Tools: What does the land transfer tax law mean for businesses?
Executive Moves: Poggenpohl’s new CEO is an Asia expert
Dear reader,
Today’s newsletter is dedicated to sustainability: hydrogen, sponge cities and green stocks.
Hydrogen is currently considered as the great hope for the energy transition – even in China. To date, no other country produces as much hydrogen as the People’s Republic. However, it currently mainly produces “gray” hydrogen. A coal region in northern China, of all places, is now set to change that. With the help of the sun, wind and a lot of money, Beijing wants to turn Inner Mongolia into a hub for green hydrogen. Frank Sieren shows which problems China still needs to solve down this path. European companies are currently the main drivers of innovation in this field, after all.
Xi Jinping had only been in office a short time when China’s state and party leader mandated the concept of sponge cities in his country. The reason for the order from the highest level: China is increasingly threatened by massive floods. But so far the “Haimian Chengshi” have not brought much relief. In her analysis, Ning Wang elaborates on the multifaceted problems of China’s sponge cities and how individual provincial governments are abusing the climate targets set by their superiors.
Whenever reports on China’s stock markets are published, analysts often resort to fierce expressions. In most cases, there is talk of a bloodbath among Chinese internet companies. But our team of authors in Beijing shows that this is not the whole truth, as there are also some winners: green stocks. Manufacturers of solar cells, wind turbines and electric cars currently benefit from ambitious climate plans set by China’s leadership. These are stocks that should not be missing from your portfolio, either.
I hope you enjoy our latest issue and gain new insights!
The plants near the cities of Ordos and Baotou will produce 66,900 tons of green hydrogen per year from 1.85 gigawatts of solar energy and 370 megawatts of wind energy, according to the Chinese Hydrogen Energy Industry Promotion Association. The region, where the majority of China’s coal has been mined to date, has about 3,100 hours of sunshine per year that can be used for generating solar power. It is also located along the route of Siberian continental winds strong enough to power dozens of gigawatt wind turbines.
These plants are expected to be ready for operation as early as mid-2023. It is the largest plant in China to date and one of the largest in the world. The exact costs are not yet known. What is clear, however, is that it is China’s largest state-owned hydrogen venture to date.
The mega-project in Inner Mongolia could, according to Bloomberg estimates, produce enough hydrogen to replace about 680 million liters of gasoline a year if used for fuel-cell vehicles – and China wants to use these fuel-cell vehicles primarily for heavy-duty transport. By 2050, Hydrogen vehicles will already account for a third of all trucks, analyst Elaine Wu of US investment bank JP Morgan estimates. Currently, it is only five percent.
However, this mega-project also poses a problem: the construction of this mega-plant alone could lead to a severe shortage of electrolyzers worldwide. In proton exchange membrane electrolyzers (PEM), distilled water is split into oxygen and hydrogen using electricity in a chemical reaction. This new plant will require 465 megawatts of electrolyzers, while last year’s global production amounted to only 200 megawatts.
China cheap, Europe innovative
One of the leading companies in this field is the German company Linde AG. It is currently building the world’s largest PEM in Leuna with 24 megawatts. The largest plant to date, with 20 megawatts, is located in Bécancour, Quebec, Canada. It was built by the French company Air Liquide. The largest global manufacturer is the Norwegian company NEL.
China and Europe are currently competing in this area: while China produces the cheapest electrolyzers, Europe leads in innovative technologies better suited for the production of green hydrogen. According to estimates by the news agency Bloomberg, Chinese manufacturers are now able to sell alkaline electrolyzers for 200 US dollars per kilowatt – 80 percent cheaper than European machines of the same type. However, they are not suitable for electricity made from renewable energies because of their poor handling of varying electrical loads.
Opportunity for the energy shift
Hydrogen is considered as the great hope for the energy transition – even in China, whose government has set the goal of reaching climate neutrality by 2060. Beijing expects hydrogen to account for ten percent of its energy supply by 2050. Hydrogen, which is always chemically bound and does not occur in pure form, can be produced from water by electrolysis and is stored in tanks like natural gas. When burned, water and energy are produced as residue, but no direct CO2 emissions.
China is already the leader in hydrogen production. The Chinese produce about 40 percent of the world’s hydrogensupply. At the end of August, Great Wall Motors alone shipped a fleet of 100 hydrogen trucks for the Xiong’an New Area Construction project in the province of Hebei. According to the manufacturer, these trucks are nearly 30 percent cheaper than conventional diesel vehicles. The city of Beijing plans to have around 10,000 hydrogen vehicles on its streets by 2025, supplied by 74 filling stations.
At the end of 2020, 7,300 vehicles with hydrogen fuel cells were driving on Chinese roads, most of them commercial vehicles. But the Ministry of Industry and Information Technology (MIIT) has big plans: by 2025 this number should range between 50,000 and 100,000 vehicles and one million by 2030 – and at least 1,000 filling stations. By 2050, hydrogen is expected to form the backbone of China’s energy sector, with an annual production value of over twelve trillion yuan.
Green hydrogen remains rare
The biggest problem until then: Hydrogen is only really useful if it is green, i.e. produced from solar, hydro or wind power. But so far, most hydrogen is still produced “gray”, i.e. from gas. 67 percent of the 25 million metric tons of hydrogen produced in China per year are based on fossil energy, only three percent from renewable energies. However, China’s hydrogen production has so far been based mainly on methane conversion from coal, which is abundantly available. The production of “Green hydrogen” through renewable energy sources such as water, wind and solar energy is still very expensive and requires a lot of power. Storage and transport of this highly flammable substance also poses great challenges for producers.
To date, the Chinese government has provided 20 billion dollars in public funding for hydrogen projects. While 53 major projects combining renewable energy with hydrogen have been announced in China, most are planned primarily for power generation. The hydrogen component, often a minor one, sometimes serves only as a concession to receive government approval, an expert tells Bloomberg.
China’s largest green hydrogen projects to date have come from state-owned industrial giants such as Sinopec and Ningxia Baofeng Energy Group, which will complete a 150-megawatt solar electrolyzer array this year. China Baowu Steel Group has announced plans for 1.5-gigawatt renewable electrolyzers, but without providing a timetable.
Xi Jinping had not long been in office when he started talking about so-called sponge cities. It was 2013, and the leader of the state and party wanted to do something about the growing number of floods in China, since they pose a serious problem for the political leadership and increasingly threaten China’s economic and social stability.
And this risk is becoming ever greater: last year alone, the People’s Republic had seen 21 large-scale floods, more than at any time in the last two decades. More than 30 rivers reached previously unseen levels.
But the fact that the number of floods has continued to increase in recent years is not only owed due to global climate change. A major cause is China’s rapid urbanization. Between 1990 and 2015 alone, the urban population more than doubled, from around 26 percent to over 56 percent. And Beijing wants to expand on this development, planning for the urbanization of China to reach 70 percent by 2035. In doing so, the government hopes to boost both domestic production and consumption. It is one of the key shifts that the political leadership wants to achieve in order to reduce their dependence on imports and to keep the country’s growth engine running at the same time.
Sponge city is new territory
Both urbanization and protection against flooding are supposed to be achieved through the concept of sponge cities. But back when Xi Jinping introduced the concept of “Haimian Chengshi” in 2013, most officials heard the term for the first time – and didn’t really know how to put it into practice.
Thus, in 2014, China began to adopt and apply Western plans of sponge cities. Then, in March 2015, the Ministry of Housing and Urban-Rural Development launched a national pilot project: 100 cities in various provinces were to develop concepts on how to absorb, recycle, and store large amounts of water. Since then, 30 cities have created or restored wetlands, urban areas have been greened with trees and plants – including green roofs – and permeable roads and pavements have been built everywhere (as reported by China.Table).
The official goal is for sponge cities to be able to absorb up to 70 percent of the water volumes in 2030 and store them underground to be drained into nearby rivers or lakes in the event of droughts. A positive side effect is that drainage would not only be provided by the sewer system, which is already very outdated and overloaded in some places.
Zhengzhou was considered a sponge city model
However, the recent severe flooding in the central Chinese city of Zhengzhou (as reported by China.Table) has shown just how far current efforts have fallen short of creating efficient sponge cities. Even though the city of eleven million people was praised as an exemplary sponge city, more than 300 people died in the floods at the end of July, according to official figures.
On social media, users questioned why the city was flooded despite massive investment in flood control infrastructure – even taking into account that Zhengzhou was one of the first cities to be upgraded to a sponge city in 2014.
“The floods in Zhengzhou gave the sponge city a slap in the face, and show that man may not be able to triumph over the heavens,” wrote one Weibo user.
Former journalist He Guangwei said that short message service provider Weibo temporarily disabled his account after he published a series of posts questioning the government’s response to the floods. In particular, the “Zhengzhou Sponge City” project and its costs were criticized, Wall Street Journal wrote. The Chinese newspaper Zhengzhou Daily last reported that Zhengzhou had invested 53.48 billion yuan (8.26 billion US dollars) by last year in projects such as the reinforcement of riverbanks and construction of water-permeable roads – proving just how expensive sponge cities can be.
Lack of coordination
However, the floods in Zhengzhou also highlight major problems associated with the ambitious goal of creating sponge cities across the country. It is exactly because of efforts by the government to take action against flooding and its promotion of slogans such as “making China greener” and “making it more resilient to climate change” why landscape and urban planners are getting caught up in bureaucratic constraints.
But there is a lack of coordinated action. For example, at the end of July, news agency Xinhua published a document stating that in April authorities had once again called for the funding of the construction of sponge cities and for the improvement of urban flood protection. In particular, it called for “better mechanisms for policy coordination among provinces” on projects.
Furthermore, there are no universal standards for sponge cities. Sometimes, the necessary infrastructure for sponge cities is not available at all, other times the existing infrastructure is not suitable for the development into a sponge city. So far, provincial leaders have mostly focused on investing in dams, dikes, or drainage systems in their fight against floods. But this is increasingly proving to be insufficient.
Pretext for faster building permits
But funding remains the biggest problem. As was the case at the beginning of the sponge cities campaign six years ago, the bill for the expansion of the cities to sponge cities is primarily footed by the government. Initially, Beijing allocated a budget of 20 billion yuan (2 billion euros) to be distributed among 16 cities that qualified to become sponge cities at the time. The State Council encouraged local banks to raise additional funds by issuing bonds and through private investors. To date, more than $12 billion have been spent on sponge city projects (as of 2019). About 15 – 20 percent of the cost was covered by the central government, while local governments and the private sector had funded the remaining amount.
To better promote the sponge city program, China’s authorities are increasingly turning to public-private partnerships, a collaborative investment model between the government and private companies. But the confidence of investors and private companies in sponge city projects is low. In their opinion, sponge cities take too long to develop, and the successes are not particularly convincing either. For example, companies and local governments haveoften used sponge cities as a pretext to receive government building permits, according to a study by Bloomberg Green. This has resulted in projects built on forests and wetlands that might otherwise have absorbed floodwaters. And once the construction projects were finished, there was no financial incentive to invest in maintenance.
Climate
Flooding
Zhengzhou
Green stocks are this year’s big winner
Things are not going well for Chinese tech companies. As a result, attention is shifting from highly volatile stocks to more reliable investments. Investors are currently focusing on green stocks in particular.
Beijing’s ongoing crackdown on the tech sector has seen the shares of companies such as Tencent, Alibaba and Meituan crash in recent months (as reported by China.Table). True, there was a small rally last week, with Alibaba, for example, climbing by 13 percent. But valuations remain low compared to last fall. The value of Alibaba’s stocks has almost halved compared to last fall, and Tencent has lost a similar amount since February. Price charts accurately depict when companies have come under regulatory scrutiny. In addition, more bad news for China’s internet stocks can be expected in the future.
But it’s not all losers on China’s stock markets these days. While the internet sector, in particular, has lost hundreds of billions of dollars in market capitalization, companies that make their money from China’s green energy transition have recently staged a remarkable rally.
The CSI New Energy, a stock index that aggregates major Chinese companies in the sector, rose by 55 percent in the past three months alone. Those who invested about a year ago were even able to double their money. The price trend of green stocks thus ran directly counter to tech stocks. In a balanced China portfolio, these two trends would have almost balanced each other out.
This example illustrates that China’s current interventions are not particularly directed against the stock market and private-sector activities. While internet companies are struggling in the face of the unending waves of stricter regulations, manufacturers of solar cells, wind turbines and electric cars are benefiting from the ambitious climate plans set by China’s leadership.
Ambitious climate plans
China’s President Xi Jinping pledged last year that China wants to reach carbon dioxide neutrality by 2060. This means that no carbon dioxide will be emitted or the country’s CO2 emissions will be fully offset, with emissions peaking before 2030. Climate policy is also a key component of the government’s current 14th Five-Year Plan.
Experts claim that such government plans make investing money in the sector comparatively predictable. “The policy risks for the sector are low,“ Hong Kong analyst Stanley Chan recently told the South China Morning Post. His colleague Kai-Kong Chay also said he was “positive” about the sector. James Thom of investment company Aberdeen Standard told Bloomberg that the sector has a “long-term growth story”.
In recent months, investors have displayed considerable interest in China Longyuan Power Group, China’s largest wind farms operator. CATL , the global leader in battery manufacturing, and Longi, a Chinese solar producer, also recently reached new highs on the stock market after each of them gained more than 40 percent in the past quarter (as reported by China.Table).
The forecast for Chinese EV manufacturers also remains positive. In anticipation of rising prices, US investment company Fidelity recently increased its stake in Xpeng Motors, while Goldman Sachs bought further shares in competitor Nio.
Comeback for Alibaba and Tencent?
Green stocks have clearly been in investors’ favor in recent months. However, there have been growing signs that the worst may be over for tech and internet stocks. China’s state media have also recently been more conciliatory towards the sector.
Last week, for example, the Global Times quoted Chinese finance expert Dong Shaopeng of Beijing People’s University as saying that the recent “administrative measures” were only “patches” to “balance an unbalanced development”. The country’s demand for Internet services will continue, he said. The growth potential of domestic internet companies such as Alibaba and Tencent is still “promising”. This may have contributed to the current recovery.
For long-term investors, however, green stocks remain a safe bet, according to analysts. They do not allow for such extreme increases in value as the innovation-driven internet stocks. But it was noticeable that EV manufacturer BYD and solar cell supplier Xinyi Solar ranked among the best performers during sell-offs. As an admixture to a balanced China portfolio, they are essential to offset violent swings in tech stocks. Gregor Koppenburg/Joern Petring
14th Five-Year Plan
Alibaba
Chinese Communist Party
Finance
green finance
Stock Exchange
Sustainability
Technology
News
No more online games during workdays for minors
There is a new rule for the hundreds of millions of young gamers in China: no more video games during the school week. Even for Fridays, weekends and holidays, authorities have limited the time minors are allowed to spend online playing games to one hour. Beijing issued these new regulations on Monday to curb video game addiction among teenagers, according to state media. It is seen as a cause of social ills and is said to be distracting young people too much from their school and family duties. In the future, online games may therefore only be used from 8 PM to 9 PM on Fridays, Saturdays, Sundays and public holidays. Previously, minors were allowed a game time for 1.5 hours a day and up to three hours on holidays.
Authorities demanded stricter scrutiny from video game companies to ensure compliance with the new rules. No details were given. Video game publisher Tencent, for example, already resorted to facial recognition some time agoto limit the game time of underage players due to previous guidelines (as reported by China.Table).
This measure is taken a month after China’s state and party leader Xi Jinping increased pressure on authorities by warning of the dangers of gambling addiction among young people.
Back in 2018, authorities stopped issuing video game licenses for nearly nine months, costing Tencent more than $1 billion in lost revenue at the time, according to Wall Street Journal. Beijing is currently cracking down on its tech sector after years of unchecked influence growth (as reported by China.Table). niw
Children
Games
Society
Technology
No more exams for children under eight
The Ministry of Education of the People’s Republic of China has banned written exams for all six- and seven-year-old children. This new guideline aims to take the pressure off schoolchildren, as it is considered detrimental to the mental and physical health of young schoolchildren. Previously, it was common practice in primary schools for first-graders to pass midterm exams and to be subjected to regular written tests throughout the school year.
According to these new regulations, even older students may only need to pass an exam once a year. Exams for senior grades will continue to be exempt.
Whether this step, which is part of China’s broad-scale education reform, will be implemented in practice remains uncertain. Parents from China’s middle class are particularly critical of the Ministry of Education’s reforms. They usually consider the school performance and good grades of their children as the only way to gain access to good schools and universities. For the resulting social advancement in society, they are willing to invest a large part of their income in extra tuition and supplementary classes.
At the end of July, Beijing banned its billion-dollar tutoring market from making profits. Instead, they are to operate as non-profit providers. Social networks fear the formation of a black market for private tuition, ever since (as reported by China.Table), which would further increase educational inequality in China. niw
Children
Education
Society
Forsa: Majority for a harder line on China
The majority of Germans wish for a harder line on China. This is the result of a survey by the opinion research institute Forsa. According to the poll, commissioned by the magazine Internationale Politik, 58 percent of respondents said the German government should take a tougher stance and defend its own interests more aggressively, even if this would harm economic relations with China. 17 percent support a tougher stance only if economic relations would not suffer. 19 percent reject a tougher stance.
Last year, according to a survey conducted by Kantar Public on behalf of the Körber Foundation, the image of China was quite different: in 2020, more than a third (36 percent) of Germans saw China as the leading partner outside Europe. This was a large increase compared to a September 2019 survey, where only 24 percent agreed that relations with China were more important than to the USA. Among 18- to 34-year-olds in particular, the expectation in Beijing was greater than in Washington, at 46 percent. niw
Germany
Society
USA
Wang Yi: USA to blame for terrorist resurgence
China has blamed the US for the dramatic situation in Afghanistan. The war in Afghanistan has not achieved the goal of removing terrorist forces, China’s Foreign Minister Wang Yi told his American counterpart Antony Blinken. On the contrary, according to Wang, the hasty withdrawal of U.S. troops will lead to terrorist organizations returning to Afghanistan. As Chinese news agency Xinhua reported on Monday, Wang had spoken with the US Secretary of State over the phone on Sunday. In the conversation, Wang called for all parties to enter into direct contact with the Taliban to calm the situation in Afghanistan.
Meanwhile, Kabul airport came under fire again on Monday. Up to five missiles were fired at the airport, according to a US government official. But they were intercepted by a missile defense system.
During their phone call, Wang and Blinken also discussed the current state of bilateral relations. “If Washington also wants to bring the China-U.S. relationship back on track, then it should stop slandering China and undermining China’s sovereignty, security and developing interests,” China’s foreign minister said, according to Xinhua, adding that the U.S. should take China’s demands serious, which were put forward at the joint meeting in Tianjin (as reported by China.Table). Accordingly, the US should lift all sanctions against Chinese officials, withdraw the extradition request against Huawei executive Meng Wanzhou, who is being held in Canada, to allow Confucius Institutes as well as Chinese state media to operate freely in America, and lift visa restrictions against Communist Party members and Chinese students.
Meanwhile, German Foreign Minister Heiko Maas has spoken out in favor of talks with China and Russia. Efforts are being made “to bring all important international players to the table, and it will be important to include Russia and China”, Maas said on Monday during a visit to the Uzbek capital Tashkent. In this context, he referred to the ongoing talks on a UN Security Council resolution on Afghanistan. Unlike Western states, both nations still operate embassies in Kabul after the Taliban took power in Afghanistan.
However, Maas does not intend to hold direct talks with the Taliban. The Federal Government’s interlocutor is Markus Potzel. The diplomat is currently negotiating in Qatar with representatives of the new Afghan rulers. “That is the channel we are using,” Maas said on Monday. rad
Afghanistan
Antony Blinken
Geopolitics
Heiko Maas
Taliban
Terrorism
Tianjin
USA
Tools
China’s New Deed Tax Law: What Does it Mean for Businesses?
By Zoey Zhang, Dezan Shira
China’s new Deed Tax Law is about to come into force on September 1, 2021. Foreign companies are subject to deed tax if they acquire real estate and/or land use rights in China, and this often occurs when the company reorganizes. Fortunately, China has extended deed tax exemptions to support certain types of corporate restructuring and reorganization.
China announced the elevation of the deed tax regulation into national law on August 11, 2020. The new Deed Tax Law is going to take effect on September 1, 2021, repealing the Interim Regulations on Deed Tax promulgated in 1997.
Deed tax is a tax levied on the assignees of land use rights and real property ownership. For businesses, it often applies when there is company restructuring and reorganization (including merger, split-up, transfer of assets, etc.).
For qualifying restructuring and reorganization of enterprises and public institutions, China granted deed tax exemptions. The exemption policies, previously extended to December 31, 2020, were further extended until December 31, 2023.
What is deed tax?
According to the Deed Tax Law, any organization or individual to whom the title to the land use rights or the real properties has been transferred within the territory of China should pay deed tax.
The transferee bears the tax obligation, under any of the following three scenarios:
Acquisition of granted land use rights from the State;
Transfer of granted land use rights (“土地使用权”), either by sale, exchange, or gifting – excluding the transfer of land contracting management right (“土地承包经营权”) and land management right(“土地经营权”); or
Purchase and sale, exchange, or gifting of real property situated on the land.
For transfer of title to the land use rights or real properties by way of conversion into investment (equity participation), debt payment, allocation, reward, and the like, the deed tax shall also be levied pursuant to the provisions of the law.
How is deed tax calculated? China’s deed tax rates range from three to five percent. The new law states that local governments can choose a specific rate within the said range.
Formula for calculating the amount of real estate transfer tax to be paid: The amount of real estate transfer tax to be paid = the assessment basis × the applicable tax rate
What are the new changes in the Deed Tax Law?
Compared with existing Interim Regulations on Deed Tax, the new Deed Tax Law clarified the deed tax collection policies on the title transfer of land use rights and real properties in forms of conversion into investment (equity participation), debt payment, allocation, and reward.
a conversion into an investment (equity investment),
a debt redemption,
an allocation
and a reward.
In addition, regarding what may be exempt from the deed tax, the new Law expands the scope, including:
non-profit schools
medical institutions
social welfare institutions from deed tax in instances where they use land or premises for office space, teaching, healthcare, scientific research, elderly care, or relief purposes
barren land (including land in mountains or on beaches) for agricultural, forestry, animal husbandry or fisheries production
change of ownership between spouses during marriage
inheritance of land use right and real property ownership by legal heirs
assuming title to the land use right and real properties by foreign embassies, consulates, and representative offices of international organizations in China.
Further, the law specifically requires tax authorities and their employees to keep confidential the personal data of taxpayers in the process of tax collection and administration.
Deed tax exemption policies for company restructuring and reorganization
To support certain types of corporate restructuring and reorganization, on April 26, 2021, the Ministry of Finance (MOF) and State Taxation Administration (STA) jointly released the Announcement on Continued Implementation of Relevant Deed Tax Policies for Restructuring and Reorganization of Enterprises and Public Institutions (MOF STA Announcement [2021] N.17), which is retroactively effective from January 1, 2021, to December 31, 2023.
Under these rules, there are exemptions from the real estate transfer tax for:
inheritance and transfer of land use rights and real estate in cases of complete restructuring of enterprises,
public institution restructuring
merger and split,
transfer as part of bankruptcy proceedings
transfer of assets between enterprises with common owners
However, the succession of land use rights originally allocated to the restructured enterprises or public institutions through assignment or state capital contribution does not qualify for the exemption.
Furthermore, during the process of corporate restructuring and reorganization, in addition to deed tax, the enterprises can also be exposed to other taxes, including land appreciate tax, value-added tax, corporate income tax, and stamp duty.
Bigger background: Law-based tax administration
In 2015, the STA released the Guiding Opinions on Comprehensively Promoting the Governing of Taxes according to Law (Shui Zong Fa [2015] No.32), stipulating that China will accelerate the process of upgrading relevant tax regulations into law, to improve the certainty of tax policies, enhance the authority of the tax documents, and ensure the efficiency of tax administrations. This is an important part of China’s broader efforts to achieve rule of law, that is, law-based governance of the country. Businesses are well-advised to keep a close eye on the future developments of China’s tax laws as it is related to how they will pay tax in China.
This article first appeared in Asia Briefing, published by Dezan Shira Associates. The firm advises international investors in Asia and has offices in China, Hong Kong, Indonesia, Singapore, Russia and Vietnam.
Chinese Communist Party
Market
Real Estate
Executive Moves
Dirk Lange will become the new CEO of kitchen manufacturer Poggenpohl as of September 1st. “We are very pleased to have acquired Dirk Lange, whose international experience and strategic expertise will sustainably drive Poggenpohl’s growth,” emphasizes Xiaowei Lin, Chairman of Poggenpohl’s board of directors. Last September, the Chinese Jomoo Group took over Poggenpohl located in Herford. Lange has many years of experience with German and American manufacturers of sanitary and interior fittings. Previously, the 56-year-old was responsible for China business activities of construction company Züblin for seven years. Most recently, Lange worked as a freelance management and strategy consultant with offices in Shanghai and Stuttgart, supporting medium-sized companies in expanding their Asia business.
Deutsche Bank Wealth Management has hired Alania Hsu Concepcion as investment management team head for Southeast Asia. Concepcion has recently returned to Singapore after 4.5 years in Europe running her own company and pursuing her interests in ESG and fintech. Before venturing out on her own, Concepcion was Credit Suisse’s head of investment consulting for Singapore and Malaysia. Prior to that, she was Barclays Bank’s co-head of private banking sales, managing a team responsible for structuring, sales and trading of capital markets products for private banks and family offices in Singapore and Hong Kong. Earlier in her career, Concepcion was a specialist in fixed income and derivatives covering institutional and corporate clients for Credit Suisse and Merrill Lynch.
Dessert
China’s table tennis player Zhao Shuai (26) won the gold medal at the Paralympics in Tokyo. For Zhao, the victory is a triple. He previously won the C8 singles at the 2012 Summer Paralympics and defended his title in Rio four years later. Zhao manages to do all this without his left arm. He lost his arm after a car accident at the age of four.
Tools: What does the land transfer tax law mean for businesses?
Executive Moves: Poggenpohl’s new CEO is an Asia expert
Dear reader,
Today’s newsletter is dedicated to sustainability: hydrogen, sponge cities and green stocks.
Hydrogen is currently considered as the great hope for the energy transition – even in China. To date, no other country produces as much hydrogen as the People’s Republic. However, it currently mainly produces “gray” hydrogen. A coal region in northern China, of all places, is now set to change that. With the help of the sun, wind and a lot of money, Beijing wants to turn Inner Mongolia into a hub for green hydrogen. Frank Sieren shows which problems China still needs to solve down this path. European companies are currently the main drivers of innovation in this field, after all.
Xi Jinping had only been in office a short time when China’s state and party leader mandated the concept of sponge cities in his country. The reason for the order from the highest level: China is increasingly threatened by massive floods. But so far the “Haimian Chengshi” have not brought much relief. In her analysis, Ning Wang elaborates on the multifaceted problems of China’s sponge cities and how individual provincial governments are abusing the climate targets set by their superiors.
Whenever reports on China’s stock markets are published, analysts often resort to fierce expressions. In most cases, there is talk of a bloodbath among Chinese internet companies. But our team of authors in Beijing shows that this is not the whole truth, as there are also some winners: green stocks. Manufacturers of solar cells, wind turbines and electric cars currently benefit from ambitious climate plans set by China’s leadership. These are stocks that should not be missing from your portfolio, either.
I hope you enjoy our latest issue and gain new insights!
The plants near the cities of Ordos and Baotou will produce 66,900 tons of green hydrogen per year from 1.85 gigawatts of solar energy and 370 megawatts of wind energy, according to the Chinese Hydrogen Energy Industry Promotion Association. The region, where the majority of China’s coal has been mined to date, has about 3,100 hours of sunshine per year that can be used for generating solar power. It is also located along the route of Siberian continental winds strong enough to power dozens of gigawatt wind turbines.
These plants are expected to be ready for operation as early as mid-2023. It is the largest plant in China to date and one of the largest in the world. The exact costs are not yet known. What is clear, however, is that it is China’s largest state-owned hydrogen venture to date.
The mega-project in Inner Mongolia could, according to Bloomberg estimates, produce enough hydrogen to replace about 680 million liters of gasoline a year if used for fuel-cell vehicles – and China wants to use these fuel-cell vehicles primarily for heavy-duty transport. By 2050, Hydrogen vehicles will already account for a third of all trucks, analyst Elaine Wu of US investment bank JP Morgan estimates. Currently, it is only five percent.
However, this mega-project also poses a problem: the construction of this mega-plant alone could lead to a severe shortage of electrolyzers worldwide. In proton exchange membrane electrolyzers (PEM), distilled water is split into oxygen and hydrogen using electricity in a chemical reaction. This new plant will require 465 megawatts of electrolyzers, while last year’s global production amounted to only 200 megawatts.
China cheap, Europe innovative
One of the leading companies in this field is the German company Linde AG. It is currently building the world’s largest PEM in Leuna with 24 megawatts. The largest plant to date, with 20 megawatts, is located in Bécancour, Quebec, Canada. It was built by the French company Air Liquide. The largest global manufacturer is the Norwegian company NEL.
China and Europe are currently competing in this area: while China produces the cheapest electrolyzers, Europe leads in innovative technologies better suited for the production of green hydrogen. According to estimates by the news agency Bloomberg, Chinese manufacturers are now able to sell alkaline electrolyzers for 200 US dollars per kilowatt – 80 percent cheaper than European machines of the same type. However, they are not suitable for electricity made from renewable energies because of their poor handling of varying electrical loads.
Opportunity for the energy shift
Hydrogen is considered as the great hope for the energy transition – even in China, whose government has set the goal of reaching climate neutrality by 2060. Beijing expects hydrogen to account for ten percent of its energy supply by 2050. Hydrogen, which is always chemically bound and does not occur in pure form, can be produced from water by electrolysis and is stored in tanks like natural gas. When burned, water and energy are produced as residue, but no direct CO2 emissions.
China is already the leader in hydrogen production. The Chinese produce about 40 percent of the world’s hydrogensupply. At the end of August, Great Wall Motors alone shipped a fleet of 100 hydrogen trucks for the Xiong’an New Area Construction project in the province of Hebei. According to the manufacturer, these trucks are nearly 30 percent cheaper than conventional diesel vehicles. The city of Beijing plans to have around 10,000 hydrogen vehicles on its streets by 2025, supplied by 74 filling stations.
At the end of 2020, 7,300 vehicles with hydrogen fuel cells were driving on Chinese roads, most of them commercial vehicles. But the Ministry of Industry and Information Technology (MIIT) has big plans: by 2025 this number should range between 50,000 and 100,000 vehicles and one million by 2030 – and at least 1,000 filling stations. By 2050, hydrogen is expected to form the backbone of China’s energy sector, with an annual production value of over twelve trillion yuan.
Green hydrogen remains rare
The biggest problem until then: Hydrogen is only really useful if it is green, i.e. produced from solar, hydro or wind power. But so far, most hydrogen is still produced “gray”, i.e. from gas. 67 percent of the 25 million metric tons of hydrogen produced in China per year are based on fossil energy, only three percent from renewable energies. However, China’s hydrogen production has so far been based mainly on methane conversion from coal, which is abundantly available. The production of “Green hydrogen” through renewable energy sources such as water, wind and solar energy is still very expensive and requires a lot of power. Storage and transport of this highly flammable substance also poses great challenges for producers.
To date, the Chinese government has provided 20 billion dollars in public funding for hydrogen projects. While 53 major projects combining renewable energy with hydrogen have been announced in China, most are planned primarily for power generation. The hydrogen component, often a minor one, sometimes serves only as a concession to receive government approval, an expert tells Bloomberg.
China’s largest green hydrogen projects to date have come from state-owned industrial giants such as Sinopec and Ningxia Baofeng Energy Group, which will complete a 150-megawatt solar electrolyzer array this year. China Baowu Steel Group has announced plans for 1.5-gigawatt renewable electrolyzers, but without providing a timetable.
Xi Jinping had not long been in office when he started talking about so-called sponge cities. It was 2013, and the leader of the state and party wanted to do something about the growing number of floods in China, since they pose a serious problem for the political leadership and increasingly threaten China’s economic and social stability.
And this risk is becoming ever greater: last year alone, the People’s Republic had seen 21 large-scale floods, more than at any time in the last two decades. More than 30 rivers reached previously unseen levels.
But the fact that the number of floods has continued to increase in recent years is not only owed due to global climate change. A major cause is China’s rapid urbanization. Between 1990 and 2015 alone, the urban population more than doubled, from around 26 percent to over 56 percent. And Beijing wants to expand on this development, planning for the urbanization of China to reach 70 percent by 2035. In doing so, the government hopes to boost both domestic production and consumption. It is one of the key shifts that the political leadership wants to achieve in order to reduce their dependence on imports and to keep the country’s growth engine running at the same time.
Sponge city is new territory
Both urbanization and protection against flooding are supposed to be achieved through the concept of sponge cities. But back when Xi Jinping introduced the concept of “Haimian Chengshi” in 2013, most officials heard the term for the first time – and didn’t really know how to put it into practice.
Thus, in 2014, China began to adopt and apply Western plans of sponge cities. Then, in March 2015, the Ministry of Housing and Urban-Rural Development launched a national pilot project: 100 cities in various provinces were to develop concepts on how to absorb, recycle, and store large amounts of water. Since then, 30 cities have created or restored wetlands, urban areas have been greened with trees and plants – including green roofs – and permeable roads and pavements have been built everywhere (as reported by China.Table).
The official goal is for sponge cities to be able to absorb up to 70 percent of the water volumes in 2030 and store them underground to be drained into nearby rivers or lakes in the event of droughts. A positive side effect is that drainage would not only be provided by the sewer system, which is already very outdated and overloaded in some places.
Zhengzhou was considered a sponge city model
However, the recent severe flooding in the central Chinese city of Zhengzhou (as reported by China.Table) has shown just how far current efforts have fallen short of creating efficient sponge cities. Even though the city of eleven million people was praised as an exemplary sponge city, more than 300 people died in the floods at the end of July, according to official figures.
On social media, users questioned why the city was flooded despite massive investment in flood control infrastructure – even taking into account that Zhengzhou was one of the first cities to be upgraded to a sponge city in 2014.
“The floods in Zhengzhou gave the sponge city a slap in the face, and show that man may not be able to triumph over the heavens,” wrote one Weibo user.
Former journalist He Guangwei said that short message service provider Weibo temporarily disabled his account after he published a series of posts questioning the government’s response to the floods. In particular, the “Zhengzhou Sponge City” project and its costs were criticized, Wall Street Journal wrote. The Chinese newspaper Zhengzhou Daily last reported that Zhengzhou had invested 53.48 billion yuan (8.26 billion US dollars) by last year in projects such as the reinforcement of riverbanks and construction of water-permeable roads – proving just how expensive sponge cities can be.
Lack of coordination
However, the floods in Zhengzhou also highlight major problems associated with the ambitious goal of creating sponge cities across the country. It is exactly because of efforts by the government to take action against flooding and its promotion of slogans such as “making China greener” and “making it more resilient to climate change” why landscape and urban planners are getting caught up in bureaucratic constraints.
But there is a lack of coordinated action. For example, at the end of July, news agency Xinhua published a document stating that in April authorities had once again called for the funding of the construction of sponge cities and for the improvement of urban flood protection. In particular, it called for “better mechanisms for policy coordination among provinces” on projects.
Furthermore, there are no universal standards for sponge cities. Sometimes, the necessary infrastructure for sponge cities is not available at all, other times the existing infrastructure is not suitable for the development into a sponge city. So far, provincial leaders have mostly focused on investing in dams, dikes, or drainage systems in their fight against floods. But this is increasingly proving to be insufficient.
Pretext for faster building permits
But funding remains the biggest problem. As was the case at the beginning of the sponge cities campaign six years ago, the bill for the expansion of the cities to sponge cities is primarily footed by the government. Initially, Beijing allocated a budget of 20 billion yuan (2 billion euros) to be distributed among 16 cities that qualified to become sponge cities at the time. The State Council encouraged local banks to raise additional funds by issuing bonds and through private investors. To date, more than $12 billion have been spent on sponge city projects (as of 2019). About 15 – 20 percent of the cost was covered by the central government, while local governments and the private sector had funded the remaining amount.
To better promote the sponge city program, China’s authorities are increasingly turning to public-private partnerships, a collaborative investment model between the government and private companies. But the confidence of investors and private companies in sponge city projects is low. In their opinion, sponge cities take too long to develop, and the successes are not particularly convincing either. For example, companies and local governments haveoften used sponge cities as a pretext to receive government building permits, according to a study by Bloomberg Green. This has resulted in projects built on forests and wetlands that might otherwise have absorbed floodwaters. And once the construction projects were finished, there was no financial incentive to invest in maintenance.
Climate
Flooding
Zhengzhou
Green stocks are this year’s big winner
Things are not going well for Chinese tech companies. As a result, attention is shifting from highly volatile stocks to more reliable investments. Investors are currently focusing on green stocks in particular.
Beijing’s ongoing crackdown on the tech sector has seen the shares of companies such as Tencent, Alibaba and Meituan crash in recent months (as reported by China.Table). True, there was a small rally last week, with Alibaba, for example, climbing by 13 percent. But valuations remain low compared to last fall. The value of Alibaba’s stocks has almost halved compared to last fall, and Tencent has lost a similar amount since February. Price charts accurately depict when companies have come under regulatory scrutiny. In addition, more bad news for China’s internet stocks can be expected in the future.
But it’s not all losers on China’s stock markets these days. While the internet sector, in particular, has lost hundreds of billions of dollars in market capitalization, companies that make their money from China’s green energy transition have recently staged a remarkable rally.
The CSI New Energy, a stock index that aggregates major Chinese companies in the sector, rose by 55 percent in the past three months alone. Those who invested about a year ago were even able to double their money. The price trend of green stocks thus ran directly counter to tech stocks. In a balanced China portfolio, these two trends would have almost balanced each other out.
This example illustrates that China’s current interventions are not particularly directed against the stock market and private-sector activities. While internet companies are struggling in the face of the unending waves of stricter regulations, manufacturers of solar cells, wind turbines and electric cars are benefiting from the ambitious climate plans set by China’s leadership.
Ambitious climate plans
China’s President Xi Jinping pledged last year that China wants to reach carbon dioxide neutrality by 2060. This means that no carbon dioxide will be emitted or the country’s CO2 emissions will be fully offset, with emissions peaking before 2030. Climate policy is also a key component of the government’s current 14th Five-Year Plan.
Experts claim that such government plans make investing money in the sector comparatively predictable. “The policy risks for the sector are low,“ Hong Kong analyst Stanley Chan recently told the South China Morning Post. His colleague Kai-Kong Chay also said he was “positive” about the sector. James Thom of investment company Aberdeen Standard told Bloomberg that the sector has a “long-term growth story”.
In recent months, investors have displayed considerable interest in China Longyuan Power Group, China’s largest wind farms operator. CATL , the global leader in battery manufacturing, and Longi, a Chinese solar producer, also recently reached new highs on the stock market after each of them gained more than 40 percent in the past quarter (as reported by China.Table).
The forecast for Chinese EV manufacturers also remains positive. In anticipation of rising prices, US investment company Fidelity recently increased its stake in Xpeng Motors, while Goldman Sachs bought further shares in competitor Nio.
Comeback for Alibaba and Tencent?
Green stocks have clearly been in investors’ favor in recent months. However, there have been growing signs that the worst may be over for tech and internet stocks. China’s state media have also recently been more conciliatory towards the sector.
Last week, for example, the Global Times quoted Chinese finance expert Dong Shaopeng of Beijing People’s University as saying that the recent “administrative measures” were only “patches” to “balance an unbalanced development”. The country’s demand for Internet services will continue, he said. The growth potential of domestic internet companies such as Alibaba and Tencent is still “promising”. This may have contributed to the current recovery.
For long-term investors, however, green stocks remain a safe bet, according to analysts. They do not allow for such extreme increases in value as the innovation-driven internet stocks. But it was noticeable that EV manufacturer BYD and solar cell supplier Xinyi Solar ranked among the best performers during sell-offs. As an admixture to a balanced China portfolio, they are essential to offset violent swings in tech stocks. Gregor Koppenburg/Joern Petring
14th Five-Year Plan
Alibaba
Chinese Communist Party
Finance
green finance
Stock Exchange
Sustainability
Technology
News
No more online games during workdays for minors
There is a new rule for the hundreds of millions of young gamers in China: no more video games during the school week. Even for Fridays, weekends and holidays, authorities have limited the time minors are allowed to spend online playing games to one hour. Beijing issued these new regulations on Monday to curb video game addiction among teenagers, according to state media. It is seen as a cause of social ills and is said to be distracting young people too much from their school and family duties. In the future, online games may therefore only be used from 8 PM to 9 PM on Fridays, Saturdays, Sundays and public holidays. Previously, minors were allowed a game time for 1.5 hours a day and up to three hours on holidays.
Authorities demanded stricter scrutiny from video game companies to ensure compliance with the new rules. No details were given. Video game publisher Tencent, for example, already resorted to facial recognition some time agoto limit the game time of underage players due to previous guidelines (as reported by China.Table).
This measure is taken a month after China’s state and party leader Xi Jinping increased pressure on authorities by warning of the dangers of gambling addiction among young people.
Back in 2018, authorities stopped issuing video game licenses for nearly nine months, costing Tencent more than $1 billion in lost revenue at the time, according to Wall Street Journal. Beijing is currently cracking down on its tech sector after years of unchecked influence growth (as reported by China.Table). niw
Children
Games
Society
Technology
No more exams for children under eight
The Ministry of Education of the People’s Republic of China has banned written exams for all six- and seven-year-old children. This new guideline aims to take the pressure off schoolchildren, as it is considered detrimental to the mental and physical health of young schoolchildren. Previously, it was common practice in primary schools for first-graders to pass midterm exams and to be subjected to regular written tests throughout the school year.
According to these new regulations, even older students may only need to pass an exam once a year. Exams for senior grades will continue to be exempt.
Whether this step, which is part of China’s broad-scale education reform, will be implemented in practice remains uncertain. Parents from China’s middle class are particularly critical of the Ministry of Education’s reforms. They usually consider the school performance and good grades of their children as the only way to gain access to good schools and universities. For the resulting social advancement in society, they are willing to invest a large part of their income in extra tuition and supplementary classes.
At the end of July, Beijing banned its billion-dollar tutoring market from making profits. Instead, they are to operate as non-profit providers. Social networks fear the formation of a black market for private tuition, ever since (as reported by China.Table), which would further increase educational inequality in China. niw
Children
Education
Society
Forsa: Majority for a harder line on China
The majority of Germans wish for a harder line on China. This is the result of a survey by the opinion research institute Forsa. According to the poll, commissioned by the magazine Internationale Politik, 58 percent of respondents said the German government should take a tougher stance and defend its own interests more aggressively, even if this would harm economic relations with China. 17 percent support a tougher stance only if economic relations would not suffer. 19 percent reject a tougher stance.
Last year, according to a survey conducted by Kantar Public on behalf of the Körber Foundation, the image of China was quite different: in 2020, more than a third (36 percent) of Germans saw China as the leading partner outside Europe. This was a large increase compared to a September 2019 survey, where only 24 percent agreed that relations with China were more important than to the USA. Among 18- to 34-year-olds in particular, the expectation in Beijing was greater than in Washington, at 46 percent. niw
Germany
Society
USA
Wang Yi: USA to blame for terrorist resurgence
China has blamed the US for the dramatic situation in Afghanistan. The war in Afghanistan has not achieved the goal of removing terrorist forces, China’s Foreign Minister Wang Yi told his American counterpart Antony Blinken. On the contrary, according to Wang, the hasty withdrawal of U.S. troops will lead to terrorist organizations returning to Afghanistan. As Chinese news agency Xinhua reported on Monday, Wang had spoken with the US Secretary of State over the phone on Sunday. In the conversation, Wang called for all parties to enter into direct contact with the Taliban to calm the situation in Afghanistan.
Meanwhile, Kabul airport came under fire again on Monday. Up to five missiles were fired at the airport, according to a US government official. But they were intercepted by a missile defense system.
During their phone call, Wang and Blinken also discussed the current state of bilateral relations. “If Washington also wants to bring the China-U.S. relationship back on track, then it should stop slandering China and undermining China’s sovereignty, security and developing interests,” China’s foreign minister said, according to Xinhua, adding that the U.S. should take China’s demands serious, which were put forward at the joint meeting in Tianjin (as reported by China.Table). Accordingly, the US should lift all sanctions against Chinese officials, withdraw the extradition request against Huawei executive Meng Wanzhou, who is being held in Canada, to allow Confucius Institutes as well as Chinese state media to operate freely in America, and lift visa restrictions against Communist Party members and Chinese students.
Meanwhile, German Foreign Minister Heiko Maas has spoken out in favor of talks with China and Russia. Efforts are being made “to bring all important international players to the table, and it will be important to include Russia and China”, Maas said on Monday during a visit to the Uzbek capital Tashkent. In this context, he referred to the ongoing talks on a UN Security Council resolution on Afghanistan. Unlike Western states, both nations still operate embassies in Kabul after the Taliban took power in Afghanistan.
However, Maas does not intend to hold direct talks with the Taliban. The Federal Government’s interlocutor is Markus Potzel. The diplomat is currently negotiating in Qatar with representatives of the new Afghan rulers. “That is the channel we are using,” Maas said on Monday. rad
Afghanistan
Antony Blinken
Geopolitics
Heiko Maas
Taliban
Terrorism
Tianjin
USA
Tools
China’s New Deed Tax Law: What Does it Mean for Businesses?
By Zoey Zhang, Dezan Shira
China’s new Deed Tax Law is about to come into force on September 1, 2021. Foreign companies are subject to deed tax if they acquire real estate and/or land use rights in China, and this often occurs when the company reorganizes. Fortunately, China has extended deed tax exemptions to support certain types of corporate restructuring and reorganization.
China announced the elevation of the deed tax regulation into national law on August 11, 2020. The new Deed Tax Law is going to take effect on September 1, 2021, repealing the Interim Regulations on Deed Tax promulgated in 1997.
Deed tax is a tax levied on the assignees of land use rights and real property ownership. For businesses, it often applies when there is company restructuring and reorganization (including merger, split-up, transfer of assets, etc.).
For qualifying restructuring and reorganization of enterprises and public institutions, China granted deed tax exemptions. The exemption policies, previously extended to December 31, 2020, were further extended until December 31, 2023.
What is deed tax?
According to the Deed Tax Law, any organization or individual to whom the title to the land use rights or the real properties has been transferred within the territory of China should pay deed tax.
The transferee bears the tax obligation, under any of the following three scenarios:
Acquisition of granted land use rights from the State;
Transfer of granted land use rights (“土地使用权”), either by sale, exchange, or gifting – excluding the transfer of land contracting management right (“土地承包经营权”) and land management right(“土地经营权”); or
Purchase and sale, exchange, or gifting of real property situated on the land.
For transfer of title to the land use rights or real properties by way of conversion into investment (equity participation), debt payment, allocation, reward, and the like, the deed tax shall also be levied pursuant to the provisions of the law.
How is deed tax calculated? China’s deed tax rates range from three to five percent. The new law states that local governments can choose a specific rate within the said range.
Formula for calculating the amount of real estate transfer tax to be paid: The amount of real estate transfer tax to be paid = the assessment basis × the applicable tax rate
What are the new changes in the Deed Tax Law?
Compared with existing Interim Regulations on Deed Tax, the new Deed Tax Law clarified the deed tax collection policies on the title transfer of land use rights and real properties in forms of conversion into investment (equity participation), debt payment, allocation, and reward.
a conversion into an investment (equity investment),
a debt redemption,
an allocation
and a reward.
In addition, regarding what may be exempt from the deed tax, the new Law expands the scope, including:
non-profit schools
medical institutions
social welfare institutions from deed tax in instances where they use land or premises for office space, teaching, healthcare, scientific research, elderly care, or relief purposes
barren land (including land in mountains or on beaches) for agricultural, forestry, animal husbandry or fisheries production
change of ownership between spouses during marriage
inheritance of land use right and real property ownership by legal heirs
assuming title to the land use right and real properties by foreign embassies, consulates, and representative offices of international organizations in China.
Further, the law specifically requires tax authorities and their employees to keep confidential the personal data of taxpayers in the process of tax collection and administration.
Deed tax exemption policies for company restructuring and reorganization
To support certain types of corporate restructuring and reorganization, on April 26, 2021, the Ministry of Finance (MOF) and State Taxation Administration (STA) jointly released the Announcement on Continued Implementation of Relevant Deed Tax Policies for Restructuring and Reorganization of Enterprises and Public Institutions (MOF STA Announcement [2021] N.17), which is retroactively effective from January 1, 2021, to December 31, 2023.
Under these rules, there are exemptions from the real estate transfer tax for:
inheritance and transfer of land use rights and real estate in cases of complete restructuring of enterprises,
public institution restructuring
merger and split,
transfer as part of bankruptcy proceedings
transfer of assets between enterprises with common owners
However, the succession of land use rights originally allocated to the restructured enterprises or public institutions through assignment or state capital contribution does not qualify for the exemption.
Furthermore, during the process of corporate restructuring and reorganization, in addition to deed tax, the enterprises can also be exposed to other taxes, including land appreciate tax, value-added tax, corporate income tax, and stamp duty.
Bigger background: Law-based tax administration
In 2015, the STA released the Guiding Opinions on Comprehensively Promoting the Governing of Taxes according to Law (Shui Zong Fa [2015] No.32), stipulating that China will accelerate the process of upgrading relevant tax regulations into law, to improve the certainty of tax policies, enhance the authority of the tax documents, and ensure the efficiency of tax administrations. This is an important part of China’s broader efforts to achieve rule of law, that is, law-based governance of the country. Businesses are well-advised to keep a close eye on the future developments of China’s tax laws as it is related to how they will pay tax in China.
This article first appeared in Asia Briefing, published by Dezan Shira Associates. The firm advises international investors in Asia and has offices in China, Hong Kong, Indonesia, Singapore, Russia and Vietnam.
Chinese Communist Party
Market
Real Estate
Executive Moves
Dirk Lange will become the new CEO of kitchen manufacturer Poggenpohl as of September 1st. “We are very pleased to have acquired Dirk Lange, whose international experience and strategic expertise will sustainably drive Poggenpohl’s growth,” emphasizes Xiaowei Lin, Chairman of Poggenpohl’s board of directors. Last September, the Chinese Jomoo Group took over Poggenpohl located in Herford. Lange has many years of experience with German and American manufacturers of sanitary and interior fittings. Previously, the 56-year-old was responsible for China business activities of construction company Züblin for seven years. Most recently, Lange worked as a freelance management and strategy consultant with offices in Shanghai and Stuttgart, supporting medium-sized companies in expanding their Asia business.
Deutsche Bank Wealth Management has hired Alania Hsu Concepcion as investment management team head for Southeast Asia. Concepcion has recently returned to Singapore after 4.5 years in Europe running her own company and pursuing her interests in ESG and fintech. Before venturing out on her own, Concepcion was Credit Suisse’s head of investment consulting for Singapore and Malaysia. Prior to that, she was Barclays Bank’s co-head of private banking sales, managing a team responsible for structuring, sales and trading of capital markets products for private banks and family offices in Singapore and Hong Kong. Earlier in her career, Concepcion was a specialist in fixed income and derivatives covering institutional and corporate clients for Credit Suisse and Merrill Lynch.
Dessert
China’s table tennis player Zhao Shuai (26) won the gold medal at the Paralympics in Tokyo. For Zhao, the victory is a triple. He previously won the C8 singles at the 2012 Summer Paralympics and defended his title in Rio four years later. Zhao manages to do all this without his left arm. He lost his arm after a car accident at the age of four.
