Image source: Gansu Provincial People’s Government
Promoting “One Belt One Road”, Lanzhou Investment & Trade Fair Has Seen 1292 Agreements Signed
The 21st Lanzhou Investment & Trade Fair, which was held with the theme centred on “One Belt One Road”,
has seen 1292 deals being signed, carrying a total worth of 697.3 billion yuan. This marks an increase of 7.1% from the previous year.
Deals signed include 17 that are related to exports, overseas project contracting, and investments. These contracts in total amount to $2.235 billion, which is at least 2 times more than that of the previous year.
Track Laying Completed For Nanning – Baise Section Of Guangxi Railway
Guangxi Railway is one of the main railway under Chinese “Mid- & Long-term Plan of the Railway Network”, and is the first high-speed railway between Guangxi and Yunnan Provinces. The railway has a total length of 710km, with Nanning – Baise section to be 223km, designed specifically for carrying passengers, and travel with an estimated speed of 250 km per hour.
Based on current progress of the project, Nanning – Baise railway section will enter testing phase from 1st October onwards, and estimated to start operations in December this year.
Image Source: Askci.com
More Than 80 State-owned Enterprises Set Up Branches in OBOR Countries
The State-owned Asset Supervision & Administration Commission of the State Council (SASAC) has released a document, indicating the progress of the “going-out” policy that Chinese government has been actively promoting among local enterprises.
The document has revealed that, at the end of 2014, 107 out of 110 state-owned enterprises have set up in total 8515 branches overseas, covering more than 150 countries and regions across the globe. Furthermore, more than 80 of these enterprises have set up operations in OBOR countries.
To cope with challenges of “going global”, many enterprises build new systems such as “Overseas Business Financial Information System””. In addition, approximately 40 state-owned enterprises have set up new specialized departments dealing with overseas operations, such as “International Business Administration”.
Participating In OBOR, Chinese Enterprises May Enjoy Tax Benefits
In an effort to encourage local enterprises participating in OBOR, Chinese authorities have started consultation with OBOR countries, in an attempt to secure tax benefits for Chinese enterprises venturing into these collaborating countries.
Currently, 53 countries have participated in this negotiation for various agendas, firstly to negotiate new terms for modifying tax agreements that were signed earlier on, and more importantly to formulate more new tax agreements. China hopes to reach 2 new terms under these tax agreements with OBOR countries, which are removal of double taxation and greater tax credits.
Malaysia Opening Up Policies, Chinese Investors May Hold Up to 40% Equity
Datuk Seri, head of Ministry of Transport and Malaysian Chinese Association (MCA), has pointed out that Malaysian government will closely cooperate with China in promoting “One Belt One Road “policy.
In terms of investment-related policies, Malaysian may adopt new regulation allowing Chinese investors to hold up to 30 or 40% equity of a local entity. In terms of infrastructure, Malaysia has been building railways and seaports.
What We Think:
“One Belt One Road” (OBOR) policy goes hand-in-hand with another Chinese development policy known as “Going-out”. This week’s news published on 14th and 16th examine the intimate relationship between these 2 policies, and the execution of “going-out” policy, as well as insights on how far this policy may go with the help of OBOR.
According to the news released by SASAC, more than 97% state-owned enterprises have overseas operations, while more than 73% have operations in OBOR countries. The high percentages indicate that “going-out” policy is not a mere slogan. Also, the high 73% indicates a high flow of investments, capital, and human resources between China and OBOR countries.
This “going-out” phenomenon to OBOR countries is likely to be further accelerated, with the possible modification and formulation of new tax agreements with OBOR countries.
With more enterprises going global, a rise in demand for professional consultation and services in areas such as legal, information system, communication, and international business management will be expected.