The new German government has set a clear direction for its relations with China: Germany’s approach is to become more European. So it is rather fitting that France, Germany’s closest partner, took over the EU Council presidency at the turn of the year.
Amelie Richter took a closer look at the French leader’s agenda for Europe and discovered: Even if Emmanuel Macron wants to set an Indo-Pacific focus and China is not explicitly at the top of the list, there will be no way to avoid the People’s Republic. Aside from strategic decisions, there are also important personnel decisions to be made.
China’s opening up policy has a rather bad reputation right now. But things can work differently. Just at the turn of the year, the Chinese State Council gave all foreign employees in China an unexpected present: The planned tax law change was postponed for a year. Finn Mayer-Kuckuk has analyzed the situation. In times of almost completely shut borders, the postponement is an unexpected offer of cooperation to the international business community.
Last but not least, I would like to bring your attention to an obituary. Jonathan D. Spence passed away during the Christmas holidays at the age of 85. He was one of the world’s most renowned sinologists, and presumably almost everyone interested in China has at least one of his books on their shelf. In today’s briefing we also take a look at what characterized his works on China.
I hope you enjoy today’s briefing!
New year, new EU Council presidency: On January 1, Paris took over the leadership of the body of heads of state and government. In the French capital, even the Eiffel Tower carried the EU flag to mark the occasion. After the relatively weak and disputed Slovenian presidency under the controversial Prime Minister Janez Janša, France’s head of state Emmanuel Macron is now taking over. Expectations are high, as the 44-year-old started the French presidency with a clear European focus. Three main pillars are to shape the next six months: “Relance, puissance, appartenance” – “recovery, strength, sense of belonging”.
While China may not be at the top of the agenda, the current trade dispute with Lithuania inevitably shifts the EU’s relationship with the People’s Republic into focus. The EU also continues to struggle to find a common line for the upcoming Winter Olympics. The domestic agenda also has the upcoming French presidential election in April – so France is starting with a full agenda.
The first three months of the year will be particularly intense for Paris, says researcher Antoine Bondaz, who focuses on China and Asia for the French think tank Fondation pour la recherche stratégique (FRS). From April onwards, it will become increasingly difficult to plan events with high-ranking representatives. The election campaign in France follows soon afterward. Foreign policy has so far played a minor role in the race for France’s highest office. The debate is dominated by migration and Covid policy.
The French EU Council presidency too will focus on the lingering issues of migration and the Covid pandemic. In his New Year’s address, Macron promised to do everything in his power to make the presidency a moment of progress: “Progress on controlling our borders, on climate-friendly technologies, on equality between men and women, on building a new alliance with Africa, on better monitoring of major internet platforms, on culture in Europe.”
Among other things, Macron wants to launch a Schengen reform to improve border defense in the next six months and calls for an EU-wide minimum wage and the creation of a CO2 border adjustment for imports, the so-called Carbon Border Adjustment Mechanism (CBAM) (China.Table reported).
The main focus in foreign policy will be on “puissance” – the strength and power that Brussels aims to display as a self-proclaimed geopolitical power, Bondaz explains. The focus here is primarily on the Indo-Pacific region. Seven of France’s thirteen overseas departments are located in the Indian Ocean and South Pacific after all. The Élysée had already presented a strategy for the region in 2018.
Bondaz is convinced that under the leadership of the French, the EU’s Indo-Pacific strategy in particular will shift into focus. A first ministerial meeting between member states and countries in the region is scheduled for the end of February. “It will be a big event in Paris.” Whether it will also generate concrete results, however, remains to be seen, says Bondaz. It certainly would be time.
Brussels had presented its Indo-Pacific strategy back in September last year. It is now crucial that key projects are identified and addressed expeditiously, the French researcher said. “How do we ensure that we can build synergies with partners in the region like Japan and Korea?” These and other questions are on the minds of the French EU presidency. “We need pilot projects now, as there are no clear initiatives so far.” China may not be officially on the priority list – but with increased involvement in the Indo-Pacific, the relationship with Beijing will certainly play an unofficial role.
Bondaz sees it as an advantage that France is virtually on home soil. Around 1.5 million French citizens live in the Indo-Pacific region. In the Indian Ocean on the islands of La Réunion and Mayotte, in the Pacific in New Caledonia and French Polynesia. In addition, 7000 French troops are permanently stationed in the Indo-Pacific. The region’s distinctive characteristics must be considered in the implementation of the EU strategy, especially the “maritime dimension,” according to Bondaz. This primarily involves securing international sea routes and important maritime trade routes. This is an issue where Beijing fears a growing influence on the Taiwan Strait. This bears the potential for conflict.
Another of Brussels’ geopolitical strategies also needs to gain momentum during the six months of the French Council Presidency: The EU Commission wants the infrastructure initiative Global Gateway to produce concrete projects by mid-2022.
President Macron has been advocating a more independent supply for Europe, not least since the start of the Covid pandemic, and is already, for example, relocating the production of paracetamol to France. In his speech on the priorities of the EU Presidency, Macron emphasized the strive for self-sufficiency, including semiconductors.
Macron also made a statement during his speech that was less well-received. Addressing a possible diplomatic boycott of the Winter Olympics in Beijing, France’s head of state expressed that he doesn’t think much of being absent: “I don’t think we should politicize these topics, especially if it’s to take steps that are insignificant and symbolic.” France’s president, however, will not travel to Beijing, Bondaz is sure. Ministers may be sent – but Macron himself will not visit, despite having attended the Olympic Games in Japan this summer. Should Beijing have any complaints about it, the presidential election in France or the pandemic situation could be cited as reasons, Bondaz said. Paris, by the way, is hosting the 2024 Olympics.
Bondaz believes that the still shelved CAI investment agreement will not experience a revival under the French Council Presidency. Currently, there is no way to resolve the impasse of mutual sanctions – and France can’t change that either. Macron was hammered with criticism from left and right shortly after the political agreement in December 2020 (China.Table reported). So it would not be the worst idea to simply leave the agreement, which is unpopular in France, in the freezer as long as he is in the election campaign.
Brussels had repeatedly shown its intention to finalize trade instruments that could be used defensively against Beijing, while the CAI remained unfinished. Next year, among other things, new regulations for international procurement are to be finalized through the International Procurement Instrument (IPI). This, however, could cause a dispute between the Parliament and the EU Council about the implementation authority (China.Table reported). However, it is expected that IPI can be finalized under the French Council Presidency.
There is also a need to discuss the authority of the anti-coercion instrument (API), which is intended to respond more effectively to economic pressure from third countries such as China. Given the current situation in Lithuania, there is a particular focus on the EU Commission’s initiative, which is to be discussed in the Council and the EU Parliament soon.
Progress on foreign investment legislation is also expected in the first six months. In March, the so-called EU Strategic Compass is to be adopted (China.Table reported). In addition, the search continues for a suitable time for a face-to-face meeting between the EU and Chinese leaders. Several possible dates for the summit have already been discussed – but given the ongoing pandemic, the Winter Games in Beijing, and the People’s Congress in early March, it is unlikely that it will happen within the next three months.
2022 also holds some staff changes in store: China’s ambassador to Brussels, Zhang Ming, has already left the Belgian capital, the Chinese EU mission wrote in its newsletter on New Year’s Eve. His successor is still unclear. There is also a change on the other end. The EU ambassador to China, Nicolas Chapuis, will also be leaving his post soon.
The end of tax breaks for foreigners living in China is a much-discussed topic in the expat community. The State Council under Li Keqiang has now decided to extend the transition period until the end of the new year (China.Table reported). Accordingly, last year’s rules will continue to apply in 2022. But postponed doesn’t mean canceled. As planned, the tax law will be aligned with regulations for nationals in 2023.
The foreign chambers of commerce see the postponement as a success of their lobbying. Both the national chambers and the US Chamber of Commerce (AmCham), as well as the EU Chamber of Commerce (European Chamber), had used their contacts with the Chinese government to overturn the tax reform if possible. Now there was at least a reprieve. “The extension of non-taxed benefits is of utmost importance, not only for a large number of foreign companies employing experienced expatriates but also for China itself,” says Joerg Wuttke, president of the EU Chamber. The imminent risk of an exodus of international specialists has thus been averted.
The decision just before the end of the year is generally regarded as a positive signal in times of tightly shut Chinese borders caused by the Covid pandemic. Coupled with the Chinese government’s efforts towards more industrial independence, international companies had felt less and less welcome. Instead of the long-awaited opening, they have rather experienced an expansion of existing restrictions into new areas.
From a Chinese perspective, on the other hand, the change in tax law was a logical step. The obligations of foreign employees would thus be aligned with Chinese laws. Specifically, this involves several employer benefits:
These fringe benefits usually have to be paid directly by the employer. They should not go through the employee’s account for better clarity. But especially for smaller items, tax bureaus also accept refunds for receipts (Fapiao).
The new regulations indeed provide for new deductions. However, the effect of the savings would be nowhere near the previous deductions. According to the new rules, deductibles are:
The latter points clearly show the proximity to domestic tax law. They rarely occur for expats. The big difference to the old system: Previously, these benefits were simply completely excluded from income. In the future, they will be considered non-cash benefits, but at least allowances can be deducted. However, these allowances are small.
For example, tuition fees up to ¥1000 per month are deductible. But the German School in Beijing alone costs over €25,000 in the first year (depending on the individual case). That is about ¥15,000 a month. Amcham estimates that an employee who previously received ¥960,000 in fringe benefits per year would soon have to pay a higher tax of ¥785,000. That is about €100,000. Since employment contracts often guarantee parity with the original location, this means additional costs for the company in the future.
The outlines of the new regulations have been known since the beginning of 2019. A transition period originally set to last three years has been in place since 2018. Expats can currently choose whether to pay tax under the old or the new procedure. However, the reformed version has only found few voluntary supporters. Figures from Amcham show that an overwhelming majority of employees opted for the previous benefits.
In many cases, however, these new regulations will mainly affect employers. Secondment contracts often stipulate that the company bears the additional costs. But this is also relevant for China as a location. Secondments bear significant costs for companies as it is. In response to rising costs, the obvious corporate response would be to reduce expat positions.
In any case, the chambers warn of two trends: an exodus of expats who have to bear the costs themselves, and a loss of importance of China as a location. At 45 percent, the standard tax rate in China is already rather high by Asian standards. The figure is also higher than the EU average. Management consultancy KPMG sees China here on the same level as Germany. The EU Chamber now expects that the State Council’s friendly gesture will “improve China’s international relations overall”.
With the extension of the transitional period, a core demand of the chambers has been met. However, they would also like to see untaxed benefits retained. The AmCham in Shanghai is also asking for more predictability in rule changes. A notice six months in advance would be required for companies to adjust. This advance notice was not given in the unexpected decision on New Year’s Eve. But this time at least, it went in the desired direction.
Anyone who studies or was somehow involved with China likely knew him: Jonathan D. Spence. He is considered one of the most renowned sinologists of our time. At least one of his many books can be found on the shelves of anyone interested in China: be it “The Search for Modern China”, “The Gate of Heavenly Peace”, “The Death of Woman Wang” or “God’s Chinese Son”, the biography of Hong Xiuquan (洪秀全), the founder and leader of the Taiping movement that once shook all of China.
Over the Christmas holidays, Jonathan Spence passed away at his home in West Haven, Connecticut. As his wife Annping Chin told American media, he died due to complications with his Parkinson’s disease. He was 85.
Although China and the US can hardly agree on anything lately, they share an admiration of Spence. He has influenced generations of Sinologists, writes the Washington Post. The Chinese business magazine Caixin praises Spence for explaining China to the West. And even the Beijing-based Global Times, which is usually fond of nationalist rhetoric, praises Spence as the guru of modern Chinese studies in the USA. The German historian Juergen Osterhammel once called Spence “one of the greatest artists of visualizing foreign worlds”.
Spence taught at the renowned Yale University for more than 40 years. His survey course on Chinese history alone was so popular all those years that it had to be held in the university’s largest halls – more often than not even in the campus chapel.
The lecture also produced what is probably his best-known book: The Search for Modern China. Published in 1990, it was translated into dozens of languages, became an international bestseller, and has long since become a classic in China’s history. In about 870 pages, Spence describes the multifaceted development of China from the 17th century to the events around Tiananmen Square in 1989. The book’s title reflects his approach: searching, ever vigilant, with great respect for detail.
The New York Times once wrote about his book “Treason by the Book”: “This is a delicate spider’s web of a book, deft, fascinating and precise as Chinese calligraphy.” The book is about the scholar Zeng Jing (曾靜), who tried to incite a rebellion against the emperor Yongzheng (雍正) in 1730.
Spence’s first publication appeared in 1966 under the title “Ts’ao Yin and the Kang-Hsi Emperor: Bondservant and Master”. In the foreword, Spence writes about his protagonist: “No great claims need be formulated concerning the importance of Ts’ao Yin. He was neither one of the great generals of the Qing dynasty nor a decisive figure in the reign of Emperor K’ang-hsi. Rather, his importance lies in the fact that the course of his life tells us much about the society in which he lived and the institutions in which he operated.
These words highlight the fundamental character of his work: Spence did not want to create a projection called China. At a time when historiography was little more than pure event history, Spence dared something revolutionary: With him, history was not made by places, dates, or treaties, but by people. He used concrete biographies in their concrete Chinese conditions to portray China as it was at the time.
Through the lives of historically authenticated figures, Spence’s readers casually learn about the social, cultural, and political events of times past. Spence himself once wrote: “It is my tacit belief that bold generalizations are usually far from reality and that individual experience is rare is in line with the assumed general trend.”
But his style was also met with criticism. Because Spence sometimes lets his characters speak, some critics accuse him of sometimes blurring the line between historical truth and literary fantasy.
Yet Spence attached great importance and care to the use of Chinese sources. By luck and chance, he was the first Western historian to visit the imperial archives in Taiwan in 1962. At the time, the documents were neither organized nor cataloged, so Spence worked his way through mountains of messy paper. In a 2010 interview, he described how he stumbled upon the handwritten notes of Qing Emperor Kangxi (K’ang-hsi, 康熙). “It was something that is still very emotional for me.”
Jonathan Dermot Spence was born in Surrey, England, in 1936. After spending two years in Germany during World War 2, he first studied history at Cambridge before finally focusing on China at Yale. There, he taught for more than 40 years until his retirement in 2008. With his second wife Annping Chin, he lived in West Haven, Connecticut, until his death.
Spence has received numerous honors and prizes: He received the John Addison Porter Prize for his dissertation and was elected to the American Academy of Arts and Sciences in 1985, the American Philosophical Society in 1992, and the British Academy in 1997. In 2001, Queen Elizabeth II named him a Companion of the Distinguished Order of St Michael and St George. He has received honorary doctorates and degrees from Yale, Oxford, Hong Kong, Beijing, and Nanjing Universities, among others.
Spence’s Chinese name, by the way, is 史景遷 (Shǐ Jǐngqiān) – it is a tribute to the Chinese historian and writer Sima Qian. The latter is considered the founder of Chinese historiography because he was the first to write a summary of more than 2000 years of Chinese history, from the legendary Yellow Emperor to his time in the first century BC.
Spence was once asked what had sparked his interest in China: the thousands of years of history, the beautiful Chinese characters, or the mighty emperors on the dragon throne? Nothing of the sort. Rather, it was simple Chinese workers. His father had taken him to the cinema when he was a little boy; they were going to see a Disney film. It was 1944 and news was shown before the movie, with one news story making a lasting impression on young Spence: simple Chinese laborers had built a road through the mountains with their bare hands while fighting Japanese troops. “I found that performance very impressive.” It was this fascination with ordinary people that drove Spence throughout his academic career.
With Jonathan Spence, the world has lost one of its most influential China experts.
It’s an icy highlight right at the beginning of the year: the Ice Festival in Harbin. Its origins lie in Harbin’s traditional lantern shows and garden parties, which have been held annually in winter since 1963. In the meantime, the festival has become highly professionalized and takes place on Sun Island, an area a few minutes away from the city. There, more than 12,000 workers create a colorful world of ice and snow at around minus 20 degrees. The festival doesn’t officially start until January 5. But it’s so beautiful that it’s hard to wait.
The new German government has set a clear direction for its relations with China: Germany’s approach is to become more European. So it is rather fitting that France, Germany’s closest partner, took over the EU Council presidency at the turn of the year.
Amelie Richter took a closer look at the French leader’s agenda for Europe and discovered: Even if Emmanuel Macron wants to set an Indo-Pacific focus and China is not explicitly at the top of the list, there will be no way to avoid the People’s Republic. Aside from strategic decisions, there are also important personnel decisions to be made.
China’s opening up policy has a rather bad reputation right now. But things can work differently. Just at the turn of the year, the Chinese State Council gave all foreign employees in China an unexpected present: The planned tax law change was postponed for a year. Finn Mayer-Kuckuk has analyzed the situation. In times of almost completely shut borders, the postponement is an unexpected offer of cooperation to the international business community.
Last but not least, I would like to bring your attention to an obituary. Jonathan D. Spence passed away during the Christmas holidays at the age of 85. He was one of the world’s most renowned sinologists, and presumably almost everyone interested in China has at least one of his books on their shelf. In today’s briefing we also take a look at what characterized his works on China.
I hope you enjoy today’s briefing!
New year, new EU Council presidency: On January 1, Paris took over the leadership of the body of heads of state and government. In the French capital, even the Eiffel Tower carried the EU flag to mark the occasion. After the relatively weak and disputed Slovenian presidency under the controversial Prime Minister Janez Janša, France’s head of state Emmanuel Macron is now taking over. Expectations are high, as the 44-year-old started the French presidency with a clear European focus. Three main pillars are to shape the next six months: “Relance, puissance, appartenance” – “recovery, strength, sense of belonging”.
While China may not be at the top of the agenda, the current trade dispute with Lithuania inevitably shifts the EU’s relationship with the People’s Republic into focus. The EU also continues to struggle to find a common line for the upcoming Winter Olympics. The domestic agenda also has the upcoming French presidential election in April – so France is starting with a full agenda.
The first three months of the year will be particularly intense for Paris, says researcher Antoine Bondaz, who focuses on China and Asia for the French think tank Fondation pour la recherche stratégique (FRS). From April onwards, it will become increasingly difficult to plan events with high-ranking representatives. The election campaign in France follows soon afterward. Foreign policy has so far played a minor role in the race for France’s highest office. The debate is dominated by migration and Covid policy.
The French EU Council presidency too will focus on the lingering issues of migration and the Covid pandemic. In his New Year’s address, Macron promised to do everything in his power to make the presidency a moment of progress: “Progress on controlling our borders, on climate-friendly technologies, on equality between men and women, on building a new alliance with Africa, on better monitoring of major internet platforms, on culture in Europe.”
Among other things, Macron wants to launch a Schengen reform to improve border defense in the next six months and calls for an EU-wide minimum wage and the creation of a CO2 border adjustment for imports, the so-called Carbon Border Adjustment Mechanism (CBAM) (China.Table reported).
The main focus in foreign policy will be on “puissance” – the strength and power that Brussels aims to display as a self-proclaimed geopolitical power, Bondaz explains. The focus here is primarily on the Indo-Pacific region. Seven of France’s thirteen overseas departments are located in the Indian Ocean and South Pacific after all. The Élysée had already presented a strategy for the region in 2018.
Bondaz is convinced that under the leadership of the French, the EU’s Indo-Pacific strategy in particular will shift into focus. A first ministerial meeting between member states and countries in the region is scheduled for the end of February. “It will be a big event in Paris.” Whether it will also generate concrete results, however, remains to be seen, says Bondaz. It certainly would be time.
Brussels had presented its Indo-Pacific strategy back in September last year. It is now crucial that key projects are identified and addressed expeditiously, the French researcher said. “How do we ensure that we can build synergies with partners in the region like Japan and Korea?” These and other questions are on the minds of the French EU presidency. “We need pilot projects now, as there are no clear initiatives so far.” China may not be officially on the priority list – but with increased involvement in the Indo-Pacific, the relationship with Beijing will certainly play an unofficial role.
Bondaz sees it as an advantage that France is virtually on home soil. Around 1.5 million French citizens live in the Indo-Pacific region. In the Indian Ocean on the islands of La Réunion and Mayotte, in the Pacific in New Caledonia and French Polynesia. In addition, 7000 French troops are permanently stationed in the Indo-Pacific. The region’s distinctive characteristics must be considered in the implementation of the EU strategy, especially the “maritime dimension,” according to Bondaz. This primarily involves securing international sea routes and important maritime trade routes. This is an issue where Beijing fears a growing influence on the Taiwan Strait. This bears the potential for conflict.
Another of Brussels’ geopolitical strategies also needs to gain momentum during the six months of the French Council Presidency: The EU Commission wants the infrastructure initiative Global Gateway to produce concrete projects by mid-2022.
President Macron has been advocating a more independent supply for Europe, not least since the start of the Covid pandemic, and is already, for example, relocating the production of paracetamol to France. In his speech on the priorities of the EU Presidency, Macron emphasized the strive for self-sufficiency, including semiconductors.
Macron also made a statement during his speech that was less well-received. Addressing a possible diplomatic boycott of the Winter Olympics in Beijing, France’s head of state expressed that he doesn’t think much of being absent: “I don’t think we should politicize these topics, especially if it’s to take steps that are insignificant and symbolic.” France’s president, however, will not travel to Beijing, Bondaz is sure. Ministers may be sent – but Macron himself will not visit, despite having attended the Olympic Games in Japan this summer. Should Beijing have any complaints about it, the presidential election in France or the pandemic situation could be cited as reasons, Bondaz said. Paris, by the way, is hosting the 2024 Olympics.
Bondaz believes that the still shelved CAI investment agreement will not experience a revival under the French Council Presidency. Currently, there is no way to resolve the impasse of mutual sanctions – and France can’t change that either. Macron was hammered with criticism from left and right shortly after the political agreement in December 2020 (China.Table reported). So it would not be the worst idea to simply leave the agreement, which is unpopular in France, in the freezer as long as he is in the election campaign.
Brussels had repeatedly shown its intention to finalize trade instruments that could be used defensively against Beijing, while the CAI remained unfinished. Next year, among other things, new regulations for international procurement are to be finalized through the International Procurement Instrument (IPI). This, however, could cause a dispute between the Parliament and the EU Council about the implementation authority (China.Table reported). However, it is expected that IPI can be finalized under the French Council Presidency.
There is also a need to discuss the authority of the anti-coercion instrument (API), which is intended to respond more effectively to economic pressure from third countries such as China. Given the current situation in Lithuania, there is a particular focus on the EU Commission’s initiative, which is to be discussed in the Council and the EU Parliament soon.
Progress on foreign investment legislation is also expected in the first six months. In March, the so-called EU Strategic Compass is to be adopted (China.Table reported). In addition, the search continues for a suitable time for a face-to-face meeting between the EU and Chinese leaders. Several possible dates for the summit have already been discussed – but given the ongoing pandemic, the Winter Games in Beijing, and the People’s Congress in early March, it is unlikely that it will happen within the next three months.
2022 also holds some staff changes in store: China’s ambassador to Brussels, Zhang Ming, has already left the Belgian capital, the Chinese EU mission wrote in its newsletter on New Year’s Eve. His successor is still unclear. There is also a change on the other end. The EU ambassador to China, Nicolas Chapuis, will also be leaving his post soon.
The end of tax breaks for foreigners living in China is a much-discussed topic in the expat community. The State Council under Li Keqiang has now decided to extend the transition period until the end of the new year (China.Table reported). Accordingly, last year’s rules will continue to apply in 2022. But postponed doesn’t mean canceled. As planned, the tax law will be aligned with regulations for nationals in 2023.
The foreign chambers of commerce see the postponement as a success of their lobbying. Both the national chambers and the US Chamber of Commerce (AmCham), as well as the EU Chamber of Commerce (European Chamber), had used their contacts with the Chinese government to overturn the tax reform if possible. Now there was at least a reprieve. “The extension of non-taxed benefits is of utmost importance, not only for a large number of foreign companies employing experienced expatriates but also for China itself,” says Joerg Wuttke, president of the EU Chamber. The imminent risk of an exodus of international specialists has thus been averted.
The decision just before the end of the year is generally regarded as a positive signal in times of tightly shut Chinese borders caused by the Covid pandemic. Coupled with the Chinese government’s efforts towards more industrial independence, international companies had felt less and less welcome. Instead of the long-awaited opening, they have rather experienced an expansion of existing restrictions into new areas.
From a Chinese perspective, on the other hand, the change in tax law was a logical step. The obligations of foreign employees would thus be aligned with Chinese laws. Specifically, this involves several employer benefits:
These fringe benefits usually have to be paid directly by the employer. They should not go through the employee’s account for better clarity. But especially for smaller items, tax bureaus also accept refunds for receipts (Fapiao).
The new regulations indeed provide for new deductions. However, the effect of the savings would be nowhere near the previous deductions. According to the new rules, deductibles are:
The latter points clearly show the proximity to domestic tax law. They rarely occur for expats. The big difference to the old system: Previously, these benefits were simply completely excluded from income. In the future, they will be considered non-cash benefits, but at least allowances can be deducted. However, these allowances are small.
For example, tuition fees up to ¥1000 per month are deductible. But the German School in Beijing alone costs over €25,000 in the first year (depending on the individual case). That is about ¥15,000 a month. Amcham estimates that an employee who previously received ¥960,000 in fringe benefits per year would soon have to pay a higher tax of ¥785,000. That is about €100,000. Since employment contracts often guarantee parity with the original location, this means additional costs for the company in the future.
The outlines of the new regulations have been known since the beginning of 2019. A transition period originally set to last three years has been in place since 2018. Expats can currently choose whether to pay tax under the old or the new procedure. However, the reformed version has only found few voluntary supporters. Figures from Amcham show that an overwhelming majority of employees opted for the previous benefits.
In many cases, however, these new regulations will mainly affect employers. Secondment contracts often stipulate that the company bears the additional costs. But this is also relevant for China as a location. Secondments bear significant costs for companies as it is. In response to rising costs, the obvious corporate response would be to reduce expat positions.
In any case, the chambers warn of two trends: an exodus of expats who have to bear the costs themselves, and a loss of importance of China as a location. At 45 percent, the standard tax rate in China is already rather high by Asian standards. The figure is also higher than the EU average. Management consultancy KPMG sees China here on the same level as Germany. The EU Chamber now expects that the State Council’s friendly gesture will “improve China’s international relations overall”.
With the extension of the transitional period, a core demand of the chambers has been met. However, they would also like to see untaxed benefits retained. The AmCham in Shanghai is also asking for more predictability in rule changes. A notice six months in advance would be required for companies to adjust. This advance notice was not given in the unexpected decision on New Year’s Eve. But this time at least, it went in the desired direction.
Anyone who studies or was somehow involved with China likely knew him: Jonathan D. Spence. He is considered one of the most renowned sinologists of our time. At least one of his many books can be found on the shelves of anyone interested in China: be it “The Search for Modern China”, “The Gate of Heavenly Peace”, “The Death of Woman Wang” or “God’s Chinese Son”, the biography of Hong Xiuquan (洪秀全), the founder and leader of the Taiping movement that once shook all of China.
Over the Christmas holidays, Jonathan Spence passed away at his home in West Haven, Connecticut. As his wife Annping Chin told American media, he died due to complications with his Parkinson’s disease. He was 85.
Although China and the US can hardly agree on anything lately, they share an admiration of Spence. He has influenced generations of Sinologists, writes the Washington Post. The Chinese business magazine Caixin praises Spence for explaining China to the West. And even the Beijing-based Global Times, which is usually fond of nationalist rhetoric, praises Spence as the guru of modern Chinese studies in the USA. The German historian Juergen Osterhammel once called Spence “one of the greatest artists of visualizing foreign worlds”.
Spence taught at the renowned Yale University for more than 40 years. His survey course on Chinese history alone was so popular all those years that it had to be held in the university’s largest halls – more often than not even in the campus chapel.
The lecture also produced what is probably his best-known book: The Search for Modern China. Published in 1990, it was translated into dozens of languages, became an international bestseller, and has long since become a classic in China’s history. In about 870 pages, Spence describes the multifaceted development of China from the 17th century to the events around Tiananmen Square in 1989. The book’s title reflects his approach: searching, ever vigilant, with great respect for detail.
The New York Times once wrote about his book “Treason by the Book”: “This is a delicate spider’s web of a book, deft, fascinating and precise as Chinese calligraphy.” The book is about the scholar Zeng Jing (曾靜), who tried to incite a rebellion against the emperor Yongzheng (雍正) in 1730.
Spence’s first publication appeared in 1966 under the title “Ts’ao Yin and the Kang-Hsi Emperor: Bondservant and Master”. In the foreword, Spence writes about his protagonist: “No great claims need be formulated concerning the importance of Ts’ao Yin. He was neither one of the great generals of the Qing dynasty nor a decisive figure in the reign of Emperor K’ang-hsi. Rather, his importance lies in the fact that the course of his life tells us much about the society in which he lived and the institutions in which he operated.
These words highlight the fundamental character of his work: Spence did not want to create a projection called China. At a time when historiography was little more than pure event history, Spence dared something revolutionary: With him, history was not made by places, dates, or treaties, but by people. He used concrete biographies in their concrete Chinese conditions to portray China as it was at the time.
Through the lives of historically authenticated figures, Spence’s readers casually learn about the social, cultural, and political events of times past. Spence himself once wrote: “It is my tacit belief that bold generalizations are usually far from reality and that individual experience is rare is in line with the assumed general trend.”
But his style was also met with criticism. Because Spence sometimes lets his characters speak, some critics accuse him of sometimes blurring the line between historical truth and literary fantasy.
Yet Spence attached great importance and care to the use of Chinese sources. By luck and chance, he was the first Western historian to visit the imperial archives in Taiwan in 1962. At the time, the documents were neither organized nor cataloged, so Spence worked his way through mountains of messy paper. In a 2010 interview, he described how he stumbled upon the handwritten notes of Qing Emperor Kangxi (K’ang-hsi, 康熙). “It was something that is still very emotional for me.”
Jonathan Dermot Spence was born in Surrey, England, in 1936. After spending two years in Germany during World War 2, he first studied history at Cambridge before finally focusing on China at Yale. There, he taught for more than 40 years until his retirement in 2008. With his second wife Annping Chin, he lived in West Haven, Connecticut, until his death.
Spence has received numerous honors and prizes: He received the John Addison Porter Prize for his dissertation and was elected to the American Academy of Arts and Sciences in 1985, the American Philosophical Society in 1992, and the British Academy in 1997. In 2001, Queen Elizabeth II named him a Companion of the Distinguished Order of St Michael and St George. He has received honorary doctorates and degrees from Yale, Oxford, Hong Kong, Beijing, and Nanjing Universities, among others.
Spence’s Chinese name, by the way, is 史景遷 (Shǐ Jǐngqiān) – it is a tribute to the Chinese historian and writer Sima Qian. The latter is considered the founder of Chinese historiography because he was the first to write a summary of more than 2000 years of Chinese history, from the legendary Yellow Emperor to his time in the first century BC.
Spence was once asked what had sparked his interest in China: the thousands of years of history, the beautiful Chinese characters, or the mighty emperors on the dragon throne? Nothing of the sort. Rather, it was simple Chinese workers. His father had taken him to the cinema when he was a little boy; they were going to see a Disney film. It was 1944 and news was shown before the movie, with one news story making a lasting impression on young Spence: simple Chinese laborers had built a road through the mountains with their bare hands while fighting Japanese troops. “I found that performance very impressive.” It was this fascination with ordinary people that drove Spence throughout his academic career.
With Jonathan Spence, the world has lost one of its most influential China experts.
It’s an icy highlight right at the beginning of the year: the Ice Festival in Harbin. Its origins lie in Harbin’s traditional lantern shows and garden parties, which have been held annually in winter since 1963. In the meantime, the festival has become highly professionalized and takes place on Sun Island, an area a few minutes away from the city. There, more than 12,000 workers create a colorful world of ice and snow at around minus 20 degrees. The festival doesn’t officially start until January 5. But it’s so beautiful that it’s hard to wait.
