China's challenge to international tax rules and the implications for global economic governance

Bibliographic Data

ID3705394
AuthorsMartin Hearson (0000-0002-7108-7372, London School of Economics and Political Science), Wilson Prichard (0000-0002-9855-6538)
Year2018
Volume94
Issue6
Pages1287-1307
Publication date2018-11-01
Peer ReviewedYes
Open AccessNo
TypeARTICLE
VenueInternational Affairs (JOURNAL)
Journal identifiersISSN: 0020-5850 • E-ISSN: 1468-2346
PublisherOxford University Press (PUBLISHER • GB)
DOI10.1093/ia/iiy189
OpenAlexW2900420488
LanguageEN
Citations received5

Twentieth century institutions of global economic governance face a profound challenge adapting to the rise of emerging markets and, especially, China's rise. This is especially the case for the international tax regime, whose institutional home is the OECD and which is based on norms that favour capital exporting states. To understand the nature of the challenge posed by China, we focus on the country's engagement with a foundational norm of the international tax regime: the arm's length principle. We show that China's approach to tax cooperation is characterized by a set of apparent contradictions: conciliatory language hides an assault on the arm's length principle; a rhetoric of common cause with developing countries is contradicted by actions that maximize only China's own share of the tax ‘pie’; and a willingness to court the OECD based on the leverage gained from flirtation with outside options. In these respects, China increasingly appears to be using its market power to seek special privileges within international regimes, in ways that mirror the historical actions of the United States.

China · Corporate governance · Economic governance · Economic system · Economics · Global governance · International trade · Leverage (statistics) · Market economy · Political economy · Political science · Tax reform · Corporate Taxation and Avoidance · Finance · Law

Tools

Open DOISci-HubOpen Access