Table.Briefing: China

Crash aftermath for Boeing + Neon shortage + Crop failure

  • China loses trust in Boeing
  • Chips: without Ukraine’s noble gasses, dependence on China increases
  • Agriculture minister: extreme weather threatens harvests
  • Geely’s profits dwindle due to commodity prices
  • China’s power grid to become stabler
  • TikTok filters “Peng Shuai” and “queer” in Germany
  • Profile: Basketball player Enes Kanter Freedom provokes Xi
Dear reader,

Despite the recovery of the black box on Wednesday, there have been no new details about the cause of the plane crash in Guangxi. But some of its consequences are already foreseeable: Another 737 debacle is causing the Chinese Market to lose trust in Boeing, our Beijing team analyzes. Since China is also entering the aviation market, it remains to be seen whether this will turn out beneficial for Airbus.

The war in Ukraine is also having a major consequence for supply chains. In today’s issue, Frank Sieren examines the impact on the supply of the noble gas neon. It may be best known for its use in old-fashioned fluorescent tubes. In reality, however, it is now used primarily in the fabrication of microchips – and they are in short supply as it is. This could benefit China, which can now step in as the second-largest supplier after Ukraine in the US business. This new dependency has, in turn, significant implications for trade policy.

The shelves for flour and sunflower oil in German stores are empty solely because of hoarding. But this is the response of consumers to entirely justified concerns about food security. But food security simply concerns the Global South more than the EU. Ukraine and Russia are among the world’s most important exporters of cereals. If China now experiences poor harvests because of climate change, this will considerably intensify concerns, analyzes Nico Beckert. China indeed has enormous reserves. But it will probably keep them for itself. After all, it feeds almost a fifth of the world’s population.

Your
Finn Mayer-Kuckuk
Image of Finn  Mayer-Kuckuk

Feature

Boeing loses trust after 737 crash

A cockpit recorder of MU5735 has been found, its data seems to be undamaged. The flight data recorder is still missing.

It could have been a great week in China for Boeing. As Reuters reported, a Boeing 737 Max headed from Boeing’s headquarters in Seattle to the People’s Republic last Monday. There, according to a source, the plane was scheduled to first land at Boeing’s Chinese delivery center and later be handed over to Shanghai Airlines, a subsidiary of China Eastern. But the plane is currently still waiting in Hawaii.

This Monday, China experienced the worst aviation disaster in more than ten years with an estimated 132 fatalities. Analysts now believe it is unlikely that times will get better any time soon for Boeing in China. The ill-fated China Eastern aircraft was a 737-800, which, unlike the 737 Max, has an excellent safety record. Nevertheless, authorities are now “extra careful,” according to an aviation expert in Beijing.

The history of the 737 Max is well known: Two aircraft of the relatively new type had crashed in Indonesia and Ethiopia in 2018 and 2019 in quick succession, resulting in flight bans around the world. Boeing came under massive pressure because a software error was held responsible.

And now, China, of all places, the second most important market for Boeing behind the USA, is now the last country where the 737 Max is still not allowed to fly. The flight from Seattle seemed to be the clearest sign yet that the 737 Max could soon be approved for commercial flights again. This would also have cleared the way for over 140 more 737 Maxs waiting at Boeing for delivery to Chinese airlines.

Talks about extending grounding to all 737s

But after a refueling stop in Hawaii, the 737 Max did not initially continue. It was said that there was currently no rush to deploy the 737 Max. In extreme cases, it would even be possible to ground large parts of the Chinese 737-800 fleet at the moment. With more than 1,200 aircraft, it is the most important workhorse of Chinese airlines. However, thousands of flights a day are currently canceled anyway because of the Covid pandemic. So far, only the ill-fated airline China Eastern has grounded its 737-800 aircraft. However, it is not completely ruled out that other airlines will follow suit, experts say. A lot will depend on how the investigations into the cause of the accident unfold.

Monday’s crash happened at “an extremely delicate time,” JPMorgan analyst Seth Seifman also warns in a statement. Boeing had been looking to finally resume 737 Max deliveries after a three-year halt. Comments from Chinese authorities in the coming days and weeks are now critical to assess the impact of the tragedy on Boeing. Even if authorities do not take action against Boeing, passengers’ fears could become an issue. “Given Boeing’s problems with the 737 MAX, there is some chance that consumers may not want to fly on a 737 until the cause of the China Eastern crash is determined,” analyzes US investment bank Cowen.

Even if Boeing’s current dry spell in China is now likely to last even longer: In the long term, the Americans consider the Chinese market to be highly promising. As recently as September, Boeing predicted that China’s airlines would require a total of 8,700 new aircraft worth $1.47 trillion by 2040 to meet the growing demand for post-pandemic commercial air travel. As early as 2030, China’s domestic passenger market will surpass the intra-European market, according to the estimate. By 2040, China’s domestic traffic could also exceed air travel within North America.

Boeing and Airbus will no longer dominate the Chinese market as a duopoly in the future. After all, Comac is the first Chinese aircraft manufacturer on the verge of a breakthrough. But since Comac is technologically lagging behind its Western competitors, they will probably still be able to claim a large share of the Chinese market for themselves in the foreseeable future. That is, assuming political tensions will not escalate. Joern Petring/Gregor Koppenburg

  • Aviation
  • Industry
  • USA

Semiconductors: dangerous bottleneck for the noble gas neon

It was no coincidence that the US government already warned its semiconductor industry to seek new sources for the gas neon on February 11, 14 days before Putin launched his war. Ukraine supplies about half of the world’s rare noble gas, which is used in the manufacturing of computer chips. And it even covers as much as 90 percent of US demand. So Putin’s war has exposed yet another major weakness of the West’s globalization.

Just one day after the start of the war, the German gas group Linde AG was allowed to announce an investment of $250 million in Texas to build a new neon production plant. It will be able to produce an additional 40 million liters per year. Only four days later, the Chinese state newspaper Global Times reported that China was also expanding its production. Because China, too, only has reserves for three to six months.

And Washington’s fear was justified: One of Ukraine’s two leading neon manufacturers, Ingas in Mariupol, which normally produces 15,000 to 20,000 cubic meters of neon a month, was bombed. The city has been left without water and power. Hundreds of thousands of people are surrounded by Russian forces.

The other company, Cryoin in Odessa, has already ceased its production on February 24, the day the war began. Its employees and management are huddled in their basements at home, fearing that the company will be bombed. Even in China, neon prices have increased ninefold since February 24. And China is in a far better position than the US and Europe. The People’s Republic is the second-largest producer of neon after Ukraine, with a 30 percent share of the world market. The third-largest is, ironically, Russia.

Irony of Globalization: US becomes more dependent on China

So Putin’s war has exposed a major weakness of the West. Because chips are needed for almost everything. Even for Americans, it now makes sense to buy more neon gas in China. An irony of globalization. “China’s share in global neon supply may rise to 50 percent,” surmises Chen Zhina, a general manager of Changzhou Naxin Special Gases in the boom province of Jiangsu, south of Shanghai, who has already received numerous international inquiries.

China’s response to the neon shock of the 2014 annexation of Crimea was most far-reaching, as it expanded its production. As a result of the annexation, neon prices rose 600 percent at the time. The Europeans responded as well, upgrading their chip machines to require less neon during production.

The Dutch company ASML, one of the leading manufacturers of machinery for the production of semiconductor elements, has now reduced the amount of neon required in its lithography machines by 30 to 50 percent thanks to a recent innovation by its subsidiary Cymer. ASML currently estimates its dependence on supplies from Ukraine at around 20 percent.

Industrial raw materials as Putin’s bargaining chip

Now, US trade policy may be jumping out of the frying pan into the fire when in China. After all, US manufacturers built up reserves after the annexation of Crimea “so we do not believe there are immediate supply disruption risks,” as the Semiconductor Industry Association emphasizes. In six months, however, these reserves will be exhausted. No one can currently predict what the situation in Ukraine will be like then.

This affects US President Joe Biden’s sanctions strategy against Russia, which he also wants to force on China. Neon is just one example of rare gasses and minerals which tie Ukraine and Russia to the global economy (China.Table reported).

At the end of February, Biden had already left no room for doubt about his intentions: “We’re going to impair their ability to compete in the 21st-century economy.” In mid-March, his Secretary of Commerce, Gina Raimondo, followed up and threatened China as well: “They have their own self-interest to not supply this stuff to Russia. So they’re not doing it out of the goodness of their heart. It would be devastating to China’s ability to produce these chips”

The US would be able to “essentialy shut” down any Chinese company that violates the sanctions, Raimondo said. Washington may soon have to dial it back, however. Because Putin has a bargaining chip in the form of neon production facilities and other raw materials that he can use in peace negotiations. Beijing is torn on this issue: On the one hand, it wants peace as quickly as possible; on the other, it wants Washington to feel that sanctions are ineffective.

After all, China has repeatedly become the target of sanctions in the trade dispute with the US. For example, chip sanctions imposed by President Donald Trump caused the smartphone division of the then global market leader Huawei to collapse. Today, the Shenzhen-based company is no longer even among the top 5. Currently, Beijing is forced to comply with sanctions imposed by the Americans against Russia when it comes to high-end chips. Washington has the upper hand in this regard. And this vexes Beijing.

China and Russia could dominate high technology

So far, Beijing has taken the position that “China and Russia will continue to conduct normal trade cooperation” without any external interference. The reality is different: If Beijing wants to play it safe in this heated conflict, it can only supply Russia with more basic chips that China already produces on its own. Chips that are used in household appliances and cars, but not those needed for smartphones or even military equipment. That is still 75 percent of all chips.

Should the conflict continue, this could change, and the value of the semiconductors supplied to Russia could increase. In any case, time is on China’s side. The worst fear of Western economy is becoming more apparent than ever in the Ukraine conflict: Russia and China share production facilities for noble gasses and rare earth elements, as well as the technology to produce the world’s fastest chips, all without the US. Over the next five years, this is not an unlikely scenario.

  • Geopolitics
  • Russia
  • Russland
  • Semiconductor
  • Technology
  • Ukraine

Climate change: poor harvest expected

China has stored more grain than any other country.

Russia’s war on Ukraine jeopardizes the food supply for millions of people around the world. The country on the Black Sea is a breadbasket. Ukraine produces more than eleven percent of the wheat traded on the global market. For corn, the figure is as high as 17 percent. Grain prices have skyrocketed in the wake of the war. This does not create a supply problem for most rich countries. In the West, most people can afford higher prices. In addition, Germany, for example, produces more wheat than it consumes.

But many African countries are dependent on grain imports from Ukraine and Russia, and rising world market prices are threatening their supplies. And the problem of rising prices could soon become even more pressing. China is expecting a poor harvest. This has been caused by severe storms in the past year, which are attributed to climate change.

At the same time, China has built up the world’s largest grain reserves and could thus take pressure off the global market. However, whether it is willing to do so is debatable. Securing the food supply for its own population has always been one of the Communist Party’s greatest concerns.

Extreme weather has destroyed crops

The People’s Republic’s Minister of Agriculture recently warned about the impact of climate change on crops. “China faces big difficulties in food production because of the unusual floods last autumn,” Tang Renjian told reporters. “Many farming experts and technicians told us that crop conditions this year could be the worst in history.” Parts of China had experienced extreme rain and flooding last fall (China.Table reported). This had caused damage to crops. Nearly 30 million hectares of farmable land were destroyed, Bloomberg reported. The floods delayed sowing on more than 18 million hectares of land, well over a third of China’s total winter wheat acreage.

The effects of climate change will become even more severe in the future. China is at risk of losing 20 percent of its harvests if the world does not manage to cut carbon emissions. That is the conclusion of a recent study by Tsinghua University in Beijing and London-based think tank Chatham House (China.Table reported). Scientists warn of a “significant threat to major grain-growing regions” in the People’s Republic if temperatures rise by 3.5 degrees over the next 80 years. Currently, the global community is on an emissions course that would result in a 2.7-degree temperature rise by 2100. But the Chinese authors write that even with an increase of just 1.6 degrees by 2100, eight percent of crops would be lost.

‘Climate change could impact food security’

These are bleak prospects, especially for the People’s Republic. After all, China has only ten percent of the world’s agricultural land, but has to feed more than 20 percent of the global population with it. And Beijing is not willing to increase its reliance on the global market. “Climate change felt in the rest of the world could also impact China’s food security,” says Even Pay of consulting firm Trivium China.

The impact of climate change on harvests could be amplified by socio-economic aspects. Increasingly unpredictable crop yields could cause farmers to quit their jobs and migrate to cities. The already existing labor shortage in the agricultural sector could potentially be exacerbated, Zhang Zhaoxin, a researcher at the Ministry of Agriculture told Bloomberg. In addition, farmers have been ill-prepared for extreme weather events. In many regions that were hit by heavy rains last year, flooded fields could not be drained due to lacking infrastructure such as pipes and drainage systems. Farmers were unable to harvest corn because their machinery could not handle the water, Zhang said.

100 kilograms of wheat for each Chinese citizen

China has been preparing for droughts and poor harvests in recent years, accumulating large stockpiles of grain. The country now stores 142 million tons of wheat. By comparison, only ten million tons have been stored in the EU. The People’s Republic’s stockpiles account for over half of global stocks. For every Chinese citizen, there are now a good 100 kilograms of wheat in storage. At the end of 2005, the value was only 26 kilograms. According to official data, these stockpiles could secure wheat supplies for 18 months. However, large stocks can only cushion the medium-term crop damage caused by unchecked climate change to a certain extent. It will be more important to slow down climate change and take adaptive measures.

Whether China is willing to sell grain on the world market or supply it to partner countries is an open question. According to estimates by the United States Department of Agriculture, the war in Ukraine will result in a loss of about four million tons. Some of this could be offset by strong harvests in India and Australia. Thus, China would not have to “release” large quantities of its reserves at all. But a bad harvest and general concerns about securing food supplies for its population could prevent Beijing from co-supplying other countries. And even if China shares its reserves with other countries, it is doubtful that prices on the global market will fall. After all, it is not only supply and demand that determine prices on agricultural markets. Speculation with food and land also drives prices.

  • Agriculture
  • Climate
  • Ukraine

News

Massive expansion of energy systems

China is aiming for a massive expansion of its energy systems and a more flexible power grid over the next few years. This is according to a new Five-Year Plan for the energy sector. At the heart of the plan is energy security. Renewable energy is expected to account for much of the increase in power generation capacity, Bloomberg reports. Coal-fired power plants are to be retooled as backups for dark periods and operate more flexibly to ensure power supply and stabilize the grid. Likewise, pumped-storage power plants are to be expanded. These serve as energy storage (China.Table reports). The expansion of transmission lines is to be continued to connect its power-hungry cities in the east with the ideal areas for renewable energy located in the west.

The country’s crude oil production is to be maintained at a stable four million barrels per day. Annual natural gas production is expected to increase to 230 billion cubic meters by 2025. It currently stands at 205 billion cubic meters, according to Reuters. China will “actively expand” the exploration and development of resources such as shale oil and shale gas. The share of non-fossil fuels in total energy consumption is expected to increase from 16 percent (2020) to 25 percent by 2025. The use of coal in heavy industry is to be curbed.

The Five-Year Plan does not provide details on the level of CO2 emissions targeted for 2025 or a schedule for reducing CO2 emissions. According to energy expert Lauri Myllyvirta, the plan is intended to create “the preconditions for peaking & cutting emissions.” According to Myllyvirta, whether the expansion of clean energy sources included in the plan will be sufficient to meet climate targets “depend entirely on energy demand growth, which in turn depends above all on economic policy.” nib

  • Climate
  • Emissions
  • Energy

Geely worries about profits

After a mixed year due to global chip shortages and rising raw material costs, Chinese Hangzhou-based automaker Geely expects sales and profitability to remain strained in 2022. Pressure on sales and returns is not expected to ease in light of increased competition in the domestic market, the rise in material prices, and pandemic-related restrictions, Geely Automobile said on Wednesday. The Ukraine war and the resulting, currently unpredictable, consequences for the global economy are also considered a risk factor for the sector.

The corporation, whose parent company Geely Holding has stakes in Volvo and Daimler, aims to increase sales by almost a quarter to 1.65 million vehicles in the current year. An expansion of exports to new markets in Southeast Asia, the Middle East and Western Europe should also contribute to this. Last year, profits slumped twelve percent to around ¥4.85 billion (about €690 million). Revenue climbed by ten percent to just under ¥102 billion. rtr

  • Autoindustrie

TikTok filters content in Germany

The social media platform TikTok, operated by Chinese company ByteDance, does not show comments and posts in Germany that include certain words. This is reported by German news channel Tagesschau, referring to a self-conducted test. According to the report, journalists tested 100 words or word combinations from different accounts. The result: 19 words were not published in at least three attempts. After NDR, WDR and Tagesschau confronted TikTok about the censorship, some of the words were unblocked.

Some of the blocked terms included the name of Chinese tennis player Peng Shuai, as well as terms from the LGBTQI community, such as “homo”, “gay” or “queer”. Words related to National Socialism were also blocked.

The use of word filters on TikTok has been known and controversial for years. One of the most recent cases is the current censorship of content in Russia. There, all non-Russian content is currently blocked. Euronews also reports that many videos containing misinformation about the war in Ukraine have been spread. Regarding the accusations from Germany, a spokeswoman announced that TikTok would launch a “thorough review” and ensure “that we recognize hate and violations, but allow counter-speech and neutral comments.” jul

  • Apps
  • Technology
  • Tiktok
  • Ukraine

Profile

Enes Kanter Freedom – career sacrificed, nominated for Nobel Prize

Enes Kanter Freedom

Enes Kanter Freedom holds up a mirror to the world’s premier basketball league. When his former employer, the glorious Boston Celtics, recently showed up to an NBA match in North America with a small solidarity flag in Ukraine’s national colors on his jersey, the Turkish native spoke up on Twitter. “What about Syria, Afghanistan, Uyghurs, Hong Kong, Tibet, Taiwan. Why is it okay to speak up about human rights violations there but not in other countries? Is there not much profit from Russia?”

It was the exclamation point behind a conflict between the business interests of a billion-dollar empire on the one hand, and the courage and consistency of an individual on the other. Kanter Freedom has been taking a fierce stand against injustice in the world for years. He has used his public persona as a top athlete on several occasions to denounce human rights violations in Turkey, Tibet, Xinjiang and Hong Kong. But his commitment ultimately cost the 29-year-old his athletic career.

Political protest on footwear

In recent months, he has repeatedly appeared at NBA games wearing basketball shoes with political messages. “Free Tibet,” “Free Uyghurs” or “No Beijing 2022”. On Twitter, he called China’s President Xi Jinping a “brutal dictator”. He accused the US sporting goods manufacturer Nike of hypocrisy because it would profit from the forced labor of Uyghur prisoners.

Kanter Freedom went for confrontation with the league, which threatened to kick him out if he continued to call for Tibet’ Freedom on his footwear. Chinese state television had already suspended all live broadcasts of Celtics games, sending a warning signal to the league. Kanter Freedom, however, kept returning with new slogans against forced labor or torture in Xinjiang.

Political messages: Kanter Freedom protests against the awarding of the Olympic Games to Beijing with his footwear

A few months ago, the Boston Celtics drew consequences and swapped Kanter at the transfer deadline. No other club signed him afterward. The club claimed that Kanter’s departure was due to athletic reasons. But it is an open secret that the only reason was to avert possible damage to the NBA.

China is an important market for the NBA

China is the league’s biggest foreign market. There are live broadcasts on television almost every morning. The euphoria was sparked in the 2000s by Chinese basketball superstar Yao Ming. An enthusiasm that was provoked in Germany at best by icons like Boris Becker or Michael Schumacher.

The NBA pays its biggest stars annual sums of more than $40 million. Even comparatively average players sign contracts that pay $5 or $10 million per season. A large part of this expenditure is returned through TV rights and merchandise in China.

The deep political consequences for the NBA became apparent at the latest when a club manager publicly supported the mass protests in Hong Kong in 2019. Back then, Chinese state television also suspended broadcasts of league matches. The league’s superstar LeBron James, who is otherwise perceived as a loud voice against racism and social inequality in the US, distanced himself at the time from solidarity with the Hong Kong democracy movement.

Death threats after criticism of Turkish president

Earlier this year, a statement made by one of the Golden State Warriors’ co-owners added fuel to the debate over the NBA’s dependence on China. In a podcast, billionaire Chamath Palihapitiya had responded to a co-host’s provocative question, “Nobody cares about the Uyghurs.” He stated that he was concerned about inflation, climate change, or US health care, but not that China was accused of genocide against the Uyghurs.

The statement came in for such sharp criticism in the USA that Palihapitiya felt compelled to justify himself. His statement had been misunderstood. Even his club distanced itself from the sharpness conveyed by its shareholder, so as not to come across as a heartless cog in the sports machinery.

Naturally, the billionaire’s statements also drew the attention of Enes Kanter Freedom. The 29-year-old had long since made a name for himself as an advocate for freedom. In 2017, he had already railed against the political purge in Turkey under President Erdoğan. Turkey revoked his citizenship at the time, and Kanter Freedom received several death threats. The NBA, however, allowed him to continue. In 2020, the US authorities even made him an American citizen. In the course of his naturalization, Kanter added the suffix Freedom to his official name.

Now Enes Kanter Freedom is without an NBA club and the prospect of a return to the world’s biggest basketball stage is close to zero. Nevertheless, he will soon be able to play professional sports – probably in Greece. Thus, the NBA is free from its troublemaker, whose commitment may yet bring a much bigger award than a championship ring in the NBA.

A Norwegian parliamentarian recently nominated Kanter Freedom for the Nobel Prize, which will be awarded in Oslo near the end of the year. The nomination was accompanied by a letter from 30 Nobel Prize winners to the Boston Celtics, asking them to support their player “to be on the right side of history.” Kanter Freedom himself was humbled. “Sometimes taking a stand is more important than your next paycheck,” he wrote on Twitter. Marcel Grzanna

  • Civil Society
  • Human Rights
  • Sports
  • Tibet
  • Xinjiang

Personnel

Jin Keyu, an economist at the London School of Economics, has been appointed to the Board of Directors of the major bank Credit Suisse. The 39-year-old’s appointment is intended to facilitate the expansion of the bank’s client base in China. She also serves on the board of Richemont, a luxury goods group based in Geneva. Jin hails from Beijing but studied in the US and has had career stints at Goldman Sachs and JPMorgan. She is known for her columns in the Financial Times and the South China Morning Post. Jin tends to support the Chinese Communist Party.

  • credit suisse

Dessert

Classes from space: The three taikonauts Zhai Zhigang, Wang Yaping and Ye Guangfu conduct scientific experiments in zero gravity and present the Chinese space station to children via livestream. The crew of the Shenzhou-13 has been on mission for six months, and for the second time the space travelers have now been live-streamed into a classroom at the China Science and Technology Museum. Will that help against homesickness?

China.Table editorial office

CHINA.TABLE EDITORIAL OFFICE

Licenses:
    • China loses trust in Boeing
    • Chips: without Ukraine’s noble gasses, dependence on China increases
    • Agriculture minister: extreme weather threatens harvests
    • Geely’s profits dwindle due to commodity prices
    • China’s power grid to become stabler
    • TikTok filters “Peng Shuai” and “queer” in Germany
    • Profile: Basketball player Enes Kanter Freedom provokes Xi
    Dear reader,

    Despite the recovery of the black box on Wednesday, there have been no new details about the cause of the plane crash in Guangxi. But some of its consequences are already foreseeable: Another 737 debacle is causing the Chinese Market to lose trust in Boeing, our Beijing team analyzes. Since China is also entering the aviation market, it remains to be seen whether this will turn out beneficial for Airbus.

    The war in Ukraine is also having a major consequence for supply chains. In today’s issue, Frank Sieren examines the impact on the supply of the noble gas neon. It may be best known for its use in old-fashioned fluorescent tubes. In reality, however, it is now used primarily in the fabrication of microchips – and they are in short supply as it is. This could benefit China, which can now step in as the second-largest supplier after Ukraine in the US business. This new dependency has, in turn, significant implications for trade policy.

    The shelves for flour and sunflower oil in German stores are empty solely because of hoarding. But this is the response of consumers to entirely justified concerns about food security. But food security simply concerns the Global South more than the EU. Ukraine and Russia are among the world’s most important exporters of cereals. If China now experiences poor harvests because of climate change, this will considerably intensify concerns, analyzes Nico Beckert. China indeed has enormous reserves. But it will probably keep them for itself. After all, it feeds almost a fifth of the world’s population.

    Your
    Finn Mayer-Kuckuk
    Image of Finn  Mayer-Kuckuk

    Feature

    Boeing loses trust after 737 crash

    A cockpit recorder of MU5735 has been found, its data seems to be undamaged. The flight data recorder is still missing.

    It could have been a great week in China for Boeing. As Reuters reported, a Boeing 737 Max headed from Boeing’s headquarters in Seattle to the People’s Republic last Monday. There, according to a source, the plane was scheduled to first land at Boeing’s Chinese delivery center and later be handed over to Shanghai Airlines, a subsidiary of China Eastern. But the plane is currently still waiting in Hawaii.

    This Monday, China experienced the worst aviation disaster in more than ten years with an estimated 132 fatalities. Analysts now believe it is unlikely that times will get better any time soon for Boeing in China. The ill-fated China Eastern aircraft was a 737-800, which, unlike the 737 Max, has an excellent safety record. Nevertheless, authorities are now “extra careful,” according to an aviation expert in Beijing.

    The history of the 737 Max is well known: Two aircraft of the relatively new type had crashed in Indonesia and Ethiopia in 2018 and 2019 in quick succession, resulting in flight bans around the world. Boeing came under massive pressure because a software error was held responsible.

    And now, China, of all places, the second most important market for Boeing behind the USA, is now the last country where the 737 Max is still not allowed to fly. The flight from Seattle seemed to be the clearest sign yet that the 737 Max could soon be approved for commercial flights again. This would also have cleared the way for over 140 more 737 Maxs waiting at Boeing for delivery to Chinese airlines.

    Talks about extending grounding to all 737s

    But after a refueling stop in Hawaii, the 737 Max did not initially continue. It was said that there was currently no rush to deploy the 737 Max. In extreme cases, it would even be possible to ground large parts of the Chinese 737-800 fleet at the moment. With more than 1,200 aircraft, it is the most important workhorse of Chinese airlines. However, thousands of flights a day are currently canceled anyway because of the Covid pandemic. So far, only the ill-fated airline China Eastern has grounded its 737-800 aircraft. However, it is not completely ruled out that other airlines will follow suit, experts say. A lot will depend on how the investigations into the cause of the accident unfold.

    Monday’s crash happened at “an extremely delicate time,” JPMorgan analyst Seth Seifman also warns in a statement. Boeing had been looking to finally resume 737 Max deliveries after a three-year halt. Comments from Chinese authorities in the coming days and weeks are now critical to assess the impact of the tragedy on Boeing. Even if authorities do not take action against Boeing, passengers’ fears could become an issue. “Given Boeing’s problems with the 737 MAX, there is some chance that consumers may not want to fly on a 737 until the cause of the China Eastern crash is determined,” analyzes US investment bank Cowen.

    Even if Boeing’s current dry spell in China is now likely to last even longer: In the long term, the Americans consider the Chinese market to be highly promising. As recently as September, Boeing predicted that China’s airlines would require a total of 8,700 new aircraft worth $1.47 trillion by 2040 to meet the growing demand for post-pandemic commercial air travel. As early as 2030, China’s domestic passenger market will surpass the intra-European market, according to the estimate. By 2040, China’s domestic traffic could also exceed air travel within North America.

    Boeing and Airbus will no longer dominate the Chinese market as a duopoly in the future. After all, Comac is the first Chinese aircraft manufacturer on the verge of a breakthrough. But since Comac is technologically lagging behind its Western competitors, they will probably still be able to claim a large share of the Chinese market for themselves in the foreseeable future. That is, assuming political tensions will not escalate. Joern Petring/Gregor Koppenburg

    • Aviation
    • Industry
    • USA

    Semiconductors: dangerous bottleneck for the noble gas neon

    It was no coincidence that the US government already warned its semiconductor industry to seek new sources for the gas neon on February 11, 14 days before Putin launched his war. Ukraine supplies about half of the world’s rare noble gas, which is used in the manufacturing of computer chips. And it even covers as much as 90 percent of US demand. So Putin’s war has exposed yet another major weakness of the West’s globalization.

    Just one day after the start of the war, the German gas group Linde AG was allowed to announce an investment of $250 million in Texas to build a new neon production plant. It will be able to produce an additional 40 million liters per year. Only four days later, the Chinese state newspaper Global Times reported that China was also expanding its production. Because China, too, only has reserves for three to six months.

    And Washington’s fear was justified: One of Ukraine’s two leading neon manufacturers, Ingas in Mariupol, which normally produces 15,000 to 20,000 cubic meters of neon a month, was bombed. The city has been left without water and power. Hundreds of thousands of people are surrounded by Russian forces.

    The other company, Cryoin in Odessa, has already ceased its production on February 24, the day the war began. Its employees and management are huddled in their basements at home, fearing that the company will be bombed. Even in China, neon prices have increased ninefold since February 24. And China is in a far better position than the US and Europe. The People’s Republic is the second-largest producer of neon after Ukraine, with a 30 percent share of the world market. The third-largest is, ironically, Russia.

    Irony of Globalization: US becomes more dependent on China

    So Putin’s war has exposed a major weakness of the West. Because chips are needed for almost everything. Even for Americans, it now makes sense to buy more neon gas in China. An irony of globalization. “China’s share in global neon supply may rise to 50 percent,” surmises Chen Zhina, a general manager of Changzhou Naxin Special Gases in the boom province of Jiangsu, south of Shanghai, who has already received numerous international inquiries.

    China’s response to the neon shock of the 2014 annexation of Crimea was most far-reaching, as it expanded its production. As a result of the annexation, neon prices rose 600 percent at the time. The Europeans responded as well, upgrading their chip machines to require less neon during production.

    The Dutch company ASML, one of the leading manufacturers of machinery for the production of semiconductor elements, has now reduced the amount of neon required in its lithography machines by 30 to 50 percent thanks to a recent innovation by its subsidiary Cymer. ASML currently estimates its dependence on supplies from Ukraine at around 20 percent.

    Industrial raw materials as Putin’s bargaining chip

    Now, US trade policy may be jumping out of the frying pan into the fire when in China. After all, US manufacturers built up reserves after the annexation of Crimea “so we do not believe there are immediate supply disruption risks,” as the Semiconductor Industry Association emphasizes. In six months, however, these reserves will be exhausted. No one can currently predict what the situation in Ukraine will be like then.

    This affects US President Joe Biden’s sanctions strategy against Russia, which he also wants to force on China. Neon is just one example of rare gasses and minerals which tie Ukraine and Russia to the global economy (China.Table reported).

    At the end of February, Biden had already left no room for doubt about his intentions: “We’re going to impair their ability to compete in the 21st-century economy.” In mid-March, his Secretary of Commerce, Gina Raimondo, followed up and threatened China as well: “They have their own self-interest to not supply this stuff to Russia. So they’re not doing it out of the goodness of their heart. It would be devastating to China’s ability to produce these chips”

    The US would be able to “essentialy shut” down any Chinese company that violates the sanctions, Raimondo said. Washington may soon have to dial it back, however. Because Putin has a bargaining chip in the form of neon production facilities and other raw materials that he can use in peace negotiations. Beijing is torn on this issue: On the one hand, it wants peace as quickly as possible; on the other, it wants Washington to feel that sanctions are ineffective.

    After all, China has repeatedly become the target of sanctions in the trade dispute with the US. For example, chip sanctions imposed by President Donald Trump caused the smartphone division of the then global market leader Huawei to collapse. Today, the Shenzhen-based company is no longer even among the top 5. Currently, Beijing is forced to comply with sanctions imposed by the Americans against Russia when it comes to high-end chips. Washington has the upper hand in this regard. And this vexes Beijing.

    China and Russia could dominate high technology

    So far, Beijing has taken the position that “China and Russia will continue to conduct normal trade cooperation” without any external interference. The reality is different: If Beijing wants to play it safe in this heated conflict, it can only supply Russia with more basic chips that China already produces on its own. Chips that are used in household appliances and cars, but not those needed for smartphones or even military equipment. That is still 75 percent of all chips.

    Should the conflict continue, this could change, and the value of the semiconductors supplied to Russia could increase. In any case, time is on China’s side. The worst fear of Western economy is becoming more apparent than ever in the Ukraine conflict: Russia and China share production facilities for noble gasses and rare earth elements, as well as the technology to produce the world’s fastest chips, all without the US. Over the next five years, this is not an unlikely scenario.

    • Geopolitics
    • Russia
    • Russland
    • Semiconductor
    • Technology
    • Ukraine

    Climate change: poor harvest expected

    China has stored more grain than any other country.

    Russia’s war on Ukraine jeopardizes the food supply for millions of people around the world. The country on the Black Sea is a breadbasket. Ukraine produces more than eleven percent of the wheat traded on the global market. For corn, the figure is as high as 17 percent. Grain prices have skyrocketed in the wake of the war. This does not create a supply problem for most rich countries. In the West, most people can afford higher prices. In addition, Germany, for example, produces more wheat than it consumes.

    But many African countries are dependent on grain imports from Ukraine and Russia, and rising world market prices are threatening their supplies. And the problem of rising prices could soon become even more pressing. China is expecting a poor harvest. This has been caused by severe storms in the past year, which are attributed to climate change.

    At the same time, China has built up the world’s largest grain reserves and could thus take pressure off the global market. However, whether it is willing to do so is debatable. Securing the food supply for its own population has always been one of the Communist Party’s greatest concerns.

    Extreme weather has destroyed crops

    The People’s Republic’s Minister of Agriculture recently warned about the impact of climate change on crops. “China faces big difficulties in food production because of the unusual floods last autumn,” Tang Renjian told reporters. “Many farming experts and technicians told us that crop conditions this year could be the worst in history.” Parts of China had experienced extreme rain and flooding last fall (China.Table reported). This had caused damage to crops. Nearly 30 million hectares of farmable land were destroyed, Bloomberg reported. The floods delayed sowing on more than 18 million hectares of land, well over a third of China’s total winter wheat acreage.

    The effects of climate change will become even more severe in the future. China is at risk of losing 20 percent of its harvests if the world does not manage to cut carbon emissions. That is the conclusion of a recent study by Tsinghua University in Beijing and London-based think tank Chatham House (China.Table reported). Scientists warn of a “significant threat to major grain-growing regions” in the People’s Republic if temperatures rise by 3.5 degrees over the next 80 years. Currently, the global community is on an emissions course that would result in a 2.7-degree temperature rise by 2100. But the Chinese authors write that even with an increase of just 1.6 degrees by 2100, eight percent of crops would be lost.

    ‘Climate change could impact food security’

    These are bleak prospects, especially for the People’s Republic. After all, China has only ten percent of the world’s agricultural land, but has to feed more than 20 percent of the global population with it. And Beijing is not willing to increase its reliance on the global market. “Climate change felt in the rest of the world could also impact China’s food security,” says Even Pay of consulting firm Trivium China.

    The impact of climate change on harvests could be amplified by socio-economic aspects. Increasingly unpredictable crop yields could cause farmers to quit their jobs and migrate to cities. The already existing labor shortage in the agricultural sector could potentially be exacerbated, Zhang Zhaoxin, a researcher at the Ministry of Agriculture told Bloomberg. In addition, farmers have been ill-prepared for extreme weather events. In many regions that were hit by heavy rains last year, flooded fields could not be drained due to lacking infrastructure such as pipes and drainage systems. Farmers were unable to harvest corn because their machinery could not handle the water, Zhang said.

    100 kilograms of wheat for each Chinese citizen

    China has been preparing for droughts and poor harvests in recent years, accumulating large stockpiles of grain. The country now stores 142 million tons of wheat. By comparison, only ten million tons have been stored in the EU. The People’s Republic’s stockpiles account for over half of global stocks. For every Chinese citizen, there are now a good 100 kilograms of wheat in storage. At the end of 2005, the value was only 26 kilograms. According to official data, these stockpiles could secure wheat supplies for 18 months. However, large stocks can only cushion the medium-term crop damage caused by unchecked climate change to a certain extent. It will be more important to slow down climate change and take adaptive measures.

    Whether China is willing to sell grain on the world market or supply it to partner countries is an open question. According to estimates by the United States Department of Agriculture, the war in Ukraine will result in a loss of about four million tons. Some of this could be offset by strong harvests in India and Australia. Thus, China would not have to “release” large quantities of its reserves at all. But a bad harvest and general concerns about securing food supplies for its population could prevent Beijing from co-supplying other countries. And even if China shares its reserves with other countries, it is doubtful that prices on the global market will fall. After all, it is not only supply and demand that determine prices on agricultural markets. Speculation with food and land also drives prices.

    • Agriculture
    • Climate
    • Ukraine

    News

    Massive expansion of energy systems

    China is aiming for a massive expansion of its energy systems and a more flexible power grid over the next few years. This is according to a new Five-Year Plan for the energy sector. At the heart of the plan is energy security. Renewable energy is expected to account for much of the increase in power generation capacity, Bloomberg reports. Coal-fired power plants are to be retooled as backups for dark periods and operate more flexibly to ensure power supply and stabilize the grid. Likewise, pumped-storage power plants are to be expanded. These serve as energy storage (China.Table reports). The expansion of transmission lines is to be continued to connect its power-hungry cities in the east with the ideal areas for renewable energy located in the west.

    The country’s crude oil production is to be maintained at a stable four million barrels per day. Annual natural gas production is expected to increase to 230 billion cubic meters by 2025. It currently stands at 205 billion cubic meters, according to Reuters. China will “actively expand” the exploration and development of resources such as shale oil and shale gas. The share of non-fossil fuels in total energy consumption is expected to increase from 16 percent (2020) to 25 percent by 2025. The use of coal in heavy industry is to be curbed.

    The Five-Year Plan does not provide details on the level of CO2 emissions targeted for 2025 or a schedule for reducing CO2 emissions. According to energy expert Lauri Myllyvirta, the plan is intended to create “the preconditions for peaking & cutting emissions.” According to Myllyvirta, whether the expansion of clean energy sources included in the plan will be sufficient to meet climate targets “depend entirely on energy demand growth, which in turn depends above all on economic policy.” nib

    • Climate
    • Emissions
    • Energy

    Geely worries about profits

    After a mixed year due to global chip shortages and rising raw material costs, Chinese Hangzhou-based automaker Geely expects sales and profitability to remain strained in 2022. Pressure on sales and returns is not expected to ease in light of increased competition in the domestic market, the rise in material prices, and pandemic-related restrictions, Geely Automobile said on Wednesday. The Ukraine war and the resulting, currently unpredictable, consequences for the global economy are also considered a risk factor for the sector.

    The corporation, whose parent company Geely Holding has stakes in Volvo and Daimler, aims to increase sales by almost a quarter to 1.65 million vehicles in the current year. An expansion of exports to new markets in Southeast Asia, the Middle East and Western Europe should also contribute to this. Last year, profits slumped twelve percent to around ¥4.85 billion (about €690 million). Revenue climbed by ten percent to just under ¥102 billion. rtr

    • Autoindustrie

    TikTok filters content in Germany

    The social media platform TikTok, operated by Chinese company ByteDance, does not show comments and posts in Germany that include certain words. This is reported by German news channel Tagesschau, referring to a self-conducted test. According to the report, journalists tested 100 words or word combinations from different accounts. The result: 19 words were not published in at least three attempts. After NDR, WDR and Tagesschau confronted TikTok about the censorship, some of the words were unblocked.

    Some of the blocked terms included the name of Chinese tennis player Peng Shuai, as well as terms from the LGBTQI community, such as “homo”, “gay” or “queer”. Words related to National Socialism were also blocked.

    The use of word filters on TikTok has been known and controversial for years. One of the most recent cases is the current censorship of content in Russia. There, all non-Russian content is currently blocked. Euronews also reports that many videos containing misinformation about the war in Ukraine have been spread. Regarding the accusations from Germany, a spokeswoman announced that TikTok would launch a “thorough review” and ensure “that we recognize hate and violations, but allow counter-speech and neutral comments.” jul

    • Apps
    • Technology
    • Tiktok
    • Ukraine

    Profile

    Enes Kanter Freedom – career sacrificed, nominated for Nobel Prize

    Enes Kanter Freedom

    Enes Kanter Freedom holds up a mirror to the world’s premier basketball league. When his former employer, the glorious Boston Celtics, recently showed up to an NBA match in North America with a small solidarity flag in Ukraine’s national colors on his jersey, the Turkish native spoke up on Twitter. “What about Syria, Afghanistan, Uyghurs, Hong Kong, Tibet, Taiwan. Why is it okay to speak up about human rights violations there but not in other countries? Is there not much profit from Russia?”

    It was the exclamation point behind a conflict between the business interests of a billion-dollar empire on the one hand, and the courage and consistency of an individual on the other. Kanter Freedom has been taking a fierce stand against injustice in the world for years. He has used his public persona as a top athlete on several occasions to denounce human rights violations in Turkey, Tibet, Xinjiang and Hong Kong. But his commitment ultimately cost the 29-year-old his athletic career.

    Political protest on footwear

    In recent months, he has repeatedly appeared at NBA games wearing basketball shoes with political messages. “Free Tibet,” “Free Uyghurs” or “No Beijing 2022”. On Twitter, he called China’s President Xi Jinping a “brutal dictator”. He accused the US sporting goods manufacturer Nike of hypocrisy because it would profit from the forced labor of Uyghur prisoners.

    Kanter Freedom went for confrontation with the league, which threatened to kick him out if he continued to call for Tibet’ Freedom on his footwear. Chinese state television had already suspended all live broadcasts of Celtics games, sending a warning signal to the league. Kanter Freedom, however, kept returning with new slogans against forced labor or torture in Xinjiang.

    Political messages: Kanter Freedom protests against the awarding of the Olympic Games to Beijing with his footwear

    A few months ago, the Boston Celtics drew consequences and swapped Kanter at the transfer deadline. No other club signed him afterward. The club claimed that Kanter’s departure was due to athletic reasons. But it is an open secret that the only reason was to avert possible damage to the NBA.

    China is an important market for the NBA

    China is the league’s biggest foreign market. There are live broadcasts on television almost every morning. The euphoria was sparked in the 2000s by Chinese basketball superstar Yao Ming. An enthusiasm that was provoked in Germany at best by icons like Boris Becker or Michael Schumacher.

    The NBA pays its biggest stars annual sums of more than $40 million. Even comparatively average players sign contracts that pay $5 or $10 million per season. A large part of this expenditure is returned through TV rights and merchandise in China.

    The deep political consequences for the NBA became apparent at the latest when a club manager publicly supported the mass protests in Hong Kong in 2019. Back then, Chinese state television also suspended broadcasts of league matches. The league’s superstar LeBron James, who is otherwise perceived as a loud voice against racism and social inequality in the US, distanced himself at the time from solidarity with the Hong Kong democracy movement.

    Death threats after criticism of Turkish president

    Earlier this year, a statement made by one of the Golden State Warriors’ co-owners added fuel to the debate over the NBA’s dependence on China. In a podcast, billionaire Chamath Palihapitiya had responded to a co-host’s provocative question, “Nobody cares about the Uyghurs.” He stated that he was concerned about inflation, climate change, or US health care, but not that China was accused of genocide against the Uyghurs.

    The statement came in for such sharp criticism in the USA that Palihapitiya felt compelled to justify himself. His statement had been misunderstood. Even his club distanced itself from the sharpness conveyed by its shareholder, so as not to come across as a heartless cog in the sports machinery.

    Naturally, the billionaire’s statements also drew the attention of Enes Kanter Freedom. The 29-year-old had long since made a name for himself as an advocate for freedom. In 2017, he had already railed against the political purge in Turkey under President Erdoğan. Turkey revoked his citizenship at the time, and Kanter Freedom received several death threats. The NBA, however, allowed him to continue. In 2020, the US authorities even made him an American citizen. In the course of his naturalization, Kanter added the suffix Freedom to his official name.

    Now Enes Kanter Freedom is without an NBA club and the prospect of a return to the world’s biggest basketball stage is close to zero. Nevertheless, he will soon be able to play professional sports – probably in Greece. Thus, the NBA is free from its troublemaker, whose commitment may yet bring a much bigger award than a championship ring in the NBA.

    A Norwegian parliamentarian recently nominated Kanter Freedom for the Nobel Prize, which will be awarded in Oslo near the end of the year. The nomination was accompanied by a letter from 30 Nobel Prize winners to the Boston Celtics, asking them to support their player “to be on the right side of history.” Kanter Freedom himself was humbled. “Sometimes taking a stand is more important than your next paycheck,” he wrote on Twitter. Marcel Grzanna

    • Civil Society
    • Human Rights
    • Sports
    • Tibet
    • Xinjiang

    Personnel

    Jin Keyu, an economist at the London School of Economics, has been appointed to the Board of Directors of the major bank Credit Suisse. The 39-year-old’s appointment is intended to facilitate the expansion of the bank’s client base in China. She also serves on the board of Richemont, a luxury goods group based in Geneva. Jin hails from Beijing but studied in the US and has had career stints at Goldman Sachs and JPMorgan. She is known for her columns in the Financial Times and the South China Morning Post. Jin tends to support the Chinese Communist Party.

    • credit suisse

    Dessert

    Classes from space: The three taikonauts Zhai Zhigang, Wang Yaping and Ye Guangfu conduct scientific experiments in zero gravity and present the Chinese space station to children via livestream. The crew of the Shenzhou-13 has been on mission for six months, and for the second time the space travelers have now been live-streamed into a classroom at the China Science and Technology Museum. Will that help against homesickness?

    China.Table editorial office

    CHINA.TABLE EDITORIAL OFFICE

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