Despite ban: China still wants to get involved in crypto
Full text published: The 6th plenum celebrates the Chinese system
Sinolytics.Radar: Data protection law hampers business
Report: VW’s Head of China has to go
After summit: Biden and Xi want more cooperation
Germany demands release of blogger
China’s representative in Brussels mourns Merkel’s departure
First Chinese Formula 1 driver
Profile: As a doctor in China’s mountain villages
Dear reader,
The 6th plenary session has now finally concluded. With the publication of the major resolution, the official realignment is complete. We have had a first look at the report. As expected, the nearly ten years under Xi play a disproportionately large role. We found no major surprises in the text.
Obviously, in order to maintain partyconsensus, Xi had to largely stick to the previously established phrasing. If anything, the resolution reaffirms the most important trends. These include strengthening the security apparatus and state-owned enterprises. The commitment to greater economic independence was also once again part of the canon of constantly repeated policy goals.
The pursuit of technical independence is also evident in the way cryptocurrencies like Bitcoin are handled. China has indeed banned trading, as well as mining. Nevertheless, there are Chinese providers like Huobi that continue their cryptocurrency operations. So China has sealed off this part of its financial system, yet it still wants to and can participate internationally, analyzes Frank Sieren. By current standards, a rather typical combination.
The mining of Bitcoins needs power. If it is mainly generated by burning coal, Bitcoin mining quickly becomes an environmental problem. This is why China’s authorities want to crack down on crypto-mining even harder: The practice is “extremely harmful” and jeopardizes the country’s efforts to reduce its CO2 emissions, National Development and Reform Commission spokesperson Meng Wei said Tuesday. Institutions that “abuse” subsidized electricity rates to mine cryptocurrencies would face a price hike. Following her remarks, the bitcoin price dropped more than seven percent to $60,889, the lowest in more than a week. Ethereum, the second-largest digital currency, also slid more than eight percent on Tuesday.
In fact, the People’s Republic had already officially pulled the plug on crypto mining in September: Since then, mining and trading with digital currencies have been practically banned. However, illegal mining continues, which is why Beijing upped the ante.
China is very critical of the growing market of independent cryptocurrencies: Decentralized cryptocurrencies like Bitcoin elude the control of the state, after all. With digital currencies, it would be possible to move large amounts of money out of the country and undermine Beijing’s strict capital controls. But these are important to Beijing because they allow the leadership to prevent the country from bleeding out financially, as it happened to Russia in the 1990s.
It also allows Beijing to keep the yuan stable. Regulations were tightened again in 2017. Since then, each Chinese citizen is only allowed to transfer the equivalent of $50,000 abroad per year. Individual transfers of more than ¥50,000 ($7,200) must be reported. Before the change, a sum of $200,000 was still allowed. This regulation has since been undermined by bitcoin trading – as China was at times home to the world’s largest bitcoin trading hub, BTC China. China also had some of the largest Bitcoin mines on the planet, and at times accounted for more Bitcoin wallet downloads than the rest of the world combined.
Growth market crypto asset management
But Beijing can’t quite let go of crypto either – and is allowing Chinese companies to continue doing business with it, but only via Hong Kong. One of the leading companies that have emerged in China and are now allowed to continue participating in the crypto boom is the Huobi Group. Founded in 2013 by Leon Li, a graduate of Beijing’s Tsinghua University, the company considers itself a global financial services provider for digital assets. Huobi is registered in Seychelles. In 2018, the company was listed on the Hong Kong Stock Exchange after acquiring a 74 percent stake in Hong Kong electronics manufacturer Pantronics Holdings.
Today, the group has offices in the United States, Japan, and South Korea. Huobi also operates its own crypto exchange, Huobi Global, which offers its own cryptocurrency, the Huobi Token. However, after the full crypto ban, Huobi announced it would no longerserve customers in mainland China.
Huobi now focuses primarily on global cryptocurrency asset management, blockchain-based services such as escrow, capital management, and crypto custody. But the company also states activity in areas such as education, market research, and business incubation. “We act as a bridge between the traditional financial world and the newer world of virtual assets in the future,” says Lily Zhang, chief financial officer of Huobi Tech.
This is an attractive business segment even without the Chinese domestic market. The crypto-asset management market was worth around $670 million in 2020 and could grow to $9.36 billion by 2030, according to analysts at Allied Market Research.
In August 2020, Huobi received approval from Hong Kong’s market regulator SFC to provide securities and wealth management counseling. Last December, Huobi Tech’s US subsidiary, Huobi Trust US, was licensed by the Financial Institutions Division of the Nevada Department of Business and Industry.
This year, the company released a crypto asset management portfolio through its subsidiary Huobi Asset Management. The offering includes Bitcoin and Ethereum tracker funds, as well as a multi-asset fund that includes a combination of asset classes, including equities, fixed income, and crypto-assets.
NFT as a gate for the masses
Huobi Group also opened its own marketplace for Non-Fungible Tokens (NFTs) on November 1st. An NFT is a certificate of authenticity for any digital file. Anyone who buys an NFT buys a token, or rather an object that is linked to it. This can be digital art, digital trading cards, music, or virtual land, for example within a computer game.
NFTs are stored on the blockchain and are therefore uniquely authenticated and tamper-proof. In Q1 of 2021, ten percent of global art market sales were already generated via NFTs. In the first half of 2021, $2.5 billion in global NFTs were transacted. “NFTs have opened up the public’s eyes to the wide range of blockchain applications out there,” said Jeff Mei, Director of Strategy at Huobi. “The concept of NFTs as an immutable proof of ownership is very powerful, so we’re excited to see where our NFT marketplace will take us.”
The Huobi example once again shows that China cannot do without Hong Kong’s financial centerbecause it does not want to be dependent on international developments – and these transactions are only possible in China in Hong Kong.
Bitcoin
Finance
Resolution of the 6th Plenum: more state, more CCP, more Xi
By no means everything in the document is new. Long passages repeat the usual formulations and phrases. Other passages are taken directly from existing party resolutions. Nevertheless, the overall picture is a snapshot of ruler Xi Jinping’s vision for China.
Political system: separation of powers not required
In the document, the partyextensively praises its ability to effectively monitor itself. The self-created system
had “solved the problem of corruption” and “eliminated all corrupt elements”. The party had “achieved overwhelming victories in this regard”.
“prevents the formation of interest groups within the party”. This translates as eliminating any opposition to Xi.
“effectively investigates cases of violations of party discipline” – specifically mentioned here are former party superiors and Xi opponents Zhou Yongkang and Bo Xilai, who are now in prison.
allows for “self-purification, self-reform, and self-improvement” of the party.
This passage is remarkable because it is meant to illustrate how unnecessary democracy is for China. According to the resolution’s world-view, the party maintains a high degree of integrity even without separation of powers and external supervision – and without the circumstances and frictions of Western systems. The previous generation of leaders under Jiang Zemin saw things differently. Independent control was definitely an issue here.
The passage, however, raises questions. If the victory over corruption is so absolute and complete, why do new investigations crop up time and time again? And if the current state is already so perfect, why is a hard-line leadership still needed to keep both the party and country on track?
Xi Jinping’s role as the “core of the Party Central Committee” 党中央的核心 is further defined here. Just as the party is the vanguard of the masses, Xiis the party’s “main representative”.He directs its powers to advance China’s renewal. Based on what has been achieved so far, he is bringing the world a “new era of socialism with Chinese characteristics.”
Two long sections of the document then deal extensively with decision-making by the Central Committee and Politburo and the establishment of the rule of law in China. The document does not see a contradiction between the two principles. However, the “socialist rule of law” 社会主义法治 can also be translated as “socialist government by law.” Self-critically, the Party acknowledges that lax handling of laws and wrongful convictions will probably continue. However, the rule of law with Chinese characteristics prevents arbitrariness and a “slide into chaos”.
History: all problems successfully overcome – except for Taiwan
The resolution addresses the democracy movement and its suppression in 1989. “International anti-communist enemy forces, the international climate, and the domestic situation led to a serious political storm in the spring and summer of 1989,” the document states. The storm did not last long, however: “The party and the government could rely on the people to oppose the troublemakers and defend socialist state power.”
According to this interpretation, it was not the party leadership that deployed its army against the people in the form of the young students. Rather, the students were controlled by foreign powers, and the actual Chinese people rejected unrest in a defensive reaction. This interpretation of the events, however, already basically existed since 2007.
Interestingly, within the same paragraph, a quick listing of other hardships the party has overcome since 1990 follows. However, these are almost exclusively natural disasters, such as the 2008 earthquake or various floods. The protests at Tiananmen Square thus stand among the challenges the party faced alongside events such as financial crises and epidemics, neither of which the party itself is responsible for.
Taiwan is mentioned as an open challenge: “the great goal of unifying the fatherland.” Deng Xiaoping had created the concept of “one country, two systems” as a blueprint for this. Hong Kong and Macao had already been brought back under China’s wing. The next step would be the “solution of the Taiwan question”.
Economy: more socialism and autonomy
The resolution briefly praises the reform and opening policy of the 1980s, without naming Deng Xiaoping as its creator. Almost in the same sentence, it also lists the problems of the course set at that time: lack of sustainability, inequality, lack of coordination. The classic policy of reform and opening is now being replaced by “strategic planning under the bundled leadership of the economy.” A new phase of “high-quality development” is approaching. Risks are to be reduced, which means that the debt levels of municipalities and state and private enterprises are to be lowered. Environmental protection is also mentioned. Domestic demand is to increase further in order to overcome dependence on exports.
The new economic system under Xi emphasizes socialist elements above all in the resolution:
Consolidation of the public sector,
support for private enterprise, but all the more “encouraging state capitalism and state enterprises to become bigger and stronger”,
the establishment of a “modern enterprise system with Chinese characteristics”,
independence of science and technology as a pillar of national development.
This program is to be accompanied by a new phase of openness and reforms. This would be a “never-ending process” in which institutions must renew themselves again and again. However, the long paragraph then simply continues to repeat phrases without much substance.
Chinese Communist Party
Domestic policy of the CP China
Taiwan
Tiananmen Massacre
Xi Jinping
Sinolytics.Radar
IT regulation takes hold
Dieser Inhalt ist Lizenznehmern unserer Vollversion vorbehalten.
The Cybersecurity Law, the Data Security Law, and the Personal Information Protection Law are now in full effect and form the pillars of a comprehensive regulatory system for China’s cyber and data security.
For the Chinese leadership, this regulatory framework represents the basis for shaping China’s future digital economy, which makes it a top priority for the Chinese government.
European companies are now facing a whole range of new requirements, some of which are far-reaching. In particular, strict data localization rules are emerging for anything with ties to critical areas such as power supply. Cross-border data flows are under increasingly strict scrutiny.
Another wave of industry-specific and local regulations is now imminent. However, China’s government also has an interest in balancing strict data controls against the continued growth of digital business models. Accordingly, special rules are currently emerging in China’s free trade zones to keep certain channels open for freer data transfer.
Sinolytics is a European consulting and analysis company that focuses entirely on China. It advises European companies on strategic orientation and specific business activities in China.
News
Report: VW withdraws China boss
Volkswagen is withdrawing its China boss Stephan Woellenstein from his post effective February 1st. This is reported by German magazine Automobilwoche, citing company circles. Reuters received confirmation that Woellenstein would be indeed leaving the country. Under Woellenstein, sales ofthe company’sEVswere below estimates for months, jeopardizing the group’s targets (China.Table reported). Woellenstein is now expected to find another position within the group. A Volkswagen spokesman refused to comment on the speculation to China.Table on Tuesday evening.
Woellenstein was in the country for three years. China is by far the company’s most important market. But recently, things have been anything but smooth. While the VW brand continued to sell a lot of combustion cars, only just over a thousand units of its ID.4 were sold per month after the market launch. As a result, the group even had to buy emission credits from more advanced suppliers. In addition, the margin per car dropped because the company can’t push through its high price premiums. In October, sales of the ID.4 electric car had indeed risen to more than 12,000 units, thanks to an improvement of its distribution network. fin
Autoindustrie
Xi warns Biden about ‘playing with fire’
At their first virtual online summit, China’s leader Xi Jinping and US President Joe Biden struck conciliatory tones. Biden declared that China and the US should cooperate, especially on important global issues like climate change. As the largest economies and permanent members of the World Security Council, both countries take active steps to move China-US relations forward in a positive direction, Xi said, according to state news agency Xinhua. In the course of the conversation, China’s leader even referred to Biden as “Lao Pengyou”, an “old friend”.
For all the superficial expressions of friendship, however, the minefields between the world’s two largest economies remain wide: Xi’s demands to unite Taiwan “with the motherland” had recently sharpened the tone between Washington and Beijing. At the end of October, Biden had declared in a television interview that the US has the “obligation” to defend Taiwan in the event of an invasion (China.Table reported).
During the conversation with Xi, Biden reiterated that the US remains committed to theone-China policy. “Unilateral efforts” to change Taiwan’s status quo, however, would be firmly rejected. Xi attributed the recent tensions to “repeated attempts by Taiwanese authorities” to seek support from Washington, according to the state-run Global Times. According to Global Times, the US wanted to use Taiwan to contain China. Xi warned, “Such moves are extremely dangerous, just like playing with fire. Whoever plays with fire will get burnt.”
Human rights violations in Xinjiang and Hong Kong as well as the one-sided trade terms between China and the US were also discussed, the White House stated. The video summit was the first meeting between the two politicians since Biden took office on January 20 this year. However, he had already met Xi on several occasions during his time as vice president under Barack Obama. Biden even told CNN that no other head of state had spent as much time with Xi as he had.
Beijing hopes that the US under Biden will bring more diplomatic stability and renegotiate the trade deal. Since the start of a trade war under Donald Trump, both nations have embarked on a course of mutual decoupling. Part of that has been sanctions against tech companies like Huawei. “Of course, China must protect its sovereignty, security, and development interests,” Xi stressed during the conversation. Still, he said it was time to overcome mutual differences “to prevent China-US relations from getting derailed or out of control.” fpe
Geopolitics
Human Rights
Joe Biden
Taiwan
USA
Germany demands release of blogger Zhang Zhan
The German government is calling for the release of Chinese blogger Zhang Zhan. This was confirmed by the Federal Foreign Office to ARD radio in Shanghai. According to the report, the German Embassy in China has contacted the Chinese Foreign Ministry and hasdemanded the “immediate release” of Zhang. The US State Department had also already expressed concerns about the state of health of the detained grassroots journalist (China.Table reported).
Zhang had been reporting on the Covid outbreak in Wuhan, including documenting the detention of journalists, overcrowded hospitals and empty supermarkets. According to AFP, Zhang Zhan has been on hunger strike for several weeks and is being force-fed. Her brother wrote on Twitter that she was severely underweight. He fears Zhang may not survive the winter. Human rights organization Amnesty International is also calling for Zhang’s release. ari
Civil Society
Coronavirus
Human Rights
China hopes for continuation of Merkel’s policy
China’s EU ambassador hopes Germany’s future government will continue Angela Merkel’s policy toward Beijing. “We hope the new German government can build on a political legacy of Chancellor Merkel and continue the pragmatic China policy which follows the expectations of our two peoples,” China’s ambassador to the European Union, Zhang Ming, said Tuesday at an online event hosted by the think tank European Policy Center. China and Germany are “comprehensive strategic partners,” Zhang said. As major countries, they need to work together to achieve a “win-win result”. This is the path that relations between the People’s Republic and Germany and the EU should take in the future, the ambassador said.
Regarding the currently shelved CAI investment agreement, Zhang said China’s decision to abide by the agreement remains. “The ball is frankly in Brussels’ court.” The European Parliament had initially stopped work on the draft in the wake of sanctions against several MEPs. Beijing had imposed punitive measures as a tit-for-tat move: Brussels had previously sanctioned numerous Xinjiang officials for human rights violations. These sanctions come back on Brussels’ agenda at the end of the year and are expected to be renewed if necessary. Zhang dodged the question of whether China would again retaliate. Zhang also did not answer whether MEPs would be threatened with sanctions if they campaigned for EU relations with Taiwan.
The EU ambassador had caused confusion earlier this week. During an interview with Financial Times, Zhang accused Brussels of risking further disruption to global supply chains with its policy. The message from the Chinese representative in Brussels was pointed directly at the Commission. Zhang cited statements by “some Chinese companies” as evidence for his accusation. They see the EU Commission’s efforts to expand trade policy instruments as “more inward-looking and unilateral measures”. The result would be the creation of “new trade barriers”.
Such steps by the EU could also have global consequences and “aggravate the tension” on global supply and production chains. Zhang also criticized the recent agreement between the EU and the US in the dispute over steel and aluminum tariffs. In it, a restriction on steel and aluminum imports from countries with greater CO2 emissions was agreed upon, which directly affects China. ari
Angela Merkel
CAI
Sanctions
Zhang Ming
Formula 1: Alfa Romeo signed first Chinese driver
Chinese racing driver Zhou Guanyu has become China’s first professional driver in Formula 1. Alfa Romeo has signed the 22-year-old as pilot alongside Valtteri Bottas from Finland. He replaces Italian Antonio Giovinazzi. “It’s great from both a sporting and a commercial point of view,” Alfa Romeo team boss Fredric Vasseur told news agency dpa. Zhou tweeted, “A childhood dream come true.” He will compete for the first time in the 2022 season.
For Formula 1, a Chinese driver is therefore commercially important because his participation will fuel interest in his home country. China is a huge market for advertising and licensing rights. Disappointed Giovinazzi on the other hand, suspects financial motivation above all behind the decision. “Money dictates the rules.” However, Zhou’s talent and ability are undisputed: he is ranked second in the Fédération Internationale de l’Automobile (FIA) Formula One championship. fin
Autoindustrie
Profile
Eckehard Scharfschwerdt – 17 years as a doctor in Yunnan
It has been four years since Eckehard Scharfschwerdt was allowed to hang a gold medal with an engraving of the Great Wall of China around his neck. Today, the 57-year-old lives in the German village of Edelweiler in the northern Black Forest and works as a family doctor in the neighboring small town of Altensteig. And: He was honored with “The Chinese Government’s Friendship Award”, the highest Chinese award for foreigners, which is intended to honor contributions to the economic and social development of the country.
Scharfschwerdt received the award in 2017 for his work in the southwestern Chinese province of Yunnan. For 17 years, from 2000 to 2016, he lived and worked there. Through a Christian organization, Scharfschwerdt and his wife, who is also a doctor, were placed at a district hospital in the small town of Heqing. The doctor’s motivation: “I wanted to get involved where my help was urgently needed – also out of my Christian faith.”
Close contact with patients’ families – and with officials
Scharfschwerdt, who himself comes from the countryside, purposely decided to go to the province. Yunnan is extremely diverse: The largest mountain is 6740 meters high, while tropical climate predominates the lower regions. Heqing is located in the mountainsides at an altitude of 2200 meters. Scharfschwerdt and his wife spent two years learning Chinese, then arrived in their new home with their two young children. “People always invited you to somewhere,” Scharfschwerdt recalls. He worked as an anesthesiologist and introduced general anesthesia in the hospital. After an operation, the patient’s family invited everyone involved to dinner. He also frequently received official invitations from government officers and learned Chinese toasts.
Scharfschwerdt also experienced the effects of the SARS pandemic of 2002 and 2003 firsthand. The population in Yunnan was not aware of the new virus for a long time. Then the hospital was converted overnight into a fever clinic, and the entire city was dusted with white lime. The pandemic had also affected the development of the health system: Before, there had been a trend toward privatization. “SARS then showed the government the importance of having control over basic health care.” The new reporting systems established at that time had now proven their worth in the Corona pandemic.
Today, the hospital in Heqing is an 18-story high-rise building with 20 specialist departments and extensive medical equipment. When Scharfschwerdt arrived in 2000, things looked very different: He found three departments with 200 beds, only half of which were occupied. “There was one X-ray, one Ultrasound, and one ECG machine for the entire clinic.”
Introduction of health insurance was decisive
Around the Olympic Games in 2008, the government had already invested an enormous amount of money in infrastructure – including in the health system. The introduction of general health insurance in Yunnan in 2006 was also decisive. “After that, a lot more beds were required because people could now get their illnesses and injuries treated.” Yet the model was not initially a success. “It wasn’t until the government covered four times the copay that people suddenly started flocking to hospitals,” Scharfschwerdt recalls. Today, most Chinese have health insurance. However, there are still great differences in care: While the largest hospitals offer cutting-edge treatment, other clinics, especially in rural areas, are still lagging behind.
Scharfschwerdt also came into contact with traditional Chinese medicine. A young colleague taught him acupuncture. “That was very exciting, but also very strange.” Chinese medicine allows for contradictions, different interpretations of the human body coexist. Today, these experiences help him in the daily routine of his practice: “I’ve learned patience, and I have more understanding when patients sometimes provide unusual explanations for their ailments.”
Help in remote mountain villages
However, Scharfschwerdt was not only committed as a physician. The German doctor was interested in the people in remote mountain villages. A three hours’ walk away from Heqing lives an ethnic minority that at that time had hardly any contact with the outside world. From time to time, Chinese officials would check in on them. Scharfschwerdt accompanied them, talked to the villagers about their worries and needs. In cooperation with his organization and Chinese officials, he introduced several aid projects voluntarily: The villagers received goats on loan, for example, with which they were to establish a breeding program.
Soon the officials allowed him to visit the village on his own. When they saw him approaching the village, its people banged on stones with hammers to announce his arrival. The sound filled the entire valley. He was also allowed to attend traditional weddings. “The people were poor but very cheerful and hospitable.” They rarely left the village. If they did, the person would talk for hours around the open fire about what he had experienced “outside.”
Times have changed in the meantime: The government has built a road up to the village, and many residents work on construction sites further away. The people in the village are doing much better economically now – but their traditional way of life has also changed a lot.
To Scharfschwerdt, the government award was completely unexpected. “I was very surprised about it myself,” he says. The initial trigger was an article by Deutsche Welle, which featured an article about him. The report spread across China and was picked up by major newspapers such as Xinhua. Their journalists tracked down as many of Scharfschwerdt’s old contacts as possible in Yunnan, interviewing friends and officials. The story of the German doctor made its way to the government – and Scharfschwerdt received an invitation to the award ceremony in Beijing. He gave a speech, sat next to Premier Li Keqiang, and attended the traditional dinner ahead of the national holiday. “My Chinese friends were incredibly proud.” Jan Wittenbrink
Health
Yunnan
Executive Moves
Pradeep Kumar Rawat is to become India’s new ambassador to China, according to media reports. Rawat has served in Hong Kong and Beijing for many years and is fluent in Mandarin. Currently, Rawat is the Indian ambassador to the Netherlands.
Isaac Meng has joined Manulife Investment Management as Head of Chinese Fixed Income. Meng is expected to revamp the China strategy and bring a better understanding of the domestic bond market. He will serve the Canadian company from its Hong Kong office.
Dessert
Chinese agricultural expert Yuan Longping was laid to rest with flags and fanfare on Monday. The scientist, who passed away at the age of 90, received a state funeral. By breeding particularly high-yielding hybrid rice varieties, Yuan helped prevent terrible famines in China. The funeral was not even the highest of all honors: In 1999, a minor planet was named after him.
Despite ban: China still wants to get involved in crypto
Full text published: The 6th plenum celebrates the Chinese system
Sinolytics.Radar: Data protection law hampers business
Report: VW’s Head of China has to go
After summit: Biden and Xi want more cooperation
Germany demands release of blogger
China’s representative in Brussels mourns Merkel’s departure
First Chinese Formula 1 driver
Profile: As a doctor in China’s mountain villages
Dear reader,
The 6th plenary session has now finally concluded. With the publication of the major resolution, the official realignment is complete. We have had a first look at the report. As expected, the nearly ten years under Xi play a disproportionately large role. We found no major surprises in the text.
Obviously, in order to maintain partyconsensus, Xi had to largely stick to the previously established phrasing. If anything, the resolution reaffirms the most important trends. These include strengthening the security apparatus and state-owned enterprises. The commitment to greater economic independence was also once again part of the canon of constantly repeated policy goals.
The pursuit of technical independence is also evident in the way cryptocurrencies like Bitcoin are handled. China has indeed banned trading, as well as mining. Nevertheless, there are Chinese providers like Huobi that continue their cryptocurrency operations. So China has sealed off this part of its financial system, yet it still wants to and can participate internationally, analyzes Frank Sieren. By current standards, a rather typical combination.
The mining of Bitcoins needs power. If it is mainly generated by burning coal, Bitcoin mining quickly becomes an environmental problem. This is why China’s authorities want to crack down on crypto-mining even harder: The practice is “extremely harmful” and jeopardizes the country’s efforts to reduce its CO2 emissions, National Development and Reform Commission spokesperson Meng Wei said Tuesday. Institutions that “abuse” subsidized electricity rates to mine cryptocurrencies would face a price hike. Following her remarks, the bitcoin price dropped more than seven percent to $60,889, the lowest in more than a week. Ethereum, the second-largest digital currency, also slid more than eight percent on Tuesday.
In fact, the People’s Republic had already officially pulled the plug on crypto mining in September: Since then, mining and trading with digital currencies have been practically banned. However, illegal mining continues, which is why Beijing upped the ante.
China is very critical of the growing market of independent cryptocurrencies: Decentralized cryptocurrencies like Bitcoin elude the control of the state, after all. With digital currencies, it would be possible to move large amounts of money out of the country and undermine Beijing’s strict capital controls. But these are important to Beijing because they allow the leadership to prevent the country from bleeding out financially, as it happened to Russia in the 1990s.
It also allows Beijing to keep the yuan stable. Regulations were tightened again in 2017. Since then, each Chinese citizen is only allowed to transfer the equivalent of $50,000 abroad per year. Individual transfers of more than ¥50,000 ($7,200) must be reported. Before the change, a sum of $200,000 was still allowed. This regulation has since been undermined by bitcoin trading – as China was at times home to the world’s largest bitcoin trading hub, BTC China. China also had some of the largest Bitcoin mines on the planet, and at times accounted for more Bitcoin wallet downloads than the rest of the world combined.
Growth market crypto asset management
But Beijing can’t quite let go of crypto either – and is allowing Chinese companies to continue doing business with it, but only via Hong Kong. One of the leading companies that have emerged in China and are now allowed to continue participating in the crypto boom is the Huobi Group. Founded in 2013 by Leon Li, a graduate of Beijing’s Tsinghua University, the company considers itself a global financial services provider for digital assets. Huobi is registered in Seychelles. In 2018, the company was listed on the Hong Kong Stock Exchange after acquiring a 74 percent stake in Hong Kong electronics manufacturer Pantronics Holdings.
Today, the group has offices in the United States, Japan, and South Korea. Huobi also operates its own crypto exchange, Huobi Global, which offers its own cryptocurrency, the Huobi Token. However, after the full crypto ban, Huobi announced it would no longerserve customers in mainland China.
Huobi now focuses primarily on global cryptocurrency asset management, blockchain-based services such as escrow, capital management, and crypto custody. But the company also states activity in areas such as education, market research, and business incubation. “We act as a bridge between the traditional financial world and the newer world of virtual assets in the future,” says Lily Zhang, chief financial officer of Huobi Tech.
This is an attractive business segment even without the Chinese domestic market. The crypto-asset management market was worth around $670 million in 2020 and could grow to $9.36 billion by 2030, according to analysts at Allied Market Research.
In August 2020, Huobi received approval from Hong Kong’s market regulator SFC to provide securities and wealth management counseling. Last December, Huobi Tech’s US subsidiary, Huobi Trust US, was licensed by the Financial Institutions Division of the Nevada Department of Business and Industry.
This year, the company released a crypto asset management portfolio through its subsidiary Huobi Asset Management. The offering includes Bitcoin and Ethereum tracker funds, as well as a multi-asset fund that includes a combination of asset classes, including equities, fixed income, and crypto-assets.
NFT as a gate for the masses
Huobi Group also opened its own marketplace for Non-Fungible Tokens (NFTs) on November 1st. An NFT is a certificate of authenticity for any digital file. Anyone who buys an NFT buys a token, or rather an object that is linked to it. This can be digital art, digital trading cards, music, or virtual land, for example within a computer game.
NFTs are stored on the blockchain and are therefore uniquely authenticated and tamper-proof. In Q1 of 2021, ten percent of global art market sales were already generated via NFTs. In the first half of 2021, $2.5 billion in global NFTs were transacted. “NFTs have opened up the public’s eyes to the wide range of blockchain applications out there,” said Jeff Mei, Director of Strategy at Huobi. “The concept of NFTs as an immutable proof of ownership is very powerful, so we’re excited to see where our NFT marketplace will take us.”
The Huobi example once again shows that China cannot do without Hong Kong’s financial centerbecause it does not want to be dependent on international developments – and these transactions are only possible in China in Hong Kong.
Bitcoin
Finance
Resolution of the 6th Plenum: more state, more CCP, more Xi
By no means everything in the document is new. Long passages repeat the usual formulations and phrases. Other passages are taken directly from existing party resolutions. Nevertheless, the overall picture is a snapshot of ruler Xi Jinping’s vision for China.
Political system: separation of powers not required
In the document, the partyextensively praises its ability to effectively monitor itself. The self-created system
had “solved the problem of corruption” and “eliminated all corrupt elements”. The party had “achieved overwhelming victories in this regard”.
“prevents the formation of interest groups within the party”. This translates as eliminating any opposition to Xi.
“effectively investigates cases of violations of party discipline” – specifically mentioned here are former party superiors and Xi opponents Zhou Yongkang and Bo Xilai, who are now in prison.
allows for “self-purification, self-reform, and self-improvement” of the party.
This passage is remarkable because it is meant to illustrate how unnecessary democracy is for China. According to the resolution’s world-view, the party maintains a high degree of integrity even without separation of powers and external supervision – and without the circumstances and frictions of Western systems. The previous generation of leaders under Jiang Zemin saw things differently. Independent control was definitely an issue here.
The passage, however, raises questions. If the victory over corruption is so absolute and complete, why do new investigations crop up time and time again? And if the current state is already so perfect, why is a hard-line leadership still needed to keep both the party and country on track?
Xi Jinping’s role as the “core of the Party Central Committee” 党中央的核心 is further defined here. Just as the party is the vanguard of the masses, Xiis the party’s “main representative”.He directs its powers to advance China’s renewal. Based on what has been achieved so far, he is bringing the world a “new era of socialism with Chinese characteristics.”
Two long sections of the document then deal extensively with decision-making by the Central Committee and Politburo and the establishment of the rule of law in China. The document does not see a contradiction between the two principles. However, the “socialist rule of law” 社会主义法治 can also be translated as “socialist government by law.” Self-critically, the Party acknowledges that lax handling of laws and wrongful convictions will probably continue. However, the rule of law with Chinese characteristics prevents arbitrariness and a “slide into chaos”.
History: all problems successfully overcome – except for Taiwan
The resolution addresses the democracy movement and its suppression in 1989. “International anti-communist enemy forces, the international climate, and the domestic situation led to a serious political storm in the spring and summer of 1989,” the document states. The storm did not last long, however: “The party and the government could rely on the people to oppose the troublemakers and defend socialist state power.”
According to this interpretation, it was not the party leadership that deployed its army against the people in the form of the young students. Rather, the students were controlled by foreign powers, and the actual Chinese people rejected unrest in a defensive reaction. This interpretation of the events, however, already basically existed since 2007.
Interestingly, within the same paragraph, a quick listing of other hardships the party has overcome since 1990 follows. However, these are almost exclusively natural disasters, such as the 2008 earthquake or various floods. The protests at Tiananmen Square thus stand among the challenges the party faced alongside events such as financial crises and epidemics, neither of which the party itself is responsible for.
Taiwan is mentioned as an open challenge: “the great goal of unifying the fatherland.” Deng Xiaoping had created the concept of “one country, two systems” as a blueprint for this. Hong Kong and Macao had already been brought back under China’s wing. The next step would be the “solution of the Taiwan question”.
Economy: more socialism and autonomy
The resolution briefly praises the reform and opening policy of the 1980s, without naming Deng Xiaoping as its creator. Almost in the same sentence, it also lists the problems of the course set at that time: lack of sustainability, inequality, lack of coordination. The classic policy of reform and opening is now being replaced by “strategic planning under the bundled leadership of the economy.” A new phase of “high-quality development” is approaching. Risks are to be reduced, which means that the debt levels of municipalities and state and private enterprises are to be lowered. Environmental protection is also mentioned. Domestic demand is to increase further in order to overcome dependence on exports.
The new economic system under Xi emphasizes socialist elements above all in the resolution:
Consolidation of the public sector,
support for private enterprise, but all the more “encouraging state capitalism and state enterprises to become bigger and stronger”,
the establishment of a “modern enterprise system with Chinese characteristics”,
independence of science and technology as a pillar of national development.
This program is to be accompanied by a new phase of openness and reforms. This would be a “never-ending process” in which institutions must renew themselves again and again. However, the long paragraph then simply continues to repeat phrases without much substance.
Chinese Communist Party
Domestic policy of the CP China
Taiwan
Tiananmen Massacre
Xi Jinping
Sinolytics.Radar
IT regulation takes hold
Dieser Inhalt ist Lizenznehmern unserer Vollversion vorbehalten.
The Cybersecurity Law, the Data Security Law, and the Personal Information Protection Law are now in full effect and form the pillars of a comprehensive regulatory system for China’s cyber and data security.
For the Chinese leadership, this regulatory framework represents the basis for shaping China’s future digital economy, which makes it a top priority for the Chinese government.
European companies are now facing a whole range of new requirements, some of which are far-reaching. In particular, strict data localization rules are emerging for anything with ties to critical areas such as power supply. Cross-border data flows are under increasingly strict scrutiny.
Another wave of industry-specific and local regulations is now imminent. However, China’s government also has an interest in balancing strict data controls against the continued growth of digital business models. Accordingly, special rules are currently emerging in China’s free trade zones to keep certain channels open for freer data transfer.
Sinolytics is a European consulting and analysis company that focuses entirely on China. It advises European companies on strategic orientation and specific business activities in China.
News
Report: VW withdraws China boss
Volkswagen is withdrawing its China boss Stephan Woellenstein from his post effective February 1st. This is reported by German magazine Automobilwoche, citing company circles. Reuters received confirmation that Woellenstein would be indeed leaving the country. Under Woellenstein, sales ofthe company’sEVswere below estimates for months, jeopardizing the group’s targets (China.Table reported). Woellenstein is now expected to find another position within the group. A Volkswagen spokesman refused to comment on the speculation to China.Table on Tuesday evening.
Woellenstein was in the country for three years. China is by far the company’s most important market. But recently, things have been anything but smooth. While the VW brand continued to sell a lot of combustion cars, only just over a thousand units of its ID.4 were sold per month after the market launch. As a result, the group even had to buy emission credits from more advanced suppliers. In addition, the margin per car dropped because the company can’t push through its high price premiums. In October, sales of the ID.4 electric car had indeed risen to more than 12,000 units, thanks to an improvement of its distribution network. fin
Autoindustrie
Xi warns Biden about ‘playing with fire’
At their first virtual online summit, China’s leader Xi Jinping and US President Joe Biden struck conciliatory tones. Biden declared that China and the US should cooperate, especially on important global issues like climate change. As the largest economies and permanent members of the World Security Council, both countries take active steps to move China-US relations forward in a positive direction, Xi said, according to state news agency Xinhua. In the course of the conversation, China’s leader even referred to Biden as “Lao Pengyou”, an “old friend”.
For all the superficial expressions of friendship, however, the minefields between the world’s two largest economies remain wide: Xi’s demands to unite Taiwan “with the motherland” had recently sharpened the tone between Washington and Beijing. At the end of October, Biden had declared in a television interview that the US has the “obligation” to defend Taiwan in the event of an invasion (China.Table reported).
During the conversation with Xi, Biden reiterated that the US remains committed to theone-China policy. “Unilateral efforts” to change Taiwan’s status quo, however, would be firmly rejected. Xi attributed the recent tensions to “repeated attempts by Taiwanese authorities” to seek support from Washington, according to the state-run Global Times. According to Global Times, the US wanted to use Taiwan to contain China. Xi warned, “Such moves are extremely dangerous, just like playing with fire. Whoever plays with fire will get burnt.”
Human rights violations in Xinjiang and Hong Kong as well as the one-sided trade terms between China and the US were also discussed, the White House stated. The video summit was the first meeting between the two politicians since Biden took office on January 20 this year. However, he had already met Xi on several occasions during his time as vice president under Barack Obama. Biden even told CNN that no other head of state had spent as much time with Xi as he had.
Beijing hopes that the US under Biden will bring more diplomatic stability and renegotiate the trade deal. Since the start of a trade war under Donald Trump, both nations have embarked on a course of mutual decoupling. Part of that has been sanctions against tech companies like Huawei. “Of course, China must protect its sovereignty, security, and development interests,” Xi stressed during the conversation. Still, he said it was time to overcome mutual differences “to prevent China-US relations from getting derailed or out of control.” fpe
Geopolitics
Human Rights
Joe Biden
Taiwan
USA
Germany demands release of blogger Zhang Zhan
The German government is calling for the release of Chinese blogger Zhang Zhan. This was confirmed by the Federal Foreign Office to ARD radio in Shanghai. According to the report, the German Embassy in China has contacted the Chinese Foreign Ministry and hasdemanded the “immediate release” of Zhang. The US State Department had also already expressed concerns about the state of health of the detained grassroots journalist (China.Table reported).
Zhang had been reporting on the Covid outbreak in Wuhan, including documenting the detention of journalists, overcrowded hospitals and empty supermarkets. According to AFP, Zhang Zhan has been on hunger strike for several weeks and is being force-fed. Her brother wrote on Twitter that she was severely underweight. He fears Zhang may not survive the winter. Human rights organization Amnesty International is also calling for Zhang’s release. ari
Civil Society
Coronavirus
Human Rights
China hopes for continuation of Merkel’s policy
China’s EU ambassador hopes Germany’s future government will continue Angela Merkel’s policy toward Beijing. “We hope the new German government can build on a political legacy of Chancellor Merkel and continue the pragmatic China policy which follows the expectations of our two peoples,” China’s ambassador to the European Union, Zhang Ming, said Tuesday at an online event hosted by the think tank European Policy Center. China and Germany are “comprehensive strategic partners,” Zhang said. As major countries, they need to work together to achieve a “win-win result”. This is the path that relations between the People’s Republic and Germany and the EU should take in the future, the ambassador said.
Regarding the currently shelved CAI investment agreement, Zhang said China’s decision to abide by the agreement remains. “The ball is frankly in Brussels’ court.” The European Parliament had initially stopped work on the draft in the wake of sanctions against several MEPs. Beijing had imposed punitive measures as a tit-for-tat move: Brussels had previously sanctioned numerous Xinjiang officials for human rights violations. These sanctions come back on Brussels’ agenda at the end of the year and are expected to be renewed if necessary. Zhang dodged the question of whether China would again retaliate. Zhang also did not answer whether MEPs would be threatened with sanctions if they campaigned for EU relations with Taiwan.
The EU ambassador had caused confusion earlier this week. During an interview with Financial Times, Zhang accused Brussels of risking further disruption to global supply chains with its policy. The message from the Chinese representative in Brussels was pointed directly at the Commission. Zhang cited statements by “some Chinese companies” as evidence for his accusation. They see the EU Commission’s efforts to expand trade policy instruments as “more inward-looking and unilateral measures”. The result would be the creation of “new trade barriers”.
Such steps by the EU could also have global consequences and “aggravate the tension” on global supply and production chains. Zhang also criticized the recent agreement between the EU and the US in the dispute over steel and aluminum tariffs. In it, a restriction on steel and aluminum imports from countries with greater CO2 emissions was agreed upon, which directly affects China. ari
Angela Merkel
CAI
Sanctions
Zhang Ming
Formula 1: Alfa Romeo signed first Chinese driver
Chinese racing driver Zhou Guanyu has become China’s first professional driver in Formula 1. Alfa Romeo has signed the 22-year-old as pilot alongside Valtteri Bottas from Finland. He replaces Italian Antonio Giovinazzi. “It’s great from both a sporting and a commercial point of view,” Alfa Romeo team boss Fredric Vasseur told news agency dpa. Zhou tweeted, “A childhood dream come true.” He will compete for the first time in the 2022 season.
For Formula 1, a Chinese driver is therefore commercially important because his participation will fuel interest in his home country. China is a huge market for advertising and licensing rights. Disappointed Giovinazzi on the other hand, suspects financial motivation above all behind the decision. “Money dictates the rules.” However, Zhou’s talent and ability are undisputed: he is ranked second in the Fédération Internationale de l’Automobile (FIA) Formula One championship. fin
Autoindustrie
Profile
Eckehard Scharfschwerdt – 17 years as a doctor in Yunnan
It has been four years since Eckehard Scharfschwerdt was allowed to hang a gold medal with an engraving of the Great Wall of China around his neck. Today, the 57-year-old lives in the German village of Edelweiler in the northern Black Forest and works as a family doctor in the neighboring small town of Altensteig. And: He was honored with “The Chinese Government’s Friendship Award”, the highest Chinese award for foreigners, which is intended to honor contributions to the economic and social development of the country.
Scharfschwerdt received the award in 2017 for his work in the southwestern Chinese province of Yunnan. For 17 years, from 2000 to 2016, he lived and worked there. Through a Christian organization, Scharfschwerdt and his wife, who is also a doctor, were placed at a district hospital in the small town of Heqing. The doctor’s motivation: “I wanted to get involved where my help was urgently needed – also out of my Christian faith.”
Close contact with patients’ families – and with officials
Scharfschwerdt, who himself comes from the countryside, purposely decided to go to the province. Yunnan is extremely diverse: The largest mountain is 6740 meters high, while tropical climate predominates the lower regions. Heqing is located in the mountainsides at an altitude of 2200 meters. Scharfschwerdt and his wife spent two years learning Chinese, then arrived in their new home with their two young children. “People always invited you to somewhere,” Scharfschwerdt recalls. He worked as an anesthesiologist and introduced general anesthesia in the hospital. After an operation, the patient’s family invited everyone involved to dinner. He also frequently received official invitations from government officers and learned Chinese toasts.
Scharfschwerdt also experienced the effects of the SARS pandemic of 2002 and 2003 firsthand. The population in Yunnan was not aware of the new virus for a long time. Then the hospital was converted overnight into a fever clinic, and the entire city was dusted with white lime. The pandemic had also affected the development of the health system: Before, there had been a trend toward privatization. “SARS then showed the government the importance of having control over basic health care.” The new reporting systems established at that time had now proven their worth in the Corona pandemic.
Today, the hospital in Heqing is an 18-story high-rise building with 20 specialist departments and extensive medical equipment. When Scharfschwerdt arrived in 2000, things looked very different: He found three departments with 200 beds, only half of which were occupied. “There was one X-ray, one Ultrasound, and one ECG machine for the entire clinic.”
Introduction of health insurance was decisive
Around the Olympic Games in 2008, the government had already invested an enormous amount of money in infrastructure – including in the health system. The introduction of general health insurance in Yunnan in 2006 was also decisive. “After that, a lot more beds were required because people could now get their illnesses and injuries treated.” Yet the model was not initially a success. “It wasn’t until the government covered four times the copay that people suddenly started flocking to hospitals,” Scharfschwerdt recalls. Today, most Chinese have health insurance. However, there are still great differences in care: While the largest hospitals offer cutting-edge treatment, other clinics, especially in rural areas, are still lagging behind.
Scharfschwerdt also came into contact with traditional Chinese medicine. A young colleague taught him acupuncture. “That was very exciting, but also very strange.” Chinese medicine allows for contradictions, different interpretations of the human body coexist. Today, these experiences help him in the daily routine of his practice: “I’ve learned patience, and I have more understanding when patients sometimes provide unusual explanations for their ailments.”
Help in remote mountain villages
However, Scharfschwerdt was not only committed as a physician. The German doctor was interested in the people in remote mountain villages. A three hours’ walk away from Heqing lives an ethnic minority that at that time had hardly any contact with the outside world. From time to time, Chinese officials would check in on them. Scharfschwerdt accompanied them, talked to the villagers about their worries and needs. In cooperation with his organization and Chinese officials, he introduced several aid projects voluntarily: The villagers received goats on loan, for example, with which they were to establish a breeding program.
Soon the officials allowed him to visit the village on his own. When they saw him approaching the village, its people banged on stones with hammers to announce his arrival. The sound filled the entire valley. He was also allowed to attend traditional weddings. “The people were poor but very cheerful and hospitable.” They rarely left the village. If they did, the person would talk for hours around the open fire about what he had experienced “outside.”
Times have changed in the meantime: The government has built a road up to the village, and many residents work on construction sites further away. The people in the village are doing much better economically now – but their traditional way of life has also changed a lot.
To Scharfschwerdt, the government award was completely unexpected. “I was very surprised about it myself,” he says. The initial trigger was an article by Deutsche Welle, which featured an article about him. The report spread across China and was picked up by major newspapers such as Xinhua. Their journalists tracked down as many of Scharfschwerdt’s old contacts as possible in Yunnan, interviewing friends and officials. The story of the German doctor made its way to the government – and Scharfschwerdt received an invitation to the award ceremony in Beijing. He gave a speech, sat next to Premier Li Keqiang, and attended the traditional dinner ahead of the national holiday. “My Chinese friends were incredibly proud.” Jan Wittenbrink
Health
Yunnan
Executive Moves
Pradeep Kumar Rawat is to become India’s new ambassador to China, according to media reports. Rawat has served in Hong Kong and Beijing for many years and is fluent in Mandarin. Currently, Rawat is the Indian ambassador to the Netherlands.
Isaac Meng has joined Manulife Investment Management as Head of Chinese Fixed Income. Meng is expected to revamp the China strategy and bring a better understanding of the domestic bond market. He will serve the Canadian company from its Hong Kong office.
Dessert
Chinese agricultural expert Yuan Longping was laid to rest with flags and fanfare on Monday. The scientist, who passed away at the age of 90, received a state funeral. By breeding particularly high-yielding hybrid rice varieties, Yuan helped prevent terrible famines in China. The funeral was not even the highest of all honors: In 1999, a minor planet was named after him.
