Economy & Trade

China Outbound: From New York to Shanghai, All Eyes Are on India

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Our Latest Round-Up of Business News Affecting China-Based Businesses Investing in Asia

In this edition of China Outbound, we highlight the growing importance of India in global investment trends, as supported by the launch of Prime Minister Narendra Modi’s “Make in India” campaign for promoting high-tech enterprises to invest in the country. At the other end of the spectrum, we outline why India is poised to inherit low value-added manufacturing to serve China’s domestic consumer market, and review the results of President Xi Jinping’s recent South Asian tour in terms of infrastructure investment in India and Sri Lanka. These projects, together with streamlined customs initiatives in China such as those in the Shanghai Free Trade Zone, will facilitate the smooth flow of both goods and investment between these two Asian powerhouses. Continue reading…

China and Spain Sign Business Deals Worth US$3.8 Billion

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SHANGHAI – Chinese Premier Li Keqiang and Spanish Prime Minister Mariano Rajoy have signed business deals worth approximately US$3.8 billion in a bid to boost bilateral cooperation and economic growth.

On September 25, 14 agreements were signed between the two parties at a ceremony in Beijing’s Great Hall of the People, covering cooperation in areas including the film industry, nuclear power, telecommunications, finance, wind power, sea water desalination and tourism. Rajoy further urged that the two sides strengthen cooperation in the food and consumer industries, adding that few countries offer such a good investment environment as Spain with its open and competitive market.

Companies which attended the meeting included Spain’s largest bank, Banco Santander (SAN.MC), Zara and Chinese e-commerce magnate Alibaba Group Holding (BABA.N). Among the attendees, Huawei, the world largest telecommunication equipment maker, signed a cooperation agreement with Spanish telecommunications juggernaut Telefonic. Four of the 14 deals were signed in the field of energy, including a contract to supply China with nuclear safety products.

Li stated that the Chinese government attaches great importance to its relations with Spain and urged the two sides to continue expanding bilateral trade and accelerate growth. He also mentioned that the two countries should strengthen cooperation in areas such as energy, finance, biological medicine and the aerospace industry. Continue reading…

The Importance of India for China-based Foreign Manufacturers

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Selling to China will no longer be dependent upon the China manufacturing price. Rather, it is the price that the product can be made for in India that will count.

Op-ed Commentary: Chris Devonshire-Ellis

With Chinese President Xi Jinping’s India visit having come to an end, it is an opportune moment to examine economic developments in both countries and to draw some conclusions about the directions both are heading. In fairness to Xi, demographics and political developments in India overshadowed his visit, which was ultimately greeted with less than baited breath in Delhi. The Chinese side had talked up the trip, promising US$100 billion worth of deals to be signed, whereas in fact just US$30 billion was agreed upon. Indian media reacted accordingly, describing the Chinese visit as “disappointing”.

Xi meanwhile seemed more intent not on trade, but on asserting China’s position over its many territorial disputes, including those in the South China Sea. That has relevance for India, which has several joint ventures with Vietnamese companies claiming  drilling rights. The trip, as it was, appears to have been a rather muted, dour affair and not the rapprochement that many (including the Chinese media) had had played up. Consequently, newsfeeds have become silent on the China-India issue.

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Xi’s Visit to Sri Lanka Heralds a Coming Free Trade Agreement

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SHANGHAI – An MoU on the development of a free trade agreement (FTA) and 20 other bilateral deals were all in two-days’ work for Chinese President Xi Jinping this week during the Sri Lankan leg of his South Asian tour.

The FTA, projected to cover trade in goods and services, investment, and economic and technological cooperation, comes after a feasibility study was jointly completed by the two nations earlier this year, to positive results.

Meanwhile, the crown among the infrastructure deals was China’s commitment of US$1.4 billion for construction in the port city of Hambantota, home constituency of Sri Lanka’s Economic Minister, Basil Rajapaksa. Continue reading…

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…

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…

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