Table.Briefing: China

A lot of money for chips + Slovenia’s EU presidency

  • Race for semiconductor subsidies
  • Slovenia’s EU presidency: China is not a priority
  • Largest offshore wind farm goes online
  • Kramp-Karrenbauer explains frigate’s journey
  • Suspected double agent arrested
  • Hong Kong wants to observe teenagers
  • Super League pauses for World Cup qualifiers
  • Point of view: Is KP investing correctly?
  • Personnel: Changes at HSBC and Burberry
Dear reader,

Nothing works without chips. The delivery problems of the Taiwanese suppliers are therefore hurting the entire industry, including in Germany. But the knot will be broken again. Because an arms race with semiconductor investments is currently brewing between the major economies. China is investing almost adventurous sums of billions in order to catch up with the world leaders in this field and to become independent of the Taiwanese and Americans. At the same time, however, they are also pumping subsidies into the industry, writes Frank Sieren. Sooner or later there will be plenty of chips for everyone. However, this year will not be that far yet.

Slovenia holds the EU Council presidency for six months – and is setting its own course. Refreshingly Zen-like, the government there ignores the whole complicated knot surrounding the trade war, CAI and sanctions. It generally finds China rather unimportant and has largely kicked the issue off the agenda. Instead, Slovenia is seeking a rapprochement with the US. That’s a pleasingly self-confident stance from a country that has fewer inhabitants than many a district in China’s metropolises.

Your
Finn Mayer-Kuckuk
Image of Finn  Mayer-Kuckuk

Analysis

Attack on the chip giants

In order to become less dependent on foreign manufacturers and to meet demand during the global supply bottleneck,China is now investingheavily in its own chip industry. In the process, the People’s Republic’s semiconductor producers have already been able to bring in large investments this year, with 164 Chinese companies raising a total of 40 billion yuan (six billion US dollars) in financing in the first five months of this year. That’s about the same as in all of 2019. In 2020, Chinese firms raised about 140 billion yuan.

According to a report by the US law firm Katten and the Chinese chip industry monitor Ijiwei.com, the companies obtained the funds mainly from state sources and venture capital firms that are close to the Chinese state. These include Shenzhen Capital Group and CAS Investment Management, for example. But also carmakers like Geely and BYD or tech giants like smartphone producer Xiaomi and e-commerce giant Alibaba invested hundreds of millions in the industry.

According to figures from the Chinese enterprise database Qichacha,17,500 new companies havealready registered in the “semiconductor” segment this year. In 2020 as a whole, there were 21,500, and only 9,400 the year before. The Shanghai Development and Reform Commission alone announced in the spring that it would investtwelve billion US dollars in new equipment from the manufacturer Semiconductor Manufacturing International Corporation (SMIC). The focus here is on elements with a structure width of 14 nanometers and below. This is very modern, but not yet the most advanced technology.

arms race among the chip powers

Founded in 2000 with the support of the Chinese government, SMIC, which is also currently buildinga new chip factory in Shenzhen at a cost of 2.35billion euros, is of great importance to Beijing’s plan to establish a competitive Chinese semiconductor industry. Under the motto “Made in China 2025”, the country wants to produce 70 percent of its chips itself in four years.

Similar plans can be found in other major economies. In June, the US Senate voted through an ambitious plan by the Americans: they want to invest 52billion US dollars in domestic semiconductor production. And 29 billion US dollars in research and development.

However, industry specialists like Intel’s CEO Patrick Paul Gelsinger believe it will take many months, if not years, to get the investment on the road. TheEuropeans want to launch a new “Important Project of Common European Interest” (IPCEI) to promote the European semiconductor industry. Negotiations are underway, withU.S. chipmakers’ share of global production capacity falling from 37 percentin 1990 to 12 percent in 2020, while European companies’ share actually fell from 44 percent in 1990 to nine percent in 2020, according to a study by the Boston Consulting Group. In contrast, the People’s Republic of China increased its share from zero to 15percent.

Higher spending on chip imports than on crude oil

Yet microchips are the biggest Achilles’ heel for China’s rise as a tech superpower. Chinese chipmakers stillrely on foreign components. In 2020, China imported $350billion worth of chips more than the value of imported crude oil.

When it comes to chip design tools, expensive patents and manufacturing technologies, China relies mainly on US companies. They have a global market share of over 50percent. In the last 30 years, only three locations outside the Western world have managed to build up their own significant chip industry: the island of Taiwan, Singapore and South Korea. So the trend is clearly towards Asia, but so far not towards China.

The business is not only about market share, but also about the most advanced technology. This is also already in Asia, but not in mainland China. Until now, Chinese companies have poached many of their skilled workers from Taiwan. But the Taiwanese government has recently announced that it will deliberately prevent this – under American pressure.

Huawei in the lead

Taiwan’s TSMC and South Korea’s Samsung Electronics currently have the most advanced technologies for manufacturing 7-nanometer chips. The goal: ever smaller transistors that compute ever faster while consuming ever less power. Chinese chipmakers have mastered only the slower 14-nanometer technology. Government subsidies ensure that thecost of new manufacturing plants in Taiwan, South Korea or Singapore is up to 30percent lower than in the USA orEurope. In China, costs are between 37and 50 percent lower, depending on the type of chip.

China is already the most important market for the international semiconductor industry. No other country imports as many chips as China, where a good third of the industry’s global sales are generated, and the trend is rising. According to ICInsight, China’s integrated circuit market was worth a total of $143.4 billion in 2020, but only $8.3 billion was produced domestically.

Companies like Huawei, which are particularly affected by the sanctions, are unceremoniously investing in highly specialized fields themselves. For example, Huawei’s venture capital subsidiary Hubble Technology Investment Co. Ltd. recently took a 4.76percent stake in Beijing-based optoelectronics company RSLaser, making it the seventh-largest shareholder in the startup, which was founded in 2019. The high-power laser producer’s products are used in the lithography process, where millions of circuits are etched onto the surface of silicon microchips.

The global market for lithography equipment is relatively small due to the limited number of chip manufacturers, and the machines are correspondingly expensive. According to BOCI International, global sales of the machines totaled just 413 units last year, with an estimated value of about $13 billion. That’s just one of 28 investments Huawei has made in various parts of its semiconductor supply chain via Hubble Technology.

Shortage will not disappear until 2022

According to the U.S. market researchers at Gartner, rising demand has caused global sales in the semiconductor industry to increase by ten percent to 466 billion U.S. dollars in 2020. The automotive industry has a particularly high demand. According to the data analysts at IHS Markit, car manufacturers had to cut production by almost one million vehicles worldwide in the first quarter due to a lack of chips.

Experts estimated that Chinese automakers still face a shortage of ten to 20 percent in the supply of microprocessors. Chang’an, one of the country’s largest carmakers, saw a shortage of nearly 30 percent in the first quarter, meaning that about a third of the company’s orders were not delivered. As a result, the company sold about 80,000 fewer cars in the first quarter.

The China Association of Automobile Manufacturers (CAAM) recently predicted that the shortage could stretch into the first quarter of 2022 before things pick up again. Automakers such as joint venture SAIC Volkswagen Automotive have set up dedicated teams to secure semiconductor supplies. “No matter how expensive, they will buy what they get,” an auto industry market analyst tells Chinese business daily Caixin.

  • Chips
  • Huawei
  • Raw materials
  • Semiconductor
  • SMIC
  • Technology

Slovenia pushes China down the EU agenda

One scene remains in the memory of participants at an event in 2014: When the President of Slovenia, Borut Pahor, spoke to diplomats, he named Japan and India as the most important partners in Asia. The Chinese ambassador at the time then left the room without a word.

The anecdote says a lot about the relationship between the Central European EU state and the People’s Republic. Because in the past Ljubljana has shown a conspicuous lack of interest in China. Today the economic partner is more present than it was just a few years ago, but Slovenia hasn’t bothered to adopt a clear stance on China. Since last week the country with a population of two million now holds the EU Council presidency – and at least wants to talk about the People’s Republic, if not with it.

A special EU summit is scheduled for 6 October, Prime Minister Janez Janša announced at the start of his country’s EU Council presidency. The debate on China will focus on trade and the future strategic relationship with Beijing. The talks are to take place behind closed doors and Chinese President Xi Jinping has not been invited, Janša said.

France looks over Slovenia’s shoulder

During the presentation of the presidential agenda yesterday in the plenary session of the European Parliament in Strasbourg, the People’s Republic was only mentioned once in an aside. In his speech to the MEPs, however, Janša stressed that the community of states must become more autonomous, for example in the production of semiconductors or medical products. In the Presidency’s official programme , China is mentioned only twice: once in the announcement of the special summit and once in connection with more cooperation on environmental issues ahead of the 26th UN Climate Change Conference.

Relations with the People’s Republic are not a top priority for the presidency of the former Yugoslav republic. And the presidency of the Balkan state holds other challenges in store for Brussels: For the right-wing nationalist head of government Janša is not too particular about the rule of law and other European values. Among other things he has been criticised for obstructing the work of the new European Public Prosecutor’s Office by blocking the deployment of two Slovenian prosecutors. Janša is also accused of attacks on press freedom and civil society and of supporting Hungary’s controversial law restricting information on homosexuality.

The EU Council Presidency’s to-do list also includes perennial issues such as EU enlargement, economic recovery after the Corona pandemic and the Green Deal. In the coming week, the EU Commission will present several legislative proposals of its “Fit for 55” climate package. In August, Brussels will be less productive anyway, due to the summer break, and September will be dominated by the German federal election and its impact on Brussels. Observers also expect that the next EU presidency – France takes over in January 2022 – will already be looking over the Slovenians’ shoulders and ensure that major political decisions are postponed until next year.

The view goes in the direction of Washington

As far as China is concerned, there is one open construction site in particular: the CAI investment agreement is still frozen. Although technical work on the agreement is continuing, work on the deal is still suspended in the European Parliament because sanctions against European politicians, academics and think tanks are still in force.

Experts therefore do not expect much progress on CAI and sanctions under the Slovenian presidency. At the very least, this is very unlikely, says Slovenian political scientist and China expert Nina Pejič. Slovenia is more likely to leave far-reaching policy decisions to the following presidency, Pejič predicts in an interview with China.Table. The Slovenian government is still generally uncertain about China.

Incentives for a more Beijing-oriented foreign policy are rather few in Slovenia, compared to other neighbours in the region, Pejič explains. There was also no big mask diplomacy here during the Corona pandemic,” the researcher says. The hope of the current Slovenian government, she says, is still to intensify transatlantic relations. A globally noted example of Slovenia’s desire to please Washington above all else was a now-infamous tweet by Janša: He took to Twitter in November to become the first European head of government to congratulate Donald Trump on his supposed re-election, claiming that the media was “denying the facts.” That alone made it clear, Pejič said, “There is a clear focus on the US. “

Pejič: Slovenia’s approach is “pragmatic

Ljubljana also made a special guest gift during the visit of then US Secretary of State Mike Pompeo last August: Janša and Pompeo signed a joint declaration on 5G network security – the US had thus gained another partner for its coalition against Huawei. But whether the Chinese tech giant will now really be excluded from the rollout of the 5G network in Slovenia is still open, says Pejič. A final decision has not yet been made.

As for the Slovenian government’s political approach to the People’s Republic, the political scientist names one word: “pragmatic.” According to Pejič, Janša, who has been active on the political stage for more than 30 years, has changed his orientation towards Beijing several times: In the 1990s, as a member of parliament, he co-founded a Slovenian-Taiwanese friendship association. When he became prime minister, however, he spoke out as a representative of the one-China policy during a visit to Beijing. In 2011 he visited Taiwan again as leader of the opposition with a delegation. Most recently, however, Janša warned publicly in EU circles against the rise of China and demanded that limits be set for Beijing, says Pejič.

China is not really a present topic of conversation in the country – even for research. Pejič speaks of a lack of “understanding of and interest in China”. This is also due to the fact that Slovenia is neither a major recipient of Chinese direct investment in the region, nor has it derived any other extraordinary benefits from economic relations with the People’s Republic.

Port in Koper offers China best access

For despite the constantly growing trade with China, its share in Slovenia’s total foreign trade has remained very limited, explains Slovenian economist Marjan Svetličič. In 2019, the Balkan state exported goods worth around 265 million euros to China, which corresponds to just three percent of total exports to third countries. In return, goods worth more than one billion euros were imported to Slovenia from the People’s Republic in the same period, he said. And the trade deficit continues to grow, Svetličič writes. Slovenia’s trade structure with China is very similar to the country’s general export structure, he says. The most important goods in bilateral trade are electrical machinery and accessories, road vehicles and pharmaceutical products.

One of the crucial starting points for bilateral cooperation is the international seaport in Koper, explains Svetličič. The multi-purpose port, with the largest container terminal on the northern Adriatic and the second largest car terminal in the Mediterranean, offers the best access to European markets in logistical terms. Its importance has increased significantly since the launch of China’s Belt and Road Initiative (BRI), as the Northern Adriatic is a terminus of the maritime Silk Road, he said. The Port of Koper has direct weekly connections with China through two alliances. One of them, The Ocean Alliance, also includes Cosco. The port formally became part of the BRI in 2018, Svetličič writes. Since then, the total turnover of goods to and from China has been steadily increasing. In the summer of 2020 alone, the operator Luka Koper recorded one million tonnes of transhipped goods from or to the People’s Republic.

Credibility problem with human rights

The port of Koper is humming – but the mood between Slovenia and China is still not at its best. The fact that Slovenia joined the US’s anti-Huawei initiative was not the best basis for talks with China, says economist Svetličič with an eye to the EU Council presidency. And then there’s another major point of contention between Brussels and Beijing: human rights violations in China. Svetličič believes that criticism of these violations coming from Slovenia has less force. After all, freedom of the press and civil rights are also restricted on a daily basis in the EU country. In the debate with China this is definitely a disadvantage when it comes to credibility.

  • CAI
  • EU
  • Geopolitics
  • Slovenia

News

Records for offshore wind power

China has completed its largest offshore wind farm to date off the coast of Rudong in the Yellow Sea. It is expected to supply 1750 gigawatt hours of electricity per year at full capacity and help reduce CO2 emissions by nearly 1.5 million tons. Construction of offshore wind turbines in China increased by nearly 28 percent last year, reports the South China Morning Post. In 2020, the People’s Republic installed over three gigawatts of new turbines.

In terms of total offshore wind capacity built worldwide, China (28.1 percent of the global total) ranks second only slightly behind the United Kingdom (29 percent), with Germany following in third place with 22 percent, the SCMP reports. Wind power is a building block in reducing China’s heavy reliance on coal-fired power, which still accounts for a good two-thirds of the country’s electricity consumption. At the end of this year, however, subsidies for wind power will expire in China. nib

  • Climate
  • Energy
  • Renewable energies
  • Sustainability

BND informant allegedly also spied for China

First for the Federal Intelligence Service (BND), later for the Chinese secret service – Klaus L. obviously knows a lot about espionage. The Federal Prosecutor’s Office has now brought charges against the political scientist Klaus L. on the charge of acting as an agent for China. He was arrested on Monday, the authorities confirmed in Karlsruhe on Tuesday. Specifically, they accuse him of having passed on information to a Chinese secret service before and after state visits and summit meetings. ARD was the first to report on the matter. According to their information, Klaus L. was an employee of the Hanns-Seidel-Foundation, which is close to the CSU, and at the same time an informant of the BND for decades.

According to the Federal Prosecutor’s Office, L. had been running his own consulting firm since 2001. Over the years, he had networked the think tank well and helped it gain international importance. In June 2020, during a lecture tour to Shanghai, the Chinese secret service allegedly approached him and won him over for cooperation. For his information, the Chinese side allegedly paid him travel expenses and an honorarium. The amount was not stated in the statement of claim.

According to ARD, the now 74-year-old has been under investigation for some time. His apartment in Munich was searched in November 2019. On 21 June 2021, the Higher Regional Court in Munich issued an arrest warrant, it was executed on Monday. According to the report, L. worked for the BND for 50 years, during which time he maintained contacts with numerous politicians and government officials from around the world. In the early 1980s, he began working for the Hanns-Seidel-Foundation and headed, among other things, the foundation’s office in the former Soviet Union. Most recently, he headed the Foundation’s department for international security policy. In the meantime, the 74-year-old has retired. According to ARD, he informed the BND about the recruitment attempt in China. He was even encouraged by the BND to get involved. He denies having given BND-internals to China. flee

  • Geopolitics
  • Germany
  • Spy

Kramp-Karrenbauer justifies frigate trip

Annegret Kramp-Karrenbauer has explained the planned deployment of the German Navy in the Indo-Pacific in a video conversation with Chinese Defence Minister Wei Fenghe. The frigate “Bayern” is to set off for Asia in August, passing through waters that China considers its own territory. During the talks, the German defense minister once again referred to Germany’s interpretation of the legal situation in the South China Sea, the defense ministry said on Tuesday. Germany considers a July 2016 arbitration award to be valid (China.Table reported). This declared China’s claims to vast maritime areas as largely legally invalid. Human rights issues and the situation of the Uyghurs were also topics in the talks. fin

  • Annegret Kramp-Karrenbauer
  • Geopolitics
  • Indo-Pacific
  • Military

Carrie Lam: “Watching Teens”

Police in Hong Kong have arrested nine people on charges of planning terrorist activities. According to police, the group had tried to manufacture explosives and plant them at court buildings in Hong Kong, among other places. Six of those arrested, aged between 15 and 39, were still students, it said. There had already been arrests and convictions at the end of June and in the recent past of people alleged to have planned explosives attacks.

The arrests are the latest under the sweeping national security law Beijing imposed on the former British crown colony of Hong Kong last year. Hong Kong’s Chief Executive Carrie Lam said shortly before the arrests that “ideologies” posed a risk to national security. She urged parents, teachers and religious leaders to monitor the behavior of teenagers and report those who break the law to authorities, Reuters reports. nib

  • Freedom of speech
  • Hongkong
  • Human Rights
  • National Security Act

World Cup: Super League wants to suspend three months for qualification

In order to improve the national team’s chances of qualifying for the World Cup, the Chinese Football Association (CFA) has imposed a three-month compulsory break on the clubs in the Super League between August and December. This is unusual: other countries do not have such a special break in their national leagues. During the break, the Chinese national team will play six away matches, each followed by a 14-day quarantine. Players from the Chinese national team must also abide by the strict Corona rules of the People’s Republic.

China will play Japan, Australia, Saudi Arabia, Oman and Vietnam in Group B, the Asian preliminary round. To qualify for the 2022 World Cup, China would have to finish in one of the top two places or, as third in Group Two, pass the deciding matches against representatives from another continental association. The last time China qualified for a World Cup was twenty years ago. President Xi Jinping is pursuing the dream of hosting a World Cup in his own country (China.Table reported). niw

  • Chinese Super League
  • Culture
  • Sports

Press review

Hong Kong police say nine arrested over alleged bomb plot THE GUARDIAN
China Targets Firms Listed Overseas After Launching Didi Probe WSJ
China’s Xi attacks calls for technology blockades INDEPENDENT
Alleged assault on scientists overshadows China’s space race success FT (PAY)
China’s Y-20 cargo aircraft joins 1st helicopter assault drill, celebrates 5th in-service anniversary GLOBALTIMES (STATE MEDIA)
Myanmar: China fears for its pipelines SUEDDEUTSCHE
Görlach Global: Citizens of the free world distance themselves from China DW
This is how the Chinese Communist Party has changed in recent years NZZ (PAY)
Virtual party meeting: Xi divides against U.S. SPIEGEL
Federal Prosecutor’s Office: German political scientist arrested for alleged espionage for China HANDELSBLATT (PAY)

Viewpoint

KP Chinas – From great power comes great responsibility

By Nancy Qian
Nancy Qian is a professor at the Kellogg School of Management at Northwestern University in Evanston.

“Over the past 100 years, the Chinese Communist Party (CCP) has united and led the Chinese people to write the most glorious chapter in the millennia-long history of the Chinese nation,” President Xi Jinping said in a speech at the CCP’s centennial celebration, highlighting the party’s role as the engine of China’s success as well as economic advancement. But the CCP’s economic record is actually mixed, and even those who are aware of it often overlook the fact that the party’s successes and failures are based on the same economic fundamentals.

Xi is right to state that under the leadership of the CCP, China has made the “historic leap” from being one of the world’s poorest countries with “relatively backward productive forces” to a middle-income country and the world’s second-largest economy. He concealed, however, that this record is marred by colossal failures, such as the Great Leap Forward (1958-1962), which led to the greatest famine in human history, or the decades of strict family planning laws that contributed to an escalating demographic crisis.

Because the CCP is capable of effectively mobilizing resources, the Party was able to provide public goods on a large scale, which in turn helped to drive development. In particular, the Party invested heavily in public health and education from the early 1950s. As a result, China managed to achieve one of the most rapid increases ever in life expectancy at birth, from 35 to 40 years in 1949 to 77.3 years today. Enrollment rates also soared. At the primary level from 20 to nearly 100 percent and at the secondary level from six to 88 percent. Literacy rates registered an increase from 20 percent in 1949 to 97 percent today.

2035: a quarter of the energy mix from renewables

In the post-1978 reform era, the state also invested in transportation and renewable energy. Between 1988 and 2019, the length of China’s entire expressway network increased sixfold; they now surpass the interstate highways in the United States in total length.

In addition, China has built 50 third-generation nuclear power plants and six to eight new reactors are approved each year. Recently, the construction of an ultra-high voltage grid was also announced. These efforts are guided by the ambitious commitment to cover a quarter of China’s primary energy consumption by wind, solar and hydropower by 2035.

This ability to mobilize resources for investment in public goods on such a large scale is one of the CCP’s greatest strengths. The party has the political power to impose economic policies for the benefit of overall growthin areas where private investment would be suboptimal.

Healthcare, education, renewable energy and infrastructure undoubtedly contribute to economic growth and create significant social value. However, the people who pay for them are not always those who benefit from these achievements. While educated and healthy people are more economically productive, parents do not necessarily reap the rewards of the investments they make. Renewable energy sources benefit future generations but hurt local economies now dependent on coal. Highways benefit newly connected populations, but farmers lose their livelihoods as their land is claimed for new roads.

Government incentives can have disastrous consequences

These are textbook examples of how the divergence between private and social value can lead to suboptimal investment. Without government intervention, there is not enough investment. But while private interests can prevail in some countries, in China the CP has the power to enforce its strategic choices. And while decisive political leadership often promotes progress, the scale and intensity of policy implementation in China means that if policymakers back the wrong horse, the consequences can prove disastrous.

This occurred during the Great Leap Forward, when peasants were forced to farm without financial compensation or private property rights as part of the collectivization of agriculture. The distorted incentives made it difficult to maintain production on the one hand and to track regional production and capacity on the other. The ensuing great famine in China resulted in 22-45 million deaths in just two years. The economy stagnated, with China experiencing zero or negative annual growth for the next two decades.

Chinas Familienplanungspolitik droht ein weiteres gravierendes Problem heraufzubeschwören. Zum Zeitpunkt der Gründung der Volksrepublik im Jahr 1949 lag die Einwohnerzahl des Landes bei 540 Millionen. Daraufhin setzte die KPCh eine geburtenfördernde Politik um, wie etwa die Einschränkung des Zugangs zu Verhütungsmitteln, und die Bevölkerung wuchs bis 1971 auf 841 Millionen an.

But shortly after the famine, the CCP decided to curtail the pro-birth policy. The extreme one-child policy then lasted from 1979 to 2016, during which time the population continued to rise and now stands at 1.4 billion. However, the one-child policy resulted in a significant increase in the old-age dependency ratio and the gender distribution shows a pronounced male preponderance.

Success through grassroots mobilisation

The implementation of the CCP’s Great Leap Forward and family planning policies-as well as its investments in health, education, renewable energy, or physical infrastructure-relied on the party’s ability to drive grassroots mobilization, persuade supporters, and coerce laggards. Yet there is a key difference in terms of economic fundamentals.

The greatest benefits from agricultural production and pro-birth policies are derived by those individuals who also pay for them; social and private values thus show great similarity. If the interests of the individual are aligned with societal needs, there is no need for government intervention. However, when challenges to implementation arise – such as estimates of how much a farmer should produce or how many children a family should have – these interventions are not only unhelpful, but also exceedingly costly.

In his 100th anniversary speech, Xi comprehensively addressed the Party’s future plans and its goal of “building China into a great, modern, socialist country in every respect” by 2049, the 100th anniversary of the People’s Republic. To succeed in this endeavor, the CCP will have to use its political power to enforce economic policies. It is to be hoped, however, that it will exercise its power wisely, focusing on public goods whose social value is much higher than their private value, and leaving the rest to the Chinese people.

Nancy Qian is a professor at Northwestern University’s Kellogg School of Management and founding director of the China Econ Lab and the China Lab at NorthwesternUniversity. Translated from the English by Helga Klinger-Groier.

Copyright: Project Syndicate, 2021.
www.project-syndicate.org

  • Chinese Communist Party
  • Civil Society
  • Domestic policy of the CP China
  • Health
  • Nancy Qian

Personal details

Jackie Mau has been appointed as HSBC’s new head of global private banking in mainland China, effective August 1. Mau is currently the regional head of ultra-high net worth at the bank. He has previously worked in various roles in global banking and HSBC’s Hong Kong, South China and Thailand markets.

Marco Gobbetti will leave luxury brand Burberry at the end of the year to join Italian brand Ferragamo as chief executive. After five years as CEO at Burberry, Gobbetti is returning to his native Italy. Gobbetti played a decisive role in the growth strategy in the Chinese market.

Dessert

“Smiling Angel” is the name of the young Chinese river dolphin swimming here with its mother. Unfortunately, not in the Yangzi River, where this species actually belongs, but in the Wuhan Hydrological Institute. The mother was brought here from Lake Poyang 14 years ago because the dolphins’ survival in their actual habitat was in danger due to environmental changes. She is the first female river dolphin to give birth to a cub in captivity.

China.Table Editors

CHINA.TABLE EDITORIAL OFFICE

Licenses:
    • Race for semiconductor subsidies
    • Slovenia’s EU presidency: China is not a priority
    • Largest offshore wind farm goes online
    • Kramp-Karrenbauer explains frigate’s journey
    • Suspected double agent arrested
    • Hong Kong wants to observe teenagers
    • Super League pauses for World Cup qualifiers
    • Point of view: Is KP investing correctly?
    • Personnel: Changes at HSBC and Burberry
    Dear reader,

    Nothing works without chips. The delivery problems of the Taiwanese suppliers are therefore hurting the entire industry, including in Germany. But the knot will be broken again. Because an arms race with semiconductor investments is currently brewing between the major economies. China is investing almost adventurous sums of billions in order to catch up with the world leaders in this field and to become independent of the Taiwanese and Americans. At the same time, however, they are also pumping subsidies into the industry, writes Frank Sieren. Sooner or later there will be plenty of chips for everyone. However, this year will not be that far yet.

    Slovenia holds the EU Council presidency for six months – and is setting its own course. Refreshingly Zen-like, the government there ignores the whole complicated knot surrounding the trade war, CAI and sanctions. It generally finds China rather unimportant and has largely kicked the issue off the agenda. Instead, Slovenia is seeking a rapprochement with the US. That’s a pleasingly self-confident stance from a country that has fewer inhabitants than many a district in China’s metropolises.

    Your
    Finn Mayer-Kuckuk
    Image of Finn  Mayer-Kuckuk

    Analysis

    Attack on the chip giants

    In order to become less dependent on foreign manufacturers and to meet demand during the global supply bottleneck,China is now investingheavily in its own chip industry. In the process, the People’s Republic’s semiconductor producers have already been able to bring in large investments this year, with 164 Chinese companies raising a total of 40 billion yuan (six billion US dollars) in financing in the first five months of this year. That’s about the same as in all of 2019. In 2020, Chinese firms raised about 140 billion yuan.

    According to a report by the US law firm Katten and the Chinese chip industry monitor Ijiwei.com, the companies obtained the funds mainly from state sources and venture capital firms that are close to the Chinese state. These include Shenzhen Capital Group and CAS Investment Management, for example. But also carmakers like Geely and BYD or tech giants like smartphone producer Xiaomi and e-commerce giant Alibaba invested hundreds of millions in the industry.

    According to figures from the Chinese enterprise database Qichacha,17,500 new companies havealready registered in the “semiconductor” segment this year. In 2020 as a whole, there were 21,500, and only 9,400 the year before. The Shanghai Development and Reform Commission alone announced in the spring that it would investtwelve billion US dollars in new equipment from the manufacturer Semiconductor Manufacturing International Corporation (SMIC). The focus here is on elements with a structure width of 14 nanometers and below. This is very modern, but not yet the most advanced technology.

    arms race among the chip powers

    Founded in 2000 with the support of the Chinese government, SMIC, which is also currently buildinga new chip factory in Shenzhen at a cost of 2.35billion euros, is of great importance to Beijing’s plan to establish a competitive Chinese semiconductor industry. Under the motto “Made in China 2025”, the country wants to produce 70 percent of its chips itself in four years.

    Similar plans can be found in other major economies. In June, the US Senate voted through an ambitious plan by the Americans: they want to invest 52billion US dollars in domestic semiconductor production. And 29 billion US dollars in research and development.

    However, industry specialists like Intel’s CEO Patrick Paul Gelsinger believe it will take many months, if not years, to get the investment on the road. TheEuropeans want to launch a new “Important Project of Common European Interest” (IPCEI) to promote the European semiconductor industry. Negotiations are underway, withU.S. chipmakers’ share of global production capacity falling from 37 percentin 1990 to 12 percent in 2020, while European companies’ share actually fell from 44 percent in 1990 to nine percent in 2020, according to a study by the Boston Consulting Group. In contrast, the People’s Republic of China increased its share from zero to 15percent.

    Higher spending on chip imports than on crude oil

    Yet microchips are the biggest Achilles’ heel for China’s rise as a tech superpower. Chinese chipmakers stillrely on foreign components. In 2020, China imported $350billion worth of chips more than the value of imported crude oil.

    When it comes to chip design tools, expensive patents and manufacturing technologies, China relies mainly on US companies. They have a global market share of over 50percent. In the last 30 years, only three locations outside the Western world have managed to build up their own significant chip industry: the island of Taiwan, Singapore and South Korea. So the trend is clearly towards Asia, but so far not towards China.

    The business is not only about market share, but also about the most advanced technology. This is also already in Asia, but not in mainland China. Until now, Chinese companies have poached many of their skilled workers from Taiwan. But the Taiwanese government has recently announced that it will deliberately prevent this – under American pressure.

    Huawei in the lead

    Taiwan’s TSMC and South Korea’s Samsung Electronics currently have the most advanced technologies for manufacturing 7-nanometer chips. The goal: ever smaller transistors that compute ever faster while consuming ever less power. Chinese chipmakers have mastered only the slower 14-nanometer technology. Government subsidies ensure that thecost of new manufacturing plants in Taiwan, South Korea or Singapore is up to 30percent lower than in the USA orEurope. In China, costs are between 37and 50 percent lower, depending on the type of chip.

    China is already the most important market for the international semiconductor industry. No other country imports as many chips as China, where a good third of the industry’s global sales are generated, and the trend is rising. According to ICInsight, China’s integrated circuit market was worth a total of $143.4 billion in 2020, but only $8.3 billion was produced domestically.

    Companies like Huawei, which are particularly affected by the sanctions, are unceremoniously investing in highly specialized fields themselves. For example, Huawei’s venture capital subsidiary Hubble Technology Investment Co. Ltd. recently took a 4.76percent stake in Beijing-based optoelectronics company RSLaser, making it the seventh-largest shareholder in the startup, which was founded in 2019. The high-power laser producer’s products are used in the lithography process, where millions of circuits are etched onto the surface of silicon microchips.

    The global market for lithography equipment is relatively small due to the limited number of chip manufacturers, and the machines are correspondingly expensive. According to BOCI International, global sales of the machines totaled just 413 units last year, with an estimated value of about $13 billion. That’s just one of 28 investments Huawei has made in various parts of its semiconductor supply chain via Hubble Technology.

    Shortage will not disappear until 2022

    According to the U.S. market researchers at Gartner, rising demand has caused global sales in the semiconductor industry to increase by ten percent to 466 billion U.S. dollars in 2020. The automotive industry has a particularly high demand. According to the data analysts at IHS Markit, car manufacturers had to cut production by almost one million vehicles worldwide in the first quarter due to a lack of chips.

    Experts estimated that Chinese automakers still face a shortage of ten to 20 percent in the supply of microprocessors. Chang’an, one of the country’s largest carmakers, saw a shortage of nearly 30 percent in the first quarter, meaning that about a third of the company’s orders were not delivered. As a result, the company sold about 80,000 fewer cars in the first quarter.

    The China Association of Automobile Manufacturers (CAAM) recently predicted that the shortage could stretch into the first quarter of 2022 before things pick up again. Automakers such as joint venture SAIC Volkswagen Automotive have set up dedicated teams to secure semiconductor supplies. “No matter how expensive, they will buy what they get,” an auto industry market analyst tells Chinese business daily Caixin.

    • Chips
    • Huawei
    • Raw materials
    • Semiconductor
    • SMIC
    • Technology

    Slovenia pushes China down the EU agenda

    One scene remains in the memory of participants at an event in 2014: When the President of Slovenia, Borut Pahor, spoke to diplomats, he named Japan and India as the most important partners in Asia. The Chinese ambassador at the time then left the room without a word.

    The anecdote says a lot about the relationship between the Central European EU state and the People’s Republic. Because in the past Ljubljana has shown a conspicuous lack of interest in China. Today the economic partner is more present than it was just a few years ago, but Slovenia hasn’t bothered to adopt a clear stance on China. Since last week the country with a population of two million now holds the EU Council presidency – and at least wants to talk about the People’s Republic, if not with it.

    A special EU summit is scheduled for 6 October, Prime Minister Janez Janša announced at the start of his country’s EU Council presidency. The debate on China will focus on trade and the future strategic relationship with Beijing. The talks are to take place behind closed doors and Chinese President Xi Jinping has not been invited, Janša said.

    France looks over Slovenia’s shoulder

    During the presentation of the presidential agenda yesterday in the plenary session of the European Parliament in Strasbourg, the People’s Republic was only mentioned once in an aside. In his speech to the MEPs, however, Janša stressed that the community of states must become more autonomous, for example in the production of semiconductors or medical products. In the Presidency’s official programme , China is mentioned only twice: once in the announcement of the special summit and once in connection with more cooperation on environmental issues ahead of the 26th UN Climate Change Conference.

    Relations with the People’s Republic are not a top priority for the presidency of the former Yugoslav republic. And the presidency of the Balkan state holds other challenges in store for Brussels: For the right-wing nationalist head of government Janša is not too particular about the rule of law and other European values. Among other things he has been criticised for obstructing the work of the new European Public Prosecutor’s Office by blocking the deployment of two Slovenian prosecutors. Janša is also accused of attacks on press freedom and civil society and of supporting Hungary’s controversial law restricting information on homosexuality.

    The EU Council Presidency’s to-do list also includes perennial issues such as EU enlargement, economic recovery after the Corona pandemic and the Green Deal. In the coming week, the EU Commission will present several legislative proposals of its “Fit for 55” climate package. In August, Brussels will be less productive anyway, due to the summer break, and September will be dominated by the German federal election and its impact on Brussels. Observers also expect that the next EU presidency – France takes over in January 2022 – will already be looking over the Slovenians’ shoulders and ensure that major political decisions are postponed until next year.

    The view goes in the direction of Washington

    As far as China is concerned, there is one open construction site in particular: the CAI investment agreement is still frozen. Although technical work on the agreement is continuing, work on the deal is still suspended in the European Parliament because sanctions against European politicians, academics and think tanks are still in force.

    Experts therefore do not expect much progress on CAI and sanctions under the Slovenian presidency. At the very least, this is very unlikely, says Slovenian political scientist and China expert Nina Pejič. Slovenia is more likely to leave far-reaching policy decisions to the following presidency, Pejič predicts in an interview with China.Table. The Slovenian government is still generally uncertain about China.

    Incentives for a more Beijing-oriented foreign policy are rather few in Slovenia, compared to other neighbours in the region, Pejič explains. There was also no big mask diplomacy here during the Corona pandemic,” the researcher says. The hope of the current Slovenian government, she says, is still to intensify transatlantic relations. A globally noted example of Slovenia’s desire to please Washington above all else was a now-infamous tweet by Janša: He took to Twitter in November to become the first European head of government to congratulate Donald Trump on his supposed re-election, claiming that the media was “denying the facts.” That alone made it clear, Pejič said, “There is a clear focus on the US. “

    Pejič: Slovenia’s approach is “pragmatic

    Ljubljana also made a special guest gift during the visit of then US Secretary of State Mike Pompeo last August: Janša and Pompeo signed a joint declaration on 5G network security – the US had thus gained another partner for its coalition against Huawei. But whether the Chinese tech giant will now really be excluded from the rollout of the 5G network in Slovenia is still open, says Pejič. A final decision has not yet been made.

    As for the Slovenian government’s political approach to the People’s Republic, the political scientist names one word: “pragmatic.” According to Pejič, Janša, who has been active on the political stage for more than 30 years, has changed his orientation towards Beijing several times: In the 1990s, as a member of parliament, he co-founded a Slovenian-Taiwanese friendship association. When he became prime minister, however, he spoke out as a representative of the one-China policy during a visit to Beijing. In 2011 he visited Taiwan again as leader of the opposition with a delegation. Most recently, however, Janša warned publicly in EU circles against the rise of China and demanded that limits be set for Beijing, says Pejič.

    China is not really a present topic of conversation in the country – even for research. Pejič speaks of a lack of “understanding of and interest in China”. This is also due to the fact that Slovenia is neither a major recipient of Chinese direct investment in the region, nor has it derived any other extraordinary benefits from economic relations with the People’s Republic.

    Port in Koper offers China best access

    For despite the constantly growing trade with China, its share in Slovenia’s total foreign trade has remained very limited, explains Slovenian economist Marjan Svetličič. In 2019, the Balkan state exported goods worth around 265 million euros to China, which corresponds to just three percent of total exports to third countries. In return, goods worth more than one billion euros were imported to Slovenia from the People’s Republic in the same period, he said. And the trade deficit continues to grow, Svetličič writes. Slovenia’s trade structure with China is very similar to the country’s general export structure, he says. The most important goods in bilateral trade are electrical machinery and accessories, road vehicles and pharmaceutical products.

    One of the crucial starting points for bilateral cooperation is the international seaport in Koper, explains Svetličič. The multi-purpose port, with the largest container terminal on the northern Adriatic and the second largest car terminal in the Mediterranean, offers the best access to European markets in logistical terms. Its importance has increased significantly since the launch of China’s Belt and Road Initiative (BRI), as the Northern Adriatic is a terminus of the maritime Silk Road, he said. The Port of Koper has direct weekly connections with China through two alliances. One of them, The Ocean Alliance, also includes Cosco. The port formally became part of the BRI in 2018, Svetličič writes. Since then, the total turnover of goods to and from China has been steadily increasing. In the summer of 2020 alone, the operator Luka Koper recorded one million tonnes of transhipped goods from or to the People’s Republic.

    Credibility problem with human rights

    The port of Koper is humming – but the mood between Slovenia and China is still not at its best. The fact that Slovenia joined the US’s anti-Huawei initiative was not the best basis for talks with China, says economist Svetličič with an eye to the EU Council presidency. And then there’s another major point of contention between Brussels and Beijing: human rights violations in China. Svetličič believes that criticism of these violations coming from Slovenia has less force. After all, freedom of the press and civil rights are also restricted on a daily basis in the EU country. In the debate with China this is definitely a disadvantage when it comes to credibility.

    • CAI
    • EU
    • Geopolitics
    • Slovenia

    News

    Records for offshore wind power

    China has completed its largest offshore wind farm to date off the coast of Rudong in the Yellow Sea. It is expected to supply 1750 gigawatt hours of electricity per year at full capacity and help reduce CO2 emissions by nearly 1.5 million tons. Construction of offshore wind turbines in China increased by nearly 28 percent last year, reports the South China Morning Post. In 2020, the People’s Republic installed over three gigawatts of new turbines.

    In terms of total offshore wind capacity built worldwide, China (28.1 percent of the global total) ranks second only slightly behind the United Kingdom (29 percent), with Germany following in third place with 22 percent, the SCMP reports. Wind power is a building block in reducing China’s heavy reliance on coal-fired power, which still accounts for a good two-thirds of the country’s electricity consumption. At the end of this year, however, subsidies for wind power will expire in China. nib

    • Climate
    • Energy
    • Renewable energies
    • Sustainability

    BND informant allegedly also spied for China

    First for the Federal Intelligence Service (BND), later for the Chinese secret service – Klaus L. obviously knows a lot about espionage. The Federal Prosecutor’s Office has now brought charges against the political scientist Klaus L. on the charge of acting as an agent for China. He was arrested on Monday, the authorities confirmed in Karlsruhe on Tuesday. Specifically, they accuse him of having passed on information to a Chinese secret service before and after state visits and summit meetings. ARD was the first to report on the matter. According to their information, Klaus L. was an employee of the Hanns-Seidel-Foundation, which is close to the CSU, and at the same time an informant of the BND for decades.

    According to the Federal Prosecutor’s Office, L. had been running his own consulting firm since 2001. Over the years, he had networked the think tank well and helped it gain international importance. In June 2020, during a lecture tour to Shanghai, the Chinese secret service allegedly approached him and won him over for cooperation. For his information, the Chinese side allegedly paid him travel expenses and an honorarium. The amount was not stated in the statement of claim.

    According to ARD, the now 74-year-old has been under investigation for some time. His apartment in Munich was searched in November 2019. On 21 June 2021, the Higher Regional Court in Munich issued an arrest warrant, it was executed on Monday. According to the report, L. worked for the BND for 50 years, during which time he maintained contacts with numerous politicians and government officials from around the world. In the early 1980s, he began working for the Hanns-Seidel-Foundation and headed, among other things, the foundation’s office in the former Soviet Union. Most recently, he headed the Foundation’s department for international security policy. In the meantime, the 74-year-old has retired. According to ARD, he informed the BND about the recruitment attempt in China. He was even encouraged by the BND to get involved. He denies having given BND-internals to China. flee

    • Geopolitics
    • Germany
    • Spy

    Kramp-Karrenbauer justifies frigate trip

    Annegret Kramp-Karrenbauer has explained the planned deployment of the German Navy in the Indo-Pacific in a video conversation with Chinese Defence Minister Wei Fenghe. The frigate “Bayern” is to set off for Asia in August, passing through waters that China considers its own territory. During the talks, the German defense minister once again referred to Germany’s interpretation of the legal situation in the South China Sea, the defense ministry said on Tuesday. Germany considers a July 2016 arbitration award to be valid (China.Table reported). This declared China’s claims to vast maritime areas as largely legally invalid. Human rights issues and the situation of the Uyghurs were also topics in the talks. fin

    • Annegret Kramp-Karrenbauer
    • Geopolitics
    • Indo-Pacific
    • Military

    Carrie Lam: “Watching Teens”

    Police in Hong Kong have arrested nine people on charges of planning terrorist activities. According to police, the group had tried to manufacture explosives and plant them at court buildings in Hong Kong, among other places. Six of those arrested, aged between 15 and 39, were still students, it said. There had already been arrests and convictions at the end of June and in the recent past of people alleged to have planned explosives attacks.

    The arrests are the latest under the sweeping national security law Beijing imposed on the former British crown colony of Hong Kong last year. Hong Kong’s Chief Executive Carrie Lam said shortly before the arrests that “ideologies” posed a risk to national security. She urged parents, teachers and religious leaders to monitor the behavior of teenagers and report those who break the law to authorities, Reuters reports. nib

    • Freedom of speech
    • Hongkong
    • Human Rights
    • National Security Act

    World Cup: Super League wants to suspend three months for qualification

    In order to improve the national team’s chances of qualifying for the World Cup, the Chinese Football Association (CFA) has imposed a three-month compulsory break on the clubs in the Super League between August and December. This is unusual: other countries do not have such a special break in their national leagues. During the break, the Chinese national team will play six away matches, each followed by a 14-day quarantine. Players from the Chinese national team must also abide by the strict Corona rules of the People’s Republic.

    China will play Japan, Australia, Saudi Arabia, Oman and Vietnam in Group B, the Asian preliminary round. To qualify for the 2022 World Cup, China would have to finish in one of the top two places or, as third in Group Two, pass the deciding matches against representatives from another continental association. The last time China qualified for a World Cup was twenty years ago. President Xi Jinping is pursuing the dream of hosting a World Cup in his own country (China.Table reported). niw

    • Chinese Super League
    • Culture
    • Sports

    Press review

    Hong Kong police say nine arrested over alleged bomb plot THE GUARDIAN
    China Targets Firms Listed Overseas After Launching Didi Probe WSJ
    China’s Xi attacks calls for technology blockades INDEPENDENT
    Alleged assault on scientists overshadows China’s space race success FT (PAY)
    China’s Y-20 cargo aircraft joins 1st helicopter assault drill, celebrates 5th in-service anniversary GLOBALTIMES (STATE MEDIA)
    Myanmar: China fears for its pipelines SUEDDEUTSCHE
    Görlach Global: Citizens of the free world distance themselves from China DW
    This is how the Chinese Communist Party has changed in recent years NZZ (PAY)
    Virtual party meeting: Xi divides against U.S. SPIEGEL
    Federal Prosecutor’s Office: German political scientist arrested for alleged espionage for China HANDELSBLATT (PAY)

    Viewpoint

    KP Chinas – From great power comes great responsibility

    By Nancy Qian
    Nancy Qian is a professor at the Kellogg School of Management at Northwestern University in Evanston.

    “Over the past 100 years, the Chinese Communist Party (CCP) has united and led the Chinese people to write the most glorious chapter in the millennia-long history of the Chinese nation,” President Xi Jinping said in a speech at the CCP’s centennial celebration, highlighting the party’s role as the engine of China’s success as well as economic advancement. But the CCP’s economic record is actually mixed, and even those who are aware of it often overlook the fact that the party’s successes and failures are based on the same economic fundamentals.

    Xi is right to state that under the leadership of the CCP, China has made the “historic leap” from being one of the world’s poorest countries with “relatively backward productive forces” to a middle-income country and the world’s second-largest economy. He concealed, however, that this record is marred by colossal failures, such as the Great Leap Forward (1958-1962), which led to the greatest famine in human history, or the decades of strict family planning laws that contributed to an escalating demographic crisis.

    Because the CCP is capable of effectively mobilizing resources, the Party was able to provide public goods on a large scale, which in turn helped to drive development. In particular, the Party invested heavily in public health and education from the early 1950s. As a result, China managed to achieve one of the most rapid increases ever in life expectancy at birth, from 35 to 40 years in 1949 to 77.3 years today. Enrollment rates also soared. At the primary level from 20 to nearly 100 percent and at the secondary level from six to 88 percent. Literacy rates registered an increase from 20 percent in 1949 to 97 percent today.

    2035: a quarter of the energy mix from renewables

    In the post-1978 reform era, the state also invested in transportation and renewable energy. Between 1988 and 2019, the length of China’s entire expressway network increased sixfold; they now surpass the interstate highways in the United States in total length.

    In addition, China has built 50 third-generation nuclear power plants and six to eight new reactors are approved each year. Recently, the construction of an ultra-high voltage grid was also announced. These efforts are guided by the ambitious commitment to cover a quarter of China’s primary energy consumption by wind, solar and hydropower by 2035.

    This ability to mobilize resources for investment in public goods on such a large scale is one of the CCP’s greatest strengths. The party has the political power to impose economic policies for the benefit of overall growthin areas where private investment would be suboptimal.

    Healthcare, education, renewable energy and infrastructure undoubtedly contribute to economic growth and create significant social value. However, the people who pay for them are not always those who benefit from these achievements. While educated and healthy people are more economically productive, parents do not necessarily reap the rewards of the investments they make. Renewable energy sources benefit future generations but hurt local economies now dependent on coal. Highways benefit newly connected populations, but farmers lose their livelihoods as their land is claimed for new roads.

    Government incentives can have disastrous consequences

    These are textbook examples of how the divergence between private and social value can lead to suboptimal investment. Without government intervention, there is not enough investment. But while private interests can prevail in some countries, in China the CP has the power to enforce its strategic choices. And while decisive political leadership often promotes progress, the scale and intensity of policy implementation in China means that if policymakers back the wrong horse, the consequences can prove disastrous.

    This occurred during the Great Leap Forward, when peasants were forced to farm without financial compensation or private property rights as part of the collectivization of agriculture. The distorted incentives made it difficult to maintain production on the one hand and to track regional production and capacity on the other. The ensuing great famine in China resulted in 22-45 million deaths in just two years. The economy stagnated, with China experiencing zero or negative annual growth for the next two decades.

    Chinas Familienplanungspolitik droht ein weiteres gravierendes Problem heraufzubeschwören. Zum Zeitpunkt der Gründung der Volksrepublik im Jahr 1949 lag die Einwohnerzahl des Landes bei 540 Millionen. Daraufhin setzte die KPCh eine geburtenfördernde Politik um, wie etwa die Einschränkung des Zugangs zu Verhütungsmitteln, und die Bevölkerung wuchs bis 1971 auf 841 Millionen an.

    But shortly after the famine, the CCP decided to curtail the pro-birth policy. The extreme one-child policy then lasted from 1979 to 2016, during which time the population continued to rise and now stands at 1.4 billion. However, the one-child policy resulted in a significant increase in the old-age dependency ratio and the gender distribution shows a pronounced male preponderance.

    Success through grassroots mobilisation

    The implementation of the CCP’s Great Leap Forward and family planning policies-as well as its investments in health, education, renewable energy, or physical infrastructure-relied on the party’s ability to drive grassroots mobilization, persuade supporters, and coerce laggards. Yet there is a key difference in terms of economic fundamentals.

    The greatest benefits from agricultural production and pro-birth policies are derived by those individuals who also pay for them; social and private values thus show great similarity. If the interests of the individual are aligned with societal needs, there is no need for government intervention. However, when challenges to implementation arise – such as estimates of how much a farmer should produce or how many children a family should have – these interventions are not only unhelpful, but also exceedingly costly.

    In his 100th anniversary speech, Xi comprehensively addressed the Party’s future plans and its goal of “building China into a great, modern, socialist country in every respect” by 2049, the 100th anniversary of the People’s Republic. To succeed in this endeavor, the CCP will have to use its political power to enforce economic policies. It is to be hoped, however, that it will exercise its power wisely, focusing on public goods whose social value is much higher than their private value, and leaving the rest to the Chinese people.

    Nancy Qian is a professor at Northwestern University’s Kellogg School of Management and founding director of the China Econ Lab and the China Lab at NorthwesternUniversity. Translated from the English by Helga Klinger-Groier.

    Copyright: Project Syndicate, 2021.
    www.project-syndicate.org

    • Chinese Communist Party
    • Civil Society
    • Domestic policy of the CP China
    • Health
    • Nancy Qian

    Personal details

    Jackie Mau has been appointed as HSBC’s new head of global private banking in mainland China, effective August 1. Mau is currently the regional head of ultra-high net worth at the bank. He has previously worked in various roles in global banking and HSBC’s Hong Kong, South China and Thailand markets.

    Marco Gobbetti will leave luxury brand Burberry at the end of the year to join Italian brand Ferragamo as chief executive. After five years as CEO at Burberry, Gobbetti is returning to his native Italy. Gobbetti played a decisive role in the growth strategy in the Chinese market.

    Dessert

    “Smiling Angel” is the name of the young Chinese river dolphin swimming here with its mother. Unfortunately, not in the Yangzi River, where this species actually belongs, but in the Wuhan Hydrological Institute. The mother was brought here from Lake Poyang 14 years ago because the dolphins’ survival in their actual habitat was in danger due to environmental changes. She is the first female river dolphin to give birth to a cub in captivity.

    China.Table Editors

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