Economy and Politics

India Poised to Be China’s New Engine for Growth

Regional demographics mean China must cozy up to India or face consequences

Op-Ed Commentary: Chris Devonshire-Ellis

May 17 – Quite possibly the most senseless foreign policy position China has taken over the years has been its stance towards Japan. With diplomacy concentrating on World War II issues that most of the world has now moved on from, sovereignty disputes over close to worthless islands, and a rise of Chinese nationalism fueled by state propaganda, China has succeeded in alienating what remains one of the world’s largest economic powers, as well as a major historic foreign investor in China and a close regional neighbor. While Japanese investment will remain in China, the fallout from the Chinese government-fueled drop off in Japanese sales to China has made the Japanese business community now feel unwelcome in the country. Consequently, future Japanese investment is looking for more sustainable, and friendly, investment relations across the rest of Asia. Continue reading →

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Update: Catalogue of Priority Industries for Foreign Investment in Central and Western China

May 16 – China’s National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOC) jointly released the “Catalogue of Priority Industries for Foreign Investment in Central and Western China (hereinafter referred to as the ‘Catalogue’)” on May 14, which is scheduled to take effect on June 10, 2013. The Catalogue replaces its predecessor issued in 2008, and adds 173 categories to the original list.

According to the “Provisions on Guiding Foreign Investment,” foreign-invested projects included in the Catalogue are entitled to the preferential policies granted for the foreign-invested projects under the encouraged category. The Catalogue is organized by province, covering 22 out of the 31 provincial-level administrative regions in Mainland China. Selected industries for each provincial-level region can be found below. Continue reading →

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China’s Provincial GDP Figures in 2012

Three-fourths of China’s provinces reported GDP figures over RMB1 trillion (US$163 billion) in 2012

By Yao Lu

May 16 – According to preliminary data released by China’s National Bureau of Statistics, the country’s economy expanded 7.8 percent in 2012 amid the sluggish global economy, reaching RMB51.9 trillion (US$8.45 trillion). The growth rate, although the slowest since 1999, still beats the government’s 7.5 percent growth target. In the fourth quarter of 2012, the country’s economic growth reached 7.9 percent, putting an end to seven consecutive quarters of slowdown, up from 7.4 percent in the third quarter and 7.6 percent in the second. Continue reading →

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Picking China’s Middle Hanging Fruit – The New Inland Consumer

Op-Ed Commentary: Chris Devonshire-Ellis

May 13 – Much commentary in the media has recently been focusing on the “China slowdown” and the impact of the country’s lower GDP growth figures going forward. In reality, measuring GDP growth is always a losing game, and not a particularly good indicator of how an economy is progressing. China has had tremendous GDP growth over the past 20 years, but it has always been inevitable that this growth would begin to slow at some point. A country cannot keep expanding its economy indefinitely at 10 percent a year, it is simply not possible. Accordingly, the naysayers over China’s future when it comes to measuring it purely in GDP growth terms are misled about what is really going on. Sure, the economy is slowing, but not all at the same time, and it doesn’t necessarily mean anything bad. Continue reading →

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China to Enhance Consumer Rights Protection

By Yao Lu

May 6 – China’s Consumer Protection Law, which was promulgated in 1993 came into effect in 1994, has contributed greatly to the protection of consumer rights in the past two decades. However, since the country’s consumption patterns and structures have undergone significant changes in the years since the law’s original release, some provisions of the current Consumer Protection Law have fallen behind the times, and are therefore hindering the development of China’s consumer market.

In response, China’s National People’s Congress released the “Draft Amendment to the Consumer Protection Law (hereinafter referred to as the ‘Draft’)” on April 28, which is the first revision to the country’s Consumer Protection Law. The Draft aims to further protect consumer rights and boost domestic demand in the country, and has made revisions to the current law in the following five areas:

Enhancing rules concerning consumer rights protection
Strengthening the obligations and duties of business operators
Regulating the e-commerce industry
Clarifying the rules of consumer associations
Clarifying the regulatory responsibilities of administrative authorities Continue reading →

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Report: RMB to be a Globally Traded Currency by 2015

May 3 – In a special report, John McCormick, the Chairman of the RBS Group, has suggested that the RMB will be a globally traded currency by 2015. Noting that the use of China’s RMB internationally is rapidly increasing despite China’s slowing economy, he states that now is the time for the new leadership to push the RMB as a major international currency.

“Financial crises in the U.S. and Europe mean the world needs a new, more stable global reserve currency, and trade in RMB is growing rapidly. In the FX market, for example, our figures show that volumes are now worth around US$5-6 billion daily – double what they were a year ago,” said McCormick.

McCormick further suggests that the Chinese authorities are also pushing to make the RMB internationalized by 2015. Continue reading →

Posted in Economy and Politics, FDI and Foreign Trade, Markets | Tagged China, Renminbi, RMB Internationalization | Leave a comment

New Issue of China Briefing: Understanding Permanent Establishments in China

Understanding-PE-Establishment-in-China-250 May 2 – The new issue of China Briefing Magazine, titled Understanding Permanent Establishments in China, is out now and will be temporarily available as a complimentary PDF download on the Asia Briefing Bookstore throughout the month of May.

With more and more foreign enterprises conducting business in China, the tax liabilities resulting from business activities in the country are becoming an issue of key concern. Many foreign enterprises doing business in China are unaware that their business activities here may constitute a permanent establishment (“PE”) and are thus subject to corporate income tax.

In recent years, China’s tax authorities have tightened the tax administration of secondment arrangements in which the HQ sends staff to work in China. Overseas parent companies might be challenged that their actions constitute provision of services to their China subsidiary and hence creation of a Service PE in China. Continue reading →

Posted in Business, Economy and Politics, FDI and Foreign Trade, Featured, Finance, Tax and Accounting, Legal and Regulatory | Tagged China, Permanent Establishment, Tax Compliance | Leave a comment

China’s MOC Releases Report on Foreign Trade Situation (Spring 2013)

May 2 – China’s Ministry of Commerce (MOC) recently released the “Foreign Trade Situation Report of China (Spring 2013) (hereinafter referred to as the ‘Report’)”. The Report reviews China’s foreign trade situation from 2012 up until the first quarter of 2013, and also analyzes the global environment and development of foreign trade.

According to the Report, in 2012, China’s total foreign trade amounted to US$3.87 trillion, growing 6.2 percent year-on-year. Of which, total exports amounted to US$2.05 trillion while imports totaled US$1.82 trillion. China also ranked second in the world in total foreign trade volume, first in total export volume and second in total import volume. Continue reading →

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