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The Daily Brief for Thursday, 4 May 2017

UK-Election, May’s Mandate? Theresa May says she is holding an early election because she wants a strong mandate to “negotiate for Britain” over Brexit. Chris Patten, last British governor of Hong Kong, former EU commissioner for external affairs and Chancellor of the University of Oxford, writes that the British Prime Minister already has the support of most of the country but the real problem is to be found within her own political party.

India’s left-wing violence: India is failing to control violent rural left wing movements that ostensibly are protecting the rights of indigenous people, reports Seema Sengupta. The government is now focusing efforts on security operations against high-value targets but observers are asking if this is really the only answer to address a deep-rooted alienation and disgruntlement prevalent among India’s indigenous people.

Asian pivot fallacy: China doesn’t have the economic ability, societal will or political transparency to lead the current world order, argues
Todd Royal. Even Beijing would concede, writes Royal, that an open, liberal post-World War II system led by the Xi Jinping government, instead of America and Asian allies such as Japan, South Korea and the Philippines, would collapse.

Tying down Blockchain: A secure digital ledger for any kind of data, Blockchain simplifies record keeping and reduces transaction costs.
Vasilis Kostakis, Primavera de Filippi and Wolfgang Drechsler write that as its range of applications in commerce, finance and potentially politics continue to widen, then so does the debate around how to regulate this buzziest of new tech tools.

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China Digest for Thursday, 4 May 2017

Application approvals streamlined for private medical institutions

A State Council executive meeting stressed the importance of social capital in developing medical institutions, such as high-end hospitals, nursing homes and Chinese medicine centers. The application and approval process will be streamlined and market observers predict a wave of public hospital mergers and acquisitions.

New preferred tax policies to support tech start-ups

The Ministry of Finance set new policies that will take effect on July 1, granting tax credits to venture capital companies that invest in technology start-ups for two years or longer. Some 70% of the total investment is deductible from income tax. For medium and small tech companies, 75% of research and development expenses are tax deductible.

Banking watchdog warns of external risks as foreign loans rise

Banks are giving more credit to emerging markets where currencies are unstable and the economic situation is unclear, adding to the risk of default, said Guo Shuqing, chairman of the China Banking Regulatory Commission. Guo’s warning came as major state-owned banks and joint-stock banks posted a dramatic rise in foreign loans in their annual report released in April.

Debt financing at local governments targeted

A cross-departmental supervision mechanism will be set up to monitor debt financing of local governments, Caixin reported on Wednesday, citing six ministries and watchdogs in a co-released document. The mechanism will monitor local governments’ medium and long-term spending as well as companies’ major debt-raising platforms to avoid regional financial risks.

SOEs must be corporations by 2018: State Council

The State Council released reform guidance for state-owned enterprises (SOEs), saying they should all become corporations by the end of 2017, the Economic Information Daily said on Thursday.

VAT streamlined to three rates from July 1

The Ministry of Finance and State Administration of Taxation jointly announced that the value added tax (VAT) of 13% will be cancelled from July 1, reducing the four rates to three – 17%, 11% and 6%. The VAT on agricultural products and natural gas will be lowered to 11%.

Tougher restrictions on property deals in tier two, tier three cities

New home owners in Zhengzhou cannot sell their property within the first three years after receiving their real estate certificate, the China Real Estate Information Corp. Local governments in announced around 50 property transaction limits in April, most of them were in tier two and tier three cities.

Premium income at insurance firms up 37% in first quarter

Life insurance companies had 1.32 trillion yuan (US$191.53 billion) in premium income in the first quarter, rising 37.24% from a year earlier, the China Insurance Regulatory Commission said on Wednesday. Firms also saw a decline in new policyholders taking out universal insurance, with payments declining 61.24% to 231.3 billion yuan.

4% of GDP spent on education for five consecutive years

Total investment in public and private education stood at 3.89 trillion yuan in 2016, a 7.57% increase from 2015, the Ministry of Education said. Around 3.14 trillion yuan went to education, which was the fifth consecutive year that more than 4% of gross domestic product was allocated.

Chinese tool giant to buy American brand

Hangzhou Great Star Indus plans to buy Arrow Fastener Co LLC, a wholly-owned subsidiary of Masco Corporation for US$125 million, China’s tool manufacturing giant said in a company statement on Wednesday night. Arrow has a comprehensive supply and marketing system in the US, the Securities Daily reported on Thursday.

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