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China Levies Heavy Corporate Back Taxes From Up to 30 Years Back

Many listed companies in China have recently received notices that they must pay back taxes from several years ago. Some back taxes date as far back as 30 years and amount to hundreds of millions or even billions of yuan. Private enterprises have gone silent after hearing this news, with some announcing that they will cease operations. Last week, seven large companies in Guangdong went bankrupt, including some that had been operating for 30 years.

A recent announcement that companies need to pay back taxes over a 30-year period has caused unease among many enterprises in China and has drawn public attention. On June 13th, VV Drink Co. announced that it had received a notice from China’s tax bureau requiring the company’s former subsidiary to pay over 85 million yuan in unpaid consumption taxes dating from 1994 to 2009. Other companies like Shanghai Shunho New Materials Technology Co., Peking University Healthcare Corp., ChinaLin Securities Co., and LianTronics followed with similar tax repayment announcements, with BoHui Chemical Technology Co. ordered to pay 500 million yuan (US$ 69 million) and consequently issuing a production halt notice.

A lawyer commented that retroactively taxing companies on the past 30 years presumes guilt and violates administrative law principles. He stated that China’s economic downturn has severely reduced government fiscal revenue, leaving tax collection as their only income source, but that pursuing more taxes will only force more private enterprises out of business and increase unemployment.

The report notes examples of companies in Guangdong being taxed retroactively for 20-25 years. A banker noted that, despite local government salary cuts, governments are still in need of more tax revenue due to strained finances. Concerns were raised that taxing private enterprises so heavily could threaten livelihoods.

Source: Radio Free Asia, June 18, 2024
https://www.rfa.org/mandarin/yataibaodao/jingmao/ql2-06182024033604.html

“Southern Water” Has Become the Main Water Supply Source Supplying Beijing

China has a South–North Water Transfer Project to channel fresh water from the Yangtze River in southern China to the more arid and industrialized north, with Beijing as one of the destinations for water transfer. Xinhua reported that by June 12, the project has transferred 10 billion cubic meters of water to Beijing since December 2014 when the first phase of the project started operation.

According to Xinhua, the “southern water” piped in from the Yangtze has met the water quality requirement and directly benefited over 16 million people. It has become the main water supply source for Beijing. However, despite the “southern water” supplying Beijing, the megacity continues to face a severe water shortage.

Source: Xinhua, June 12, 2024
http://www.news.cn/politics/20240612/8bbcbe099a2c44b991261c19d9d1b2fa/c.html

People’s Daily: “Technological Weapons” to Prevent Cheating in the College Entrance Exam

China holds national college entrance exams once a year. Over 13 million people took the exam in 2024.  People’s Daily published an article introducing the idea of using “technological weapons” to prevent cheating on the exam.

  • Beijing has developed an Artificial Intelligence (AI) platform to monitor the exam rooms to identify student cheating and mass incidents (incidents involving many people, e.g. protests).
  • Shanxi Province created a system to ensure that mobile devices cannot “be brought in, used, or send signals out.”
  • Harbin City in Heilongjiang Province set up an AI check gate to prevent students from bringing any electronic equipment into the exam.
  • Henan Province “cleaned out” those local markets that sell cheating equipment. It also set up electromagnetic systems to inspect vehicles, houses, and people for radio transmission equipment and to check radio signals in the relevant frequency bands.

Source: People’s Daily, June 7, 2024
http://edu.people.com.cn/BIG5/n1/2024/0607/c1006-40252243.html

People’s Daily: Help Graduates Create New Career Concept

As college graduates in China are having a hard time landing jobs, People’s Daily published an article suggesting that graduates “reset their career perceptions.”

The article acknowledged that college graduates are facing “employment difficulties.” However, certain small cities and rural areas and certain industries have “recruitment difficulties” and “labor shortages” — according to People’s Daily, the “job paradox” is due to graduates’ (possibly unrealistic) preferences for jobs with internet platform enterprises, technology companies, modern service industries, or government jobs. Among the 2024 job-seeking graduates, 62 percent want to work in state-owned enterprises or government agencies, the article reported.

The article’s proposed solution to the difficulties facing graduates is to “mobilize the government, universities, and companies to change students’ job perspective.” The government should increase its promotional efforts and actively guide college graduates to adopt new career perspectives; universities should actively develop new career concept training and labor education courses, strengthen school-enterprise connections, take companys’ order to train students with specific, targeted skills; companies should expand career development opportunities and enhance their attractiveness; families should create a diligent and progressive atmosphere for their children’s healthy growth and future career development; and university graduates should be independent and face the reality.

{Editor’s Notes: China produces around 10 million college graduates each year, and there are just not enough white-collar jobs to employ all of them. On the other hand, manufacturers face shortage of labors. Jobs in manufacturing, however, are not only low paid (many have been filled by migrant workers, i.e. rural peasants who have migrated to cities) but also lack in job security (as many employers in the manufacturing sector face the pressure of a tough economy and the squeeze from the State-Owned Enterprises (SOE’s) that the government wants to expand).}

Sources: People’s Daily, June 14, 2024
http://theory.people.com.cn/n1/2024/0614/c40531-40256286.html

Lianhe Zaobao: Turkey to Increase Tariffs on All Chinese Cars

Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported that Turkey will increase tariffs on all cars imported from China by 40 percent in a bid to narrow the country’s trade deficit with China. Turkey’s Trade Ministry said that the move is meant to protect Turkey’s declining share of domestic production. The Ministry’s statement also mentioned that the additional tariffs will reduce Turkey’s current account deficit and to encourage domestic investments. The decision will take effect on July 7.

The additional tariffs will be at least US$7,000 per vehicle; if the 40 percent tariff (as calculated based on the price of the imported car) is less than US$7,000 then a minimum tariff of US$7,000 will be imposed.

Turkey previously raised tariffs on Chinese electric cars in 2023 to support the country’s first domestically produced electric car. The Turkish government is now taking measures to combat inflation, including the maintenance of tight monetary policy, the strengthening of fiscal positions, and the narrowing of the trade deficit. Last year, Turkey’s trade deficit was US$45.2 billion. At the end of May, the country’s inflation rate reached about 75.5 percent.

Source: Lianhe Zaobao, June 8, 2024
https://www.zaobao.com.sg/realtime/world/story20240608-3866680

RFI Chinese: Amsterdam Replaces Chinese Monitoring Devices

Radio France Internationale (RFI) Chinese Edition recently reported that the Amsterdam city councilor responsible for information and communications technology policies said that Amsterdam’s city government will stop using CCTV systems and cameras made in China due to concerns over human rights and espionage. Chinese-made devices are expected to be phased out within five years.

There are currently 1,280 Chinese-made cameras in Amsterdam used for various municipal tasks such as surveillance or monitoring of road traffic. In May 2023 the City Council passed a motion calling on the mayor to stop using monitoring devices made in China because they could transmit data and images to the manufacturer, to the Chinese government, or both. There are also concerns that Chinese camera manufacturers may be complicit in human rights abuses in China, including abuses against the Uyghurs.

All organizational units in the city of Amsterdam must look for alternatives to Chinese equipment; each organizational unit can assess alternatives’ feasibility and cost on its own. The city government will also ban intermediary suppliers from sourcing from Chinese manufacturers.

The Association of Dutch Municipalities (VNG) said many municipalities are struggling to resolve the issue of dependence on Chinese devices. The VNG will share details of the Amsterdam procurement contract terms and incentives with all other municipalities.

Source: RFI Chinese, June 11, 2024
https://tinyurl.com/bdrdvk7z

CNA: U.S. was ASEAN’s Largest Export Market in Q1

Primary Taiwanese news agency Central News Agency (CNA) recently reported that, from January to March of this year, the exports to the United States by member countries of the Association of Southeast Asian Nations (ASEAN) surpassed their exports to China. This was the first time in six quarters that ASEAN exports to the U.S. have surpassed exports to China. Trade activity in the region appears to be shifting with the reorganization of global supply chains.

According to statistics reported by the ASEAN Secretariat as well as ASEAN member governments and local media, ASEAN’s exports to the United States in the first quarter this year were US$67.2 billion, exceeding the US$57 billion in exports to China. Experts expressed the belief that this trend reflects that the United States is purchasing more and more semiconductors and electronic components from ASEAN markets while China’s economy continues to exhibit sluggishness.

Malaysia’s exports to the United States in the first quarter increased by eight percent year-over-year, while Malaysian exports to China decreased by 3.3 percent year-over-year. Vietnam’s Q1 exports to the United States increased by 24 percent year-over-year to US$25.7 billion, the highest total among ASEAN countries, far exceeding Thailand’s US$12.6 billion and Singapore’s US$12 billion.

Source: CNA, June 13, 2024
https://www.cna.com.tw/news/aopl/202406130343.aspx

Three Arrested in Hong Kong for Allegedly Insulting Chinese National Anthem

Three Hong Kong citizens were arrested on June 6 at a football stadium for allegedly insulting the national anthem of the People’s Republic of China.

The World Cup Asian qualifying match between Hong Kong and Iran was held at the Hong Kong Stadium on the night of the June 6. As is customary, the Chinese national anthem was played before the match.

The police stated that during the playing of the national anthem, the three arrested individuals either turned their backs to the field or did not stand up, violating Hong Kong’s National Anthem Ordinance. They were subsequently removed from the stadium and arrested.

The case is currently under investigation by Hong Kong’s Serious Crime Team. All three individuals have been released on bail and will have to report to the police early next month.

After the 2014 “Occupy Central” movement in Hong Kong, the city saw a local rise in anti-China sentiment. During international football matches, large groups of fans would boo during the Chinese national anthem.

In June 2020, the “National Anthem Ordinance” came into effect, criminalizing improper use of the national anthem as well as the public, intentional insult of the anthem. The ordinance stipulates that insulting the national anthem can result in a HK$50,000 fine or 3 years imprisonment.

Source: Central News Agency (Taiwan), June 7, 2024
https://www.cna.com.tw/news/acn/202406070057.aspx