers and HR managers should understand China’s regulatory details before making reduction in an employer’s remuneration, so that they can effectively avoid labor-related legal risks.

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China Regulatory Brief: 2017 Legislation Plan Released, More Certificates to be Consolidated

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2017 legislation plan released

At the beginning of this month, China’s Standing Committee of the National People’s Congress released its 2017 legislation plan, which announces proposals for legislative amendments and new laws for the year.

Under the plan, new laws such as the Tobacco Tax Law, Shipping Tonnage Tax Law, Individual Income Tax, Real Estate Tax Law, the Tariff Law, and the Farmland Occupancy Tax Law are scheduled for deliberation later this year.

Notably, the Administrative Supervision Law will be changed to the National Supervision Law. Other amendments include those of the Judge Law, Procurators Law, Rural Land Contracting Law, Patent Law, Copyright Law, Maritime Traffic Safety Law, Vocational Education Law, Land Management Law, Tax Collection Administration Law, Forest Law, Metrology Law, and Mine Safety Law.

The formulation of laws like the Land Border Law, Ocean Basic Law, Futures Law, Atomic Energy Law, and Criminal Victim Relief Law are also scheduled.

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China, ASEAN, and OBOR Trade Picks Up: How to Take Advantage

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CDE Op-Ed Commentary

The recently released 2016 China bilateral trade figures may not yet herald a shifting trade dynamic for global procurement, but there are warning signs that China’s traditional trade partners in the US and EU may be coming under increasing pressure. The figures, released by the Ministry of Commerce (MOFCOM), show significant reductions in both US and EU trade figures, with a counter-balance being provided by ASEAN and the OBOR routes, which both increased.

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Dezan Shira & Associates

Meet the firm behind our content. Dezan Shira & Associates have been servicing foreign investors in China, India and the ASEAN region since 1992. Click here to visit their professional services website and discover how they can help your business succeed in Asia.

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