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The anti-graft drive of President Xi, has created a new normal in China biz ecosystem. It makes a difference in property firms, and also other firms which alsp depend on "Guanxi" (personal relations).

Leadership crisis in Chinese property firms

SINGAPORE (Jan 7): The loan default by Kaisa Group Holdings, after the second surprise exit of a Chinese property tycoon in six months, is prompting investors to ask who’s next.

The 2019 notes from the builder, based in the southern city of Shenzhen, have tumbled 38.4 cents on the dollar to a record low of 25.3 cents, after the resignation of the developer’s chairman triggered a loan default on Dec 31.

The perpetual securities of Agile Property Holdings dropped 17 cents to 67 since its billionaire chairman was placed under control of prosecutors in September before being released last month without details of the detention.

China’s junk dollar notes have lost 3.9 percent in 2015, the worst start to a year ever in Bank of America Merrill Lynch indexes, after Kaisa Chairman Kwok Ying Shing resigned days after two other executives left their positions.

Developers that rely on personal relations in securing land from the government are among the most at risk from President Xi Jinping’s local-government financing shakeup and anti-graft drive.

“You never know where the skeletons in the closet are or what company will be next,” said Charles Macgregor, head of Asia high-yield research at Lucror Analytics, the Singapore-based independent credit researcher focused on high-yield markets.

“There’s always been a bit of a corporate-governance premium on Chinese developers and that will increase because of the latest challenges.”
Farmers take hiding as China cracks down on tannery pollution
RICHARD SILK AND LUCY CRAYMER THE AUSTRALIAN JANUARY 08, 2015 12:00AM

Lambskins trade.Lambskins trade. Source: The Wall Street Journal < PrevNext >
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AUSTRALIAN and New Zealand farmers are having a tough time selling lambskins as China’s tanneries face slowing demand for the products, particularly from Russia, and as Beijing cracks down on chemical-­intensive ­processing plants.

In Australia, lambskin prices were down about 85 per cent last year. Sheep farmers are also being hit in New Zealand, where prices have fallen as much as 40 per cent.

China’s government is under growing pressure from a rapidly emerging middle class to address the country’s air, soil and water quality. In May, China began regulating tanneries and other factories believed to be contributing to pollution, targeting smaller outfits in particular.

In Xinji, a gritty factory town 220km south of Beijing dominated by the tanning industry, Zhao Jingchuan sat surrounded by stacks of finished sheepskins in a workshop that doubled as an office. Outside, a mound of raw, still-bloody skins lay waiting to be processed.

Mr Zhao, the manager of Jinquan Fur and Leather, said business was slack, although he put most of the blame on slowing demand. “The whole economy, the whole market isn’t good,” he said.

Mr Zhao’s most important export market, Russia, has dried up as the plummeting rouble has made imported lambskins more expensive for Russian customers.

Russia is also keeping more of the skins it produces as a result of US and European bans on importing Russian farm products in the wake of the Ukraine crisis.

Mr Zhao also blamed China’s stalling housing market — and the knock-on effect on demand for leather furniture — for the lull in business.

He said tougher environmental standards accounted for perhaps 20 per cent of the slowdown in business.

The company has spent about 15 million yuan ($2.99 million) on a treatment plant to deal with the run-off chemicals from the tanning process.

Mr Zhao said larger factories such as his would ultimately benefit from stricter environmental rules, as smaller outfits that could not meet modern standards closed. The smaller factories were flying under the radar of regulators and often skirting waste­water-treatment rules. “They can’t do that anymore,” he said.

The effects of the slowdown reach as far as New Zealand and Australia, two of the five largest exporters of sheepskins globally, alongside South Africa, Spain and Britain, according to the United Nations Food and Agricultural Organisation (FAO).

UN statistics don’t distinguish between the skins of sheep and lambs, which are usually cheaper and used mainly in lower-quality products such as shoe and bag ­linings. Sheepskin tends to be used to make blankets and more expensive branded footwear such as Ugg boots.

On the east coast of New Zealand’s North Island, sheep farmer Rick Powdrell expects to cull around 2700 lambs this year, which means the drop in lambskin prices will significantly cut into farm revenue.

Mr Powdrell said it helped that prices of live sheep and just-slaughtered ones had stayed strong.

New Zealand farmers produce about $43m of lambskins a year, according to Statistics New ­Zealand.

Carl Alsweiler, manager of marketing at Alliance Group, a meat processor based in Invercargill, said the price falls were linked to China’s environmental policies, but that a soft global economy was also a factor.

China is the biggest importer of sheep and lamb skins, receiving about 74 per cent of all skins exported worldwide, while remaining one of the top five sheep and lamb skin producers, according to the FAO. Turkey, Russia and Italy are smaller importers of the skins.

Most leather products require chemicals such as chromium to help preserve the skin. In addition, gases such as hydrogen sulfide are frequently released into the air as workers in factories process the skins so they can be preserved.

Beijing began its clampdown on tanneries as part of a wider sweep on factories seen as failing to meet new environmental guidelines.

Mr Alsweiler said there was evidence some Chinese tanneries were grouping together to avoid being targeted.

The number of tanneries forced to shut since May isn’t known because no data is kept on the number of factories. Chen Zhanguang, deputy secretary-general of the China Leather Industry Association, said large factories tended to do better at meeting environmental regulations.

“The factories which cannot reach the standards will definitely be turned off,” he said, although adding the rules applied only to new factories.

He blamed the fall in lambskin prices mainly on lower demand. The leather goods market might get a boost from the US, which appears to be emerging from several years of slow growth.

The Wall Street Journal
This is definitely a implication on business practices in China, and also China citizen abroad...

China taxes income earned abroad

HONG KONG — As Chinese individuals and companies head overseas in greater numbers, the country’s tax authorities are starting to follow.

Beijing billionaires who set up cryptically named companies in the British Virgin Islands to hold their fortunes are in its cross hairs. So are the Guangdong salesmen living and working in Africa and Latin America. China’s tax officials are demanding that citizens start reporting exactly how much money they earn overseas.

In asking for this information, national and municipal tax agencies are quietly beginning to enforce a little-known and widely ignored regulation: Citizens and companies must pay domestic taxes on their entire worldwide incomes, not only what they earn in China.

The nascent campaign puts Beijing on the same side as the United States in a global debate over whether taxation should be primarily national or global. On the other side of the issue are European nations, Japan, Australia and Canada, all of which tax people within their borders but exempt most expatriates and overseas subsidiaries from paying income taxes in their home countries.

Economists and accountants have long debated the fairness of taxing citizens and firms overseas. Europeans have argued that expatriates use fewer government services, such as state-run healthcare, while playing a big role in promoting exports. Advocates of worldwide taxation have contended that such exemptions are regressive and hurt lower-income individuals.

The roots of China’s decision to embrace worldwide taxation trace to the early 1990s. It sent teams of tax officials to the US, Britain, Germany and other nations to seek advice on drafting a modern tax code.

One team visited state tax officials in California and New York, said Ms Lili Zheng, a Deloitte accountant who coordinated the visit and is now co-leader of the firm’s Asian international investment practice. The team paid a long visit to the Internal Revenue Service (IRS) and was given a two-volume bound copy of the US tax code and a five-volume copy of IRS regulations.

Chinese officials chose the American definition of income, with its worldwide scope, in issuing their tax code in 1993.

Now, it is taking the first steps to enforce that broad definition.
...
http://www.todayonline.com/chinaindia/ch...ned-abroad
Bank of America warns of 'lethal' damage to China's financial system as deflation deepens
http://www.telegraph.co.uk/finance/econo...epens.html
China Wants Taxes Paid by Citizens Living Afar

By KEITH BRADSHER
1271 words
8 Jan 2015
NYTimes.com Feed
NYTFEED
English
Copyright 2015. The New York Times Company. All Rights Reserved.
Correction Appended

HONG KONG — As Chinese individuals and companies head overseas in greater numbers, the country’s tax authorities are starting to follow.

The Beijing billionaires who set up cryptically named companies in the British Virgin Islands to hold their fortunes are in the cross hairs. So are the Guangdong salesmen living and working in Africa and Latin America. China’s tax officials are now demanding that citizens start reporting exactly how much money they earn overseas.

In asking for this information, national and municipal tax agencies in China are quietly beginning to enforce a little-known and widely ignored regulation: Citizens and companies must pay domestic taxes on their entire worldwide incomes, not just on what they earn in China.

The nascent campaign this winter puts China on the same side as the United States in a global debate over whether taxation should be primarily national or global. On the other side of the issue are European nations, Japan, Australia and Canada, all of which tax people within their borders but exempt most expatriates and overseas subsidiaries from paying income taxes in their home countries.

“The newest element is the Chinese tax authorities’ deciding to more strictly enforce this worldwide taxation, which has always been required of Chinese individuals,” said Edmund Yang, a PricewaterhouseCoopers partner in Beijing for international assignments. “The level of compliance among Chinese nationals overseas has been relatively low.”

Economists and accountants have long debated the fairness of taxing citizens and companies overseas. Europeans have argued that expatriates use fewer government services, like state-run health care, while playing a big role in promoting exports.

Advocates of worldwide taxation have contended that such exemptions are regressive and hurt lower-income individuals, as many expatriates are bankers and other high earners in finance. Expatriates may also benefit if their home countries are prosperous, well-run places with solid tax bases to which they can return someday.

The roots of China’s decision to embrace worldwide taxation trace to the early 1990s. Still a very poor country then, China sent teams of tax officials to the United States, Britain, Germany and other nations to seek advice on drafting a modern tax code.

One team sent to the United States visited state tax officials in California and New York, said Lili Zheng, a Deloitte accountant who coordinated the visit and is now co-leader of the firm’s Asian international investment practice. The team paid a long visit to the Internal Revenue Service and was given a two-volume bound copy of the United States tax code and a five-volume copy of I.R.S. regulations.

Chinese officials chose the American definition of income, with its worldwide scope, in issuing their tax code in 1993. It remains in force today, although with many amendments.

Now, China is taking the first steps to enforce that broad definition.

The government of Guangzhou, the commercial hub of southeastern China, has summoned executives from 150 of the largest corporations based there to a meeting on Jan. 28 to discuss the obligation of their overseas employees to pay Chinese taxes. Municipal governments in Beijing and other big cities are also contacting big companies in their jurisdictions and telling them to provide detailed information on the expatriates’ incomes, tax advisers said.

The State Administration of Taxation in Beijing has begun a separate campaign to curb tax evasion by Chinese companies as they start to make big overseas investments. New rules taking effect on Feb. 1 will ban a wide range of international investments deemed to be tax shelters. The rules could indirectly hit many wealthy Chinese individuals, who commonly make their overseas investments through specially created companies, often located in the Caribbean.

Worldwide tax enforcement could also prove a potent tool as President Xi Jingping seeks to catch corrupt officials who have fled overseas.

Enforcement of the tax regulation and compliance has been low partly because China lacked data on its citizens’ overseas earnings and investments. But the Chinese government has seized on the continuing United States effort to gather more information on the overseas activities of American companies and citizens. China has simultaneously been negotiating with the United States and other countries to share information on overseas bank accounts belonging to Chinese citizens.

The Chinese tax enforcement effort comes as the country’s economy starts to slow. With overseas investments by Chinese individuals and companies surging, national tax officials are looking for ways to collect on that trend. And local governments are seeking to develop a new source of tax revenue to offset dwindling revenue from other sources.

The finances of local governments across China have deteriorated considerably in the last two years. Sales of government-owned land to developers for apartment buildings and office towers have dropped as real estate prices have fallen and housing starts have tumbled. At the same time, Beijing has overhauled its system of business taxation to the disadvantage of local governments.

Local governments used to assess a tax of 5 percent on the revenue of most businesses in service industries and real estate, and shared part of the proceeds with the central government. Beijing is phasing out these taxes in favor of value-added taxes, which go directly to the central government.

That has given municipalities a powerful incentive to step up enforcement of individual and corporate income taxes, which they still collect and then split with the central government. Sam Pang, a tax partner at Ernst & Young, is helping Guangzhou draft a tax enforcement brochure to give companies at the January meeting.

China’s decision could increase pressure for similar action by countries that face sizable budget deficits and have large numbers of affluent expatriates, like Australia, Britain, France and Ireland. Although not one of these countries has shown signs yet of switching to a different model, there has been a broad increase in interest by governments around the world in sharing more information on overseas financial accounts.

While China is taking a page from the United States playbook, Beijing’s tax policies in some ways are even tougher.

The top income tax bracket in China is 45 percent, compared with 35 percent in the United States. That top bracket for the Chinese kicks in at $12,900 a month.

The United States also allows expatriates to exempt a slowly rising sum of foreign earned income, which amounted to $99,200 last year. It then taxes the rest. In China, overseas citizens are eligible only for an extra deduction of $210 for each month they are overseas.

Ms. Zheng at Deloitte predicted that China would pursue a few prominent cases to persuade other Chinese companies and individuals to declare their overseas income and pay taxes on it.

“The law has always been there — the enforcement has previously been lacking because of limited resources,” she said. “China is going to enforce some cases to let people know.”

Correction: January 9, 2015, Friday

This article has been revised to reflect the following correction: An article on Thursday about China’s moves to enforce a widely ignored law requiring its expatriate citizens to pay income tax misstated the threshold for the top tax bracket in China. The top bracket, 45 percent, begins at $12,900 a month — not $12,900 a year — after deductions. The error was repeated in a picture caption.


The New York Times Company

Document NYTFEED020150107eb18004jx
getting the tax men to chase after tax, either Beijing is having cash flow issue or they are using this as an excuse to get rid of more opposition.
(11-01-2015, 05:38 PM)BlueKelah Wrote: [ -> ]getting the tax men to chase after tax, either Beijing is having cash flow issue or they are using this as an excuse to get rid of more opposition.

US is also proposing the same. Does it mean Washington is having cash flow issue, or they are using this as excuse to get rid of more opposition? Tongue

https://americansabroad.org/files/4214/1...c-2014.pdf

Washington, D.C. – (December 19, 2014) In a new policy paper, Republican
staff of the Senate Finance Committee have proposed major changes to the
way the United States taxes its citizens overseas. According to the report,
“The United States needs to rethink its taxing rules for nonresident U.S.
citizens.”
China wise its harder to decide, with all the recent arrests of corrupt officials, talking about chasing after tax now seems like an extension of the anti-corruption campaign by Xi which some say its to weed out opposition.

In USA case, looks more like their gov need some extra cash, like those stashed overseas in Switzerland. In fact the opposition to Obama now have more majority in their parliament and so far no reports of republicans getting arrested for tax fraud..
China to raise consumption tax on oil products, cut prices
DOW JONES NEWSWIRES JANUARY 12, 2015 10:00PM

China said on Monday that it would raise the consumption tax on a range of oil products for the third time in less than two months, as global oil prices remained under pressure.

At the same time, the state economic planner said it would cut the official retail prices on gasoline and diesel, adding that the two moves effectively result in a net reduction of domestic oil prices.

The moves are aimed at promoting energy conservation and cutting pollution, the Ministry of Finance said in statements on its website.

China would raise the consumption tax on gasoline, lubricants and naphtha by 0.12 yuan (about US$US0.02) a liter to 1.52 yuan, while the tax on diesel, jet fuel and fuel oil would rise by 0.1 yuan a liter to 1.2 yuan, effective Tuesday, the finance ministry said.

The ministry said the additional tax revenue will be used to clean up the air and water, and support the country's alternative energy industry.

Also effective Tuesday, the National Development and Reform Commission said it would cut the retail price of gasoline and diesel by 0.13 yuan and 0.20 yuan a liter, respectively.

Last month, the government raised the consumption tax on gasoline, lubricants and naphtha by 0.28 yuan per liter, and the tax on diesel, jet fuel and fuel oil by 0.16 yuan. The NDRC said it would cut the retail price of gasoline and diesel by 0.13 yuan and 0.34 yuan a litre, respectively.

The government has been taking advantage of weaker oil prices to boost revenue. The central government has had slower revenue growth due to the decelerating economy in the past year. Government fiscal revenue was up 9.1 per cent from a year earlier in November, compared with a 9.4 per cent gain in October.
Export engine driving China’s economy
PETER CAI THE AUSTRALIAN JANUARY 14, 2015 12:00AM

Export engine driving China’s economy
Chinese exports grew 9.7 per cent in December as the country’s monthly trade surplus hit $US49.6 billion. Source: AFP
CHINESE exports rebounded sharply during the final month of 2014, beating expectations from economists and analysts.

Export growth increased from 4.7 per cent in November to 9.7 per cent in December. This was stronger than the Bloomberg median forecast of 6 per cent.

Yesterday’s trade data makes China’s export sector one of the best performing sectors in the world, according to Capital Economics, a London-based global economic consultancy. The rebound in the export sector is indicative of a slowly recovering world economy — especially in the US, which is regaining its ­momentum.

The slowdown in Chinese imports also moderated in December, posting a 2.4 per cent drop, against a 6.6 per cent decline in November.

The growth in Chinese imports has been weighed down by sharp falls in global commodity prices such as oil and iron ore. Oil prices have dropped below $US50 per barrel for the first time since April 2009 and the iron ore price is also below $US70 per tonne.

Chinese demand for capital goods such as machinery is also moderating due to a combination of import substitution industrial policy as well as more subdued domestic demand. Import growth for electronics and machinery goods only increased 0.9 per cent during the first 11 months of 2014.

The December trade surplus of $US49.6 billion was only slightly smaller than the historically high trade surplus of $US54.5bn in ­November.

China’s foreign exchange reserves are approaching a record high of $US4 trillion. But this huge war chest is becoming a headache for the country’s central bank as it finds it difficult to manage such a vast holding.

The deputy governor of the Chinese central bank, Yi Gang, who is in charge of managing the foreign exchange reserve, has said repeatedly that he wants the country to import more goods from abroad to ease the pressure on increasing the size of the reserve any further.

Looking ahead in 2015, China’s export industry is expected to perform better as key export markets such as the US gaining more recovery momentum. In addition, Beijing’s grand strategy of building better connectivity between China and emerging economies in Southeast Asia and central Asian countries has the potential to boost Chinese exports — especially for capital goods such as construction machinery.

As far as imports are concerned, don’t expect Beijing to unleash another round of reckless stimulus to boost its slowing economy despite media reports of a planned $US1.1 trillion infrastructure splurge in 2015.

Officials from the National Development and Reform Commission, the country’s key planning agency, went on record to say the spending plan was fundamentally different from the four trillion yuan rescue package during the financial crisis. Falling commodities prices and weak demand will further weigh on the country’s import figures. For 2014 as a whole, China imports only grew 0.4 per cent with the sluggish import performance playing a key role in missing the trade growth target of 7.5 per cent.