China State Council

China’s recently issued Guideline regarding its economy contains numerous favorable, albeit general, offerings for foreign direct investment (FDI). To retaliate against United States (US) exports controls against Huawei, China readies itself to add US companies to an “unreliable entity list” which may subject them to various sanctions. US Chamber of Commerce decries potentially excessive measures by US government to move supply chains away from China. United Kingdom looks to reduce Huawei involvement in its 5G network with Huawei potentially being removed from all telecommunications infrastructure by 2023. Chinese contractors plan to make substantial progress on Indonesia’s Jakarta-Bandung high-speed rail over the balance of 2020. US pressure influences Israel to reject Hong Kong firm’s bid on strategically located, large-scale desalination plant. Japan categorizes firms into three groups as part of its effort to clarify what review processes apply to FDI pursuant to its Foreign Exchange and Foreign Trade Act. New Japanese law requires technology companies operating e-commerce websites and apps to submit annual reports, notifications of contract changes, and establish complaint processes. In quest for supply chain resiliency, Japan will provide subsides to encourage Japanese firms to return to Japan or move to Southeast Asia. Realized inward FDI into Korea in the first quarter 2020 plunges over similar period last year due to shorter worker hours, higher minimum wages, and other factors. South Korean parliament passes legislation that likely forces content providers to share network costs with local internet service providers. US support for the Economic Prosperity Network raises fears among Korean companies they will be pushed to shift FDI to the US. Korean firm to make huge investment in UAE pipeline as part of its consortium’s winning bid.

China’s Ministry of Justice promulgates draft implementation rules for the country’s new foreign direct investment (FDI) law which contains a lot of positive news regarding intellectual property rights (IPR) and trade secrets. China rejects European Chamber of Commerce claims about the possibility of “promise fatigue.” China’s State Council issues 20 opinions with a strong emphasis on breaking down foreign entry and operating barriers in the banking, securities, and fund management sectors. Consultancy reports that China’s mergers and acquisitions (M&A) activity jumped in 3rd quarter of 2019 versus 2nd, though it remained far under the highs of 2014. Japan’s Fair Trade Commission survey points out a number of internet giant practices that may violate the country’s anti-monopoly law. The United Kingdom’s Brexit is affecting an increasing amount of Japanese there such as by forcing them to develop alternative supply chains. China’s move to end subsidy programs for electric vehicles may give South Korean companies in China new business opportunities. South Korea’s Alliex partners with Vietnam’s Central on cashless payment system in Korea.

China’s plan to apply its social-credit system to foreign companies is raising concerns about possible abuses. China’s State Council announces it will establish pilot free trade zones (FTZs) in Shandong, Jiangsu, Guangxi Zhuang, Yunnan, Hebei, and Heilongjiang. United States (US) companies likely to stay in China despite trade war, a problematic regulatory environment, and US President Donald Trump’s call for them to leave. Although frictions over maritime issues remain unsettled, Chinese President Xi Jinping proposes joint oil & gas development in Reed Bank area to visiting Philippines’ President Rodrigo Duterte. Japan is paying more attention to tax shifting activities by high-tech companies and has recently forced Facebook to pay more in taxes for some questionable tax shifting activities. After the 7th Tokyo International Conference on African Development (TICAD), Japan and 53 African countries signed the Yokohama declaration which stressed “‘quality infrastructure investment.’” South Korea’s new policy for network fees has led to frictions with Facebook and service problems that led to fines which Facebook fought successfully in court. The Korea Startup Forum, the Korea Internet Corporations Association, and local and foreign content providers have called upon the South Korean government “to completely overhaul its network fee calculation structure.”

Reports suggest that following intensifying China-United States (US) trade frictions, a growing number of foreign multinational corporations (MNCs) are considering moving their manufacturing out of China. At a recent China State Council meeting, officials state China aims to provide better intellectual property rights (IPR) protections and that it will treat domestic and foreign firms equally. China courts Japan’s involvement in the Belt and Road Initiative (BRI) purportedly to improve the BRI’s image. Bangladesh works to calm foreign investors in the wake of a violent clash between local and Chinese workers at the Chinese-invested Payra thermal power plant. Japan’s Fair Trade Commission (FTC) moves forward on guidelines to regular IT giants’ use of personal data without consent. Korea preparing plan to “‘to reduce the country’s dependence on Japan’s materials, components and equipment industries.’” Korean firms threatened by possibility that Japan will “remove Korea from its export white list.” Hyundai Motor Co. and Hyundai Motor America have requested the US International Trade Commission to start an investigation against four auto part importers.

China moving to improve the business environment for foreign companies, especially in Free Trade Zones (FTZs). China’s National Development and Reform Commission (NDRC) announces that it will permit foreign banks in China to apply for approval for a quota increase in their medium to long-term foreign debt for 2019. Per Donald Trump, the United States may take a bite out of Apple products coming from China which previously have escaped a special 10 percent tariffs on Chinese goods. China’ Huawei finds Kiwis not so soft after New Zealand’s intelligence agency blocks it supplying 5G mobile network equipment to the major domestic telecom provider. Maldives’ new finance minister criticizes true price of Chinese projects, which has led to the Maldives returning to an “India First” policy. Japan’s Mitsubishi Heavy Industries ordered by South Korea’s Supreme Court to pay USD $365,500 in damages to two groups of South Koreans for forced wartime labor. In post-Carlos Ghosn arrest meeting, France suggests to Japanese official “the head of the Renault-Nissan alliance should be from the French automaker.” European firms with business in South Korea push Seoul to upgrade the country’s business regulations to reach international standards. At the 6th Association of Southeast Asian Nations (ASEAN) Connectivity Forum, South Korea’s secretary-general of the ASEAN-Korea Centre states Korea is looking to improve relations with ASEAN countries especially in infrastructure area.