We wish you a good start to the new year of the Chinese lunar calendar, this year under the sign of the dragon. The zodiac sign is accompanied by an element, this year it is wood (甲, jia). The wooden dragon is associated with being down-to-earth, but also with knowledge and research, creativity and sociability. The last Wood Dragon year was 1964.
Shortly before the New Year celebrations, BASF made a surprise announcement on Friday announcing its withdrawal from two joint ventures in Xinjiang. Its partner company Markor is accused of actively participating in the surveillance of Uyghurs in the region. German politicians welcome the chemical company’s withdrawal. And yet there is criticism because the company responded late to the reports about Markor, as Marcel Grzanna analyzes. BASF also emphasized climate reasons in its statement.
The company wants to retain all its other activities in China, and so BASF is faced with the task of pulling out without upsetting the Chinese government. It remains to be seen whether this will succeed. One thing is clear: Critics immediately drew a connection to Volkswagen, which has so far held on to its plant in Xinjiang’s capital, Urumqi.
Irish human rights lawyer Caoilfhionn Gallagher also complains about surveillance. She heads the international team of lawyers for detained publisher Jimmy Lai, who is currently on trial in Hong Kong. In an interview with Table.Media, she talks about attacks by the Chinese state media and the Hong Kong authorities as well as cyberattacks via several VPN channels. She would like to see Germany take a leading role in dealing with the erosion of media freedom and other civil rights in Hong Kong.
BASF has succeeded where Volkswagen failed. By announcing its withdrawal from the Xinjiang Autonomous Region in northwest China, the chemical company has avoided a PR disaster in the Western world for the time being. Human rights organizations, politicians and investors in Germany are unanimous: BASF’s announcement on Friday that it was selling its shares in the two joint ventures BASF Markor Chemical Manufacturing (Xinjiang) Co., Ltd. and Markor Meiou Chemical (Xinjiang) Co., Ltd. in Korla was definitely the right decision. According to BASF, the sales process was initiated in the fourth quarter of 2023.
“The decision is expressly to be welcomed,” Renata Alt, member of the Free Democratic Party (FDP) and Chairwoman of the Human Rights Committee in the German Bundestag, told Table.Media. She said BASF’s withdrawal sends a clear signal; Xinjiang must become a taboo location for economic activities by Western companies. “For far too long, the Chinese government has exerted pressure on Western companies to settle in Xinjiang – and used them as a fig leaf to make their inhumane policy of oppressing Uyghurs acceptable,” emphasized Alt.
But BASF’s dilemma remains. The company’s management wants to avoid the wrath of the Chinese government at all costs. The company only announced its withdrawal from the joint ventures after it could no longer be denied that its own joint venture partner was part of the system of oppression against the Uyghurs. Between the lines, however, it became clear how difficult it was for the company to cite the human rights violations in China as a sufficient reason for the withdrawal.
In the press release, BASF first referred to increased competitive pressure and the higher carbon footprint of the sites in Korla instead of directly addressing recent media reports that joint venture partner Markor employees were actively helping enforce government control measures against the Uyghur minority.
Only the second paragraph referred to “recently published reports related to the joint venture partner contain serious allegations that indicate activities inconsistent with BASF’s values.” The divestment of the shares in the joint ventures will be accelerated as a result. Otherwise, BASF’s presence in China will remain unchanged. The company pledges full commitment to its business activities and planned investments. Alongside car manufacturers VW, BMW and Daimler, BASF is one of the four largest German investors in the People’s Republic.
“The divestment of shares signals neither reason nor transparency, it is purely profit-driven,” commented Michael Brand, human rights spokesman for the Christian Democrats in the Bundestag, to Table.Media. It was only when there was no other option that BASF reacted “without a word of regret.”
The Association of Ethical Shareholders (DKA) also believes that BASF continues to have an obligation. “Once again, BASF is only reacting to grievances uncovered externally by independent journalism instead of identifying them through its own risk analyses and measures,” said Co-Managing Director Tilman Massa. It is still completely unclear how BASF deals with the risk of Uyghur forced labor or human rights violations in the supply chains to other BASF sites in China, he said.
The Ethical Shareholders had previously expressed skepticism about the special audit of the Volkswagen plant in Urumqi – and questioned the value of such audits in general. Employees of the auditing company also distanced themselves from the audit. The VW plant, which has been in operation since 2012, is controversial due to its proximity to human rights violations, such as the internment camps for Uyghurs in Xinjiang. Official documents and eyewitness reports provide evidence of state-run work programs that channel Uyghur women and men into various industrial sectors at net wages far below the minimum wage.
BASF and Volkswagen have, therefore, also been under scrutiny in the financial markets for some time. Following the results of its audit, the rating agency MSCI replaced the red flag for Volkswagen with an orange flag, giving the car manufacturer a breather. The investment management company Union Investment also continues to classify VW shares as “investable” for sustainable investments in December. BASF has so far remained unaffected.
The China scholar Adrian Zenz, who gained worldwide renown for exposing the Xinjiang camp system, had investigated Markor. Zenz painstakingly sifted through Markor’s websites from 2017 to 2019 and compared them with official documents on state control of the Uyghurs. This revealed that employees of the BASF partner company were directly involved in exerting pressure on Uyghurs.
“Due to its historical responsibility, the company should have acted earlier,” Zenz commented on the withdrawal. Zenz was referring to BASF’s involvement in the human rights crimes committed by the Nazis. Nevertheless, Zenz said it was a “very important signal” from BASF, especially as Volkswagen could now also come under increasing pressure. “There are no more excuses for Volkswagen: German companies must withdraw from Xinjiang.”
The World Uyghur Congress (WUC) expressed relief over BASF’s decision to withdraw from Xinjiang. The WUC also stressed the contrast with VW. Although VW outwardly demonstrates social responsibility, “its actions bear witness to a worrying ignorance of Uyghur forced labor,” said WUC Berlin Director Haiyuer Kuerban.
Human rights politician Brand reminded BASF Group CEO Martin Brudermuller that German law does not forget serious human rights violations. “The BASF management must give up its toxic devotion to a brutal regime in Beijing and respect international standards and, not least, German law,” said Brand. Once the EU Supply Chain Law comes into force, it will put environmental, human rights and social issues at suppliers at the center of attention throughout Europe.
You are leading the international legal team for Jimmy Lai, who has been imprisoned in Hong Kong for three years now. How is he and his legal team holding up?
He is 76 now. We are very concerned about his health. He is held in solitary confinement, which, of course, should not be happening. His son Sebastien cannot travel back to Hong Kong to visit him.
What problems are you confronted with in this case?
As human rights lawyers, we are often in the slipstream of abuse that our clients get. But what we have seen with the Jimmy Lai case is on a very different scale to what we’ve experienced so far. In 20 years I have never encountered this level of abuse. We face attacks by the state media and the Hong Kong authorities as well as cyberattacks through multiple VPN channels and we even get followed. Part of the shadowy attacks, which are often coordinated before important days in his case, are often targeting the female members of our legal team. These attacks come in the form of misogynist and sexist messages, as well as rape and dismemberment threats on a regular basis. That is a shocking and unacceptable development.
Why do you think the response is so harsh?
You can see clearly: If they are willing to throw this amount of financial resources and effort at us for simply being the lawyers of Jimmy Lai, it tells you a lot about the importance of our client and how much they want to silence him.
You are convinced that the Chinese state is behind the attacks.
China is acting with bully tactics and transnational repression, often in a shadowy way but with unparalleled technical capabilities. Every country needs to find a strategy responding to it. It is still astonishing to me that there hasn’t been a widespread advisory to civil society in European countries to call out these tactics and make people alert to them and protect people. We know that China has been targeting members of the European Parliament and a number of individual countries. The international community has to stand up against that.
You are calling it a sham trial.
Jimmy Lai is, of course, a symbolic figure. His case is designed to be emblematic, to have a chilling effect on others. He is imprisoned, essentially for a conspiracy connected to journalism and being outspoken about human rights. It sends a message to anyone who dares to be a journalist in Hong Kong: If you are not silent, you are going to be next.
His trial is devoid of the rule of law. It is played out with handpicked judges, using a law that the United Nations and many countries worldwide recognize should not exist. The offenses are drawn so broadly that there is only one possible outcome: him being convicted. At the age of 76, he faces spending the rest of his life in prison. That’s why it is important that the international community speaks out and holds China to account.
What does it mean for the trial and you as his legal team that Jimmy Lai is a British citizen?
The British passport is the only passport he holds. This means his case should be a high political priority for the UK. Regrettably, it took some time for the UK government to call for his freedom, but now they are doing that, and we are pleased to see this. Lord Cameron, the Foreign Secretary, has called for the immediate and unconditional release of Jimmy Lai.
Do other countries and organizations also speak out?
The US Government, the European Parliament, the Canadian Parliament, and UN human rights experts have also called for an end to his prosecution and his immediate release. The UK is not waiting for the end of the trial to call for his release, because they realize this is a flawed process under a law which shouldn’t exist. The UK can’t let a British citizen die behind bars for running a newspaper and speaking out for freedom and peaceful pro-democratic protests.
What could Germany do?
The German government signed a powerful statement in late December by 24 countries as part of the Media Freedom Coalition highlighting concerns about media freedom and its degradation in Hong Kong, concerns about the National Security law and concerns about Jimmy Lai’s case specifically. We would like Germany to show leadership in this field, given there are close relationships between China and Hong Kong and Germany with respect to trade and the many German companies that operate in Hong Kong
What would that mean in practice?
In terms of addressing the issue of political prisoners more generally, we think it important that there is an office or institution within the German government and/ or the EU that specifically deals with the cases of political prisoners and other persons arbitrarily detained or taken hostage, similar to the US Special Presidential Envoy for Hostage Affairs, currently headed by Ambassador Roger Carstens. Then, you would have proper resources attached to securing the freedom of political prisoners and institutional memory and expertise that could be built upon and shared with State partners. This is a global issue and it must be tackled with a globally joined-up strategy.
Will the revised homegrown National Security Law proposed by Hong Kong’s Chief Executive John Lee last week make a difference for Hong Kong and Jimmy Lai?
Whether you deal with a so-called homegrown National Security Law, or the 2020 National Security Law imposed by Beijing, the aims are the same: To silence and crush dissent, and to send a clear message: that if you speak truth to power in Hong Kong you will be criminalized for it.
Some see this law as the downfall of Hong Kong. Others say it fosters stability, especially for the business world…
The law has been condemned by the United Nations, by the EU, by multiple countries worldwide, by human rights organizations like Amnesty International and so on. And rightly so: It is drafted in a very broad way, the offenses are breathtakingly broad. It essentially criminalizes any form of peaceful dissent and political debate. We think that there is a false view amongst some expat companies and individuals operating in Hong Kong, that they are immune to this. That’s simply not right. The National Security Law applies to everyone.
What do you advise companies in Hong Kong?
It is time that business people and companies recognize that doing business in Hong Kong in such circumstances is exposing their employees to potential risks. Any employee who likes an Amnesty International tweet or reads the wrong newspaper or speaks a certain way about China or Hong Kong’s leadership could soon find themselves under surveillance or investigated or arrested, or their companies investigated; or even their assets frozen and seized.
What options are there now to change this? Many people believe that China is too powerful to compromise.
It is important to remember that China cares how Hong Kong does as an international trade hub. China cares what Germany thinks, even more so since China’s economy is slowing down. You can see that by the fact that China has sent a huge delegation of 120 people to Davos and a bit later to Geneva, telling the world that China and Hong Kong are open for business and that international investment can return to Hong Kong safely. But that’s just a fig leaf. As long as you have a man like Jimmy Lai behind bars, it can’t be business as usual with Hong Kong or in Hong Kong. Hong Kong has seen a very steep and speedy descent into authoritarianism. Since it has been that quick, people have not necessarily noticed what has been happening. It’s like a frog in boiling water with the temperature rising up gradually, not realizing the danger until it’s too late.
Is there a realistic chance that Jimmy Lai will be released?
It is important to remember that Australia recently managed to secure the release of the journalist and Australian citizen Cheng Lei. It was made clear to China that her release was an essential precondition for the foreign minister’s visit. It is possible and we will not falter until he is released.
Caoilfhionn Gallagher KC is an Irish-born barrister at Doughty Street Chambers in London, specializing in human rights and civil liberties. She has acted in many of the leading human rights cases in the UK in recent years. In 2016 she was named by the Irish Times as one of the 100 most influential Irishwomen living outside Ireland.
Over the weekend, Chinese people around the world welcomed the New Year of the Dragon with fireworks, firecrackers, dancing dragons in the street and family celebrations. According to legend, the fireworks are supposed to ward off evil spirits and, in particular, scare away the mythical monster Nian, which supposedly rose from the bottom of the sea at the beginning of the new year to prey on people and livestock in the villages. An old man is said to have chased the monster away with bamboo torches and red candles and decorations. Red is still the most important color for New Year’s decorations today. Money gifts for the children, for example, are traditionally given in red paper bags called hongbao (红包)
Many people start the new year with high hopes. The dragon has always had a deep symbolism in Chinese culture and is not only the symbol of the ancient emperors. The Year of the Dragon also promises good luck, success and prosperity. According to Chinese astrology, children born in the year of the dragon are considered charismatic, determined and self-confident. This is why many young couples in China specifically aim to have children in the Year of the Dragon.
On New Year’s Eve, most Chinese watch the annual spectacular New Year’s show on state television, and on the following days, there are outdoor events in many places despite the cold in the north of the country.
Chinese people live all over the world. Especially in the Chinatowns of various big cities in Asia, Europe and America, people celebrated on the streets over the weekend, in which not only the Chinese communities themselves took part, but also local residents and tourists. In Los Angeles, 100,000 people were expected to attend the New Year’s parade.
At the beginning of the year, state banks extended new loans at record levels to stimulate China’s economic recovery. In January, banks granted new loans in the national currency totaling 4.92 trillion yuan (around 634.5 billion euros), according to data from the central bank. This is more than four times the volume of loans granted in December.
Financial institutions generally lend particularly actively at the beginning of the year in order to secure market share and premium customers as early as possible. Nevertheless, the high lending volume in January even surprised experts: Experts surveyed by Reuters had only expected a total of 4.50 trillion yuan.
In order to prop up the economy, the central bank recently lowered the reserve requirement ratio (RRR) for commercial banks – by half a percentage point. This released around one trillion yuan (equivalent to around 128 billion euros) of liquidity for the financial system. The central bank wants to use a flexible line to boost domestic demand while maintaining price stability. rtr
Chinese manufacturers of turbines for offshore wind farms have suffered dramatic decline in profits due to a weak phase in the segment. China’s third-largest turbine manufacturer, Mingyang Smart Energy, reported a decline in net profit for 2023 of almost 90 percent to between 354 and 530 million yuan (46-69 million euros) compared to 2022. Shanghai Electric’s turbine division even recorded losses of well over one billion yuan. Both are particularly active in the offshore sector. At Shanghai Electric, the share of offshore turbine production was over 70 percent.
Analysts at consulting firm Trivium China see several reasons for this malaise: The end of subsidies from the central government, increasing red tape regarding approvals and tougher competition between providers for scarce marine areas. As a result, only six gigawatts (GW) of offshore wind power were added in 2023, barely more than in 2022 (5.2 GW). The record growth of 17 GW in 2021 is far away. In addition, a price war has been raging between turbine manufacturers for the past three years, putting pressure on margins.
Companies are looking for solutions. According to Trivium China, Mingyang has aggressively expanded into neighboring industries to compensate for losses, but this requires massive capital investment, with low short-term returns and great uncertainty. Trivium experts also expect the sector to internationalize: “Over-reliance on the domestic market will drive Chinese OEMs to accelerate their expansion into more profitable overseas markets – putting them in increasingly direct competition with Western turbine giants.” This is already happening. In 2022, Mingyang already supplied the 30-megawatt Beleolico offshore wind farm off southern Italy. ck
The German automotive supplier and technology group ZF from Friedrichshafen has received the approval for level 4 autonomous driving tests in Shanghai. ZF can now carry out tests on the open road in the designated city zones – making it the first foreign supplier to receive such a license in Shanghai. ZF confirmed a corresponding report by the Chinese trade journal Gasgoo to Table.Media on Friday.
In December, ZF announced that it would concentrate on its role as a technology provider for autonomous driving in the future – instead of offering complete autonomous transport systems, including shuttles. The company sees that “the most promising strategy for the future is to focus on positioning ZF as a premium supplier of autonomous driving technology and engineering services.” To this end, the company has developed its own system with technologies for various capabilities such as perception, localization, AI, data, decision-making and control.
In China, which ZF describes “as one of the company’s strategic core markets,” ZF also sells drive systems for electric cars. According to a ZF press release from November 2023, the People’s Republic accounts for around 17 percent of global sales. ck
Car sales in China have declined for the first time since August 2023 compared to the previous month. According to data published by the China Passenger Car Association (CPCA) on Thursday, 2.04 million passenger cars were sold in China in January, 13.9 percent fewer than in December. Sales of electric cars and plug-in hybrids also declined for the first time since August – by 29.5 percent to 668,000 vehicles compared to December 2023. Year-on-year comparisons for January and February are generally meaningless due to the fluctuating New Year holidays, when consumption always remains largely dormant.
At least there is good news for Volkswagen. According to the CPCA figures, the German car manufacturer sold 209,476 vehicles in January, the first time in over a year that it sold more cars than its Chinese competitor BYD, which came in second place with 191,122 vehicles sold. This means that VW was once again number one in China, at least in January. However, BYD remained the market leader in the electric segment, where Volkswagen only ranked 6th.
According to a report by the business magazine Caixin, the decline in sales is due to year-end promotions by car manufacturers, as well as a price increase for certain models and a reduction in local subsidy programs for car purchases. However, according to Caixin, some manufacturers, including Tesla, lowered prices again in January, raising concerns about another car price war. ck
The organizer of a football match in Hong Kong, where Lionel Messi sat on the bench instead of impressing fans on the pitch, will refund fans half of their ticket price, totaling around 7.2 million US dollars. This was the response of lifestyle company Tatler Asia to an outcry in the local government on Friday. The company owned by the Swiss Edipresse Group will now emerge from the event with a high loss. The repayment process will begin in March, it announced.
Around 40,000 people paid between 880 and 4,880 Hong Kong dollars (105 to 580 euros) for tickets to the friendly between Messi’s club Inter Miami CF and Hong Kong XI on February 4. Messi is an idol for many fans in Asia, and most of them only came to the match because of him. Several local tycoons and Chief Executive John Lee were also in attendance.
After the game, many had chanted “refund.” Chinese internet users raged against Messi on social media after the 36-year-old wrote about “muscle discomfort” on Weibo on Wednesday, but without issuing an apology. On the same day, the Argentina football superstar played more than 30 minutes in a friendly in Tokyo. The state-run Global Times voiced anger at the stark difference between Messi’s two appearances, stating that he had appeared unenthusiastic in Hong Kong but full of energy and endearment towards the fans in Japan.
Hong Kong’s government representatives also reacted with outrage at the fiasco for their city. Authorities demanded an explanation from Inter Miami CF as to why Messi did not play. Prominent Lee consultant Regina Ip even called for Messi to be denied entry in the future. “Our aspiration was to create an iconic moment in support of the government’s efforts to remind the world how relevant and exciting Hong Kong is,” Tatler Asia said after a meeting with government representatives. “That dream is broken today for us and all those who bought tickets to see Messi on the pitch.” ck
Chinese policy in the Middle East is shaped by two factors: China’s threat perceptions and its strategic calculus regarding its great-power competition with the United States. And when it comes to dealing with the US, China’s approach comes down to three “nos”: no cooperation, no support, and no confrontation. This credo underlies China’s decision not to push back against the Iran-backed Houthis as they carry out drone and missile attacks on Red Sea shipping lanes.
The Red Sea attacks – a response to Israel’s war against Hamas in Gaza – have not directly threatened Chinese ships, and the Houthis insist this will not change: neither Chinese or Russian vessels will be targeted, a senior Houthi official declared last month, as long as they are not connected with Israel.
But the attacks will still affect China’s economic interests, and not only because of the need to avoid links with Israel. COSCO, China’s largest shipping conglomerate, has already been forced to suspend all shipping to Israel, owing to security concerns
The identification of ships (or their flag countries) is not always straightforward, and shipping that affects China’s interests can still be targeted. But avoiding the area is costly. The Red Sea is one of the most sensitive chokepoints for world trade. If Chinese ships heading to Europe must circle around the Cape of Good Hope, rather than following the traditional route through the Suez Canal, a 26-day journey grows to 36 days and adds significantly to costs.
Longer shipping routes could also raise import prices, potentially fueling inflation in China; if oil prices are affected, China’s economy – already in the doldrums – will come under even more pressure. More broadly, continued shipping disruptions will hamper China’s efforts to boost its economy by strengthening external trade.
So, whether they target Chinese vessels directly or not, Houthi attacks on Red Sea shipping could undermine China’s economic recovery. And things could get much worse: If Iran deepens its involvement in the conflict between the Houthis and the US-led coalition that is launching strikes against them, the Strait of Hormuz could be affected, threatening China’s energy supplies.
Yet, for now, China does not seem to be treating the threat posed by the Houthis as either immediate or acute. Yes, Chinese officials have reportedly urged their Iranian counterparts to pressure the Houthis to curb their attacks. But, while China has some influence over Iran, it hardly controls Iranian policy. Nor is Iran fully in control of the Houthis, despite being their main backer. Given this – and contrary to what the US apparently thinks – China’s ability to rein in the Houthis diplomatically is limited.
And China is unlikely to go much further. Since Chinese strategists tend to view developments in the Middle East through the lens of Sino-American relations, even regional instability might not appear all bad to China. Among Chinese experts, there is no shortage of schadenfreude watching the US being forced to back Israel, at the cost of its strategic relationships with Muslim countries in the region. And China can only benefit from its great-power rival being sucked into a conflict in the Middle East, at a time when it is already heavily invested in the Ukraine war.
To be sure, China does not appear to be plotting to exploit America’s distractedness, say, by making a move on Taiwan. But it does relish the decline of US credibility and leadership. The longer the US stands by Israel, the more opportunity China will have to consolidate its ties with other Middle Eastern countries, and the more credible China’s alternative approach to regional security will appear.
Under no circumstances will China join the US-led coalition against the Houthis, not only because of the first “no,” but also because this would upend its own delicate balancing act between Israel and the Arab world, and between Sunni and Shia Muslims.
The fact remains, however, that the Houthis’ activities in the Red Sea are costing China. So, what are China’s options?
One possible response is to deploy naval escorts for cargo ships, as China has been doing in the Gulf of Aden since 2008. But the Gulf of Aden escorts – part of a counter-piracy effort – are deployed on the basis of a mandate from the United Nations: Security Council Resolution 1846. Without such a mandate, the Chinese have been reluctant to pursue similar actions in the Red Sea, though they have recently begun to do so.
But, for China, the easiest and most politically convenient response to the current Middle East crisis lies elsewhere. The key is to blame the turmoil since Hamas’s October 7 attack on Israel – the event that triggered the current conflict – on the failure of the US and Israel to achieve a two-state solution with the Palestinians and to treat such a deal as the precondition for any practical resolution to the ongoing crisis.
China well knows that reaching a two-state solution is highly unlikely to happen anytime soon, not least because it would fundamentally change Israel’s national-security outlook and that of the entire Middle East. But achieving a two-state solution is probably not the point; undermining the US is.
Yun Sun is a senior fellow and Co-Director of the East Asia Program and Director of the China Program at the Stimson Center.
Copyright: Project Syndicate, 2024.
www.project-syndicate.org
Imke Neiteler joined the IHK Dusseldorf in January as a consultant for Greater China & ASEAN. Neiteler was trained at the Chamber of Foreign Trade (AHK) in Singapore, among other places. In her new role, she will monitor the international markets and trends in the region.
Ouassim Sfar took over the position of Head of Technical Project Management MEB at VW China last month. The industrial engineer has worked for the German car manufacturer for over seven years. For his new role, he moved from Germany to Hefei in the province of Anhui.
Is something changing in your organization? Let us know at heads@table.media!
Hairy gifts: German Federal President Frank-Walter Steinmeier and his wife Elke Buedenbender received the camels Winterfreund (right) and Schneemaedchen (left) as gifts on their trip to Mongolia.
Some might reject this as not particularly animal-friendly, but this is actually to the benefit of Winterfreund and Schneemaedchen. They stay in Mongolia as a state gift and enjoy special care from now on.
Steinmeier signed a strategic partnership in Ulaanbaatar last week aimed at making the country less dependent on its giant neighbors China and Russia.
We wish you a good start to the new year of the Chinese lunar calendar, this year under the sign of the dragon. The zodiac sign is accompanied by an element, this year it is wood (甲, jia). The wooden dragon is associated with being down-to-earth, but also with knowledge and research, creativity and sociability. The last Wood Dragon year was 1964.
Shortly before the New Year celebrations, BASF made a surprise announcement on Friday announcing its withdrawal from two joint ventures in Xinjiang. Its partner company Markor is accused of actively participating in the surveillance of Uyghurs in the region. German politicians welcome the chemical company’s withdrawal. And yet there is criticism because the company responded late to the reports about Markor, as Marcel Grzanna analyzes. BASF also emphasized climate reasons in its statement.
The company wants to retain all its other activities in China, and so BASF is faced with the task of pulling out without upsetting the Chinese government. It remains to be seen whether this will succeed. One thing is clear: Critics immediately drew a connection to Volkswagen, which has so far held on to its plant in Xinjiang’s capital, Urumqi.
Irish human rights lawyer Caoilfhionn Gallagher also complains about surveillance. She heads the international team of lawyers for detained publisher Jimmy Lai, who is currently on trial in Hong Kong. In an interview with Table.Media, she talks about attacks by the Chinese state media and the Hong Kong authorities as well as cyberattacks via several VPN channels. She would like to see Germany take a leading role in dealing with the erosion of media freedom and other civil rights in Hong Kong.
BASF has succeeded where Volkswagen failed. By announcing its withdrawal from the Xinjiang Autonomous Region in northwest China, the chemical company has avoided a PR disaster in the Western world for the time being. Human rights organizations, politicians and investors in Germany are unanimous: BASF’s announcement on Friday that it was selling its shares in the two joint ventures BASF Markor Chemical Manufacturing (Xinjiang) Co., Ltd. and Markor Meiou Chemical (Xinjiang) Co., Ltd. in Korla was definitely the right decision. According to BASF, the sales process was initiated in the fourth quarter of 2023.
“The decision is expressly to be welcomed,” Renata Alt, member of the Free Democratic Party (FDP) and Chairwoman of the Human Rights Committee in the German Bundestag, told Table.Media. She said BASF’s withdrawal sends a clear signal; Xinjiang must become a taboo location for economic activities by Western companies. “For far too long, the Chinese government has exerted pressure on Western companies to settle in Xinjiang – and used them as a fig leaf to make their inhumane policy of oppressing Uyghurs acceptable,” emphasized Alt.
But BASF’s dilemma remains. The company’s management wants to avoid the wrath of the Chinese government at all costs. The company only announced its withdrawal from the joint ventures after it could no longer be denied that its own joint venture partner was part of the system of oppression against the Uyghurs. Between the lines, however, it became clear how difficult it was for the company to cite the human rights violations in China as a sufficient reason for the withdrawal.
In the press release, BASF first referred to increased competitive pressure and the higher carbon footprint of the sites in Korla instead of directly addressing recent media reports that joint venture partner Markor employees were actively helping enforce government control measures against the Uyghur minority.
Only the second paragraph referred to “recently published reports related to the joint venture partner contain serious allegations that indicate activities inconsistent with BASF’s values.” The divestment of the shares in the joint ventures will be accelerated as a result. Otherwise, BASF’s presence in China will remain unchanged. The company pledges full commitment to its business activities and planned investments. Alongside car manufacturers VW, BMW and Daimler, BASF is one of the four largest German investors in the People’s Republic.
“The divestment of shares signals neither reason nor transparency, it is purely profit-driven,” commented Michael Brand, human rights spokesman for the Christian Democrats in the Bundestag, to Table.Media. It was only when there was no other option that BASF reacted “without a word of regret.”
The Association of Ethical Shareholders (DKA) also believes that BASF continues to have an obligation. “Once again, BASF is only reacting to grievances uncovered externally by independent journalism instead of identifying them through its own risk analyses and measures,” said Co-Managing Director Tilman Massa. It is still completely unclear how BASF deals with the risk of Uyghur forced labor or human rights violations in the supply chains to other BASF sites in China, he said.
The Ethical Shareholders had previously expressed skepticism about the special audit of the Volkswagen plant in Urumqi – and questioned the value of such audits in general. Employees of the auditing company also distanced themselves from the audit. The VW plant, which has been in operation since 2012, is controversial due to its proximity to human rights violations, such as the internment camps for Uyghurs in Xinjiang. Official documents and eyewitness reports provide evidence of state-run work programs that channel Uyghur women and men into various industrial sectors at net wages far below the minimum wage.
BASF and Volkswagen have, therefore, also been under scrutiny in the financial markets for some time. Following the results of its audit, the rating agency MSCI replaced the red flag for Volkswagen with an orange flag, giving the car manufacturer a breather. The investment management company Union Investment also continues to classify VW shares as “investable” for sustainable investments in December. BASF has so far remained unaffected.
The China scholar Adrian Zenz, who gained worldwide renown for exposing the Xinjiang camp system, had investigated Markor. Zenz painstakingly sifted through Markor’s websites from 2017 to 2019 and compared them with official documents on state control of the Uyghurs. This revealed that employees of the BASF partner company were directly involved in exerting pressure on Uyghurs.
“Due to its historical responsibility, the company should have acted earlier,” Zenz commented on the withdrawal. Zenz was referring to BASF’s involvement in the human rights crimes committed by the Nazis. Nevertheless, Zenz said it was a “very important signal” from BASF, especially as Volkswagen could now also come under increasing pressure. “There are no more excuses for Volkswagen: German companies must withdraw from Xinjiang.”
The World Uyghur Congress (WUC) expressed relief over BASF’s decision to withdraw from Xinjiang. The WUC also stressed the contrast with VW. Although VW outwardly demonstrates social responsibility, “its actions bear witness to a worrying ignorance of Uyghur forced labor,” said WUC Berlin Director Haiyuer Kuerban.
Human rights politician Brand reminded BASF Group CEO Martin Brudermuller that German law does not forget serious human rights violations. “The BASF management must give up its toxic devotion to a brutal regime in Beijing and respect international standards and, not least, German law,” said Brand. Once the EU Supply Chain Law comes into force, it will put environmental, human rights and social issues at suppliers at the center of attention throughout Europe.
You are leading the international legal team for Jimmy Lai, who has been imprisoned in Hong Kong for three years now. How is he and his legal team holding up?
He is 76 now. We are very concerned about his health. He is held in solitary confinement, which, of course, should not be happening. His son Sebastien cannot travel back to Hong Kong to visit him.
What problems are you confronted with in this case?
As human rights lawyers, we are often in the slipstream of abuse that our clients get. But what we have seen with the Jimmy Lai case is on a very different scale to what we’ve experienced so far. In 20 years I have never encountered this level of abuse. We face attacks by the state media and the Hong Kong authorities as well as cyberattacks through multiple VPN channels and we even get followed. Part of the shadowy attacks, which are often coordinated before important days in his case, are often targeting the female members of our legal team. These attacks come in the form of misogynist and sexist messages, as well as rape and dismemberment threats on a regular basis. That is a shocking and unacceptable development.
Why do you think the response is so harsh?
You can see clearly: If they are willing to throw this amount of financial resources and effort at us for simply being the lawyers of Jimmy Lai, it tells you a lot about the importance of our client and how much they want to silence him.
You are convinced that the Chinese state is behind the attacks.
China is acting with bully tactics and transnational repression, often in a shadowy way but with unparalleled technical capabilities. Every country needs to find a strategy responding to it. It is still astonishing to me that there hasn’t been a widespread advisory to civil society in European countries to call out these tactics and make people alert to them and protect people. We know that China has been targeting members of the European Parliament and a number of individual countries. The international community has to stand up against that.
You are calling it a sham trial.
Jimmy Lai is, of course, a symbolic figure. His case is designed to be emblematic, to have a chilling effect on others. He is imprisoned, essentially for a conspiracy connected to journalism and being outspoken about human rights. It sends a message to anyone who dares to be a journalist in Hong Kong: If you are not silent, you are going to be next.
His trial is devoid of the rule of law. It is played out with handpicked judges, using a law that the United Nations and many countries worldwide recognize should not exist. The offenses are drawn so broadly that there is only one possible outcome: him being convicted. At the age of 76, he faces spending the rest of his life in prison. That’s why it is important that the international community speaks out and holds China to account.
What does it mean for the trial and you as his legal team that Jimmy Lai is a British citizen?
The British passport is the only passport he holds. This means his case should be a high political priority for the UK. Regrettably, it took some time for the UK government to call for his freedom, but now they are doing that, and we are pleased to see this. Lord Cameron, the Foreign Secretary, has called for the immediate and unconditional release of Jimmy Lai.
Do other countries and organizations also speak out?
The US Government, the European Parliament, the Canadian Parliament, and UN human rights experts have also called for an end to his prosecution and his immediate release. The UK is not waiting for the end of the trial to call for his release, because they realize this is a flawed process under a law which shouldn’t exist. The UK can’t let a British citizen die behind bars for running a newspaper and speaking out for freedom and peaceful pro-democratic protests.
What could Germany do?
The German government signed a powerful statement in late December by 24 countries as part of the Media Freedom Coalition highlighting concerns about media freedom and its degradation in Hong Kong, concerns about the National Security law and concerns about Jimmy Lai’s case specifically. We would like Germany to show leadership in this field, given there are close relationships between China and Hong Kong and Germany with respect to trade and the many German companies that operate in Hong Kong
What would that mean in practice?
In terms of addressing the issue of political prisoners more generally, we think it important that there is an office or institution within the German government and/ or the EU that specifically deals with the cases of political prisoners and other persons arbitrarily detained or taken hostage, similar to the US Special Presidential Envoy for Hostage Affairs, currently headed by Ambassador Roger Carstens. Then, you would have proper resources attached to securing the freedom of political prisoners and institutional memory and expertise that could be built upon and shared with State partners. This is a global issue and it must be tackled with a globally joined-up strategy.
Will the revised homegrown National Security Law proposed by Hong Kong’s Chief Executive John Lee last week make a difference for Hong Kong and Jimmy Lai?
Whether you deal with a so-called homegrown National Security Law, or the 2020 National Security Law imposed by Beijing, the aims are the same: To silence and crush dissent, and to send a clear message: that if you speak truth to power in Hong Kong you will be criminalized for it.
Some see this law as the downfall of Hong Kong. Others say it fosters stability, especially for the business world…
The law has been condemned by the United Nations, by the EU, by multiple countries worldwide, by human rights organizations like Amnesty International and so on. And rightly so: It is drafted in a very broad way, the offenses are breathtakingly broad. It essentially criminalizes any form of peaceful dissent and political debate. We think that there is a false view amongst some expat companies and individuals operating in Hong Kong, that they are immune to this. That’s simply not right. The National Security Law applies to everyone.
What do you advise companies in Hong Kong?
It is time that business people and companies recognize that doing business in Hong Kong in such circumstances is exposing their employees to potential risks. Any employee who likes an Amnesty International tweet or reads the wrong newspaper or speaks a certain way about China or Hong Kong’s leadership could soon find themselves under surveillance or investigated or arrested, or their companies investigated; or even their assets frozen and seized.
What options are there now to change this? Many people believe that China is too powerful to compromise.
It is important to remember that China cares how Hong Kong does as an international trade hub. China cares what Germany thinks, even more so since China’s economy is slowing down. You can see that by the fact that China has sent a huge delegation of 120 people to Davos and a bit later to Geneva, telling the world that China and Hong Kong are open for business and that international investment can return to Hong Kong safely. But that’s just a fig leaf. As long as you have a man like Jimmy Lai behind bars, it can’t be business as usual with Hong Kong or in Hong Kong. Hong Kong has seen a very steep and speedy descent into authoritarianism. Since it has been that quick, people have not necessarily noticed what has been happening. It’s like a frog in boiling water with the temperature rising up gradually, not realizing the danger until it’s too late.
Is there a realistic chance that Jimmy Lai will be released?
It is important to remember that Australia recently managed to secure the release of the journalist and Australian citizen Cheng Lei. It was made clear to China that her release was an essential precondition for the foreign minister’s visit. It is possible and we will not falter until he is released.
Caoilfhionn Gallagher KC is an Irish-born barrister at Doughty Street Chambers in London, specializing in human rights and civil liberties. She has acted in many of the leading human rights cases in the UK in recent years. In 2016 she was named by the Irish Times as one of the 100 most influential Irishwomen living outside Ireland.
Over the weekend, Chinese people around the world welcomed the New Year of the Dragon with fireworks, firecrackers, dancing dragons in the street and family celebrations. According to legend, the fireworks are supposed to ward off evil spirits and, in particular, scare away the mythical monster Nian, which supposedly rose from the bottom of the sea at the beginning of the new year to prey on people and livestock in the villages. An old man is said to have chased the monster away with bamboo torches and red candles and decorations. Red is still the most important color for New Year’s decorations today. Money gifts for the children, for example, are traditionally given in red paper bags called hongbao (红包)
Many people start the new year with high hopes. The dragon has always had a deep symbolism in Chinese culture and is not only the symbol of the ancient emperors. The Year of the Dragon also promises good luck, success and prosperity. According to Chinese astrology, children born in the year of the dragon are considered charismatic, determined and self-confident. This is why many young couples in China specifically aim to have children in the Year of the Dragon.
On New Year’s Eve, most Chinese watch the annual spectacular New Year’s show on state television, and on the following days, there are outdoor events in many places despite the cold in the north of the country.
Chinese people live all over the world. Especially in the Chinatowns of various big cities in Asia, Europe and America, people celebrated on the streets over the weekend, in which not only the Chinese communities themselves took part, but also local residents and tourists. In Los Angeles, 100,000 people were expected to attend the New Year’s parade.
At the beginning of the year, state banks extended new loans at record levels to stimulate China’s economic recovery. In January, banks granted new loans in the national currency totaling 4.92 trillion yuan (around 634.5 billion euros), according to data from the central bank. This is more than four times the volume of loans granted in December.
Financial institutions generally lend particularly actively at the beginning of the year in order to secure market share and premium customers as early as possible. Nevertheless, the high lending volume in January even surprised experts: Experts surveyed by Reuters had only expected a total of 4.50 trillion yuan.
In order to prop up the economy, the central bank recently lowered the reserve requirement ratio (RRR) for commercial banks – by half a percentage point. This released around one trillion yuan (equivalent to around 128 billion euros) of liquidity for the financial system. The central bank wants to use a flexible line to boost domestic demand while maintaining price stability. rtr
Chinese manufacturers of turbines for offshore wind farms have suffered dramatic decline in profits due to a weak phase in the segment. China’s third-largest turbine manufacturer, Mingyang Smart Energy, reported a decline in net profit for 2023 of almost 90 percent to between 354 and 530 million yuan (46-69 million euros) compared to 2022. Shanghai Electric’s turbine division even recorded losses of well over one billion yuan. Both are particularly active in the offshore sector. At Shanghai Electric, the share of offshore turbine production was over 70 percent.
Analysts at consulting firm Trivium China see several reasons for this malaise: The end of subsidies from the central government, increasing red tape regarding approvals and tougher competition between providers for scarce marine areas. As a result, only six gigawatts (GW) of offshore wind power were added in 2023, barely more than in 2022 (5.2 GW). The record growth of 17 GW in 2021 is far away. In addition, a price war has been raging between turbine manufacturers for the past three years, putting pressure on margins.
Companies are looking for solutions. According to Trivium China, Mingyang has aggressively expanded into neighboring industries to compensate for losses, but this requires massive capital investment, with low short-term returns and great uncertainty. Trivium experts also expect the sector to internationalize: “Over-reliance on the domestic market will drive Chinese OEMs to accelerate their expansion into more profitable overseas markets – putting them in increasingly direct competition with Western turbine giants.” This is already happening. In 2022, Mingyang already supplied the 30-megawatt Beleolico offshore wind farm off southern Italy. ck
The German automotive supplier and technology group ZF from Friedrichshafen has received the approval for level 4 autonomous driving tests in Shanghai. ZF can now carry out tests on the open road in the designated city zones – making it the first foreign supplier to receive such a license in Shanghai. ZF confirmed a corresponding report by the Chinese trade journal Gasgoo to Table.Media on Friday.
In December, ZF announced that it would concentrate on its role as a technology provider for autonomous driving in the future – instead of offering complete autonomous transport systems, including shuttles. The company sees that “the most promising strategy for the future is to focus on positioning ZF as a premium supplier of autonomous driving technology and engineering services.” To this end, the company has developed its own system with technologies for various capabilities such as perception, localization, AI, data, decision-making and control.
In China, which ZF describes “as one of the company’s strategic core markets,” ZF also sells drive systems for electric cars. According to a ZF press release from November 2023, the People’s Republic accounts for around 17 percent of global sales. ck
Car sales in China have declined for the first time since August 2023 compared to the previous month. According to data published by the China Passenger Car Association (CPCA) on Thursday, 2.04 million passenger cars were sold in China in January, 13.9 percent fewer than in December. Sales of electric cars and plug-in hybrids also declined for the first time since August – by 29.5 percent to 668,000 vehicles compared to December 2023. Year-on-year comparisons for January and February are generally meaningless due to the fluctuating New Year holidays, when consumption always remains largely dormant.
At least there is good news for Volkswagen. According to the CPCA figures, the German car manufacturer sold 209,476 vehicles in January, the first time in over a year that it sold more cars than its Chinese competitor BYD, which came in second place with 191,122 vehicles sold. This means that VW was once again number one in China, at least in January. However, BYD remained the market leader in the electric segment, where Volkswagen only ranked 6th.
According to a report by the business magazine Caixin, the decline in sales is due to year-end promotions by car manufacturers, as well as a price increase for certain models and a reduction in local subsidy programs for car purchases. However, according to Caixin, some manufacturers, including Tesla, lowered prices again in January, raising concerns about another car price war. ck
The organizer of a football match in Hong Kong, where Lionel Messi sat on the bench instead of impressing fans on the pitch, will refund fans half of their ticket price, totaling around 7.2 million US dollars. This was the response of lifestyle company Tatler Asia to an outcry in the local government on Friday. The company owned by the Swiss Edipresse Group will now emerge from the event with a high loss. The repayment process will begin in March, it announced.
Around 40,000 people paid between 880 and 4,880 Hong Kong dollars (105 to 580 euros) for tickets to the friendly between Messi’s club Inter Miami CF and Hong Kong XI on February 4. Messi is an idol for many fans in Asia, and most of them only came to the match because of him. Several local tycoons and Chief Executive John Lee were also in attendance.
After the game, many had chanted “refund.” Chinese internet users raged against Messi on social media after the 36-year-old wrote about “muscle discomfort” on Weibo on Wednesday, but without issuing an apology. On the same day, the Argentina football superstar played more than 30 minutes in a friendly in Tokyo. The state-run Global Times voiced anger at the stark difference between Messi’s two appearances, stating that he had appeared unenthusiastic in Hong Kong but full of energy and endearment towards the fans in Japan.
Hong Kong’s government representatives also reacted with outrage at the fiasco for their city. Authorities demanded an explanation from Inter Miami CF as to why Messi did not play. Prominent Lee consultant Regina Ip even called for Messi to be denied entry in the future. “Our aspiration was to create an iconic moment in support of the government’s efforts to remind the world how relevant and exciting Hong Kong is,” Tatler Asia said after a meeting with government representatives. “That dream is broken today for us and all those who bought tickets to see Messi on the pitch.” ck
Chinese policy in the Middle East is shaped by two factors: China’s threat perceptions and its strategic calculus regarding its great-power competition with the United States. And when it comes to dealing with the US, China’s approach comes down to three “nos”: no cooperation, no support, and no confrontation. This credo underlies China’s decision not to push back against the Iran-backed Houthis as they carry out drone and missile attacks on Red Sea shipping lanes.
The Red Sea attacks – a response to Israel’s war against Hamas in Gaza – have not directly threatened Chinese ships, and the Houthis insist this will not change: neither Chinese or Russian vessels will be targeted, a senior Houthi official declared last month, as long as they are not connected with Israel.
But the attacks will still affect China’s economic interests, and not only because of the need to avoid links with Israel. COSCO, China’s largest shipping conglomerate, has already been forced to suspend all shipping to Israel, owing to security concerns
The identification of ships (or their flag countries) is not always straightforward, and shipping that affects China’s interests can still be targeted. But avoiding the area is costly. The Red Sea is one of the most sensitive chokepoints for world trade. If Chinese ships heading to Europe must circle around the Cape of Good Hope, rather than following the traditional route through the Suez Canal, a 26-day journey grows to 36 days and adds significantly to costs.
Longer shipping routes could also raise import prices, potentially fueling inflation in China; if oil prices are affected, China’s economy – already in the doldrums – will come under even more pressure. More broadly, continued shipping disruptions will hamper China’s efforts to boost its economy by strengthening external trade.
So, whether they target Chinese vessels directly or not, Houthi attacks on Red Sea shipping could undermine China’s economic recovery. And things could get much worse: If Iran deepens its involvement in the conflict between the Houthis and the US-led coalition that is launching strikes against them, the Strait of Hormuz could be affected, threatening China’s energy supplies.
Yet, for now, China does not seem to be treating the threat posed by the Houthis as either immediate or acute. Yes, Chinese officials have reportedly urged their Iranian counterparts to pressure the Houthis to curb their attacks. But, while China has some influence over Iran, it hardly controls Iranian policy. Nor is Iran fully in control of the Houthis, despite being their main backer. Given this – and contrary to what the US apparently thinks – China’s ability to rein in the Houthis diplomatically is limited.
And China is unlikely to go much further. Since Chinese strategists tend to view developments in the Middle East through the lens of Sino-American relations, even regional instability might not appear all bad to China. Among Chinese experts, there is no shortage of schadenfreude watching the US being forced to back Israel, at the cost of its strategic relationships with Muslim countries in the region. And China can only benefit from its great-power rival being sucked into a conflict in the Middle East, at a time when it is already heavily invested in the Ukraine war.
To be sure, China does not appear to be plotting to exploit America’s distractedness, say, by making a move on Taiwan. But it does relish the decline of US credibility and leadership. The longer the US stands by Israel, the more opportunity China will have to consolidate its ties with other Middle Eastern countries, and the more credible China’s alternative approach to regional security will appear.
Under no circumstances will China join the US-led coalition against the Houthis, not only because of the first “no,” but also because this would upend its own delicate balancing act between Israel and the Arab world, and between Sunni and Shia Muslims.
The fact remains, however, that the Houthis’ activities in the Red Sea are costing China. So, what are China’s options?
One possible response is to deploy naval escorts for cargo ships, as China has been doing in the Gulf of Aden since 2008. But the Gulf of Aden escorts – part of a counter-piracy effort – are deployed on the basis of a mandate from the United Nations: Security Council Resolution 1846. Without such a mandate, the Chinese have been reluctant to pursue similar actions in the Red Sea, though they have recently begun to do so.
But, for China, the easiest and most politically convenient response to the current Middle East crisis lies elsewhere. The key is to blame the turmoil since Hamas’s October 7 attack on Israel – the event that triggered the current conflict – on the failure of the US and Israel to achieve a two-state solution with the Palestinians and to treat such a deal as the precondition for any practical resolution to the ongoing crisis.
China well knows that reaching a two-state solution is highly unlikely to happen anytime soon, not least because it would fundamentally change Israel’s national-security outlook and that of the entire Middle East. But achieving a two-state solution is probably not the point; undermining the US is.
Yun Sun is a senior fellow and Co-Director of the East Asia Program and Director of the China Program at the Stimson Center.
Copyright: Project Syndicate, 2024.
www.project-syndicate.org
Imke Neiteler joined the IHK Dusseldorf in January as a consultant for Greater China & ASEAN. Neiteler was trained at the Chamber of Foreign Trade (AHK) in Singapore, among other places. In her new role, she will monitor the international markets and trends in the region.
Ouassim Sfar took over the position of Head of Technical Project Management MEB at VW China last month. The industrial engineer has worked for the German car manufacturer for over seven years. For his new role, he moved from Germany to Hefei in the province of Anhui.
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Hairy gifts: German Federal President Frank-Walter Steinmeier and his wife Elke Buedenbender received the camels Winterfreund (right) and Schneemaedchen (left) as gifts on their trip to Mongolia.
Some might reject this as not particularly animal-friendly, but this is actually to the benefit of Winterfreund and Schneemaedchen. They stay in Mongolia as a state gift and enjoy special care from now on.
Steinmeier signed a strategic partnership in Ulaanbaatar last week aimed at making the country less dependent on its giant neighbors China and Russia.