China
Trump versus Huawei: right target, disastrous strategy
Author: William H Overholt, Harvard Kennedy School
The United States has valid complaints about Huawei, but US President Donald Trump is botching the negotiation. The principal issue with Huawei is the lack of reciprocal market access. As long as Huawei has access to all three major markets — the United States, European Union and China — and foreign tech companies are prevented from having full access to the Chinese market, it will soon dominate the global 5G market. With access to all markets, Huawei can sustain research and development budgets larger than its major competitors — Ericsson and Nokia — combined; they cannot compete with Huawei’s superior technological advance. Their imminent unfair destruction is unacceptable.
This happens in many areas. Take credit cards — China UnionPay’s global market share dwarfs that of Mastercard or Visa, not because it’s a better company but because UnionPay has fuller access to all three major markets.
This also happened earlier with pork. US food processing company Hormel Foods was an outstanding company when Chinese companies were smaller and less efficient, but in China it was prominent only in Shanghai. It agreed to buy one of the biggest Chinese pork producers, with the consent of the Chinese company. But the local Chinese Communist Party secretary blocked the deal. Despite being less competitive, over time some Chinese companies grew huge because they had largely exclusive access to the biggest and fastest growing market, China, as well as Western markets. For example, the Chinese food processing company WH Group grew so big that it was able to buy US meat processing company Smithfield Foods. It is now the biggest force in the US market, towering over Hormel Foods. If this trend continues, it will be fatal for many major Western companies. Major US and EU businesses therefore support a decisive challenge to China’s misbehaviour.
The right strategy to counter this is to restrict or deny market access to Chinese companies in sectors where China formally or informally restricts foreign companies’ access. And Western governments should help domestic companies develop technology superior to Huawei’s. They should make it clear that Huawei — and other Chinese companies — will get access when Chinese policy offers commensurate market access and meets their security concerns. Denying Huawei market access now is appropriate, but the door must be open for a future solution. Since Huawei’s major foreign competitors are European, this is the perfect opportunity to build US–EU cooperation.
The United States and European Union are wide open in the sectors where China has a comparative advantage, namely manufacturing, while China remains largely closed in the sectors where the West has a comparative advantage, mainly services. So in addition to restricting China’s access in services, Western countries need targeted restrictions in manufacturing too.
Similar market reciprocity issues existed between the United States and Japan when the latter became a major global economy. This included security issues, with Toshiba selling the Soviet Union technology that impaired US security. Then US president Richard Nixon responded by imposing a 10 per cent tariff on all Japanese exports while making it clear that the United States wanted to solve the problems, not bring Japan down. The United States was largely successful against a competitor that was more sophisticated than today’s China. Past US negotiations with China have been easier than with Japan but this changed when Chinese President Xi Jinping and Trump took power.
Trump focusses on security concerns — which many key international allies do not buy into — and attacks EU allies rather than emphasizing cooperation. He proposes to deny vital exports to Huawei in order to threaten its existence. He deliberately creates a cold war atmosphere designed to mobilize his domestic voter base rather than to solve international problems. He has convinced China’s leaders that his goal is to bring China down. In so doing, he alienates much of the US and EU business community, who want the problems solved, not rendered impossible. Unsurprisingly, China responds with threats to cripple or kill US companies like Boeing.
When Xi came to power, Chinese and foreign elites expected, based on the book China 2030 and other extensive planning efforts, that China was about to move decisively ahead to liberalise its obsolete infant industry protectionism. Instead, Xi has moved backward, with more policies to secure a…
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
- China’s Golden Rooster Film Festival Kicks Off in Xiamen – Thailand Business News
- Italy and China New DTA Set to Take Effect in 2025: Important Changes and Implications
- China’s New Home Prices Stabilize After 17-Month Decline Following Support Measures
- U.S. national debt is its Achilles’ heel, but China sees it as an opportunity
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