China will remain globally relevant
Many nations and areas, including China, are facing unprecedented disruptions as a result of global challenges
The outgoing president of the EU Chamber of Commerce in China has lived in China for over forty years. Wuttke discusses China’s future in an in-depth interview with The Market NZZ.
In this interview Joerg Wuttke highlights that Beijing’s ideological reorientation does not necessarily mean that China wants to isolate itself economically and industrially. President Xi Jinping’s slogan that China should be independent of the world, but the world should be dependent on China, is a deeply worrying prospect for Wuttke, a globalization advocate who founded the EU Chamber of Commerce in China in 2000 with a view to the country’s admission to the WTO.
With the trust between Washington and Beijing gone, Wuttke argues that the Cold War analogy is misleading as today’s conflict is a trade and technology war between two closely intertwined economic powers. He believes that a deliberate attack on Taiwan is not feasible but warns that a ‘sleepwalking’ accident could happen if both parties continue to act irresponsibly.
Wuttke points out that the service sector is doing well, with hotels, restaurants, cinemas, and airplanes booked up again. However, the employment situation is weak, with hardly any new workers being hired.
The manufacturing sector, leading economic indicators, are dipping again. The automotive sector for electric vehicles (EVs) is doing quite well, and China has been exporting at record levels, but the combustion engines sector is struggling.
Joerg Wuttke still sees positive signals from the Party leadership for the private sector, including foreign companies. The new Prime Minister Li Qiang , with a good reputation with private companies is trying to create trust in IT sector, for example.
But he also wants to see the private sector unleashed again, as it has tremendous resilience and entrepreneurial spirit. Finally, unless a company is at risk of being targeted by American sanctions or when it is overrun by Chinese overcapacity, Wuttke advises European companies to stay in China, not to turn their backs on China, despite the political uncertainty.
Joerg Wuttke offers a cautiously optimistic view of the situation in China. While acknowledging the challenges posed by the country’s ideological path and the ongoing conflict with the US, Wuttke believes that there are opportunities for growth and development for both Chinese and foreign companies. Staying in the “fitness club” that is China, to remain globally relevant. The Chinese economy is extremely good at developing products and processes, and they can learn to be faster and more willing to take risks in the Chinese market.
Hong Kong's Budget For 2023-24 To Boost The City's Recovery
The Financial Secretary has proposed a one-time reduction of profits tax for the year of assessment 2022-23 by 100 percent, subject to a ceiling of HK$6,000 per case, which is lower than the previous Budget cap (HK$10,000). This measure will benefit 134,000 businesses while costing the government HK$720 million.
Salaries tax and tax under personal assessment
To assist individuals affected by the epidemic, the 2023-24 Budget proposes a one-time 100 percent reduction in salaries tax and tax under personal assessment for the year of assessment 2022-23, subject to a cap of HK$6,000, which is lower than the previous Budget’s cap (HK$10,000). This measure will benefit 1.9 million taxpayers while costing the government HK$8.5 billion.
New international tax regulations
In 2021, Hong Kong, along with more than 130 other jurisdictions around the world, pledged to implement the Organization for Economic Cooperation and Development (OECD) international tax reform proposals to address base erosion and profit shifting (abbreviated as BEPS 2.0). The Financial Secretary stated in his Budget Plan speech that Hong Kong will implement the global minimum effective tax rate in accordance with international consensus in order to protect Hong Kong’s taxing rights and maintain the city’s tax regime’s competitiveness.
Concerning the new tax rules for the implementation of BEPS 2.0, the Financial Secretary stated that Hong Kong intends to apply the global minimum effective tax rate on these large MNE groups and implement the domestic minimum top-up tax beginning in 2025. He also promised that Hong Kong will launch a consultation exercise to allow MNE groups to make early preparation.
Hong Kong’s economy will continue to be driven by its position as a major regional trading port in the coming years. Budget 2023-24 proposes several strategies for developing trade with overseas markets, particularly emerging ones, to expand its trading industry.
One such strategy would be to broaden its network of free trade agreements (FTAs) and investment treaties (IAs) to include more emerging markets. In his speech, the financial secretary also stated that Hong Kong will work actively to join the Regional Comprehensive Economic Partnership (RCEP), a trade pact of 15 Asia-Pacific countries, including the ten ASEAN members.
Attracting foreign companies to re-domicile in Hong Kong
Hong Kong is well-known as a highly competitive location for multinational enterprises (MNEs) and corporate headquarters. The government intends to introduce a facilitation mechanism to encourage companies with a focus on the Asia-Pacific region to re-domicile in Hong Kong in order to expand market opportunities and attract foreign companies.
This initiative aims to enable these businesses to take advantage of Hong Kong’s favorable business environment and professional services.
SWAP CONNECT - China Hong Kong Financial Integration
July 11, 2022
The Hong Kong Special Administrative Region Government published a press release last July 4th, welcoming the introduction of Swap Connect, which will enable mutual access arrangements between the interest rate swap markets of the Mainland and Hong Kong.
According to a joint announcement by the People’s Bank of China, the Securities & Futures Commission and the Monetary Authority, Swap Connect will be officially launched in six months, following the completion of preparatory work including finalizing the relevant rules and system development, and obtaining regulatory approvals.
Swap Connect refers to an arrangement that enables investors to participate in the financial derivatives markets in the Mainland and Hong Kong through a connection between infrastructure institutions in both places.
It will start with northbound trading in the initial phase, allowing Hong Kong and overseas investors to participate in the Mainland’s interbank derivatives market through arrangements in trading, clearing, settlement etc. between specified institutions in Hong Kong and the Mainland.
Southbound trading will be explored in due course, aiming to allow Mainland investors to participate in Hong Kong’s derivatives market through mutual access arrangements between specified institutions of the two places.
Consolidate Hong Kong’s status as an international financial centre and a business hub
Chief Executive John Lee said Swap Connect marks another milestone in the integration of the Mainland and Hong Kong financial markets through introducing mutual access in the realm of financial derivatives products, enhancing the comprehensiveness of the product suit trading under the mutual market access schemes.
“I am most grateful to the Central People’s Government for announcing the initiative at the beginning of the new-term Government, which will bolster investors’ confidence in our country’s steadfast support to the development of Hong Kong as an international financial centre.
The implementation of the initiative will further support Hong Kong in strengthening its functions as a global offshore renminbi business hub and a risk management centre in response to the targets laid down in the National 14th Five-Year Plan, while contributing to the high-quality opening up of the Mainland capital market.”
Financial Secretary Paul Chan said: “Swap Connect will help drive forward the development of derivatives markets in the Mainland and Hong Kong, offering more diverse risk management tool options to investors and enhancing the ecosystem for derivatives products of the two places.
It will also be conducive to the development of Hong Kong’s offshore RMB market, thereby further consolidating Hong Kong’s status as an international financial centre and a global offshore renminbi business hub.”
Monetary Authority Chief Executive Eddie Yue noted: “Swap Connect will create synergy with Bond Connect to facilitate global investors’ management of interest rate risks for their bond investment on the Mainland. The scheme will add to the depth and breadth of the opening-up of the Mainland financial markets. It will also create more opportunities for financial institutions in Hong Kong and strengthen Hong Kong’s status as a risk management centre.”
Do you have a development project in China? Do you need help to define your strategy?
Please contact Maja Kovačević Coupé
/ Business Development & Account Manager / Altios Hong Kong & Greater China
+852 3703 3775 // +852 6251 2551
CHINA'S POST COVID ERA
July 8, 2022
China, home to 1.3 billion people, the world’s second largest economy, and the largest exporter of goods has shut down its border since early 2020. In the wake of the epidemic, China adhered to a general policy of dynamic clearing, and established various measures to prevent imports from abroad and to prevent a resurgence from within. These measures were designed to ensure that enterprises and employees are protected from global epidemics, its limited possibility of travel, zero-covid policy and strict action to limit the impact and speed of COVID-19 virus has caused a serious imbalance in the world’s socioeconomic status.
For more information please download the article.
Impact of COVID-19 on the Business Community
April 27, 2022
In an effort to voice the concerns of our members, European Chamber of Commerce (EuroCham) conducted a survey on the impact of COVID-19 on the business community this February.
The purpose of the survey is to examine the challenges faced by the European Chambers of Commerce members represented in EuroCham and, more broadly, by Hong Kong’s business community as a result of the ongoing COVID-19 pandemic and the policies of the HKSAR Government.
They have presented the results of this survey with valuable information for the business community in Hong Kong.
Read more about the Impact of COVID-19 on the Business Community by downloading our document!
ALTIOS: 30 years old, an international success story
ALTIOS is the story of a passion for international business and the meeting of 5 personalities.
Founded in Sydney in 1991 by Bruno Mascart, Altios’ mission was initially to support European companies looking to set up in Australia. Over the years, Bruno was joined by David Gerard, Patrick Ferron, Boris Lechevalier and finally Klaus Maier, each one contributing to the Corporate DNA.
ALTIOS’ services have evolved considerably over the last few years to go beyond traditional marketing and sales assistance services. Today, the group offers real expertise integrating all the internationalization solutions enabling companies to expand at each stage of their growth on a market.
As a leading international advisory firm for Small and Mid-Cap companies expanding in the G30, Altios records:
/ + 10,500 carried out projects
/ + 2,000 managed employees
/ + 1,700 created subsidiaries
/ + 750 employees
/ 22 locations spread over the largest markets
/ 4 solutions adapted to each stage of #internationalization: Strategy, Development, Implementation & Investment
Read more about Altios’ story by downloading our press release!