China
China’s challenges amid COVID-19 and great power competition
Author: Wang Yong, Peking University
The COVID-19 pandemic and major power competition tested China in 2021. A review of the trends of 2021 reveals the opportunities and challenges ahead.
COVID-19 continues to have a big impact on China’s economy. China controlled the pandemic, which helped its rapid economic recovery as it outperformed other major economies in 2020. But in 2021, new waves of infection sent shock waves from economically underdeveloped regions — including Inner Mongolia and Gansu — to the country’s economic centres like Beijing, Shanghai and Zhejiang. China adheres to a zero-COVID-19 policy of eliminating the virus and public opinion opposes the so-called ‘living with the virus’ model followed by Western countries.
After promoting poverty alleviation for many years, the government announced the goals of ‘common prosperity’, getting rid of absolute poverty and the construction of a well-off society. Great progress has been made in promoting green development, including reversing environmental deterioration. China is also at the forefront of the development of new energy power generation and new energy vehicles.
Since the Biden administration took office in the United States, it has mobilised allies to contain China’s influence, including reinvigorating the Quadrilateral Security Dialogue (Quad) and establishing the AUKUS security arrangement. Senior diplomats from China and the United States engaged in quarrels in March, but since August they have carried out high-level diplomatic activities. The leaders of the two countries held their first video meeting on 16 November. Both sides agreed to stabilise their relations with ‘guardrails’ and facilitate visas for journalists. They also reached a joint statement promising to work together on climate change in Glasgow before the COP26 meeting ended, surprising the world.
But the improvement of Sino-US relations was limited. The United States tightened export restrictions on Chinese high-tech enterprises and forbade US investment in China’s so-called military-civilian fusion firms, safeguarding US advantages in big data, artificial intelligence and quantum computing.
China has adopted key steps to continue integration with the regional and global economy, sending a strong political signal to the outside world on reform. China signed the trade liberalising Regional Comprehensive Economic Partnership (RCEP), which will be implemented at the beginning of 2022. It has formally applied to join the Comprehensive and Progressive Agreement for Trans-Pacific (CPTPP) and the Digital Economy Partnership Agreement, demonstrating a will to promote domestic economic restructuring by meeting high standards of economic openness.
China’s economy is facing some uncertainties. The question is how much influence the new Omicron variant of COVID-19 will have and what the cost of the strict ‘dynamic zeroing-out’ anti-virus measures on the economy will be. The country faces a tough time maintaining economic growth while also containing the pandemic. While lowering the economic growth target to between 4–5 per cent, the government also has prioritised the goal of stable employment.
China is likely to adopt expansive financial and monetary policies to stimulate economic growth, partly to ensure a stable political environment before the 20th Party Congress. China may find it necessary to consult further with CPTPP members to begin the accession process at an earlier time by opening up the domestic market further to create a favourable environment for domestic growth.
Another question is how to address the gap between China’s proposed goal of ‘common prosperity’ and the means to achieve it. Restricting the ‘disorderly expansion of capital’ and promoting more even wealth distribution is the right direction, but building social consensus will be a test for the country’s leadership. Related to this, solving real estate debt and local government debt problems, nurturing employment growth and maintaining moderate economic growth will be a more complicated challenge for China’s economy.
The Party and government at all levels will be in the process of handing over power in 2022. The change of local Party leadership will come at first, followed by the 20th Party Congress when a new Politburo and the new top leaders will be elected. Many people expect Xi Jinping will lead the country for a third five-year term to ensure the policies of the last ten years continue with stable and strong leadership. Yet the transition of power may take some time to…
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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