One piece of positive news: They are talking to each other again. US President Joe Biden will meet with Chinese President Xi Jinping on Wednesday.
Necessities are forcing both heads of state to meet. Joe Biden already has two crisis regions with Ukraine and Palestine and welcomes anything that somewhat reduces the pressure. Conversely, Xi is facing an economic crisis and is launching a diplomatic charm offensive.
So, are the chances of productive results promising? Not at all. The underlying conflicts have not changed. China continues to maintain close ties with Russia and distances itself from Israel. The USA, in turn, wants to keep China cut off from high technology.
However, the high attention to the Xi-Biden meeting also shows how irrelevant Europe has become. The EU hardly plays a role in major global political events anymore, says renowned political scientist Eberhard Sandschneider in an interview by Michael Radunksi. He sees no multipolar world, even if German Chancellor Olaf Scholz wishes for it. Sandschneider also considers the frequently cited triad of partner, rival and competitor meaningless – because nobody quite knows what it means.
Sandschneider also has a message for German Foreign Minister Annalena Baerbock: China will not let itself be lectured. Europe’s decisive role will depend on thriving industry and, for that, will require advanced high-tech. But here, Europe is looking increasingly tired and left behind.
Next Wednesday is the big day: US President Joe Biden and his Chinese counterpart Xi Jinping will meet for direct talks in San Francisco on the sidelines of the APEC summit.
Let’s start with the good news: They are talking. It is almost a year to the day since China’s President Xi Jinping and his US counterpart Joe Biden last met – back then in Bali on the sidelines of the G20 summit. This should not be underestimated, especially with China under Xi Jinping. The “chairman of everything” has amassed an enormous amount of power and control. This suggests unity, but prevents independent initiatives. Without Xi’s explicit approval, no Chinese ministry can take any action on its own. If Xi is silent, then China is currently silent, too.
The meeting on Wednesday may also signal internally that the signs are pointing towards a willingness to talk again – for example, in the military sphere. There are indeed signs that talks between the military could be resumed after months of silence. This would be an important step to prevent any unwanted incidents off the coast of Taiwan or in the South China Sea from turning into a disaster.
But that is as far as the positives go. After all, one problem in particular remains on Wednesday: The positions of China and the USA could hardly be more conflicting.
Experts do not expect any results on these sensitive issues. “The tensions between China and the US are fundamental,” Alexander Gabuev told Table.Media. “What we are seeing now is an attempt by Biden to give the collapsing relations a foundation so that they don’t break down completely, especially as we approach the upcoming US election campaign,” the Director of the renowned Carnegie Russia Eurasia Centre explains the US perspective on the meeting.
The Chinese side is also lowering expectations. “The political climate in the US has not fundamentally altered its attitude toward China,” Li Yong, senior researcher at the China Association of International Trade, told Global Times. He said the US launched a technology war against China’s high-tech industry and showed no intention of reducing the trade restrictions imposed on China.
Beijing clearly blames Washington for the deterioration in relations. Xi Jinping openly accuses the US of attempting to encircle, contain and suppress China. And this has not changed.
Glenn Tiffert from the Hoover Institution, therefore, notes: “Beijing’s willingness to talk is a tactical response to China’s deteriorating economic and strategic situation and should not be confused with a deeper, fundamental change of heart.” China is trying to balance all sides while playing them off against each other, the academic told Table.Media.
And where is Europe, the supposed mediator between the two superpowers, in all of this? “Many Chinese delegations have expressed the hope that the Europeans could be something of a balancing element between the USA and China,” political scientist Eberhard Sandschneider told Table.Media – and dismissed the idea. “But that’s a misguided hope. Europe is lagging behind and plays no significant role.”
US President Joe Biden will meet his Chinese counterpart Xi Jinping on Wednesday – for the first time in almost a year. Is there any reason to hope that relations will improve?
It is important that the meeting between Biden and Xi takes place at all. Only personal talks can create the necessary atmosphere to discuss major differences. But nobody should harbor false hopes. The meeting will not change American technology policy or China’s Taiwan policy.
Why not? If at all, then at a meeting between the two heads of state.
Relationships are simply too strained. Unfortunately, there is a considerable risk. Both sides are playing with fire, and at some point – even if unintentionally by accident – someone could get burned. The military exercises in the Taiwan Strait are highly dangerous. We could inadvertently slip into a military confrontation at any moment. I fear we are in a pre-World War I situation, I see a lot of sleepwalkers.
So the meeting is pointless?
On the contrary, that is precisely why the conversation between Biden and Xi is so important. Talks, especially between the military, must be resumed. This is vital in the event of a crisis. In this respect, there are currently signs of a slight de-escalation. But this does not change the fundamental conflict: China is marching full of confidence on its way to achieving its supposed place under the sun, and the United States is trying to cast as much shadow as possible on this path.
We are talking about China and the USA. Where does that leave Europe?
Let’s not fool ourselves. Europe plays no role at all here. German Chancellor Olaf and EU Commission President von der Leyen are completely mistaken in their colorful talk of a multipolar world. A realistic look shows that Europe has long since lost out in the technological race between China and the USA. The same situation looms regarding industrial policy.
Europe considers itself a mediator between the two superpowers.
I do hear the hope from many Chinese delegations that the Europeans could be something of a balancing element between the US and China. But that is a mistaken hope. Europe is lagging behind and plays no significant role.
Why is that?
I fear that the Europeans neither want to nor can do anything more. For years, I have heard and read that Europe should speak with one voice. Yes, Europe could actually play a role if it pulled itself together. But Europe is not doing that. We are witnessing Europe’s power-political decline, which many deny and thus do nothing to change.
How do we get out of this situation?
A first step would be realizing that things will not work against China, just as they would not work against the USA. We will have to learn to cooperate with both without repeating the same old empty phrases: partner, competitor and systemic rival – most of those who keep repeating them don’t even know what that means, let alone how to translate them into practical policy.
But isn’t the “partner, competitor and systemic rival” approach precisely the middle position that makes Europe important?
These empty phrases are not enough. That is no pragmatic policy in the world of the 21st century, where, unfortunately, there are fires in many places. If Germany and Europe want to survive technologically, scientifically and economically, we cannot ignore the largest market of the future. That is China. Europe will have to come to terms with this.
So again, what can we do?
We must stop making and repeating the mistakes of the past 20 years. We must stop waiting for convergence with China. Instead, we should finally realize that China will not become like us. China will not simply allow itself to be bound by our rules. And above all, we must learn that China will not allow itself to be contained and lectured from outside. If German Foreign Minister Baerbock would start to realize this, much would already have been achieved.
Eberhard Sandschneider was Professor of Chinese Politics and International Relations at the Free University of Berlin from 1998 to 2020. From 2003 to 2016, he was also Otto Wolff Director of the Research Institute of the German Council on Foreign Relations. He is now a partner at consulting firm Berlin Global Advisors.
China’s revised export restrictions on graphite hit the USA and its allies at a particularly vulnerable spot: In the supply chain for batteries and electric vehicles. This is because China is the only producer of spherical graphite, the base material for the anodes in lithium batteries.
The goal is clear: China aims to delay, if not prevent, the development of an independent battery industry overseas. Nothing works without Chinese graphite. The tentative attempts by the US and Europe to establish an independent battery industry will be made considerably more challenging. And established Korean and Japanese anode manufacturers such as POSCO will face a tight supply situation.
The restrictions are thus China’s counter-attack in the tech war with the USA and its attempt to cut off China from advanced semiconductor technology. What semiconductors are for China, batteries could become for the West. This makes the automotive industry another arena in the geopolitical exchange of blows.
The adjusted export restrictions are part of China’s new strategy of using its dominance in high-tech supply chains as political leverage. At the end of last year, China initially threatened to restrict the export of key production technologies for the manufacturing of solar cells, thereby thwarting the ambitions of an independent European solar industry. These measures were ultimately not carried out. In July, export restrictions were then imposed on gallium and germanium, which are used in the semiconductor industry, among other things.
China has only activated this strategy in recent years in response to US export controls. However, it goes back to a paradigm Xi Jinping formulated in 2013 as asymmetrical dependencies. According to this, China must rely on so-called “trump cards” (杀手锏), i.e., technologies in which it can play its dominance politically. The goal would be to increase foreign dependency on China in these areas.
Graphite exporters have been required to obtain a dual-use license since 2006. However, the licensing process has so far been straightforward and the rules vague. Furthermore, local branch offices of the Ministry of Trade could issue licenses at their own discretion. The amended regulations are much more comprehensive; now, precise details of the purchase contract and end user have to be provided. It can be assumed that exporters will have to renew their licenses once the new rules come into force on 1 December. As licenses are issued for individual exports depending on the buyer and end user, China can very precisely control who gets Chinese graphite and who does not.
In this context, the revised graphite export restrictions are a severe intervention. However, they are not yet the big blow. China will likely take a more strict licensing approach in the future. However, it remains to be seen how strict China will actually be and whether this will lead to long-term supply bottlenecks. China’s behavior in the coming months will largely determine the pace of the geopolitical conflict.
The export restrictions also do not yet affect the most critical area of the battery industry. Lithium and cobalt are much scarcer and more expensive than graphite. An export restriction on these two raw materials would have a considerably bigger effect – China is also a leader in processing these materials. Moreover, China has not restricted the export of anode material itself. This means foreign cell manufacturers are not cut off from the supply of this critical material.
Nevertheless, the repercussions are serious: Independent European and American production of graphite anodes will be significantly more difficult. In addition, bottlenecks in graphite supply are expected from now until the end of January. The regulation will come into force in December, and it will take one and a half to two months before the first licenses are issued. Only then can exports resume. This will result in short-term price surges.
The restrictions are anything but surprising. Governments and companies outside China are working hard to de-risk the battery industry. For instance, the US company Anovion is advertising a complete domestic graphite supply chain. Many synthetic graphite projects will be developed outside China in the coming years. Natural graphite is only partially suitable for use in batteries due to its disordered structure.
And yet, this will not be enough. As demand for EVs increases, so will the need for graphite. China is building up considerable graphite overcapacity and can push the graphite price down again at will by granting more licenses in the short term, making non-Chinese projects unprofitable. Dependence is, therefore, likely to remain high. China’s magnetic effect is too great. Silicon anodes could be a solution, as silicon is much more common. However, they are not yet widely used.
But what is yet to come could be much more serious. In July, Wei Jianguo, China’s former Vice Minister of Commerce, said that the restrictions on gallium and germanium were “just the beginning.” So, even now, there is a feeling that the end of the line has not yet been reached. Apart from graphite, China has many other levers to hit the foreign battery industry.
The most likely scenario is the restriction of other raw material exports, including lithium and cobalt products and – outside of batteries – dysprosium, neodymium and terbium for permanent magnets. China could even limit the export of anode and cathode materials. However, this is less likely because, similar to cell production itself, Chinese companies are expected to expand globally and ensure domestic value creation.
However, the USA, Europe and other allies are not entirely powerless either. After all, China is partly dependent on imports of needle coke for synthetic graphite production. And that comes mainly from the UK, Japan, South Korea and the US. China also imports some lithium from Australia. These countries could take countermeasures.
In this respect, the cat-and-mouse game of export controls will continue, particularly between China and the USA. The spiral of the technology conflict could now extend from semiconductors to the automotive sector – especially given the EU Commission’s investigations into subsidies for Chinese car manufacturers.
This does not bode well for companies and the economy. The risk of disruption is increasing, and many things are becoming more expensive. A rethink seems particularly urgent in the battery industry, especially regarding the extraction and processing of raw materials as well as the production of anode and cathode materials. The success of the non-Chinese automotive industry also depends on the success of these measures.
Jost Wuebbeke is Managing Partner at Sinolytics, a European research-based consultancy specializing in China with offices in Berlin, Zurich and Beijing. He was previously Head of the Business & Technology Program at the Mercator Institute for China Studies (Merics) in Berlin.
These delivery drivers in Shijiazhuang were certainly not lonely on Saturday. Because of the many 1s, Alibaba founder Jack Ma once declared November 11 “Singles’ Day” and sweetened the day for the many singles in China with numerous discounts on his shopping platforms. November 11 is now the highest-selling day of the year – and the busiest for delivery drivers.
In the current economic crisis, retailers offer large discounts to counteract low consumer spending. Nevertheless, there do not appear to have been any new records. On Sunday, JD.com did not even publish retail sales figures for Singles’ Day.
One piece of positive news: They are talking to each other again. US President Joe Biden will meet with Chinese President Xi Jinping on Wednesday.
Necessities are forcing both heads of state to meet. Joe Biden already has two crisis regions with Ukraine and Palestine and welcomes anything that somewhat reduces the pressure. Conversely, Xi is facing an economic crisis and is launching a diplomatic charm offensive.
So, are the chances of productive results promising? Not at all. The underlying conflicts have not changed. China continues to maintain close ties with Russia and distances itself from Israel. The USA, in turn, wants to keep China cut off from high technology.
However, the high attention to the Xi-Biden meeting also shows how irrelevant Europe has become. The EU hardly plays a role in major global political events anymore, says renowned political scientist Eberhard Sandschneider in an interview by Michael Radunksi. He sees no multipolar world, even if German Chancellor Olaf Scholz wishes for it. Sandschneider also considers the frequently cited triad of partner, rival and competitor meaningless – because nobody quite knows what it means.
Sandschneider also has a message for German Foreign Minister Annalena Baerbock: China will not let itself be lectured. Europe’s decisive role will depend on thriving industry and, for that, will require advanced high-tech. But here, Europe is looking increasingly tired and left behind.
Next Wednesday is the big day: US President Joe Biden and his Chinese counterpart Xi Jinping will meet for direct talks in San Francisco on the sidelines of the APEC summit.
Let’s start with the good news: They are talking. It is almost a year to the day since China’s President Xi Jinping and his US counterpart Joe Biden last met – back then in Bali on the sidelines of the G20 summit. This should not be underestimated, especially with China under Xi Jinping. The “chairman of everything” has amassed an enormous amount of power and control. This suggests unity, but prevents independent initiatives. Without Xi’s explicit approval, no Chinese ministry can take any action on its own. If Xi is silent, then China is currently silent, too.
The meeting on Wednesday may also signal internally that the signs are pointing towards a willingness to talk again – for example, in the military sphere. There are indeed signs that talks between the military could be resumed after months of silence. This would be an important step to prevent any unwanted incidents off the coast of Taiwan or in the South China Sea from turning into a disaster.
But that is as far as the positives go. After all, one problem in particular remains on Wednesday: The positions of China and the USA could hardly be more conflicting.
Experts do not expect any results on these sensitive issues. “The tensions between China and the US are fundamental,” Alexander Gabuev told Table.Media. “What we are seeing now is an attempt by Biden to give the collapsing relations a foundation so that they don’t break down completely, especially as we approach the upcoming US election campaign,” the Director of the renowned Carnegie Russia Eurasia Centre explains the US perspective on the meeting.
The Chinese side is also lowering expectations. “The political climate in the US has not fundamentally altered its attitude toward China,” Li Yong, senior researcher at the China Association of International Trade, told Global Times. He said the US launched a technology war against China’s high-tech industry and showed no intention of reducing the trade restrictions imposed on China.
Beijing clearly blames Washington for the deterioration in relations. Xi Jinping openly accuses the US of attempting to encircle, contain and suppress China. And this has not changed.
Glenn Tiffert from the Hoover Institution, therefore, notes: “Beijing’s willingness to talk is a tactical response to China’s deteriorating economic and strategic situation and should not be confused with a deeper, fundamental change of heart.” China is trying to balance all sides while playing them off against each other, the academic told Table.Media.
And where is Europe, the supposed mediator between the two superpowers, in all of this? “Many Chinese delegations have expressed the hope that the Europeans could be something of a balancing element between the USA and China,” political scientist Eberhard Sandschneider told Table.Media – and dismissed the idea. “But that’s a misguided hope. Europe is lagging behind and plays no significant role.”
US President Joe Biden will meet his Chinese counterpart Xi Jinping on Wednesday – for the first time in almost a year. Is there any reason to hope that relations will improve?
It is important that the meeting between Biden and Xi takes place at all. Only personal talks can create the necessary atmosphere to discuss major differences. But nobody should harbor false hopes. The meeting will not change American technology policy or China’s Taiwan policy.
Why not? If at all, then at a meeting between the two heads of state.
Relationships are simply too strained. Unfortunately, there is a considerable risk. Both sides are playing with fire, and at some point – even if unintentionally by accident – someone could get burned. The military exercises in the Taiwan Strait are highly dangerous. We could inadvertently slip into a military confrontation at any moment. I fear we are in a pre-World War I situation, I see a lot of sleepwalkers.
So the meeting is pointless?
On the contrary, that is precisely why the conversation between Biden and Xi is so important. Talks, especially between the military, must be resumed. This is vital in the event of a crisis. In this respect, there are currently signs of a slight de-escalation. But this does not change the fundamental conflict: China is marching full of confidence on its way to achieving its supposed place under the sun, and the United States is trying to cast as much shadow as possible on this path.
We are talking about China and the USA. Where does that leave Europe?
Let’s not fool ourselves. Europe plays no role at all here. German Chancellor Olaf and EU Commission President von der Leyen are completely mistaken in their colorful talk of a multipolar world. A realistic look shows that Europe has long since lost out in the technological race between China and the USA. The same situation looms regarding industrial policy.
Europe considers itself a mediator between the two superpowers.
I do hear the hope from many Chinese delegations that the Europeans could be something of a balancing element between the US and China. But that is a mistaken hope. Europe is lagging behind and plays no significant role.
Why is that?
I fear that the Europeans neither want to nor can do anything more. For years, I have heard and read that Europe should speak with one voice. Yes, Europe could actually play a role if it pulled itself together. But Europe is not doing that. We are witnessing Europe’s power-political decline, which many deny and thus do nothing to change.
How do we get out of this situation?
A first step would be realizing that things will not work against China, just as they would not work against the USA. We will have to learn to cooperate with both without repeating the same old empty phrases: partner, competitor and systemic rival – most of those who keep repeating them don’t even know what that means, let alone how to translate them into practical policy.
But isn’t the “partner, competitor and systemic rival” approach precisely the middle position that makes Europe important?
These empty phrases are not enough. That is no pragmatic policy in the world of the 21st century, where, unfortunately, there are fires in many places. If Germany and Europe want to survive technologically, scientifically and economically, we cannot ignore the largest market of the future. That is China. Europe will have to come to terms with this.
So again, what can we do?
We must stop making and repeating the mistakes of the past 20 years. We must stop waiting for convergence with China. Instead, we should finally realize that China will not become like us. China will not simply allow itself to be bound by our rules. And above all, we must learn that China will not allow itself to be contained and lectured from outside. If German Foreign Minister Baerbock would start to realize this, much would already have been achieved.
Eberhard Sandschneider was Professor of Chinese Politics and International Relations at the Free University of Berlin from 1998 to 2020. From 2003 to 2016, he was also Otto Wolff Director of the Research Institute of the German Council on Foreign Relations. He is now a partner at consulting firm Berlin Global Advisors.
China’s revised export restrictions on graphite hit the USA and its allies at a particularly vulnerable spot: In the supply chain for batteries and electric vehicles. This is because China is the only producer of spherical graphite, the base material for the anodes in lithium batteries.
The goal is clear: China aims to delay, if not prevent, the development of an independent battery industry overseas. Nothing works without Chinese graphite. The tentative attempts by the US and Europe to establish an independent battery industry will be made considerably more challenging. And established Korean and Japanese anode manufacturers such as POSCO will face a tight supply situation.
The restrictions are thus China’s counter-attack in the tech war with the USA and its attempt to cut off China from advanced semiconductor technology. What semiconductors are for China, batteries could become for the West. This makes the automotive industry another arena in the geopolitical exchange of blows.
The adjusted export restrictions are part of China’s new strategy of using its dominance in high-tech supply chains as political leverage. At the end of last year, China initially threatened to restrict the export of key production technologies for the manufacturing of solar cells, thereby thwarting the ambitions of an independent European solar industry. These measures were ultimately not carried out. In July, export restrictions were then imposed on gallium and germanium, which are used in the semiconductor industry, among other things.
China has only activated this strategy in recent years in response to US export controls. However, it goes back to a paradigm Xi Jinping formulated in 2013 as asymmetrical dependencies. According to this, China must rely on so-called “trump cards” (杀手锏), i.e., technologies in which it can play its dominance politically. The goal would be to increase foreign dependency on China in these areas.
Graphite exporters have been required to obtain a dual-use license since 2006. However, the licensing process has so far been straightforward and the rules vague. Furthermore, local branch offices of the Ministry of Trade could issue licenses at their own discretion. The amended regulations are much more comprehensive; now, precise details of the purchase contract and end user have to be provided. It can be assumed that exporters will have to renew their licenses once the new rules come into force on 1 December. As licenses are issued for individual exports depending on the buyer and end user, China can very precisely control who gets Chinese graphite and who does not.
In this context, the revised graphite export restrictions are a severe intervention. However, they are not yet the big blow. China will likely take a more strict licensing approach in the future. However, it remains to be seen how strict China will actually be and whether this will lead to long-term supply bottlenecks. China’s behavior in the coming months will largely determine the pace of the geopolitical conflict.
The export restrictions also do not yet affect the most critical area of the battery industry. Lithium and cobalt are much scarcer and more expensive than graphite. An export restriction on these two raw materials would have a considerably bigger effect – China is also a leader in processing these materials. Moreover, China has not restricted the export of anode material itself. This means foreign cell manufacturers are not cut off from the supply of this critical material.
Nevertheless, the repercussions are serious: Independent European and American production of graphite anodes will be significantly more difficult. In addition, bottlenecks in graphite supply are expected from now until the end of January. The regulation will come into force in December, and it will take one and a half to two months before the first licenses are issued. Only then can exports resume. This will result in short-term price surges.
The restrictions are anything but surprising. Governments and companies outside China are working hard to de-risk the battery industry. For instance, the US company Anovion is advertising a complete domestic graphite supply chain. Many synthetic graphite projects will be developed outside China in the coming years. Natural graphite is only partially suitable for use in batteries due to its disordered structure.
And yet, this will not be enough. As demand for EVs increases, so will the need for graphite. China is building up considerable graphite overcapacity and can push the graphite price down again at will by granting more licenses in the short term, making non-Chinese projects unprofitable. Dependence is, therefore, likely to remain high. China’s magnetic effect is too great. Silicon anodes could be a solution, as silicon is much more common. However, they are not yet widely used.
But what is yet to come could be much more serious. In July, Wei Jianguo, China’s former Vice Minister of Commerce, said that the restrictions on gallium and germanium were “just the beginning.” So, even now, there is a feeling that the end of the line has not yet been reached. Apart from graphite, China has many other levers to hit the foreign battery industry.
The most likely scenario is the restriction of other raw material exports, including lithium and cobalt products and – outside of batteries – dysprosium, neodymium and terbium for permanent magnets. China could even limit the export of anode and cathode materials. However, this is less likely because, similar to cell production itself, Chinese companies are expected to expand globally and ensure domestic value creation.
However, the USA, Europe and other allies are not entirely powerless either. After all, China is partly dependent on imports of needle coke for synthetic graphite production. And that comes mainly from the UK, Japan, South Korea and the US. China also imports some lithium from Australia. These countries could take countermeasures.
In this respect, the cat-and-mouse game of export controls will continue, particularly between China and the USA. The spiral of the technology conflict could now extend from semiconductors to the automotive sector – especially given the EU Commission’s investigations into subsidies for Chinese car manufacturers.
This does not bode well for companies and the economy. The risk of disruption is increasing, and many things are becoming more expensive. A rethink seems particularly urgent in the battery industry, especially regarding the extraction and processing of raw materials as well as the production of anode and cathode materials. The success of the non-Chinese automotive industry also depends on the success of these measures.
Jost Wuebbeke is Managing Partner at Sinolytics, a European research-based consultancy specializing in China with offices in Berlin, Zurich and Beijing. He was previously Head of the Business & Technology Program at the Mercator Institute for China Studies (Merics) in Berlin.
These delivery drivers in Shijiazhuang were certainly not lonely on Saturday. Because of the many 1s, Alibaba founder Jack Ma once declared November 11 “Singles’ Day” and sweetened the day for the many singles in China with numerous discounts on his shopping platforms. November 11 is now the highest-selling day of the year – and the busiest for delivery drivers.
In the current economic crisis, retailers offer large discounts to counteract low consumer spending. Nevertheless, there do not appear to have been any new records. On Sunday, JD.com did not even publish retail sales figures for Singles’ Day.
