The reality of the economic centers in mainland China does not match the image that the trade war, sanctions, and justified criticism of human rights violations suggest: This is what Rudolf Scharping tells us in our latest CEO Talk with Frank Sieren. German companies operating in China continue to expect very good business proceedings in the growth market. Scharping knows the situation in China especially well: Despite the pandemic, he spends a lot of time in the People’s Republic, where he runs a management consultancy and is therefore well connected. He sees both international relations and life and business in China with refreshing optimism.
Manufacturing companies currently perceive the availability of supplier parts and cheap raw materials as a real obstacle to their business. Christiane Kühl reports on an initiative at the junction of these two problems: China wants to become independent of chemical imports for their semiconductor productions. Many of the substances needed to manufacture chips are imported from the USA, Japan or Europe. Their strive for more independence in this regard is understandable. But news of this kind continues to confirm the growing trend of decoupling economies. In other words, it is exactly what Scharping warns against in our interview.
I wish you a pleasant and productive week!
Former SPD party chairman and minister of defense Rudolf Scharping (73) has founded a successful consulting company with a focus on China since his time in Gerhard Schröder’s cabinet: Rudolf Scharping Strategie, Beratung und Kommunikation AG (RSBK). Every year, he organizes a high-profile China congress that aims to be closer to companies than the Hamburg Summit. Even in times of Covid quarantines, Scharping spends a lot of time in China – most recently on another four-month stint. You can also watch the full German version of our CEO Talk in this video.
Disclaimer: This is an English translation of the CEO-Talk, which was conducted in German and is not considered an official translation by any party involved.
We currently find ourselves in a difficult political situation between Europe and China. What is going wrong?
Is something really going wrong? Well, the relations are basically very good, they have a very stable foundation and also a very good perspective. One should not let oneself be influenced too much by the buzz of everyday politics. The main direction is cooperation and competition in a market economy, even if there are sometimes fierce debates about sanctions, human rights or the ratification of the investment agreement. Of course, all this has to be discussed. However, the question is where, by whom and in what context.
Nevertheless, you have to note that relations have not been more strained since 1989.
Yes, that is quite true. On the other hand, I deal with everyday reality, not limited to political discussions. It quickly becomes clear that some people are trying to paint a picture about the formation of new blocs. However, this does not correspond to reality. A few weeks ago, the EU Chamber of Commerce published a survey with very surprising results. European companies have confidence in China’s stability. They trust in the opportunities that China offers. And they do so to an extent that has never been the case before. This also applies, by the way, to American companies, which are investing more in China than ever before in the history of US-Chinese relations.
You work a lot with Chinese and German companies. Are your interlocutors worried about being crushed by heated political disputes?
Rather, they are worried about whether political rhetoric will affect their economic life in the medium term. Now it is clearer than ever: we need realism tied to our values. With respect for the different set of values that exist in China. None of the really big global challenges will be solved in a better way without or against China, but rather in cooperation with them.
This realism cannot mean that we simply accept the current events of the Hong Kong freedom movement or the minorities in Xinjiang.
Of course not. We should take a close look at the 1949 Declaration of Human Rights. Then we will see that in China, for example, the right to life without hardship and poverty, the right to good health care, the right to a fulfilled and long life, as well as the right to access to education and opportunities for advancement have now been largely realized, to an extent that has never been achieved before. On the other hand, political rights are not yet fully developed. They are even disregarded or restricted. Yet, even independent American surveys in China show that Chinese trust in the political system and the government is very high.
Can people even realistically assess this? There is no freedom of media, and most Chinese have never been outside the country?
People, however, know exactly how they lived 20 years ago or before China opened its borders and reformed, and how they live today. They don’t need the media or a visit abroad to know this. Before the pandemic, by the way, well over 100 million Chinese spent time abroad. They compare, they exchange – and one should be careful not to assume that there is no discourse just because of the undeniable censorship in China. Every minute, hundreds of millions of people communicate with each other via WeChat and other social media.
A censored exchange.
You can also put it this way: a free exchange within certain limits, at least as free as never before in Chinese history, with unprecedented cultural diversity, a new level of economic freedom and a middle class of 400 to 600 million people, depending on how you do the math. What’s wrong with life expectancy doubling in the past 40 years?
Still, the Chinese need to be careful about what they share.
Here, too, a distinction must be made. You can tell snide jokes about President Xi Jinping with impunity, which would never have been possible in this form under the Nazis or the GDR. In China, this is shrugged off as long as you don’t start touching or even crossing lines. These include the one-party principle, the territorial integrity of China with Tibet and Taiwan. If one does not cross such and other lines, then everyday life is relatively carefree and relatively free of pressure.
That would mean that you, as one of the once leading German and European social democrats, would have to concede that the CCP, your historic rival, which celebrates its 100th anniversary this year, has done a good job, perhaps even a better job than the SPD?
I see it differently. On important questions: what is the right and the role of the individual in a society, in a political system? What does that mean for the freedoms of the individual? How are these secured under the rule of law and so on? On such questions, the SPD has always been liberal and progressive.
Nevertheless, our classic ideas of communist planned economy dictatorships no longer apply to China. The freedom to travel makes a big difference. There are 44,000 young Chinese studying in Germany alone. In 2019, before the pandemic, well over 100 million Chinese traveled abroad. They bring back personal impressions, which they then talk about with many others. They are too many to make them an ornament of an overpowering system in which people are treated as objects of a planning bureaucracy.
We, in Western democracies, are well-advised to come to terms with the fact that China has developed a political system that is in large part very much its own. We should understand that, until the end of the Cultural Revolution, the individual in China was part of an oppressively planning bureaucracy that sometimes brutally disregarded basic human rights. And, if you think about the Great Leap Forward or the horrors of the Cultural Revolution, then, in my opinion, something has fundamentally changed in the meantime.
Though without the Constitution ever being amended. That’s strange, isn’t it?
However, the de facto social contract has changed. Deng Xiaoping’s reform policy complemented very Chinese traditions with pragmatism, not just economic: let’s find out, unbiased, what serves the progress and the life of the Chinese people better. A giant step, the results of which people insist on.
A system with many flaws remains.
Without a doubt. The Chinese leadership also knows that the real challenges to China’s stable future lie within China itself. So how do we engage with China? If this is an argument that aims to reach the domestic audience with rhetorical sharpness, then this is too little, downright dangerous – like any foreign policy based on domestic political motives.
Do German politicians concern themselves too little with China?
Our chancellors, whether Helmut Kohl or Helmut Schmidt, Willy Brandt, Gerhard Schröder or Angela Merkel, have understood very well how to successfully deal with China and that their Chinese counterparts have a different idea of how to engage in a thoroughly critical dialogue.
How do you accomplish that?
You have to address key issues, but you should also be aware of who you are talking to about what, and in what context. Angela Merkel has always engaged in dialogue with human rights activists and lawyers and others here in China. The Chinese leadership knew that. They accepted it because there never was any public fuss about it. Merkel wanted to inform herself and provide tangible help, but she didn’t want to show off.
But isn’t that pointless, if it’s only happening behind the scenes?
Is it really? I myself have experienced how useful it can be to help very consistently, but also discreetly, individual people who are in trouble in China. In the end, it is the result that counts. Then the way to get there is secondary.
Can you give us an example?
As a young politician in Rhineland-Palatinate, I regularly accompanied Chinese delegations to the Karl Marx House in Trier. During this time I met a person who became a lifelong friend. At that time he was the secretary of the Standing Committee, the highest governing body of the party. After the bloody suppression of the protest movement in 1989, he lost all his posts. I then made it clear that I would be happy to travel to China if I could meet this man.
Weren’t you resented for that?
No, on the contrary, it has created respect. Stability of personal relationships, longevity and reliability all play a major role in China. And as a result, after the year 2000, I met a whole number of people again who firstly knew this, secondly respected it and thirdly had therefore also developed a certain degree of trust in me: True to the motto, he is not an opportunist, at the same time knows how to place criticism without offending someone, and he is interested in China and its relations with Germany in the long term.
Who was the most important among them?
As Minister of Defense, I met, among others, the Head of State and Party Jiang Zemin and had a very interesting conversation with him. Originally, it was only intended as a formal diplomatic exchange, courtesy of the then President of the European Social Democrats, from party leader to party leader, so to speak. But then it became a dialogue and there were also concrete agreements, namely a dialogue on security policy at various levels. And that followed a line that I think is wise, to keep trying to get China to adopt the best possible constructive policy within the global institutions and on global challenges.
I am sure you count the EU-China investment agreement among these. Is it not too soft on China?
No. On the contrary. It is a starting point for a better, more level playing field, better access to markets and, at the same time, solid foundations for an international division of labor. In short: a win-win situation.
The EU Parliament sees things differently.
I think that the European Parliament will also see it that way at the end of the day. In any case, I hope that the Treaty will be ratified. Sanctions are not constructive here, regardless of which side they come from. Those who are currently advising us to focus on the essentials and not to lose sight of the prospects for development are right.
Shouldn’t we for once send Beijing a clear ‘stop!’ in light of the developments in Xinjiang and Hong Kong, instead of continuing to do business-as-usual?
Yes, of course. That is why I talk about value-based realism and dialogue that keeps the big picture in mind. Us Europeans should view the agreement with China in the context of two other major trade agreements that China arranged in 2020; one with the US, the second to establish the largest free trade area in the world – with Australia, New Zealand, Japan and other democracies. Only Europe has managed to negotiate social and other human rights standards into the agreement.
Is there systemic competition between China and Europe?
Of course there is competition. Is it a competition between systems? I have my doubts about that, because it presupposes a certain rigidity in the systems, which I don’t see. Not in China and not in Europe either. That is why it is important to ask how adaptable a system is and what its foundations actually are. I have learned one thing in my long political and then in my entrepreneurial and economic life: systemic struggles promote rigidity on both sides and prevent innovation and change. We ourselves must remain progressive.
You now do this with your own management consultancy. How was the transition from politician to entrepreneur? No other colleague of yours in Germany has succeeded to this extent.
Managing my political memory and processing it into lectures as a professor in the US didn’t seem challenging enough. So the obvious thing to do was to put some money out of my pocket and build up a company that would be helpful in the future market of China.
What is different in business than in politics?
The path to success is much more winding in politics. And success has many fathers and mothers. In business, the path is more straightforward and therefore more transparent as to who has achieved the success.
Your advice for companies on their way to China?
A stable foundation at home, combined with cosmopolitanism and a clear strategy.
And for corporations?
A European car manufacturer, for example, can no longer ignore developments of the world’s largest market, even if we have different ideas. So it makes sense to talk about these different ideas very thoroughly and with the goal of finding common solutions, for example in drive technologies, autonomous driving and the use of artificial intelligence. In the end, we Europeans will be the ones to bear the brunt should the world split into two technological worlds. Only ideologues take much pleasure in this.
Where do you as an entrepreneur need politics?
Of course, entrepreneurs generally need politics for reliable legislation, a stable geopolitical environment. But politics does not only create room for maneuver for companies, it must also ensure social balance and livelihoods. It supports workers’ interests and protects small businesses from corporations that tend to form monopolies. The struggle for the best way can currently also be observed in China.
These days, there is a lot of talk about chip shortages and the challenges for the globally networked semiconductor industry in a world of geopolitical tensions. Hardly any other product has a high-tech supply chain as complex as semiconductors, whose intermediates are shipped from a multitude of countries.
Chemicals are an important part of this chain: The production process for chips, from wafer manufacturing to proper packaging, requires around 400 different chemicals and materials, John Lee and Jan-Peter Kleinhans wrote in a study by the Mercator Institute for China Studies (MERICS) and the New Responsibility Foundation. These include commodity chemicals, special chemicals and composites or liquefied gases. “These materials come from all over the world and tend to be highly sophisticated,” explains Christopher Thomas, an expert at the US-based Brookings Institution. “No country has true independence in this complex semiconductor value chain.”
However, China is under pressure to localize as much of the semiconductor manufacturing process as possible to avoid supply bottlenecks. One reason is Covid, which creates supply shortages. Another reason is the control measures by the US. Most of the chemicals for semiconductors are currently imported from the US and Taiwan, according to industry insiders in Beijing. While it is a business with good profit margins, US suppliers of relevant chemicals for exports to China have to apply for a license specifically.
Controlled commodities include, for example, etching gases, photoresists or photomasks. The bureaucracy of US Imports is troublesome, leading to China’s desire for independence from such supplies.
The People’s Republic is therefore investing massively in building up the entire value chain of the chip industry. Currently, the country produces less than 20 percent of its required semiconductors locally (as reported by China.Table); Chinese companies have so far not been able to keep up with the global market leaders when it came to technical aspects in any production step.
The requirements of this particular segment, however, are extremely high, especially for materials used in the production of wafers, which are the heart of semiconductors. The chip industry requires ultra-pure wet chemicals such as acids, solvents, oxidants and bases – for example, oxide etch or photoresists with a maximum impurity of well below 100 parts per trillion (ppt). Virtually every known gas is required in pure form: oxygen, nitrogen, carbon dioxide, and hydrogen, as well as noble and specialty gases such as helium or argon. According to Lee and Kleinhans, all of these materials are supplied primarily by global giants such as BASF, Dupont, Air Liquide and Shin-Etsu.
Somewhat lower purity requirements exist for materials used in the composition or packaging of finished semiconductors – such as organic substrates, ceramic packages, resins and interconnect wires. Lee and Kleinhans expect that Chinese companies could play a larger role and increase their global market share in the coming years in these areas in particular. “For high-performance materials used in advanced wafer fabrication, on the other hand, the barriers to entry are significant. It is unlikely that Chinese suppliers will be able to successfully enter this market segment and challenge international incumbents in the next 10 years.”
Nevertheless, high-purity materials, photoresists and photomask materials have a high priority in government funding plans, from the 14th Five-Year Plan down to various regional semiconductor development strategies with added plans for complex composite materials such as silicon carbide and gallium nitride.
Governments and companies sometimes cooperate purposefully. According to a report published in the trade journal Japan Chemical Daily, chemical company Suzhou Crystal Clear Chemical, for example, founded a 1.5 billion yuan (195 million euros) joint fun with the city government of Suzhou for the purpose of creating a material base for semiconductors and liquid crystal displays (LC displays), to which it itself contributed only 30 percent. Other contributions came from other levels of government.
Here, Suzhou Crystal plans to produce semiconductor-grade hydrogen peroxide, ammonia solution and various protective coatings, among other things. According to the magazine, the company had completed the first-phase equipment for the production of 30,000 tons of high-purity chip-grade sulfuric acid in December 2020, using technology from Mitsubishi Chemical. And as recently as June, Suzhou Crystal announced plans also participate in a similar initiative in the province of Hubei – the Hubei Yangtze River Economic Belt Industry Fund, with which the central government is promoting the development of semiconductor sites along the Yangtze River, with a volume of three billion yuan (just under 400 million euros). So a lot of money is on the table.
A similar example is the chemical company Juhua Group, which is developing semiconductor chemicals in cooperation with the state-affiliated China Integrated Circuit Industry Investment Fund (CICIIF). Juhua subsidiary Grandit produces wet chemicals such as hydrogen fluoride and sulfuric acid, as well as electronic material gases for this purpose. In November 2020, Juhua Chairman Hu Zhongming told Japan Chemical Daily that his company was working with two Japanese companies to learn all it could about semiconductor chemicals. State-owned Sinochem Group is also looking to develop semiconductor chemicals into a new revenue pillar, with a corporation located in the city of Lianyungang. Among other things, the city is supporting Sinochem by providing land.
Lee and Kleinhans expect that such suppliers may well benefit from the enormous funding available to the semiconductor industry as well as “efforts by subnational governments to promote materials production in integration with other value chain segments-especially in Shanghai, the most promising hub of China’s semiconductor industry.”
In order to bring the relevant players to the table, the China Electronic Chemical Materials Alliance was formed back in 2015, which now has more than 60 member organizations, including Tsinghua University, panel manufacturer BOE Technology Group and the Chemistry Institute of the Chinese Academy of Sciences. The commitment of educational institutions to the sector is of utmost importance for those responsible. After all, China also lacks well-trained specialists in the field of semiconductor materials. So the road to chip independence is still a long one.
When Chancellor Angela Merkel appointed Jan Hecker as her chief advisor on foreign policy four years ago, it came as quite a surprise. After all, she had filled the most important foreign policy position with someone who was not particularly internationally versed. Until then, Hecker had been a domestic politician through and through. As head of the Refugee Policy Coordination Unit, he was at best only marginally involved in foreign policy issues. In another unexpected move, leaks at the beginning of the year revealed that the Chancellor was going to appoint the 55-year-old as the Federal Republic’s new ambassador to Beijing. He is expected to take up his new post in the next few weeks.
Born in Kiel, Hecker studied law and political science in Freiburg, Grenoble and Göttingen. After his second state examination, he worked as a lawyer at the renowned law firms Freshfields Bruckhaus Deringer and Hengeler Mueller before moving to the Federal Ministry of the Interior in 1999. Here, he was mainly responsible for police and constitutional law issues and met Peter Altmaier, who was appointed as Parliamentary State Secretary in the Ministry of the Interior between 2005 and 2009.
In the meantime, Hecker habilitated at the Faculty of Law of the European University Viadrina in Frankfurt/Oder. In 2011, he became a judge at the Federal Administrative Court in Leipzig. When Altmaier became head of the Chancellor’s Office in 2015, he brought Hecker into the Chancellor’s Office and appointed him as head of the newly created Refugee Policy Coordination Unit during the summer of the crisis. In 2017, the chancellor eventually made Hecker her top foreign policy adviser. Hecker took over from his predecessor Christoph Heusgen as ministerial director in charge of foreign, security and development policy. Now his appointment as German ambassador in Beijing follows.
Unlike his predecessors Clemens von Götze, who was appointed as ambassador to Beijing for three years, and Michael Clauss, who held the post for five years until 2018 and now shapes China policy as chief diplomat in Brussels, Hecker has not followed a classic diplomatic career path, a rather unusual occurrence in Germany.
But the chancellery now regards the position as ambassador to Beijing as one of the most important outposts of the German government. The fact that Merkel is filling this post with one of her closest collaborators of recent years shows the importance she continues to attribute to the People’s Republic. And with this executive move, she perhaps wants to ensure a certain continuity in German China policy after her imminent departure as chancellor. Following the motto: just not too much confrontation. Felix Lee
Oolong tea goes in the cup, that much is clear. But an “oolong ball”? It goes into the goal, of course, but unfortunately into the wrong goal! ” Oolong ball” 乌龙球 wūlóngqiú or “oolong goal” is the common Chinese term for “own goal”. Be it the land of tea drinkers or not, what in the heavens do fermented tea leaves have to do with ball sports? Well, China has the creativity of its Hong Kong football fans to thank for that. The English term “own goal” reminded them of the Chinese word “wūlóng”. And since in the Hong Kong-Guangdong region the regional expression 摆乌龙 bǎi wūlóng translates into “to mess something up” (literally “to wave an oolong”), ball sports enthusiasts quickly combined the two and christened the own goal “oolong goal”.
But the “tee goal” is by far not the only entertaining Chinese ball sports term one should know during the Olympic weeks. First, it should be noted that Chinese strictly distinguish between “small-ball” and “big-ball” sports (小球 xiǎoqiú and 大球 dàqiú). The former include China’s best disciplines of table tennis and badminton, but also includes tennis, golf, hockey, ice hockey, billiards and not to forget “wall ball” (壁球 bìqiú), or squash, as we know it. The “big ball disciplines” include football, basketball, volleyball, handball, bowling and “olive ball” (橄榄球 gǎnlǎnqiú), i.e. rugby.
Anyone who watches a Chinese football broadcast should not be blindsided when a “twelve-yarder” is suddenly awarded. Because 十二码球 shíèrmǎ-qiú, literally “twelve-yard ball”, is one of the usual terms for penalty kicks in Chinese (alongside 点球 diǎnqiú “point ball” and the colloquial 杀人球 shārénqiú “killer ball”). This is simply because the Chinese here use yards as measurement, not meters. And twelve yards (12 x 0.9114 meters) equals just under eleven meters, so it’s fitting.
Of course, commentators in Chinese ball sports stemming from the land of gourmets cannot avoid a certain food metaphor. If someone provides his team-mates with good passes in a match or with accurately passed balls in training, this is called “feeding the balls” (喂球 wèi qiú) in Chinese. On the other hand, if you beat your opponent with unstoppable balls, you make him “eat balls” 吃球 chī qiú. The best way to do the latter – for example in badminton or table tennis – is to “kill the ball” 杀球 shāqiú – the Chinese synonym for “smash”.
And should things not go so well for the team – whether in sports or elsewhere – experience has shown that it’s not very helpful to “kick the leather ball” 踢皮球 tī píqiú, in English: to pass the buck to each other. And who knows, in the end, maybe an edge or line ball 擦边球 cābiānqiú (literally “edge ball”) can tip the scales between victory and defeat. Sometimes this applies to real life as well. Here, the term “playing an edge ball” 打擦边球 dǎ cābiānqiú is a common metaphor for operating at the edge of legality, for example by exploiting existing loopholes.
If your head is already buzzing with new vocabulary, you can settle for an easy-to-remember, authentic cheering phrase to start with, namely, “good ball!” 好球 hǎoqiú! Translated into English, it means “bomb shot” or simply “bravo!” So now nothing stands in the way of watching the next ball sports or spending an Olympic evening with Chinese friends.
Verena Menzel runs the online language school New Chinese in Beijing.
The reality of the economic centers in mainland China does not match the image that the trade war, sanctions, and justified criticism of human rights violations suggest: This is what Rudolf Scharping tells us in our latest CEO Talk with Frank Sieren. German companies operating in China continue to expect very good business proceedings in the growth market. Scharping knows the situation in China especially well: Despite the pandemic, he spends a lot of time in the People’s Republic, where he runs a management consultancy and is therefore well connected. He sees both international relations and life and business in China with refreshing optimism.
Manufacturing companies currently perceive the availability of supplier parts and cheap raw materials as a real obstacle to their business. Christiane Kühl reports on an initiative at the junction of these two problems: China wants to become independent of chemical imports for their semiconductor productions. Many of the substances needed to manufacture chips are imported from the USA, Japan or Europe. Their strive for more independence in this regard is understandable. But news of this kind continues to confirm the growing trend of decoupling economies. In other words, it is exactly what Scharping warns against in our interview.
I wish you a pleasant and productive week!
Former SPD party chairman and minister of defense Rudolf Scharping (73) has founded a successful consulting company with a focus on China since his time in Gerhard Schröder’s cabinet: Rudolf Scharping Strategie, Beratung und Kommunikation AG (RSBK). Every year, he organizes a high-profile China congress that aims to be closer to companies than the Hamburg Summit. Even in times of Covid quarantines, Scharping spends a lot of time in China – most recently on another four-month stint. You can also watch the full German version of our CEO Talk in this video.
Disclaimer: This is an English translation of the CEO-Talk, which was conducted in German and is not considered an official translation by any party involved.
We currently find ourselves in a difficult political situation between Europe and China. What is going wrong?
Is something really going wrong? Well, the relations are basically very good, they have a very stable foundation and also a very good perspective. One should not let oneself be influenced too much by the buzz of everyday politics. The main direction is cooperation and competition in a market economy, even if there are sometimes fierce debates about sanctions, human rights or the ratification of the investment agreement. Of course, all this has to be discussed. However, the question is where, by whom and in what context.
Nevertheless, you have to note that relations have not been more strained since 1989.
Yes, that is quite true. On the other hand, I deal with everyday reality, not limited to political discussions. It quickly becomes clear that some people are trying to paint a picture about the formation of new blocs. However, this does not correspond to reality. A few weeks ago, the EU Chamber of Commerce published a survey with very surprising results. European companies have confidence in China’s stability. They trust in the opportunities that China offers. And they do so to an extent that has never been the case before. This also applies, by the way, to American companies, which are investing more in China than ever before in the history of US-Chinese relations.
You work a lot with Chinese and German companies. Are your interlocutors worried about being crushed by heated political disputes?
Rather, they are worried about whether political rhetoric will affect their economic life in the medium term. Now it is clearer than ever: we need realism tied to our values. With respect for the different set of values that exist in China. None of the really big global challenges will be solved in a better way without or against China, but rather in cooperation with them.
This realism cannot mean that we simply accept the current events of the Hong Kong freedom movement or the minorities in Xinjiang.
Of course not. We should take a close look at the 1949 Declaration of Human Rights. Then we will see that in China, for example, the right to life without hardship and poverty, the right to good health care, the right to a fulfilled and long life, as well as the right to access to education and opportunities for advancement have now been largely realized, to an extent that has never been achieved before. On the other hand, political rights are not yet fully developed. They are even disregarded or restricted. Yet, even independent American surveys in China show that Chinese trust in the political system and the government is very high.
Can people even realistically assess this? There is no freedom of media, and most Chinese have never been outside the country?
People, however, know exactly how they lived 20 years ago or before China opened its borders and reformed, and how they live today. They don’t need the media or a visit abroad to know this. Before the pandemic, by the way, well over 100 million Chinese spent time abroad. They compare, they exchange – and one should be careful not to assume that there is no discourse just because of the undeniable censorship in China. Every minute, hundreds of millions of people communicate with each other via WeChat and other social media.
A censored exchange.
You can also put it this way: a free exchange within certain limits, at least as free as never before in Chinese history, with unprecedented cultural diversity, a new level of economic freedom and a middle class of 400 to 600 million people, depending on how you do the math. What’s wrong with life expectancy doubling in the past 40 years?
Still, the Chinese need to be careful about what they share.
Here, too, a distinction must be made. You can tell snide jokes about President Xi Jinping with impunity, which would never have been possible in this form under the Nazis or the GDR. In China, this is shrugged off as long as you don’t start touching or even crossing lines. These include the one-party principle, the territorial integrity of China with Tibet and Taiwan. If one does not cross such and other lines, then everyday life is relatively carefree and relatively free of pressure.
That would mean that you, as one of the once leading German and European social democrats, would have to concede that the CCP, your historic rival, which celebrates its 100th anniversary this year, has done a good job, perhaps even a better job than the SPD?
I see it differently. On important questions: what is the right and the role of the individual in a society, in a political system? What does that mean for the freedoms of the individual? How are these secured under the rule of law and so on? On such questions, the SPD has always been liberal and progressive.
Nevertheless, our classic ideas of communist planned economy dictatorships no longer apply to China. The freedom to travel makes a big difference. There are 44,000 young Chinese studying in Germany alone. In 2019, before the pandemic, well over 100 million Chinese traveled abroad. They bring back personal impressions, which they then talk about with many others. They are too many to make them an ornament of an overpowering system in which people are treated as objects of a planning bureaucracy.
We, in Western democracies, are well-advised to come to terms with the fact that China has developed a political system that is in large part very much its own. We should understand that, until the end of the Cultural Revolution, the individual in China was part of an oppressively planning bureaucracy that sometimes brutally disregarded basic human rights. And, if you think about the Great Leap Forward or the horrors of the Cultural Revolution, then, in my opinion, something has fundamentally changed in the meantime.
Though without the Constitution ever being amended. That’s strange, isn’t it?
However, the de facto social contract has changed. Deng Xiaoping’s reform policy complemented very Chinese traditions with pragmatism, not just economic: let’s find out, unbiased, what serves the progress and the life of the Chinese people better. A giant step, the results of which people insist on.
A system with many flaws remains.
Without a doubt. The Chinese leadership also knows that the real challenges to China’s stable future lie within China itself. So how do we engage with China? If this is an argument that aims to reach the domestic audience with rhetorical sharpness, then this is too little, downright dangerous – like any foreign policy based on domestic political motives.
Do German politicians concern themselves too little with China?
Our chancellors, whether Helmut Kohl or Helmut Schmidt, Willy Brandt, Gerhard Schröder or Angela Merkel, have understood very well how to successfully deal with China and that their Chinese counterparts have a different idea of how to engage in a thoroughly critical dialogue.
How do you accomplish that?
You have to address key issues, but you should also be aware of who you are talking to about what, and in what context. Angela Merkel has always engaged in dialogue with human rights activists and lawyers and others here in China. The Chinese leadership knew that. They accepted it because there never was any public fuss about it. Merkel wanted to inform herself and provide tangible help, but she didn’t want to show off.
But isn’t that pointless, if it’s only happening behind the scenes?
Is it really? I myself have experienced how useful it can be to help very consistently, but also discreetly, individual people who are in trouble in China. In the end, it is the result that counts. Then the way to get there is secondary.
Can you give us an example?
As a young politician in Rhineland-Palatinate, I regularly accompanied Chinese delegations to the Karl Marx House in Trier. During this time I met a person who became a lifelong friend. At that time he was the secretary of the Standing Committee, the highest governing body of the party. After the bloody suppression of the protest movement in 1989, he lost all his posts. I then made it clear that I would be happy to travel to China if I could meet this man.
Weren’t you resented for that?
No, on the contrary, it has created respect. Stability of personal relationships, longevity and reliability all play a major role in China. And as a result, after the year 2000, I met a whole number of people again who firstly knew this, secondly respected it and thirdly had therefore also developed a certain degree of trust in me: True to the motto, he is not an opportunist, at the same time knows how to place criticism without offending someone, and he is interested in China and its relations with Germany in the long term.
Who was the most important among them?
As Minister of Defense, I met, among others, the Head of State and Party Jiang Zemin and had a very interesting conversation with him. Originally, it was only intended as a formal diplomatic exchange, courtesy of the then President of the European Social Democrats, from party leader to party leader, so to speak. But then it became a dialogue and there were also concrete agreements, namely a dialogue on security policy at various levels. And that followed a line that I think is wise, to keep trying to get China to adopt the best possible constructive policy within the global institutions and on global challenges.
I am sure you count the EU-China investment agreement among these. Is it not too soft on China?
No. On the contrary. It is a starting point for a better, more level playing field, better access to markets and, at the same time, solid foundations for an international division of labor. In short: a win-win situation.
The EU Parliament sees things differently.
I think that the European Parliament will also see it that way at the end of the day. In any case, I hope that the Treaty will be ratified. Sanctions are not constructive here, regardless of which side they come from. Those who are currently advising us to focus on the essentials and not to lose sight of the prospects for development are right.
Shouldn’t we for once send Beijing a clear ‘stop!’ in light of the developments in Xinjiang and Hong Kong, instead of continuing to do business-as-usual?
Yes, of course. That is why I talk about value-based realism and dialogue that keeps the big picture in mind. Us Europeans should view the agreement with China in the context of two other major trade agreements that China arranged in 2020; one with the US, the second to establish the largest free trade area in the world – with Australia, New Zealand, Japan and other democracies. Only Europe has managed to negotiate social and other human rights standards into the agreement.
Is there systemic competition between China and Europe?
Of course there is competition. Is it a competition between systems? I have my doubts about that, because it presupposes a certain rigidity in the systems, which I don’t see. Not in China and not in Europe either. That is why it is important to ask how adaptable a system is and what its foundations actually are. I have learned one thing in my long political and then in my entrepreneurial and economic life: systemic struggles promote rigidity on both sides and prevent innovation and change. We ourselves must remain progressive.
You now do this with your own management consultancy. How was the transition from politician to entrepreneur? No other colleague of yours in Germany has succeeded to this extent.
Managing my political memory and processing it into lectures as a professor in the US didn’t seem challenging enough. So the obvious thing to do was to put some money out of my pocket and build up a company that would be helpful in the future market of China.
What is different in business than in politics?
The path to success is much more winding in politics. And success has many fathers and mothers. In business, the path is more straightforward and therefore more transparent as to who has achieved the success.
Your advice for companies on their way to China?
A stable foundation at home, combined with cosmopolitanism and a clear strategy.
And for corporations?
A European car manufacturer, for example, can no longer ignore developments of the world’s largest market, even if we have different ideas. So it makes sense to talk about these different ideas very thoroughly and with the goal of finding common solutions, for example in drive technologies, autonomous driving and the use of artificial intelligence. In the end, we Europeans will be the ones to bear the brunt should the world split into two technological worlds. Only ideologues take much pleasure in this.
Where do you as an entrepreneur need politics?
Of course, entrepreneurs generally need politics for reliable legislation, a stable geopolitical environment. But politics does not only create room for maneuver for companies, it must also ensure social balance and livelihoods. It supports workers’ interests and protects small businesses from corporations that tend to form monopolies. The struggle for the best way can currently also be observed in China.
These days, there is a lot of talk about chip shortages and the challenges for the globally networked semiconductor industry in a world of geopolitical tensions. Hardly any other product has a high-tech supply chain as complex as semiconductors, whose intermediates are shipped from a multitude of countries.
Chemicals are an important part of this chain: The production process for chips, from wafer manufacturing to proper packaging, requires around 400 different chemicals and materials, John Lee and Jan-Peter Kleinhans wrote in a study by the Mercator Institute for China Studies (MERICS) and the New Responsibility Foundation. These include commodity chemicals, special chemicals and composites or liquefied gases. “These materials come from all over the world and tend to be highly sophisticated,” explains Christopher Thomas, an expert at the US-based Brookings Institution. “No country has true independence in this complex semiconductor value chain.”
However, China is under pressure to localize as much of the semiconductor manufacturing process as possible to avoid supply bottlenecks. One reason is Covid, which creates supply shortages. Another reason is the control measures by the US. Most of the chemicals for semiconductors are currently imported from the US and Taiwan, according to industry insiders in Beijing. While it is a business with good profit margins, US suppliers of relevant chemicals for exports to China have to apply for a license specifically.
Controlled commodities include, for example, etching gases, photoresists or photomasks. The bureaucracy of US Imports is troublesome, leading to China’s desire for independence from such supplies.
The People’s Republic is therefore investing massively in building up the entire value chain of the chip industry. Currently, the country produces less than 20 percent of its required semiconductors locally (as reported by China.Table); Chinese companies have so far not been able to keep up with the global market leaders when it came to technical aspects in any production step.
The requirements of this particular segment, however, are extremely high, especially for materials used in the production of wafers, which are the heart of semiconductors. The chip industry requires ultra-pure wet chemicals such as acids, solvents, oxidants and bases – for example, oxide etch or photoresists with a maximum impurity of well below 100 parts per trillion (ppt). Virtually every known gas is required in pure form: oxygen, nitrogen, carbon dioxide, and hydrogen, as well as noble and specialty gases such as helium or argon. According to Lee and Kleinhans, all of these materials are supplied primarily by global giants such as BASF, Dupont, Air Liquide and Shin-Etsu.
Somewhat lower purity requirements exist for materials used in the composition or packaging of finished semiconductors – such as organic substrates, ceramic packages, resins and interconnect wires. Lee and Kleinhans expect that Chinese companies could play a larger role and increase their global market share in the coming years in these areas in particular. “For high-performance materials used in advanced wafer fabrication, on the other hand, the barriers to entry are significant. It is unlikely that Chinese suppliers will be able to successfully enter this market segment and challenge international incumbents in the next 10 years.”
Nevertheless, high-purity materials, photoresists and photomask materials have a high priority in government funding plans, from the 14th Five-Year Plan down to various regional semiconductor development strategies with added plans for complex composite materials such as silicon carbide and gallium nitride.
Governments and companies sometimes cooperate purposefully. According to a report published in the trade journal Japan Chemical Daily, chemical company Suzhou Crystal Clear Chemical, for example, founded a 1.5 billion yuan (195 million euros) joint fun with the city government of Suzhou for the purpose of creating a material base for semiconductors and liquid crystal displays (LC displays), to which it itself contributed only 30 percent. Other contributions came from other levels of government.
Here, Suzhou Crystal plans to produce semiconductor-grade hydrogen peroxide, ammonia solution and various protective coatings, among other things. According to the magazine, the company had completed the first-phase equipment for the production of 30,000 tons of high-purity chip-grade sulfuric acid in December 2020, using technology from Mitsubishi Chemical. And as recently as June, Suzhou Crystal announced plans also participate in a similar initiative in the province of Hubei – the Hubei Yangtze River Economic Belt Industry Fund, with which the central government is promoting the development of semiconductor sites along the Yangtze River, with a volume of three billion yuan (just under 400 million euros). So a lot of money is on the table.
A similar example is the chemical company Juhua Group, which is developing semiconductor chemicals in cooperation with the state-affiliated China Integrated Circuit Industry Investment Fund (CICIIF). Juhua subsidiary Grandit produces wet chemicals such as hydrogen fluoride and sulfuric acid, as well as electronic material gases for this purpose. In November 2020, Juhua Chairman Hu Zhongming told Japan Chemical Daily that his company was working with two Japanese companies to learn all it could about semiconductor chemicals. State-owned Sinochem Group is also looking to develop semiconductor chemicals into a new revenue pillar, with a corporation located in the city of Lianyungang. Among other things, the city is supporting Sinochem by providing land.
Lee and Kleinhans expect that such suppliers may well benefit from the enormous funding available to the semiconductor industry as well as “efforts by subnational governments to promote materials production in integration with other value chain segments-especially in Shanghai, the most promising hub of China’s semiconductor industry.”
In order to bring the relevant players to the table, the China Electronic Chemical Materials Alliance was formed back in 2015, which now has more than 60 member organizations, including Tsinghua University, panel manufacturer BOE Technology Group and the Chemistry Institute of the Chinese Academy of Sciences. The commitment of educational institutions to the sector is of utmost importance for those responsible. After all, China also lacks well-trained specialists in the field of semiconductor materials. So the road to chip independence is still a long one.
When Chancellor Angela Merkel appointed Jan Hecker as her chief advisor on foreign policy four years ago, it came as quite a surprise. After all, she had filled the most important foreign policy position with someone who was not particularly internationally versed. Until then, Hecker had been a domestic politician through and through. As head of the Refugee Policy Coordination Unit, he was at best only marginally involved in foreign policy issues. In another unexpected move, leaks at the beginning of the year revealed that the Chancellor was going to appoint the 55-year-old as the Federal Republic’s new ambassador to Beijing. He is expected to take up his new post in the next few weeks.
Born in Kiel, Hecker studied law and political science in Freiburg, Grenoble and Göttingen. After his second state examination, he worked as a lawyer at the renowned law firms Freshfields Bruckhaus Deringer and Hengeler Mueller before moving to the Federal Ministry of the Interior in 1999. Here, he was mainly responsible for police and constitutional law issues and met Peter Altmaier, who was appointed as Parliamentary State Secretary in the Ministry of the Interior between 2005 and 2009.
In the meantime, Hecker habilitated at the Faculty of Law of the European University Viadrina in Frankfurt/Oder. In 2011, he became a judge at the Federal Administrative Court in Leipzig. When Altmaier became head of the Chancellor’s Office in 2015, he brought Hecker into the Chancellor’s Office and appointed him as head of the newly created Refugee Policy Coordination Unit during the summer of the crisis. In 2017, the chancellor eventually made Hecker her top foreign policy adviser. Hecker took over from his predecessor Christoph Heusgen as ministerial director in charge of foreign, security and development policy. Now his appointment as German ambassador in Beijing follows.
Unlike his predecessors Clemens von Götze, who was appointed as ambassador to Beijing for three years, and Michael Clauss, who held the post for five years until 2018 and now shapes China policy as chief diplomat in Brussels, Hecker has not followed a classic diplomatic career path, a rather unusual occurrence in Germany.
But the chancellery now regards the position as ambassador to Beijing as one of the most important outposts of the German government. The fact that Merkel is filling this post with one of her closest collaborators of recent years shows the importance she continues to attribute to the People’s Republic. And with this executive move, she perhaps wants to ensure a certain continuity in German China policy after her imminent departure as chancellor. Following the motto: just not too much confrontation. Felix Lee
Oolong tea goes in the cup, that much is clear. But an “oolong ball”? It goes into the goal, of course, but unfortunately into the wrong goal! ” Oolong ball” 乌龙球 wūlóngqiú or “oolong goal” is the common Chinese term for “own goal”. Be it the land of tea drinkers or not, what in the heavens do fermented tea leaves have to do with ball sports? Well, China has the creativity of its Hong Kong football fans to thank for that. The English term “own goal” reminded them of the Chinese word “wūlóng”. And since in the Hong Kong-Guangdong region the regional expression 摆乌龙 bǎi wūlóng translates into “to mess something up” (literally “to wave an oolong”), ball sports enthusiasts quickly combined the two and christened the own goal “oolong goal”.
But the “tee goal” is by far not the only entertaining Chinese ball sports term one should know during the Olympic weeks. First, it should be noted that Chinese strictly distinguish between “small-ball” and “big-ball” sports (小球 xiǎoqiú and 大球 dàqiú). The former include China’s best disciplines of table tennis and badminton, but also includes tennis, golf, hockey, ice hockey, billiards and not to forget “wall ball” (壁球 bìqiú), or squash, as we know it. The “big ball disciplines” include football, basketball, volleyball, handball, bowling and “olive ball” (橄榄球 gǎnlǎnqiú), i.e. rugby.
Anyone who watches a Chinese football broadcast should not be blindsided when a “twelve-yarder” is suddenly awarded. Because 十二码球 shíèrmǎ-qiú, literally “twelve-yard ball”, is one of the usual terms for penalty kicks in Chinese (alongside 点球 diǎnqiú “point ball” and the colloquial 杀人球 shārénqiú “killer ball”). This is simply because the Chinese here use yards as measurement, not meters. And twelve yards (12 x 0.9114 meters) equals just under eleven meters, so it’s fitting.
Of course, commentators in Chinese ball sports stemming from the land of gourmets cannot avoid a certain food metaphor. If someone provides his team-mates with good passes in a match or with accurately passed balls in training, this is called “feeding the balls” (喂球 wèi qiú) in Chinese. On the other hand, if you beat your opponent with unstoppable balls, you make him “eat balls” 吃球 chī qiú. The best way to do the latter – for example in badminton or table tennis – is to “kill the ball” 杀球 shāqiú – the Chinese synonym for “smash”.
And should things not go so well for the team – whether in sports or elsewhere – experience has shown that it’s not very helpful to “kick the leather ball” 踢皮球 tī píqiú, in English: to pass the buck to each other. And who knows, in the end, maybe an edge or line ball 擦边球 cābiānqiú (literally “edge ball”) can tip the scales between victory and defeat. Sometimes this applies to real life as well. Here, the term “playing an edge ball” 打擦边球 dǎ cābiānqiú is a common metaphor for operating at the edge of legality, for example by exploiting existing loopholes.
If your head is already buzzing with new vocabulary, you can settle for an easy-to-remember, authentic cheering phrase to start with, namely, “good ball!” 好球 hǎoqiú! Translated into English, it means “bomb shot” or simply “bravo!” So now nothing stands in the way of watching the next ball sports or spending an Olympic evening with Chinese friends.
Verena Menzel runs the online language school New Chinese in Beijing.
