China
The complexities of China–Iran strategic balancing
Author: Sanam Vakil, Chatham House
China–Iran relations have been the subject of much speculation after a draft of a 25-year partnership agreement was leaked in July 2020. Some analysts have asserted that this deal is a result of US President Donald Trump’s maximum pressure campaign that is forcing Tehran into Beijing’s orbit to survive sanctions and weather the economic storm of COVID-19 and pushing China to abandon its long-standing policy of non-intervention in the Middle East. But the reality is more complex and reflective of the balanced outgrowth of long-standing ties rather than a significant reorientation.
The leaked draft presents a framework for greater Iranian integration into Beijing’s Belt and Road Initiative (BRI). The agreement would see China invest US$400 billion into Iran’s oil, gas, petrochemical, transportation and manufacturing industry over a 25-year period in exchange for a discount in oil sales alongside military and strategic engagement.
China’s engagement in the Middle East has grown out of President Xi Jinping’s BRI. The region has benefited from Chinese investment as a strategic gateway and global transit point. China has signed five comprehensive strategic partnerships alongside 12 strategic partnerships with regional states, including Israel, promising strengthened commercial and economic ties.
China–Iran relations were elevated to a comprehensive strategic partnership level in 2016. Iran is considered geographically and strategically essential for the BRI. Bilateral relations are also historical, dating back centuries. Ties have been further strengthened by reciprocal presidential visits in 2014, 2016 and 2018. Discussions on the partnership agreement supposedly began during President Hassan Rouhani’s 2014 visit to Beijing.
Unlike other stakeholders in the region, China’s strategy has been primarily economic — believing that economic gains will bring greater stability to the region. This approach has enabled China to avoid taking sides in regional conflicts and has allowed Beijing to benefit from the US security presence in the region.
China’s increasing influence in the region presents an opportunity for Beijing to fill a vacuum at a time when regional states that have long relied on US security are more anxious about US security commitments.
Regional states have reoriented their energy and commercial trade from West to East over the past two decades. This shift took place due to Asia’s growing energy demand. Prior to the spread of COVID-19, China imported almost half of its energy from the region. In 2016, the Middle East saw the largest inflow of Chinese foreign direct investment.
Arab Gulf states like Saudi Arabia and the United Arab Emirates, among others, have benefitted from infrastructure investments in ports, rail links and refineries. Growing synergies in terms of arms sales and the development of an indigenous defence capacity is also in the works. China’s support for Saudi Arabia’s nuclear program is another example of Beijing’s balanced approach in helping Riyadh while also supporting Tehran.
China–Iran ties still remain challenged by Iran’s role in the region, the US withdrawal from the Joint Comprehensive Plan of Action (JCPOA) and the re-imposition of US nuclear-related sanctions. China was a facilitator and signatory of the nuclear agreement and continues to support the implementation of the deal. China was also an economic beneficiary of the agreement taking advantage of numerous investment projects, including in Iran’s energy and infrastructure sectors. But the US withdrawal from the agreement in 2018 has added a US dimension to China–Iran relations.
The US maximum pressure campaign and sanctions have made Chinese investors cautious about engagement with Tehran. China has also been frustrated by Tehran’s regional activities, nuclear program and interventionist foreign policy that are seen as destabilising and deleterious to Beijing’s economic interests.
While Iran is strategically central to the BRI, it remains to be seen if new levels of commercial activity will strengthen the economic and political dimensions of the relationship. Seeking greater Chinese economic assistance in light of US sanctions, Iran has developed a ‘look East’ policy that has been championed by Supreme Leader Ali Khamenei. As part of this strategy, Tehran has hoped that China will take advantage of lucrative investment opportunities in the absence of Western competition.
China was the largest buyer of Iranian crude oil and has also…
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
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