Table.Briefing: China (English)

Baerbock’s de-risking in the Pacific + Machine builders see opportunities in niche markets

Dear reader,

Xi Jinping has arrived in Paris with his wife Peng Liyuan; this Monday marks the start of a series of summit meetings in France, Hungary and Serbia. None of these are the most China-critical countries in Europe, but at least in France, Xi will have to discuss some of the demands of his counterpart Emmanuel Macron. We will be keeping an eye on Xi’s European tour for you every day.

Meanwhile, German Foreign Minister Annalena Baerbock is traveling the South Pacific. Her main focus there is on security issues, as Bernhard Pötter analyzes. The elephant in the room in all of this is China. While Australia and New Zealand are primarily looking for Western-style alliances in the face of growing Chinese self-confidence in the region, the West has to work hard to win the cooperation of the South Pacific island states. Not just the Solomon Islands consider China an effective security partner. Baerbock knows that Europe’s longstanding absence in this region must come to an end.

One of the topics at the summit in Paris will be the issues surrounding growing economic competition, particularly subsidies and overcapacity. Despite tougher competition, “Made in Germany” still has opportunities and a good reputation in mechanical engineering. One reason is that German production technology, shaped by medium-sized companies, operates in niche markets where it offers customized solutions. According to Gerald Poerschmann, Managing Director of the innovation network Alliance for the Future of Industrial Engineering, Chinese competition in these markets is still limited. In an interview with Michael Radunski, Poerschmann explains why he has a positive outlook for the future despite an increasingly difficult environment.

Your
Christiane Kühl
Image of Christiane  Kühl

Feature

New definition of security: How Baerbock is flying her flag in the Pacific

Focus on security policy: Germany’s Foreign Minister Annalena Baerbock on board the Australian coastal patrol boat Arafura at the Osborne Naval Dockyard in Adelaide.

During her tour of the Pacific region, German Foreign Minister Annalena Baerbock hopes to strengthen the cohesion of Western democracies in times of war in Ukraine and tensions over Taiwan. She aims to clearly identify China and Russia as threats to the rules-based international order and to demonstratively strengthen the nations of the Indo-Pacific against their big neighbor, China.

Beyond these goals, Baerbock also has a new message: To define security policy more broadly than before. On the very first day of the trip, which will continue until Tuesday, the Minister announced a message in Adelaide, Australia. When she met her Australian counterpart Penny Wong on Friday, Baerbock said that there was now evidence that the cyberattack against the German Social Democratic Party (SPD) in January 2023 was the work of the Russian intelligence agencies. “Russian state hackers have attacked Germany in cyberspace,” she said after the meeting with Wong, adding that it would have consequences. Baerbock made one such consequence clear during her trip: The concept of security must be defined more broadly than before.

Baerbock defines overlapping security complexes

Australia’s “valuable experience” in security policy with China shows that we need to “clearly have an eye on the risks,” said Baerbock. “This is for espionage and for undermining, but also reducing essential supply chains.” In New Zealand, she said that the country sensed “that the security requirements overlap“:

  • They exist in the “hard security sector,” i.e., against military threats, for example, in securing freedom of navigation in the Pacific and the Taiwan Strait
  • They exist in the “economic sector,” where, for example, dependence on China must be reduced through supply chains – as is the case with the important raw material lithium from China, which actually comes from Australia in its raw state.
  • Baerbock sees overlaps, “especially in climate security“: the island states in the Pacific are particularly vulnerable here. But Australia has also experienced massive forest fires and New Zealand storm damage.
  • Regarding defense against cyber attacks, “we discussed how we can better cooperate,” said Penny Wong. In the current situation, it “is not just military engagement and cooperation that matters.”
  • Baerbock’s visit to the Space Institute in Auckland and the research cooperation on Antarctica are intended to show that science and space travel should also be part of a comprehensive security concept.
  • Ultimately, according to Baerbock, the “inner strength of our societies” is important for the various facets of security: “Equality and diversity make societies stronger and more resilient.”

Security issues dominate the program of visits

The Foreign Minister’s itinerary was based on these security aspects: In Adelaide, she inspected the Australian Cyber Collaboration Centre and the Osborne Naval Shipyard, where the German defense company Luerssen builds patrol boats for the Australian Navy. The fact that the ships are not so much intended to deter potential military opponents, but primarily to help the coastguard intercept illegal migrants, almost went unnoticed.

In Auckland, New Zealand, she and her counterpart Winston Peters took part in the signing of a memorandum of understanding for research cooperation in the Antarctic, where China is currently greatly expanding its capacities. She also met with the Minister for Defense and Research, Judith Collins, and visited the university’s space institute.

“Here in the Indo Pacific, the organization of the order of the 21st century are substantially developed,” explained the German Foreign Minister in Adelaide. The region is a “powerhouse for the world economy,” and Germany is expanding its relations with it for political and economic reasons. Penny Wong pointed out, “Germany’s industrial heft is a critical part of its national power.”

Security issues dominate the visit

Such words are grist to the mill of Baerbock’s de-risking strategy against China. Australia experienced the consequences of such a strategy when it excluded the Chinese mobile phone provider Huawei from its network in 2018. The measure sparked a trade war with China, which is only slowly being resolved.

Baerbock considers the cooperation in the Antarctic to be a successful example of cooperation between Germany and New Zealand, as well as the new bilateral EU free trade agreement. The latter came into force on May 1 and, thanks to its environmental and social standards, is the “gold standard” of such agreements, according to the Minister. She referred to two German navy ships that had just begun their “Pacific mission” to support the freedom of the sea routes. However, the Foreign Minister did not specify whether the ships would take the route through the Taiwan Strait claimed by China.

Germany wants to expand relations with the South Pacific

Baerbock also wants to improve relations with the Pacific island states and be more present: Germany inaugurated a new embassy in Fiji in August 2023 – the only reason Baerbock was unable to attend was the damage to the government plane, which broke down in Abu Dhabi at the time. Germany has realized that if it wants to cooperate with countries, it cannot afford to let 13 years go by without a foreign minister making an appearance, as was the case until recently. Especially as 14 countries in the Indo-Pacific are 14 votes in the UN bodies that are important when it comes to decisions on the war in Ukraine or Germany’s aspiration for a non-permanent seat on the UN Security Council. China is also seeking their votes.

The island nations in the South Pacific are also receiving increased attention because China has been deliberately and massively expanding its presence there for some time – and outdoing the USA in the process. The fear is that other countries could also sign secret police training agreements like the one on the Solomon Islands – and possibly later permit Chinese naval bases or airports, as the US media speculate. This, in turn, could threaten the sea routes between Australia/New Zealand and the US fleet in Hawaii.

Baerbock offers Germany’s support for climate action

As an experienced climate politician, Baerbock also wants to include the fight against global warming much more strongly as a “soft power” in official German diplomacy. At the end of 2023, she laid this down for COP28 in the German government’s “Climate Foreign Policy Strategy.” That is important because China will also likely include climate action in its foreign policy in the Global South soon. Beijing is already focusing on South-South cooperation. In the summer of 2022, Baerbock visited the Pacific state of Palau to learn about the consequences of the climate crisis in the region. Now, the Foreign Minister is devoting two whole days to the island state of Fiji, which is particularly affected by rising sea levels due to global warming.

Moreover, Germany supports Australia’s and its neighbors’ bid to host the COP31 climate conference in 2026. Germany has experience with a climate charm offensive in the Pacific: When Fiji hosted the COP in 2017, the conference was hosted in the German city of Bonn because Fiji could not handle the meeting of thousands of delegates on its own. Germany provided the island republic with substantial logistical and financial support of 110 million euros and also put up with delegates and visitors trampling the Bonn Rhine recreation area.

  • Indopazifik
  • Lithium
Translation missing.

Interview

How German mechanical engineering companies intend to stay successful in Chinese markets

Gerald Pörschmann, Executive Board Member and Managing Director of the Alliance for the Future of Industrial Engineering.

Be it the Chamber of Foreign Trade or the Federation of German Industries – many associations currently lament the poor situation in China. How is the German mechanical engineering industry faring in China?

This may surprise you, but things are still going relatively well for German production technology companies in China. Of course, we, too, are feeling the effects of the slowdown in economic growth in China, the geopolitical situation, and the fallout from the Covid pandemic. We are not immune to this. But overall, we are optimistic about the future.

In other words, the much-lamented government subsidies, trade barriers, and over-capacities don’t affect the mechanical engineering industry as much?

Of course, they do. I believe that Chinese overcapacity is the biggest threat. This is a consequence of the Made in China 2025 strategy. It’s now taking full effect, not only in the automotive industry, but also in production technology. The difference is that we are niche markets. We are a customized solutions provider in the medium-sized production technology sector, and our Chinese competitors are still relatively small.

Does that sound like a relaxed situation?

Not at all. I would advise everyone to take a close look at who is appearing and exhibiting at the industrial automation trade fairs in China and Europe. Many of these companies will also enter our niche markets in the medium term. The competitive scenarios are intensifying. But it was obvious that this would happen. The Made in China 2025 strategy was announced back in 2015. At that time, the Chinese leadership named our industry one of ten key future industries. That is why we have been informing the medium-sized member companies in our innovation network for years in joint events and China Expert Talks with the AHK Greater China and GTAI Germany Trade & Invest. We are also in close contact with Chinese partners through our cooperation with the economic development agency of the southern Chinese city of Foshan in order to get a feel for what is to come.

How do you react to such a comprehensive strategy as Made in China 2025?

First and foremost is a professional market development and customer retention strategy. A second aspect is Chinese management. Like a Chinese company, we must integrate ourselves into the market as much as possible. And a third point is the brand. We also hear this from our Chinese customers: ‘Made in Germany’ still has an excellent reputation in the mechanical engineering sector. You must cultivate all this: be present at trade fairs, visit customers, and create proximity. We have to capitalize on Made in Germany.

Chinese companies are being massively subsidized by “Made in China 2025”. What are the consequences?

This is indeed hard for us because it is not clear what subsidies are paid and what contacts politicians broker. Politicians and local party secretaries can influence companies. China is not a normal market economy location; it is different. We have to constantly react to this and see how we have to behave in the game in China. Let’s not fool ourselves: The communist government’s political goal is not just to enter certain key markets but to take over the market.

They sound pretty laid-back.

Well, if I were a politician in China, I would do the same. You can’t be dependent as a third-class supplier in the long term, you have to ensure that you make it into the premium sector and thus develop the entire economy.

You said that business is still going quite well for you.

Yes, business is going relatively well, given the economic situation. What worries us most is the global economy and the geopolitical situation. These create uncertainty and delay important decisions.

However, the German government has made it clear in its China strategy that companies need to become active themselves, keyword de-risking. Are you doing that?

From our companies, I can definitely say that resilience is organized and dependencies are reduced as far as economically justifiable. German SMEs are much more consistent in this respect than large companies. The situation is clear: Our value creation in Germany and Europe depends on whether we can obtain certain key products from China. That is why we are in the process of reorganizing. But this process is ongoing. We are still in the middle of it. One approach is to create value in China for China. We either do this with Chinese suppliers or tell our German partners to come to China with us. Large companies often bring their suppliers with them and help them get started in the Chinese market.

Does this mean the criticism of Germany’s huge investments in China is misguided?

This criticism ignores reality. For German companies, investing in China is part of de-risking.

Everyone is talking about risks. Do you also see opportunities?

Absolutely. This reorganization also opens up new opportunities. When industrial production is established in China, investing companies will also require high-tech production technology. New markets are emerging in China – and we cannot leave them to the Chinese competition. We have to tap into these new markets. We have to be there, on the ground, with our customers, to take advantage of these opportunities. And it’s good to have Chinese employees working in strategic sales. It’s their job to stay there and also to use their mentality and culture. We can hardly do that.

What about alternatives to China? New markets are currently emerging in countries like India and Vietnam.

That is true. However, there is a difference between large and medium-sized companies. Large corporations can change course more easily and set up a new plant in India or Vietnam. It’s not so easy for SMEs. We have invested a lot of money, time and effort to achieve success in China. You can’t just pack up and move on. As an entrepreneur, you can’t and don’t want to give that up overnight. In addition, the framework conditions there also have to be right, for example, in aspects such as skilled workers or infrastructure. China is simply the best in that respect – and cannot be replaced overnight.

So, it’s still China. But how?

Politicians should set the framework. No trade war, but a level playing field. Entrepreneurs will then take care of everyday life and business. The most important thing is that we don’t start a trade war between the EU and China. In this respect, you have to commend the German Chancellor. Olaf Scholz has understood that.

Gerald Poerschmann holds an industrial engineering degree. He has been the Managing Director of the Alliance for the Future of Industrial Engineering since 2015. The alliance aims to strengthen small and medium-sized mechanical engineering and industrial automation technology companies in central and northern Germany, particularly in the face of global competition.

  • Mittelstand

News

Xi arrives in Paris: Macron’s goals for the summit

President Xi Jinping has arrived in France. On Sunday afternoon, he landed at Orly Airport south of Paris accompanied by his wife Peng Liyuan and was received there by Prime Minister Gabriel Attal. Alongside the summit talks with his counterpart Emmanuel Macron and – at times – EU Commission President Ursula von der Leyen, he will also attend a dinner at the Élysée Palace this Monday and join Macron on a short trip to the Pyrenees.

In doing so, Macron returns Xi’s charm offensive in kind, who accompanied him to the southern province of Guangdong in 2023. At the same time, however, he has concrete goals, as he made clear in a series of interviews: Reducing the EU’s trade deficit with China and motivating Xi to take a more constructive stance in the Ukraine war. In his most recent interview with the Sunday newspaper La Tribune Dimanche, Macron called for an “update” of France’s economic relations with China. He said France wanted to achieve reciprocity in trade and get China to consider aspects of Europe’s economic security. The most recent controversy is about China’s overcapacity, particularly in the cleantech sector, which has resulted in a sharp rise in exports.

Lobbyists are also getting ready for the summit. For example, French cognac producers have called for a deal regarding the dispute over China’s dumping allegations. The summit on May 6 offers a “unique opportunity for an agreement,” explained the industry association Bureau National Interprofessionnel du Cognac. The Chinese Ministry of Commerce launched an anti-dumping investigation into spirits such as cognac from the European Union at the beginning of 2024. It was a reaction to the EU investigation launched in October 2023 into Chinese subsidies for electric cars. Unlike Germany, France supports the EU investigation.

Despite his tough stance on economic matters, Macron defends Europe’s role as a power that seeks balance and allows China to remain part of the global discussion. “Let’s be clear, I’m not proposing to distance ourselves from China,” he told La Tribune Dimanche. “Whether it’s about climate or about safety, we need the Chinese.” Macron has often called for Europe to be more independent. Speaking about the wars in Ukraine and Gaza, Macron told The Economist: “We must work with China to build peace.” ck

  • Emmanuel Macron
  • Europe
  • Geopolitics

Beijing and Moscow: Why Putin will again meet with Xi in mid-May

The date for Russian President Vladimir Putin’s planned trip to China has apparently been set. Putin will travel to the People’s Republic on May 15 and 16, Bloomberg quoted a source with access to the Kremlin as saying. It will be Putin’s first foreign trip after his re-inauguration, which will be held on May 7. In March, Putin was confirmed in office in what was considered an unfree election. A few weeks ago, he announced his intention to travel to China in May, but initially did not specify any dates. The last time Putin was in Beijing was in October 2023, when he attended Xi Jinping’s Belt and Road Forum, among other events.

This visit to his most important supporter, Xi, underscores the enormous importance that Moscow attaches to Beijing. There have been repeated signals of this. Moscow reportedly ordered the troops in Ukraine to “take something” in time for the traditional victory parade on May 9 or at least to have a countable conquest by the time Putin travels to China, said Deputy Head of Ukrainian military intelligence Vadym Skibitsky in an interview with The Economist. Apparently, Putin is keen to appear in Beijing as a strong man on the road to victory.

So far, Beijing remains loyal. Xi is resisting all Western attempts to break China away from Russia in connection with the war in Ukraine. French President Emmanuel Macron will try again during his meetings with Xi in France this week. The fact that Xi plans to meet with Putin just a few days later does not indicate a change in Chinese strategy. ck

  • Wladimir Putin

Why Taiwanese are no longer allowed to work for Confucius Institutes

Taiwan has added the Chinese government-funded Confucius Institutes to the list of Chinese political, state and military institutions where Taiwanese citizens are prohibited from working. This was reported by Taiwan’s Central News Agency (CNA) on Friday, citing Taiwan’s Mainland Affairs Council (MAC). According to the report, the measure is part of a more comprehensive amendment to an existing law from 2004. It lists work bans at Chinese organizations that compromise national identity and loyalty, are associated with China’s United Front, or pose a threat to national security.

In addition to the Confucius Institutes, other organizations have been added to the blacklist. These include the Association for Relations Across the Taiwan Straits (ARATS), a semi-official body responsible for technical and business affairs with Taiwan, as well as the All-China Youth Federation and the All-China Federation of Taiwanese Compatriots. Under the law, individuals working for these organizations can be fined between 100,000 and 500,000 Taiwan dollars (2,900-14,400 euros). Government officials and people in security-related positions can be punished with up to three years in prison. fpe

  • Konfuzius-Institute

Why the US struggles to replace Huawei technology

According to the Federal Communications Commission (FCC), US telecoms companies urgently need more money to remove Chinese components from their networks. Almost 40 percent of US companies that have already received government aid need further support, FCC chief Jessica Rosenworcel told Congress. Some companies had warned that they might otherwise have to switch off their networks. The cost of removing Huawei and ZTE’s technology is estimated at just under five billion dollars. However, only 1.9 billion US dollars have been approved as part of the “rip and replace” program.

In 2019, Congress instructed the FCC to oblige subsidy recipients under the US telecoms group to remove Chinese equipment. In October, the White House requested a further 3.1 billion US dollars for this. However, Congress has not yet approved the funds.

Due to their close ties to the government in Beijing, Chinese companies such as Huawei are under scrutiny in many countries. The concern is that China could gain direct or indirect access to mobile phone users’ data. This is why the US has categorized Huawei and ZTE as a threat to national security.

Furthermore, the FCC wants to prevent Huawei, ZTE and other foreign companies classified as security risks from being allowed to certify mobile devices. The FCC plans to put a corresponding bipartisan proposal to a vote in Congress before the end of May, officials told Reuters. The draft is intended to ensure that the companies in question cannot exert any influence on telecommunications certification bodies and test labs. rtr

  • Technologie

Heads

Why China’s dance pioneer Wen Hui feels like a child again in Germany

Tanztheater-Pionierin Wen Hui
Wen Hui has brought experimental dance theater to China.

Her biography can be used to retell the Chinese history of the past 64 years, says Wen Hui. Whenever political doctrine shifted, her life also changed. The pioneer of modern Chinese dance theater grew up with the ideologically tinged model operas of Mao’s wife, Jiang Qing. During the Cultural Revolution, modern Western theater was considered bourgeois filth.

After Mao’s death, the conviction of Jiang Qing’s Gang of Four, and Deng Xiaoping’s reforms, Western influences began to seep back into the country, including dance and performance art. “It was an exciting time. China was suddenly open to influences from all over the world. Young people from abroad came to Beijing. I was ready to soak up all the new things,” Wen Hui recalls.

Wen Hui was born in 1960 in Yunnan, the “province of song and dance,” as she calls it. As a young woman, she initially studied ballet and classical folk dance at the Beijing Dance Academy. After graduating in 1989, she took up a position as a choreographer with the Oriental Song and Dance Ensemble of China. Like many of her generation, she was driven by a longing for the big wide world. In 1994, she ventured abroad and went to New York. “It was the heyday of modern dance. What I saw inspired my spirit.”

Back in China, she founded China’s first independent dance theater with filmmaker Wu Wenguang. Her Living Dance Studio raised many eyebrows with its experimental approach. “I remember my first performance. We had placed a lamp on the floor in a studio at the film academy. I then showed the audience a day from my life. I showered, washed my clothes, hung up the laundry. My dance colleagues at the time said: That’s not dance. What are you doing?” Years later, some of the younger audience members told her this was a crucial moment. Wen Hui’s performance encouraged them to break out of the rigid artistic concepts of the universities.

Who has control over the female body?

Much of Wen Hui’s art revolves around the female body and the obligations forced upon it by a patriarchal society. “I have always tried to put my body in relation to society. What is demanded of it? And what do I want? And who ultimately has control over that?” Her piece “New Report on Giving Birth,” recently performed in Frankfurt and Berlin, deals with motherhood – or the decision not to be a mother. Five dancers, including Wen Hui, move through personal stories that are repeatedly accompanied by flickering documentary footage.

One sequence shows images of a woman with her neck chained to a wall. These are original recordings that made international headlines in January 2022. Reports say that the woman named Yang had been trafficked into a family in the north-western city of Xuzhou, where she gave birth to eight children over the years. Although the authorities were slow to investigate and state censors deleted online comments, the case sparked a debate about women’s rights in China, particularly in rural areas. “The video made me so angry,” recalls Wen Hui. Especially as it is not an isolated case. The consequences of the one-child policy are even more noticeable in the different treatment of men and women in rural areas.

Women’s lives in China have changed for the better overall, she adds. Many of the most successful Chinese are women. However, there is still little trace of this in politics. “You only have to look at photos of the National People’s Congress,” she says. She is also concerned about the increasingly extreme beauty standards of young Chinese women that are being propagated on social media.

She has always wanted to tell the stories of individuals and not – as art had demanded in her childhood and youth – about the collective struggle. Although her main place of residence is still Beijing, the stages of the world have long been her second home. She currently lives in Germany. This was not planned. During the pandemic, her return flight was canceled. And then another one. In the end, she made the best of it and moved to Frankfurt am Main for an artist residency at the Mousonturm Theater. Here, she rehearses new plays and gives workshops for young talent. In 2021, she received the Goethe Medal for her work.

“Life in Germany sometimes takes me back to my early childhood,” she says. “I can’t read anything in the supermarket and I can’t understand people. That makes my senses open up more. My favorite thing is watching the children here. They are so free and run around a lot. In China, children are under more pressure to learn in their free time.” Fabian Peltsch

  • Art
  • Ein-Kind-Politik
  • Kunst

Executive Moves

Matthias Brüggemann is the new Key Account Manager for China at Deutz AG. He was previously in China as a Product Manager for Audi in 2018.

Thomas A. Duff is the new Head of M&A at VW China. Duff has been working for Volkswagen for almost four years. He gained experience in China during his business studies at Sun Yat-sen University in Guangzhou. He is moving from Berlin to Beijing for his new post.

Is something changing in your organization? Let us know at heads@table.media!

Dessert

Building airports – that’s something China is good at. The photo shows the construction of the future international airport in Hohhot, the provincial capital of Inner Mongolia. And because the new airport is being built in the middle of the desert south of Hohhot, an entire river is being diverted and a new city district, including a university, is being built. Expected completion: 2025.

China.Table editorial team

CHINA.TABLE EDITORIAL OFFICE

Licenses:
    Dear reader,

    Xi Jinping has arrived in Paris with his wife Peng Liyuan; this Monday marks the start of a series of summit meetings in France, Hungary and Serbia. None of these are the most China-critical countries in Europe, but at least in France, Xi will have to discuss some of the demands of his counterpart Emmanuel Macron. We will be keeping an eye on Xi’s European tour for you every day.

    Meanwhile, German Foreign Minister Annalena Baerbock is traveling the South Pacific. Her main focus there is on security issues, as Bernhard Pötter analyzes. The elephant in the room in all of this is China. While Australia and New Zealand are primarily looking for Western-style alliances in the face of growing Chinese self-confidence in the region, the West has to work hard to win the cooperation of the South Pacific island states. Not just the Solomon Islands consider China an effective security partner. Baerbock knows that Europe’s longstanding absence in this region must come to an end.

    One of the topics at the summit in Paris will be the issues surrounding growing economic competition, particularly subsidies and overcapacity. Despite tougher competition, “Made in Germany” still has opportunities and a good reputation in mechanical engineering. One reason is that German production technology, shaped by medium-sized companies, operates in niche markets where it offers customized solutions. According to Gerald Poerschmann, Managing Director of the innovation network Alliance for the Future of Industrial Engineering, Chinese competition in these markets is still limited. In an interview with Michael Radunski, Poerschmann explains why he has a positive outlook for the future despite an increasingly difficult environment.

    Your
    Christiane Kühl
    Image of Christiane  Kühl

    Feature

    New definition of security: How Baerbock is flying her flag in the Pacific

    Focus on security policy: Germany’s Foreign Minister Annalena Baerbock on board the Australian coastal patrol boat Arafura at the Osborne Naval Dockyard in Adelaide.

    During her tour of the Pacific region, German Foreign Minister Annalena Baerbock hopes to strengthen the cohesion of Western democracies in times of war in Ukraine and tensions over Taiwan. She aims to clearly identify China and Russia as threats to the rules-based international order and to demonstratively strengthen the nations of the Indo-Pacific against their big neighbor, China.

    Beyond these goals, Baerbock also has a new message: To define security policy more broadly than before. On the very first day of the trip, which will continue until Tuesday, the Minister announced a message in Adelaide, Australia. When she met her Australian counterpart Penny Wong on Friday, Baerbock said that there was now evidence that the cyberattack against the German Social Democratic Party (SPD) in January 2023 was the work of the Russian intelligence agencies. “Russian state hackers have attacked Germany in cyberspace,” she said after the meeting with Wong, adding that it would have consequences. Baerbock made one such consequence clear during her trip: The concept of security must be defined more broadly than before.

    Baerbock defines overlapping security complexes

    Australia’s “valuable experience” in security policy with China shows that we need to “clearly have an eye on the risks,” said Baerbock. “This is for espionage and for undermining, but also reducing essential supply chains.” In New Zealand, she said that the country sensed “that the security requirements overlap“:

    • They exist in the “hard security sector,” i.e., against military threats, for example, in securing freedom of navigation in the Pacific and the Taiwan Strait
    • They exist in the “economic sector,” where, for example, dependence on China must be reduced through supply chains – as is the case with the important raw material lithium from China, which actually comes from Australia in its raw state.
    • Baerbock sees overlaps, “especially in climate security“: the island states in the Pacific are particularly vulnerable here. But Australia has also experienced massive forest fires and New Zealand storm damage.
    • Regarding defense against cyber attacks, “we discussed how we can better cooperate,” said Penny Wong. In the current situation, it “is not just military engagement and cooperation that matters.”
    • Baerbock’s visit to the Space Institute in Auckland and the research cooperation on Antarctica are intended to show that science and space travel should also be part of a comprehensive security concept.
    • Ultimately, according to Baerbock, the “inner strength of our societies” is important for the various facets of security: “Equality and diversity make societies stronger and more resilient.”

    Security issues dominate the program of visits

    The Foreign Minister’s itinerary was based on these security aspects: In Adelaide, she inspected the Australian Cyber Collaboration Centre and the Osborne Naval Shipyard, where the German defense company Luerssen builds patrol boats for the Australian Navy. The fact that the ships are not so much intended to deter potential military opponents, but primarily to help the coastguard intercept illegal migrants, almost went unnoticed.

    In Auckland, New Zealand, she and her counterpart Winston Peters took part in the signing of a memorandum of understanding for research cooperation in the Antarctic, where China is currently greatly expanding its capacities. She also met with the Minister for Defense and Research, Judith Collins, and visited the university’s space institute.

    “Here in the Indo Pacific, the organization of the order of the 21st century are substantially developed,” explained the German Foreign Minister in Adelaide. The region is a “powerhouse for the world economy,” and Germany is expanding its relations with it for political and economic reasons. Penny Wong pointed out, “Germany’s industrial heft is a critical part of its national power.”

    Security issues dominate the visit

    Such words are grist to the mill of Baerbock’s de-risking strategy against China. Australia experienced the consequences of such a strategy when it excluded the Chinese mobile phone provider Huawei from its network in 2018. The measure sparked a trade war with China, which is only slowly being resolved.

    Baerbock considers the cooperation in the Antarctic to be a successful example of cooperation between Germany and New Zealand, as well as the new bilateral EU free trade agreement. The latter came into force on May 1 and, thanks to its environmental and social standards, is the “gold standard” of such agreements, according to the Minister. She referred to two German navy ships that had just begun their “Pacific mission” to support the freedom of the sea routes. However, the Foreign Minister did not specify whether the ships would take the route through the Taiwan Strait claimed by China.

    Germany wants to expand relations with the South Pacific

    Baerbock also wants to improve relations with the Pacific island states and be more present: Germany inaugurated a new embassy in Fiji in August 2023 – the only reason Baerbock was unable to attend was the damage to the government plane, which broke down in Abu Dhabi at the time. Germany has realized that if it wants to cooperate with countries, it cannot afford to let 13 years go by without a foreign minister making an appearance, as was the case until recently. Especially as 14 countries in the Indo-Pacific are 14 votes in the UN bodies that are important when it comes to decisions on the war in Ukraine or Germany’s aspiration for a non-permanent seat on the UN Security Council. China is also seeking their votes.

    The island nations in the South Pacific are also receiving increased attention because China has been deliberately and massively expanding its presence there for some time – and outdoing the USA in the process. The fear is that other countries could also sign secret police training agreements like the one on the Solomon Islands – and possibly later permit Chinese naval bases or airports, as the US media speculate. This, in turn, could threaten the sea routes between Australia/New Zealand and the US fleet in Hawaii.

    Baerbock offers Germany’s support for climate action

    As an experienced climate politician, Baerbock also wants to include the fight against global warming much more strongly as a “soft power” in official German diplomacy. At the end of 2023, she laid this down for COP28 in the German government’s “Climate Foreign Policy Strategy.” That is important because China will also likely include climate action in its foreign policy in the Global South soon. Beijing is already focusing on South-South cooperation. In the summer of 2022, Baerbock visited the Pacific state of Palau to learn about the consequences of the climate crisis in the region. Now, the Foreign Minister is devoting two whole days to the island state of Fiji, which is particularly affected by rising sea levels due to global warming.

    Moreover, Germany supports Australia’s and its neighbors’ bid to host the COP31 climate conference in 2026. Germany has experience with a climate charm offensive in the Pacific: When Fiji hosted the COP in 2017, the conference was hosted in the German city of Bonn because Fiji could not handle the meeting of thousands of delegates on its own. Germany provided the island republic with substantial logistical and financial support of 110 million euros and also put up with delegates and visitors trampling the Bonn Rhine recreation area.

    • Indopazifik
    • Lithium
    Translation missing.

    Interview

    How German mechanical engineering companies intend to stay successful in Chinese markets

    Gerald Pörschmann, Executive Board Member and Managing Director of the Alliance for the Future of Industrial Engineering.

    Be it the Chamber of Foreign Trade or the Federation of German Industries – many associations currently lament the poor situation in China. How is the German mechanical engineering industry faring in China?

    This may surprise you, but things are still going relatively well for German production technology companies in China. Of course, we, too, are feeling the effects of the slowdown in economic growth in China, the geopolitical situation, and the fallout from the Covid pandemic. We are not immune to this. But overall, we are optimistic about the future.

    In other words, the much-lamented government subsidies, trade barriers, and over-capacities don’t affect the mechanical engineering industry as much?

    Of course, they do. I believe that Chinese overcapacity is the biggest threat. This is a consequence of the Made in China 2025 strategy. It’s now taking full effect, not only in the automotive industry, but also in production technology. The difference is that we are niche markets. We are a customized solutions provider in the medium-sized production technology sector, and our Chinese competitors are still relatively small.

    Does that sound like a relaxed situation?

    Not at all. I would advise everyone to take a close look at who is appearing and exhibiting at the industrial automation trade fairs in China and Europe. Many of these companies will also enter our niche markets in the medium term. The competitive scenarios are intensifying. But it was obvious that this would happen. The Made in China 2025 strategy was announced back in 2015. At that time, the Chinese leadership named our industry one of ten key future industries. That is why we have been informing the medium-sized member companies in our innovation network for years in joint events and China Expert Talks with the AHK Greater China and GTAI Germany Trade & Invest. We are also in close contact with Chinese partners through our cooperation with the economic development agency of the southern Chinese city of Foshan in order to get a feel for what is to come.

    How do you react to such a comprehensive strategy as Made in China 2025?

    First and foremost is a professional market development and customer retention strategy. A second aspect is Chinese management. Like a Chinese company, we must integrate ourselves into the market as much as possible. And a third point is the brand. We also hear this from our Chinese customers: ‘Made in Germany’ still has an excellent reputation in the mechanical engineering sector. You must cultivate all this: be present at trade fairs, visit customers, and create proximity. We have to capitalize on Made in Germany.

    Chinese companies are being massively subsidized by “Made in China 2025”. What are the consequences?

    This is indeed hard for us because it is not clear what subsidies are paid and what contacts politicians broker. Politicians and local party secretaries can influence companies. China is not a normal market economy location; it is different. We have to constantly react to this and see how we have to behave in the game in China. Let’s not fool ourselves: The communist government’s political goal is not just to enter certain key markets but to take over the market.

    They sound pretty laid-back.

    Well, if I were a politician in China, I would do the same. You can’t be dependent as a third-class supplier in the long term, you have to ensure that you make it into the premium sector and thus develop the entire economy.

    You said that business is still going quite well for you.

    Yes, business is going relatively well, given the economic situation. What worries us most is the global economy and the geopolitical situation. These create uncertainty and delay important decisions.

    However, the German government has made it clear in its China strategy that companies need to become active themselves, keyword de-risking. Are you doing that?

    From our companies, I can definitely say that resilience is organized and dependencies are reduced as far as economically justifiable. German SMEs are much more consistent in this respect than large companies. The situation is clear: Our value creation in Germany and Europe depends on whether we can obtain certain key products from China. That is why we are in the process of reorganizing. But this process is ongoing. We are still in the middle of it. One approach is to create value in China for China. We either do this with Chinese suppliers or tell our German partners to come to China with us. Large companies often bring their suppliers with them and help them get started in the Chinese market.

    Does this mean the criticism of Germany’s huge investments in China is misguided?

    This criticism ignores reality. For German companies, investing in China is part of de-risking.

    Everyone is talking about risks. Do you also see opportunities?

    Absolutely. This reorganization also opens up new opportunities. When industrial production is established in China, investing companies will also require high-tech production technology. New markets are emerging in China – and we cannot leave them to the Chinese competition. We have to tap into these new markets. We have to be there, on the ground, with our customers, to take advantage of these opportunities. And it’s good to have Chinese employees working in strategic sales. It’s their job to stay there and also to use their mentality and culture. We can hardly do that.

    What about alternatives to China? New markets are currently emerging in countries like India and Vietnam.

    That is true. However, there is a difference between large and medium-sized companies. Large corporations can change course more easily and set up a new plant in India or Vietnam. It’s not so easy for SMEs. We have invested a lot of money, time and effort to achieve success in China. You can’t just pack up and move on. As an entrepreneur, you can’t and don’t want to give that up overnight. In addition, the framework conditions there also have to be right, for example, in aspects such as skilled workers or infrastructure. China is simply the best in that respect – and cannot be replaced overnight.

    So, it’s still China. But how?

    Politicians should set the framework. No trade war, but a level playing field. Entrepreneurs will then take care of everyday life and business. The most important thing is that we don’t start a trade war between the EU and China. In this respect, you have to commend the German Chancellor. Olaf Scholz has understood that.

    Gerald Poerschmann holds an industrial engineering degree. He has been the Managing Director of the Alliance for the Future of Industrial Engineering since 2015. The alliance aims to strengthen small and medium-sized mechanical engineering and industrial automation technology companies in central and northern Germany, particularly in the face of global competition.

    • Mittelstand

    News

    Xi arrives in Paris: Macron’s goals for the summit

    President Xi Jinping has arrived in France. On Sunday afternoon, he landed at Orly Airport south of Paris accompanied by his wife Peng Liyuan and was received there by Prime Minister Gabriel Attal. Alongside the summit talks with his counterpart Emmanuel Macron and – at times – EU Commission President Ursula von der Leyen, he will also attend a dinner at the Élysée Palace this Monday and join Macron on a short trip to the Pyrenees.

    In doing so, Macron returns Xi’s charm offensive in kind, who accompanied him to the southern province of Guangdong in 2023. At the same time, however, he has concrete goals, as he made clear in a series of interviews: Reducing the EU’s trade deficit with China and motivating Xi to take a more constructive stance in the Ukraine war. In his most recent interview with the Sunday newspaper La Tribune Dimanche, Macron called for an “update” of France’s economic relations with China. He said France wanted to achieve reciprocity in trade and get China to consider aspects of Europe’s economic security. The most recent controversy is about China’s overcapacity, particularly in the cleantech sector, which has resulted in a sharp rise in exports.

    Lobbyists are also getting ready for the summit. For example, French cognac producers have called for a deal regarding the dispute over China’s dumping allegations. The summit on May 6 offers a “unique opportunity for an agreement,” explained the industry association Bureau National Interprofessionnel du Cognac. The Chinese Ministry of Commerce launched an anti-dumping investigation into spirits such as cognac from the European Union at the beginning of 2024. It was a reaction to the EU investigation launched in October 2023 into Chinese subsidies for electric cars. Unlike Germany, France supports the EU investigation.

    Despite his tough stance on economic matters, Macron defends Europe’s role as a power that seeks balance and allows China to remain part of the global discussion. “Let’s be clear, I’m not proposing to distance ourselves from China,” he told La Tribune Dimanche. “Whether it’s about climate or about safety, we need the Chinese.” Macron has often called for Europe to be more independent. Speaking about the wars in Ukraine and Gaza, Macron told The Economist: “We must work with China to build peace.” ck

    • Emmanuel Macron
    • Europe
    • Geopolitics

    Beijing and Moscow: Why Putin will again meet with Xi in mid-May

    The date for Russian President Vladimir Putin’s planned trip to China has apparently been set. Putin will travel to the People’s Republic on May 15 and 16, Bloomberg quoted a source with access to the Kremlin as saying. It will be Putin’s first foreign trip after his re-inauguration, which will be held on May 7. In March, Putin was confirmed in office in what was considered an unfree election. A few weeks ago, he announced his intention to travel to China in May, but initially did not specify any dates. The last time Putin was in Beijing was in October 2023, when he attended Xi Jinping’s Belt and Road Forum, among other events.

    This visit to his most important supporter, Xi, underscores the enormous importance that Moscow attaches to Beijing. There have been repeated signals of this. Moscow reportedly ordered the troops in Ukraine to “take something” in time for the traditional victory parade on May 9 or at least to have a countable conquest by the time Putin travels to China, said Deputy Head of Ukrainian military intelligence Vadym Skibitsky in an interview with The Economist. Apparently, Putin is keen to appear in Beijing as a strong man on the road to victory.

    So far, Beijing remains loyal. Xi is resisting all Western attempts to break China away from Russia in connection with the war in Ukraine. French President Emmanuel Macron will try again during his meetings with Xi in France this week. The fact that Xi plans to meet with Putin just a few days later does not indicate a change in Chinese strategy. ck

    • Wladimir Putin

    Why Taiwanese are no longer allowed to work for Confucius Institutes

    Taiwan has added the Chinese government-funded Confucius Institutes to the list of Chinese political, state and military institutions where Taiwanese citizens are prohibited from working. This was reported by Taiwan’s Central News Agency (CNA) on Friday, citing Taiwan’s Mainland Affairs Council (MAC). According to the report, the measure is part of a more comprehensive amendment to an existing law from 2004. It lists work bans at Chinese organizations that compromise national identity and loyalty, are associated with China’s United Front, or pose a threat to national security.

    In addition to the Confucius Institutes, other organizations have been added to the blacklist. These include the Association for Relations Across the Taiwan Straits (ARATS), a semi-official body responsible for technical and business affairs with Taiwan, as well as the All-China Youth Federation and the All-China Federation of Taiwanese Compatriots. Under the law, individuals working for these organizations can be fined between 100,000 and 500,000 Taiwan dollars (2,900-14,400 euros). Government officials and people in security-related positions can be punished with up to three years in prison. fpe

    • Konfuzius-Institute

    Why the US struggles to replace Huawei technology

    According to the Federal Communications Commission (FCC), US telecoms companies urgently need more money to remove Chinese components from their networks. Almost 40 percent of US companies that have already received government aid need further support, FCC chief Jessica Rosenworcel told Congress. Some companies had warned that they might otherwise have to switch off their networks. The cost of removing Huawei and ZTE’s technology is estimated at just under five billion dollars. However, only 1.9 billion US dollars have been approved as part of the “rip and replace” program.

    In 2019, Congress instructed the FCC to oblige subsidy recipients under the US telecoms group to remove Chinese equipment. In October, the White House requested a further 3.1 billion US dollars for this. However, Congress has not yet approved the funds.

    Due to their close ties to the government in Beijing, Chinese companies such as Huawei are under scrutiny in many countries. The concern is that China could gain direct or indirect access to mobile phone users’ data. This is why the US has categorized Huawei and ZTE as a threat to national security.

    Furthermore, the FCC wants to prevent Huawei, ZTE and other foreign companies classified as security risks from being allowed to certify mobile devices. The FCC plans to put a corresponding bipartisan proposal to a vote in Congress before the end of May, officials told Reuters. The draft is intended to ensure that the companies in question cannot exert any influence on telecommunications certification bodies and test labs. rtr

    • Technologie

    Heads

    Why China’s dance pioneer Wen Hui feels like a child again in Germany

    Tanztheater-Pionierin Wen Hui
    Wen Hui has brought experimental dance theater to China.

    Her biography can be used to retell the Chinese history of the past 64 years, says Wen Hui. Whenever political doctrine shifted, her life also changed. The pioneer of modern Chinese dance theater grew up with the ideologically tinged model operas of Mao’s wife, Jiang Qing. During the Cultural Revolution, modern Western theater was considered bourgeois filth.

    After Mao’s death, the conviction of Jiang Qing’s Gang of Four, and Deng Xiaoping’s reforms, Western influences began to seep back into the country, including dance and performance art. “It was an exciting time. China was suddenly open to influences from all over the world. Young people from abroad came to Beijing. I was ready to soak up all the new things,” Wen Hui recalls.

    Wen Hui was born in 1960 in Yunnan, the “province of song and dance,” as she calls it. As a young woman, she initially studied ballet and classical folk dance at the Beijing Dance Academy. After graduating in 1989, she took up a position as a choreographer with the Oriental Song and Dance Ensemble of China. Like many of her generation, she was driven by a longing for the big wide world. In 1994, she ventured abroad and went to New York. “It was the heyday of modern dance. What I saw inspired my spirit.”

    Back in China, she founded China’s first independent dance theater with filmmaker Wu Wenguang. Her Living Dance Studio raised many eyebrows with its experimental approach. “I remember my first performance. We had placed a lamp on the floor in a studio at the film academy. I then showed the audience a day from my life. I showered, washed my clothes, hung up the laundry. My dance colleagues at the time said: That’s not dance. What are you doing?” Years later, some of the younger audience members told her this was a crucial moment. Wen Hui’s performance encouraged them to break out of the rigid artistic concepts of the universities.

    Who has control over the female body?

    Much of Wen Hui’s art revolves around the female body and the obligations forced upon it by a patriarchal society. “I have always tried to put my body in relation to society. What is demanded of it? And what do I want? And who ultimately has control over that?” Her piece “New Report on Giving Birth,” recently performed in Frankfurt and Berlin, deals with motherhood – or the decision not to be a mother. Five dancers, including Wen Hui, move through personal stories that are repeatedly accompanied by flickering documentary footage.

    One sequence shows images of a woman with her neck chained to a wall. These are original recordings that made international headlines in January 2022. Reports say that the woman named Yang had been trafficked into a family in the north-western city of Xuzhou, where she gave birth to eight children over the years. Although the authorities were slow to investigate and state censors deleted online comments, the case sparked a debate about women’s rights in China, particularly in rural areas. “The video made me so angry,” recalls Wen Hui. Especially as it is not an isolated case. The consequences of the one-child policy are even more noticeable in the different treatment of men and women in rural areas.

    Women’s lives in China have changed for the better overall, she adds. Many of the most successful Chinese are women. However, there is still little trace of this in politics. “You only have to look at photos of the National People’s Congress,” she says. She is also concerned about the increasingly extreme beauty standards of young Chinese women that are being propagated on social media.

    She has always wanted to tell the stories of individuals and not – as art had demanded in her childhood and youth – about the collective struggle. Although her main place of residence is still Beijing, the stages of the world have long been her second home. She currently lives in Germany. This was not planned. During the pandemic, her return flight was canceled. And then another one. In the end, she made the best of it and moved to Frankfurt am Main for an artist residency at the Mousonturm Theater. Here, she rehearses new plays and gives workshops for young talent. In 2021, she received the Goethe Medal for her work.

    “Life in Germany sometimes takes me back to my early childhood,” she says. “I can’t read anything in the supermarket and I can’t understand people. That makes my senses open up more. My favorite thing is watching the children here. They are so free and run around a lot. In China, children are under more pressure to learn in their free time.” Fabian Peltsch

    • Art
    • Ein-Kind-Politik
    • Kunst

    Executive Moves

    Matthias Brüggemann is the new Key Account Manager for China at Deutz AG. He was previously in China as a Product Manager for Audi in 2018.

    Thomas A. Duff is the new Head of M&A at VW China. Duff has been working for Volkswagen for almost four years. He gained experience in China during his business studies at Sun Yat-sen University in Guangzhou. He is moving from Berlin to Beijing for his new post.

    Is something changing in your organization? Let us know at heads@table.media!

    Dessert

    Building airports – that’s something China is good at. The photo shows the construction of the future international airport in Hohhot, the provincial capital of Inner Mongolia. And because the new airport is being built in the middle of the desert south of Hohhot, an entire river is being diverted and a new city district, including a university, is being built. Expected completion: 2025.

    China.Table editorial team

    CHINA.TABLE EDITORIAL OFFICE

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