China
Making the Belt and Road work for Southeast Asia
Author: Phidel Vineles, RSIS
Southeast Asia is an important strategic partner in China’s Belt and Road Initiative (BRI). The region serves as a key link in the BRI’s Maritime Silk Road, which aims to connect China’s coast to South Asia, the Middle East and Europe through the South China Sea and Indian Ocean. But criticisms of the BRI highlight some of the risks of participation. Southeast Asian countries should address these risks by persuading China to adopt multilateral rules that broaden participation in the BRI, including by leveraging ASEAN’s potential role.
According to a 2018 study by Oxford Economics and the CIMB ASEAN Research Institute, BRI projects in ASEAN countries amount to more than US$739 billion. Indonesia is home to the highest BRI investment total amounting to US$171 billion, followed by Vietnam (US$152 billion), Cambodia (US$104 billion), Malaysia (US$98.5 billion), Singapore (US$70.1 billion), Laos (US$48 billion), Brunei (US$36 billion), Myanmar (US$27.2 billion), Thailand (US$24 billion) and the Philippines (US$9.4 billion).
In April 2019, China hosted the second Belt and Road Forum which was attended by 37 heads of state, government and international organisations. During the Forum, President Xi Jinping said the BRI will adopt multilateral rules and international best practices in implementing the projects.
Xi’s apparent willingness to multilateralise the BRI is necessary to prevent projects in Southeast Asia from being exposed to operational risks, policy risks and project cancellations and to address criticisms of its lack of transparency and inclusivity.
In Laos, for example, locals complain that the labour force on the 414-kilometre BRI railway project, which will link its capital Vientiane to the China-Laos border, is mainly provided by Chinese nationals. This echoes the criticisms of BRI in some other countries which have similar complaints.
The promised BRI Debt Sustainability Framework is laudable for aiming to help allay growing concerns that the BRI is exposing its stakeholders to debt traps. In 2018, Myanmar’s Planning and Finance Minister, Soe Win, wanted to ‘lean’ down a China-led special economic zone project in Kyaukpyu, which was estimated to be worth US$10 billion.
China is also establishing a panel of international mediators from BRI countries to resolve cross-border disputes arising from BRI projects. This initiative is important, since a wide range of contracts and deals are already in place between China and ASEAN member states.
If President Xi is willing to multilateralise the BRI, some ASEAN countries have the opportunity to play important roles in improving the provision of mutual benefits.
Singapore has the potential to be a financial and third-country partnership hub within the BRI. According to Enterprise Singapore, 60 per cent of project finance transactions across ASEAN are led by Singapore-based banks. Moreover, Singapore is well regarded for its transparent business dealings and for being one of the largest offshore Renminbi centres. This puts it in an ideal position for Renminbi trade and investment-related flows. Some local banks have also signed MOUs with Chinese banks to cooperate in cross-border financing.
Some Singaporean firms are already proactive in BRI projects in other ASEAN countries. For example, Surbana Jurong is involved in master-planning for the Kyaukpyu Special Economic Zone and Port in Myanmar. Meanwhile, BRI Connect serves as a platform to facilitate communication within and between BRI projects and to promote Singapore as a regional infrastructure and financial hub. The platform is building a business community around the BRI into which Singaporean firms can tap as partners for BRI projects.
Singapore can also be a dispute resolution hub. In January this year, Singapore and China inked an agreement to establish an international panel of mediators to handle disputes that might arise from the multi-billion-dollar BRI projects. The agreement was signed between the Singapore International Mediation Centre and the China Council for the Promotion of International Trade.
Malaysia too plays an important role in helping the BRI achieve its goal of building a ‘community of common destiny’. This was demonstrated when Malaysia successfully renegotiated the controversial East Coast Rail Link (ECRL), reducing the project’s price tag by about a third. Under the new agreement signed in April between Malaysia and China, the 640-kilometre and 20-station ECRL will cost US$16.7 million per kilometre, compared with US$23.2 million…
Business
China’s Golden Rooster Film Festival Kicks Off in Xiamen – Thailand Business News
The 2024 China Golden Rooster and Hundred Flowers Film Festival began in Xiamen on Nov 13, featuring awards, cultural projects worth 31.63 billion yuan, and fostering international film collaborations.
2024 China Golden Rooster and Hundred Flowers Film Festival Opens
The 2024 China Golden Rooster and Hundred Flowers Film Festival commenced in Xiamen, Fujian province, on November 13. This prestigious event showcases the top film awards in China and spans four days, concluding with the China Golden Rooster Awards ceremony on November 16.
The festival features various film exhibitions, including the Golden Rooster Mainland Film Section and the Golden Rooster International Film Section. These showcases aim to highlight the achievements of Chinese-language films and foster global cultural exchanges within the film industry.
On the festival’s opening day, a significant milestone was reached with the signing of 175 cultural and film projects, valued at 31.63 billion yuan ($4.36 billion). Additionally, the International Film and Television Copyright Service Platform was launched, furthering the globalization of Chinese film and television properties.
Source : China’s Golden Rooster film festival opens in Xiamen – Thailand Business News
China
Italy and China New DTA Set to Take Effect in 2025: Important Changes and Implications
Italy ratified an upgraded Double Tax Agreement (DTA) with China, effective in 2025, to reduce tax burdens, prevent evasion, and enhance investment. The DTA introduces modern provisions aligned with international standards, targeting tax avoidance and improving dispute resolution for Italian businesses.
Italy recently ratified the upgraded Double Tax Agreement (DTA), which will finally take effect in 2025. This agreement was signed in 2019 and was designed to reduce tax burdens, prevent tax evasion, and promote Italian investment in China.
On November 5, 2024, Italy’s Chamber of Deputies gave final approval to the ratification of the 2019 Double Tax Agreement (DTA) between Italy and China (hereinafter, referred to as the “new DTA”).
Set to take effect in 2025, the new DTA is aimed at eliminating double taxation on income, preventing tax evasion, and creating a more favorable environment for Italian businesses operating in China.
The ratification bill for the new DTA consists of four articles, with Article 3 detailing the financial provisions. Starting in 2025, the implementation costs of the agreement are estimated at €10.86 million (US$11.49 million) annually. These costs will be covered by a reduction in the special current expenditure fund allocated in the Italian Ministry of Economy’s 2024 budget, partially drawing from the reserve for the Italian Ministry of Foreign Affairs.
During the parliamentary debate, Deputy Foreign Minister Edmondo Cirielli emphasized the new DTA’s strategic importance, noting that the agreement redefines Italy’s economic and financial framework with China. Cirielli highlighted that the DTA not only strengthens relations with the Chinese government but also supports Italian businesses, which face increasing competition as other European countries have already established double taxation agreements with China. This ratification, therefore, is part of a broader series of diplomatic and economic engagements, leading up to a forthcoming visit by the President of the Italian Republic to China, underscoring Italy’s commitment to fostering bilateral relations and supporting its businesses in China’s complex market landscape.
The newly signed DTA between Italy and China, introduces several modernized provisions aligned with international tax frameworks. Replacing the 1986 DTA, the agreement adopts measures from the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project and the OECD Multilateral Instrument (MLI), targeting tax avoidance and improving dispute resolution.
The Principal Purpose Test (PPT) clause, inspired by BEPS, is one of the central updates in the new DTA, working to prevent treaty abuse. This clause allows tax benefits to be denied if one of the primary purposes of a transaction or arrangement was to gain a tax advantage, a move to counter tax evasion through treaty-shopping.
This article was first published by China Briefing , which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, and India . Readers may write to info@dezshira.com for more support. |
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Business
China’s New Home Prices Stabilize After 17-Month Decline Following Support Measures
China’s new home prices fell for the 17th month in October, declining 0.5% from September, but slowing, indicating potential market stabilization amid supportive measures. Second-hand home prices showed mixed trends.
Decline in China’s Home Prices Stabilizes
China’s new home prices continued to decline in October for the 17th consecutive month, although the drop showed signs of slowing. Recent support measures from Beijing appear to be inching the market toward stabilization, as evidenced by a lighter decline compared to earlier months.
Monthly and Yearly Comparisons
According to the latest data from the National Bureau of Statistics, new home prices across 70 mainland cities fell by 0.5% from September, marking the smallest decrease in seven months. Year-on-year, prices dropped by 6.2%, slightly worse than the September decline of 6.1%. In tier-1 cities like Beijing and Shanghai, prices decreased by 0.2%, a smaller fall than 0.5% in the previous month.
Second-Hand Home Market Trends
Second-hand home prices in tier-1 cities experienced a 0.4% increase in October, reversing a 13-month downward trend. Conversely, tier-2 cities observed a 0.4% drop in second-hand prices, while tier-3 cities faced a similar 0.5% decline. Overall, recent trends indicate a potential stabilization in China’s property market.
Source : China’s new home prices slow 17-month decline after support measures kick in