China
China is ageing gracefully, for now
Author: Editorial Board, ANU
China has a new Premier. Former Shanghai Party Secretary Li Qiang has taken the number two spot in China from Li Keqiang, who retired after two terms even as his boss, President Xi Jinping, is delaying his own departure. At a press conference, the new premier cautiously suggested that President Xi would not be the only one working longer than expected: ‘“careful studies” would be made about raising the retirement age for some, perhaps all, Chinese workers’.
The news that China’s population shrank this year for the first time since the 1950s on some reckonings presages an end to the country’s economic modernisation. Without a young and rapidly growing workforce, the impetus to economic growth and modernisation could peter out, some contend.
With an ageing population, a smaller proportion of the workforce has to cover for those not engaged in productive employment and, by simple arithmetic, that drags down average per capita output. A young and rapidly growing population has the potential at least to lift average per capita output because it more readily absorbs the new skills and knowledge to boost productivity or output per head. That’s what gives the old aphorism that China will grow old before it grows rich its ominous ring.
Those who worry about China’s rising power suggest that India is now the best hedging bet, with its much younger and rapidly growing population, although that will depend on whether there is sufficient investment in physical and human capital to stave off immiserising growth. In any case, India’s income is still less than one-fifth that of China. Even if China were to stop growing altogether and stagnate completely, and India were to grow at 7 to 8 per cent every year and double its income every decade, India won’t catch up with China until 2050.
The impact of China’s demographic transition on its economic modernisation is more complex and gradual than these accurate propositions, qualified by the assumptions on which they rest, suggest. Transition takes time. And its character will be qualified by both feasible policy responses and the behaviour of ordinary people to the new circumstances they face.
As Peter McDonald argues in this week’s lead article from the latest issue of East Asia Forum Quarterly, edited by Jocelyn Chey and Ryan Manuel, ‘[i]n the short to medium term, between now and 2040, China’s labour force will fall by only 8 per cent assuming constant age and gender labour force participation rates … because the size of the labour force will increase at older ages while falling at younger ages’.
As Premier Li Qiang somewhat cheekily hinted, the Chinese government has scope to lift older age labour participation rates. That can offset the projected fall in the labour force. In China, older people also have an incentive to continue working because of low pension coverage and few children to provide support, although they are overwhelmingly low-skilled.
A shift from low-skilled, labour-intensive production to higher value-added production based on advanced technologies, McDonald reminds us, is what’s necessary for transition from middle income to higher income status. China can no longer depend on the demographic dividend (a growing workforce, higher labour participation and higher employment) but needs higher labour productivity to drive growth. This is a transition that has been successfully navigated in Japan, South Korea and Taiwan and is already well under way in China, a country ‘which has almost half of the world’s industrial robots and is a manufacturer of electric vehicles, lithium-ion batteries and photovoltaic solar panels’.
The next two decades will be critical.
In the years leading up to 2040, ‘China’s highly productive young workers (who unusually earned roughly twice that of their 50 plus year old counterparts in 2014) will age and increase labour productivity across the age range of the labour force. Each new generation entering the labour force will be better educated than its predecessors. This should ensure healthy economic growth in China over this period’, says McDonald.
Demographic changes that are now underway will certainly have major impacts on the economy of China. But how these changes will all play out is unclear, McDonald points out — especially in the longer term where there is a high degree of uncertainty in population predictions — because there is no precedent of a population falling by such vast numbers (around 658 million between now and 2100). In the medium…
China
China Unveils Plan to Upgrade Industrial Equipment
China unveiled a comprehensive action plan for upgrading industrial equipment, with a focus on driving technological innovation and economic growth. The plan, released on April 9, 2024, aims to enhance competitiveness and sustainability within the manufacturing sector through extensive investment and regulatory support.
China announced an ambitious action plan for industrial equipment upgrading, which aims to drive technological innovation and economic growth through extensive investment and regulatory support.
On April 9, 2024, China’s Ministry of Industry and Information Technology (MIIT) and six other departments jointly released a notice introducing the Implementation Plan for Promoting Equipment Renewal in the Industrial Sector (hereafter referred to as the “action plan”).
Finalized earlier on March 23, 2024, this comprehensive action plan addresses critical issues related to technological innovation and economic development. It reflects China’s proactive stance in enhancing competitiveness and sustainability within its manufacturing sector. The initiative underscores the recognition of industrial equipment upgrading as a top policy priority.
The scope of China’s action plan to upgrade industrial equipment in manufacturing, is extensive, covering various aspects such as:
In line with China’s ambitious goals for industrial modernization and sustainable development, the action plan outlines several key objectives aimed at driving substantial advancements in the industrial sector by 2027.
These objectives encompass a wide range of areas, from increasing investment to enhancing digitalization and promoting innovation, including:
The objectives and key actions proposed in the action plan are summarized below.
This article is republished from China Briefing. Read the rest of the original article.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.
China
China deepens engagement with new Indonesian president as top diplomat visits Jakarta
China’s top diplomat met the outgoing Indonesian president and his successor in Jakarta on Thursday, as Beijing deepened its engagement with future leader Prabowo Subianto, amid a competition for regional influence with the United States.
The meeting with Chinese Foreign Minister Wang Yi was part of a joint commitment to advance the partnership between the two countries, said Prabowo, who visited Beijing in early April after his landslide win in the February general election.
“It is a great honor for me to welcome him [Wang] today. Thank you for the kind reception I received in Beijing a few weeks ago,” Prabowo said, according to an Indonesian defense ministry statement.
Chinese President Xi Jinping had invited Prabowo to visit, and the latter accepting the invitation raised eyebrows in Indonesia because no president-elect had made a foreign visit such as this one without being sworn in. China is Indonesia’s largest trading partner.
Wang, too, mentioned Prabowo’s Beijing trip, according to the same statement.
“We really appreciate and welcome Defense Minister Prabowo’s visit to China,” he said.
“We are committed to continuing to increase bilateral cooperation with Indonesia, both in the defense sector and other fields such as economic, social and cultural.”
Wang is scheduled to go to East Nusa Tenggara province on Friday to attend the China-Indonesia High-Level Dialogue Cooperation Mechanism, a process to support more effective bilateral cooperation. His Jakarta stop was the first of a six-day tour that also includes Cambodia and Papua New Guinea.
Prabowo and Wang discussed cooperation in the defense industry and sector, with potential measures such as educational and training collaboration, as well as joint exercises, said Brig. Gen. Edwin Adrian Sumantha, spokesman at the Indonesian defense ministry.
In fact, the ministry statement said that “China is Indonesia’s close partner and has had close bilateral relations, especially in the defense sector, for a long time.”
Of course, China has also invested billions of U.S. dollars in infrastructure projects in Indonesia, including as part of Beijing’s Belt and Road Initiative – the Jakarta-Bandung high-speed train, which began commercial operations in October 2023, is one such BRI project.
The two countries have drawn closer during outgoing President Joko “Jokowi” Widodo’s two terms, and Beijing would like that to continue as the U.S. tries to catch up with China’s gargantuan influence in Southeast Asia, analysts have said.
Indonesia, China call for ceasefire in Gaza
Both Indonesia and China shared the same position on Israel’s devastating attacks on Gaza, said Wang’s Indonesian counterpart, Retno Marsudi.
Israel’s air and ground strikes have killed more than 33,000 Palestinians following the Oct. 7 attack on the Jewish state by Palestinian militant group Hamas, which killed around 1,100 Israelis.
“We … have the same view regarding the importance of a ceasefire in Gaza and resolving the Palestinian problem fairly through two state solutions,” Retno told reporters in a joint press conference after meeting with Wang.
“Indonesia will support full Palestinian membership in the U.N. Middle East stability will not be realized without resolving the Palestinian issue.”
For his part, Wang slammed Washington for repeatedly vetoing resolutions calling for Israel to end the attacks on the Palestinian territory it occupies.
“The conflict in Gaza has lasted for half a year and caused a rare humanitarian tragedy in the 21st century,” Wang told the media at the same press conference, according to the Associated Press.
“The United Nations Security Council responded to the call of the international community and continued to review the resolution draft on the cease-fire in Gaza, but it was repeatedly vetoed by the United States.”
The conflict in the Middle East offered a strategic opportunity for China to further expand its influence in Southeast Asia, said Muhamad Arif, a lecturer in international relations at the University of Indonesia.
“China is trying to strengthen its position as a key player in the region,” Arief told BenarNews.
China could present an alternative approach to the conflict in Gaza, he said, which may find approval in Southeast Asia’s largest country, Indonesia, and other Mulism-majority states in the region, such as Malaysia and Brunei.
BenarNews is an RFA-affiliated online news organization.
Read the rest of this article here >>> China deepens engagement with new Indonesian president as top diplomat visits Jakarta
China
New Publication: A Guide for Foreign Investors on Navigating China’s New Company Law
The sixth revision of China’s Company Law is the most extensive amendment in history, impacting foreign invested enterprises with stricter rules on capital injection and corporate governance. Most FIEs must align with the New Company Law by July 1, 2024, with a deadline of December 31, 2024 for adjustments. Contact Dezan Shira & Associates for assistance.
The sixth revision of China’s Company Law represents the most extensive amendment in its history. From stricter capital injection rules to enhanced corporate governance, the changes introduced in the New Company Law have far-reaching implications for businesses, including foreign invested enterprises (FIEs) operating in or entering the China market.
Since January 1, 2020, the Company Law has governed both wholly foreign-owned enterprises (WFOEs) and joint ventures (JVs), following the enactment of the Foreign Investment Law (FIL). Most FIEs must align with the provisions of the New Company Law from July 1, 2024, while those established before January 1, 2020 have bit more time for adjustments due to the five-year grace period provided by the FIL. The final deadline for their alignment is December 31, 2024.
In this publication, we guide foreign investors through the implications of the New Company Law for existing and new FIEs and relevant stakeholders. We begin with an overview of the revision’s background and objectives, followed by a summary of key changes. Our in-depth analysis, from a foreign stakeholder perspective, illuminates the practical implications. Lastly, we explore tax impacts alongside the revisions, demonstrating how the New Company Law may shape future business transactions and arrangements.
If you or your company require assistance with Company Law adjustments in China, please do not hesitate to contact Dezan Shira & Associates. For more information, feel free to reach us via email at china@dezshira.com.
This article is republished from China Briefing. Read the rest of the original article.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.
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- China deepens engagement with new Indonesian president as top diplomat visits Jakarta
- New Publication: A Guide for Foreign Investors on Navigating China’s New Company Law
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