Apr 20, 2021 09:32 AM

CX Daily: Zhou Xiaochuan on the Challenges of Taxing the Digital Economy

Digital services tax /

Cover Story: Zhou Xiaochuan on the challenges of taxing the digital economy

Along with many of the world’s nations, China faces difficult and delicate decisions around taxation of internet giants and fairness in an increasingly global digital economy, according to Zhou Xiaochuan, former governor of the People’s Bank of China (PBOC) and current president of the China Society for Finance and Banking, a PBOC-managed financial research institution.

On the one hand, advocates of a global digital services tax (DST) framework argue that multinational corporations shouldn’t be allowed to extract massive, tax-free profits from digital consuming countries. On the other hand, setting up a multilateral framework has repeatedly run into roadblocks amid rising protectionism and unilateralism.

In the past three years, more than 20 countries have sought to go it alone with DSTs. That set off a backlash in tech giants’ home countries, particularly the U.S., where Google, Amazon and Facebook are based.

Climate /

Analysis: Sino-U.S. climate change statement signals revived cooperation by two biggest carbon emitters

The joint Sino-U.S. statement on climate change shows that the world’s two largest carbon emitters have revived cooperation ahead of the U.N. climate conference in Glasgow later this year.

According to the Sunday statement, China and the U.S. will cooperate with each other and with other countries to “tackle the climate crisis, which must be addressed with the seriousness and urgency that it demands.”

The two sides will also “cooperate to promote a successful COP 26 in Glasgow, aiming to complete the implementation arrangements for the Paris Agreement and to significantly advance global climate ambition on mitigation, adaptation, and support.”

China criticizes U.S. on climate as Xi meets Merkel, Macron

Weekend Long Read: Zhou Xiaochuan on the key questions facing China’s carbon ambitions (Part 2)


Diplomacy /

Biden and Suga pledge to strengthen alliance in challenge to China

U.S. President Joe Biden and Japanese Prime Minister Yoshihide Suga pledged Friday following a meeting at the White House to strengthen cooperation on climate change and regional security, as well as bolster their alliance to counter China’s rise.

“We underscore the importance of peace and stability across the Taiwan Strait and encourage the peaceful resolution of cross-Strait issues,” according to a joint statement issued after the meeting, which was Biden’s first in-person meeting with a foreign leader since taking office Jan. 20.

The last time the U.S. and Japan mentioned Taiwan in a joint statement was in 1969 when then-U.S. President Richard Nixon held talks with Japanese Prime Minister Eisaku Sato.

Economy /

Boao Forum predicts Asia’s economy will grow 6.5% in 2021

The Asian economy will grow 6.5% this year after a recession caused by Covid-19 resulted in a 1.7% contraction in 2020, according to a report released by the Boao Forum for Asia.

Due to the impact of the pandemic, Asian economies suffered falling prices, increased unemployment, reduced trade and cross-border investment and changes in commodity prices, according to the forum’s Asian Economic Outlook and Integration Process report.

Lawsuit /

China sees first class-action lawsuit against listed company

A court in southern China’s Guangzhou city accepted a lawsuit filed by a group of retail investors through a special representative against Kangmei Pharmaceutical Co. on fraud allegations, marking the first ever class-action lawsuit against a listed company in China.

The China Securities Investor Service Centre (CSISC), a government-backed body, is suing Kangmei on behalf of 56 investors, according to the court document released Friday.

Kangmei, one of the country’s biggest listed drugmakers, was accused of financial reporting fraud involving 88.6 billion yuan ($12.6 billion) of overstatements between 2016 and 2018.

Quick hits /

China’s internet stocks face more pain, top global investors say

Huarong in normal operation with ample liquidity, regulator says

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Huawei /

First car equipped with Huawei self-driving system goes on sale

The first commercial passenger car fitted with an autonomous driving system developed by Huawei Technologies Co. Ltd. has gone into pre-order, cementing the company’s push into the auto industry as it tries to cushion the impact of U.S. sanctions on its core smartphone business.

Arcfox, a brand owned by the electric vehicle subsidiary of Shanghai-listed automaker BAIC BluePark New Energy Technology Co. Ltd., said Saturday it started taking pre-orders for the Polar Fox Alpha S, a four-door electric sedan equipped with Huawei’s self-driving technology and a version of the Shenzhen-based company’s homegrown Harmony operating system.

The head of Huawei’s car unit said the company would invest $1 billion in automotive technology this year, placing it firmly among a group of Chinese tech giants pushing aggressively into an auto sector undergoing a historic shift toward increasingly autonomous, connected, and new-energy powered vehicles.

In Depth: How tech giants will reshape carmaking

SOEs /

Record profits at China’s biggest state firms show strength of economic recovery

The profits of China’s centrally administered state-owned enterprises (SOEs) tripled in the first quarter, setting a record for the period as the country’s economy continued to recover from the Covid-19 pandemic, the top SOE regulator said Friday at a press conference (link in Chinese).

In the first quarter, central SOEs earned 415.3 billion yuan ($63.7 billion) in net profits, more than double the amount reported for the same period last year and up 31.1% from the same period in 2019, said Peng Huaguang, secretary general of the State-owned Assets Supervision and Administration Commission (SASAC).

Peng said the central SOEs extended a growth trend that started in the second half of last year. Enterprises in certain industries, including petroleum, metallurgy, machinery, construction and the military, recorded first-quarter net profits that more than doubled from the same period a year earlier.

Flying car /

China to examine airworthiness of battered drone-maker’s ‘flying car’

China’s civil aviation authority set up a working group to establish the airworthiness of a “flying car” from passenger drone startup EHang Holdings Ltd., in a step forward for the company whose shares have continued to slide since a downgrade from Morgan Stanley last week.

The Civil Aviation Administration of China (CAAC) established a type certificate team last week to evaluate the two-seat EH216, which the Guangzhou-based company calls a “pilotless air taxi” or “autonomous aerial vehicle” (AAV), according to statements Friday from the CAAC’s central south regional office and the company.

EHang posted an unaudited full year loss of $14.1 million that morning, and its Nasdaq-listed shares slid 2.5% April 13 when Morgan Stanley said the stock was overpriced in a note that cited regulatory uncertainty and growing competition.

Jack Ma /

Ant Group denies report that it’s exploring ways for Jack Ma to sell stake

Ant Group Co. Ltd. denied a report that the Chinese finance-technology company is exploring ways for founder Jack Ma to sell his stake and give up control as a means to ease pressure from the country’s regulators.

Reuters reported earlier that officials from the People’s Bank of China and the China Banking and Insurance Regulatory Commission held talks with Ma and Ant Group separately between January and March, where the possibility of Ma’s exit was discussed. The report cited people familiar with the matter.

The company said it hoped Ma’s stake would be sold to existing shareholders in Ant or its e-commerce partner Alibaba Group Holding Ltd., Reuters said.

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