The new Covid variant Omicron caused headaches over the weekend, not only because of its spread but also because of its name. This is because the World Health Organization (WHO) had skipped some letters of the Greek alphabet when naming it. Before Omicron, it would have been Ny and Xi. Ny was dropped because it sounded too much like “new” in English. And Xi? According to the WHO, it was too similar to the Chinese surname, which may not be very common but does have a weighty bearer in the form of the head of state. Critics then accused the WHO of false political consideration. Whether this would also have applied to a variant called “Scholz” is anyone’s guess.
Dominic Lyncker worked for the Volkswagen Group as Motorsport Director for five years. One of his tasks was also to find a new China-Schumacher, to no avail. A few days ago, competitor Alfa Romeo now signed the first Chinese Formula 1 driver, Zhou Guanyu. ” If it is possible to personalize motorsport in China through Zhou and thus to emotionalize it, a large market will open up,” Lyncker explains in today’s interview with Marcel Grzanna. The 49-year-old also talks about the mammoth task of establishing a motorsport culture in the People’s Republic – and his experiences with clueless track marshals.
Several large nations have recently decided to tap their strategic oil reserves due to the current power crisis. China has expressed that it is open to the idea, but a firm commitment has not yet been made, as our author Christiane Kuehl analyzes. The issue is geopolitically volatile. The US rejects cooperation on raw materials, while Beijing does not want to be restricted in its freedom of action. It is also unclear whether the oil from the People’s Republic will find any buyers at all.
We hope you enjoy today’s issue!
Disclaimer: This interview has been translated into English and is not considered an official translation by any party involved in the interview.
Mr. Lyncker, next year Zhou Guanyu will be the first Chinese to drive for Alfa Romeo in Formula 1, the world’s most prestigious and lucrative motorsport racing series. Did the news come as a surprise to you?
Only to a certain extent. Zhou brings the greatest possible talent. Having started out in karting, he has made steady progress over the past seven years through the various Formula series, and in the current Formula 2 season, he also still has a chance of winning the title. As a test driver for Renault, he already sat over 6,500 kilometers in a Formula 1 car. It was only a matter of time before a team signed him.
What do you expect from the young man?
The pressure on a Chinese driver is unimaginably high because an entire nation with 1.4 billion landsmen will be watching him. He first has to process this and live up to the expectations.
What does his promotion to the super league mean for Chinese motorsport?
That could trigger a real boom. If it is possible to personalize motorsport in China through Zhou and thus to emotionalize it, a large market will open up. Yao Ming has shown how it is done. In the wake of his popularity, basketball courts were built all over China. But a challenge for Zhou will be to take full advantage of the momentum in China, even though there is no race in China next season and travel is limited due to Corona. That means any marketing efforts targeting the Chinese market will also be limited.
You also spent almost five years looking for a potential motorsport hero from China on behalf of the Volkswagen Group. Do you look at Alfa Romeo with envy?
No. Zhou has lived in the UK for ten years. He’s not a product of Chinese scouting but has been racing in Europe since he was a junior. For us in China, five years was simply not enough time to build up a motorsport culture in the country that would have spat out such a China Schumacher sooner or later.
How much time would you have needed?
Hard to say. Driving has only become popular in China over the past three decades. The appreciation for motorsports, the love for driving, but also the infrastructure for a low-threshold entry into the sport came delayed. Our plan was to develop a broad magnetic effect in China via a Group initiative including the Star Racing Academy and a Formula Junior racing series. However, the program was discontinued in 2016 because the Group had to reassess its priorities due to the Diesel scandal.
Otherwise, VW would have brought about the first Chinese racing driver with star potential?
The chances would certainly have been greater. Our academy trained three to four drivers every year. There, they not only got to know racing better, but also the technology and physical forces that act on the vehicles. The academy was rock-solid training, supported by all six of the Group’s sports car manufacturers.
Training sounds good. But isn’t there more to establishing a motorsport culture than an academy for three or four drivers?
Of course. Our strategy was to have a lot more motorsport take place in China and to find Chinese drivers who could have competed for victories. We flanked racing with road safety initiatives, but also with sports car or classic car events. It was a complete package, with which we wanted to establish a connection to sports cars and motorsport culture in the country. And ideally, a driver like Zhou Guanyu would have emerged from our racing series.
Why hasn’t that worked in five years?
There are many reasons for this. For example, the level from which we had to push motorsport. I remember a press release in the beginning. It said, ‘The players are getting ready for the game.’ You can guess how much groundwork you have to lay before motorsport becomes a mass phenomenon in China.
But that was certainly not only due to poor public relations.
No, but where few people are interested in motorsport, you inevitably find less talent. In China, many parents don’t support their children in a risky sport because they’re afraid that something might happen. Others forbid it because they see their academic education in jeopardy. This attitude has been encouraged in China by the one-child policy of the past decades. In today’s Chinese meritocracy, hardly anyone takes risks. Instead, life paths are often determined by parents and grandparents. Sons especially have to provide for the parent’s retirement. That was already a big hurdle for us. That’s why we were also looking at young people who have made their mark in national online racing championships.
Do you mean you let best at Super Mario Kart drive a 300-horsepower vehicle?
Not necessarily Super Mario Kart, but very realistic racing simulators have already given us clues whether someone can control a real car at high speeds. In China, there are simply too few opportunities for children and young people to find out whether racing is a suitable sport for them. So we had to find other ways and means.
Who financed the Chinese drivers who competed in your racing series?
We financed the drivers of the academy. Otherwise, you’d have to budget over 100,000 euros per season to be able to participate. In return, they received all-around service from us. That means the drivers only had to bring their helmets to the race weekend. We took care of the rest.
So you sold cockpits instead of placing the best drivers in them?
Inevitably. With us, anyone who was willing to afford it could buy their way into the racing series. There was no other way we could have financed it. But that also meant that a social pre-selection was already made, which automatically left many potential talents undiscovered.
If you had found a hero, what would that have meant for car sales?
A motorsport hero could have been built up as a mouthpiece for the entire car sector, including issues such as consideration, safety, or discipline on the road. A Chinese driver can also boost the self-esteem of a large segment of the population, and Alfa Romeo can position itself as the brand that promotes just that. But attributing the decision to buy a car to enthusiasm for motorsport is difficult in this environment.
Nevertheless, millions of euros have been poured into the project every year. How exactly were you able to measure the success of your work?
We evaluated media contacts and found that there is a growing interest in motorsport. Click rates and follower numbers in social media also provided information. And of course, the viewer numbers at all events and races were also an indication. In Shanghai, we had a crowd of over 50,000 on some weekends.
That sounds like a solid foundation.
It was. Nevertheless, China-specific challenges came along. To attract people to the race weekend, we always had to come up with new ideas. For example, we sometimes offered free lunches, which we distributed in lunch boxes in the grandstands.
Good idea, the Chinese love food.
Yes, so much so that they often just went back home after getting the food without even bothering to stay and watch the rest of the race
Oh, then that must have been the wrong point of appeal.
Well, we just handed out the food at a later time to keep people longer at the track.
So every race weekend you sponsored 50,000 lunch boxes?
No. Elsewhere, there were far fewer viewers. In Ordos in Inner Mongolia, for example, we had counted on this town, which was created on the drawing board, to still receive a lot of influx. Ordos, however, has always remained something of a ghost town. Of the hoped-for 1.5 million people, only 70,000 lived there. Accordingly, we had little response to our offer on-site.
Wouldn’t you rather have stayed in Shanghai?
The idea was, after all, a nationwide race series. But in fact, that brought other challenges. For example, some marshals had no experience. That was a problem because it was about the safety of the drivers. If someone forgets to wave the yellow flag when there’s danger on the track, that can have a nasty outcome.
However, during your five years of work, no tragic accident has ever happened.
At least nothing serious. But that could well have been the case in Ordos. On one race day, the situation on the track even escalated because we complained about the safety of the track.
Were the curves too steep?
No, a cover grille over a water drain on the track was not welded on properly. When racing cars speed over it with the downforce they generate, such an iron grille could even be catapulted into the air.
The Chinese hosts didn’t care?
At least the awareness of the problem was not there. Their suggestion was that they just run their race series first. But that wouldn’t have solved the problem and, secondly, it would have messed up the schedule. We couldn’t accept that because our organization and marketing were geared to that schedule. After all, this is also about money that we had invested as a group.
What did you do?
We parked up the pit lane exit with our cars so that nobody could get onto the track. That’s when things got pretty emotional, with a lot of discussion and a lack of understanding on both sides. Suddenly, a squad from Bao’an (Chinese security service) even set up in front of us in military-style. But I was in charge of our drivers. Eventually, we were able to convince the Chinese organizers that welding would have to be done first. I certainly didn’t make any friends back then.
Things are moving pretty fast now. Several big countries have decided to tap their strategic oil reserves because of the current power crisis. The US is about to open the oil taps: Around 50 million barrels are expected to flow out of reserves in the next few months. India, Japan, and the UK have also announced an opening of their reserves. With that, the world is now looking to China. An announcement is expected from Beijing over the next few days. The US government had talked about an internationally coordinated release measure.
A few weeks ago, hopes were dashed that Opec, the club of oil-producing states, would significantly boost crude oil production to counteract the rapidly rising commodity prices. So far, the 23 producing countries of the Opec+ oil group are only expanding their production at a moderate pace. They have no interest in flooding the market, as this would hurt their revenue. This is why many countries are now looking to their own emergency reserves because that’s exactly what they’re there for. Back home, US President Joe Biden is struggling with high inflation, to which rising oil prices are a major contributor. At his video summit with China’s leader Xi Jinping, Biden asked the People’s Republic to also tap its oil reserves in view of rising oil prices.
China subsequently expressed willingness but did not initially give a clear commitment. A week ago, the State Reserves Bureau in Beijing announced that it was working on a release of crude oil reserves. However, the agency did not comment on the US request.
As with climate protection, geopolitics also plays a part when it comes to oil reserves. Beijing’s argument: The US has no right to demand cooperation from China if, at the same time, it is trying to isolate the country. “China might do the US a favor to open its crude oil reserves,” writes the state newspaper Global Times, for example. However, China will “prioritize own interests” amid strained relations with Washington. Only on Tuesday, the US demonstratively invited Taiwan to Biden’s virtual summit of democracies. China is, of course, qua its system, excluded. But inviting Taiwan, which Beijing sees as a rogue province, is an affront in the eyes of the government.
China’s government, meanwhile, is well aware that the inflation back home is putting Biden under great domestic pressure – pressure that Beijing has not yet felt to the same extent. The current crude oil price of around $80 per barrel does not necessarily require China to immediately release strategic reserves, the South China Morning Post quotes energy expert Wang Yongzhong of the Chinese Academy of Social Sciences as saying. But Wang acknowledges that both the US and China, as major consumers, have an interest in lowering the price.
At 727 million barrels, the USA has the world’s largest reported strategic oil reserves. China, on the other hand, only began storing oil reserves in 2007. It has not published the volume of its reserves regularly ever since: The latest data published by the National Bureau of Statistics is from 2017, when China held a total of around 280 million barrels at seven locations, including Dalian, Qingdao, or the coast of the province of Zhejiang. However, experts believe that China stockpiled a large additional amount, especially in March and April 2020. Back then, at the beginning of the Covid pandemic, oil prices were at their lowest.
Oil security has been of great strategic importance to China for decades. The People’s Republic is by far the world’s largest oil importer, as it has only small reserves of its own. In 2020, China imported just under three-quarters of the oil it consumed. Wang Yongzhong estimates that China’s crude oil reserves are currently roughly equivalent to 40-50 days’ worth of imports. That’s not a lot. The International Energy Agency recommends reserves equal to at least 90 days of net imports. But if it comes down to it, China can also draw on the stockpiles of its three oil companies, all of which are majority state-owned.
Whether China will be able to sell large quantities of released oil reserves, however, is uncertain. In September, Beijing had already announced that it would sell parts of its reserves to refineries via auctions. But only one of these auctions took place at all. It met with only moderate interest. If another auction of oil reserves were to take place, refiners might have little interest in bidding, analysts at S&P Global Platts said, citing sources within China’s oil sector. That is because “domestic demand slows down amid pandemic-related curbs ahead of Winter Olympics.”
Indeed, Beijing is expected to curtail refining activities in northern China to limit their emissions ahead of the Beijing Winter Olympics in February 2022. The ongoing zero-covid policy, with its numerous restrictions, is also currently severely limiting Chinese mobility. And this, in turn, is reducing demand for transport fuels. This trend is confirmed by import data from this year: Between January and October, China’s oil imports were 7.2, percent lower than in the same period last year. So it is an open question to what extent China will actually be able to contribute to the fight against the high oil prices.
Metin Hakverdis’ constituency of Hamburg-Bergedorf-Harburg has a very direct link to China: the Container Terminal Altenwerder. Several million containers are handled there every year – many from the Middle Kingdom. “It’s impressive when you stand up there on the bridge for half an hour and look at all the arrivals,” reports the Member of the Bundestag. The Hanseatic city has close contacts in the People’s Republic – as does Hakverdi. During the last legislative period, he was responsible for German-Chinese relations as the SPD parliamentary group’s China representative.
He has represented Hamburg’s south, where he grew up, in the German Bundestag since 2013. However, it was anything but sure that Hakverdi would one day become a politician. His father worked as a taxi driver, his mother was a secretary. Politics, he says, was not a big topic in his family. “My parents were especially united by the idea of advancement,” Hakverdi recalls. “They wanted the best for their children.” They were successful: Hakverdi studied law and became a lawyer. In 2002, he joined the SPD, and a few years later he won his first direct mandate for the Hamburg parliament.
In the Bundestag, he has so far been primarily concerned with international relations, and in recent years he has been a member of the Europe Committee, among other things. There he also received his function as China rapporteur for the Social Democrats. “At the beginning of the legislature, the position did not even exist, because no one in the committee felt responsible for China,” he says. Hakverdi wanted to change that, and he was quickly put to the test: 5G. Should technology from the Chinese company Huawei also be used to build the networks?
“Such major issues are very difficult to address in parliament because they affect so many areas,” says Hakverdi. He tried to get the members of all the committees involved to the table, and in the end, he succeeded. German politicians agreed on an update of the IT security law. The 52-year-old believes that the dispute over 5G has brought a debate to Germany that has been going on in the US for some time: What is the relationship with China?
This question cannot simply be answered with a buzzword such as competitor or partner. “A differentiated analysis is needed”. In it, he says, it is important to keep a level head and not lose sight of the bigger picture. “This is really a difficult discipline.” Hakverdi, who is also concerned about the transatlantic relationship, sees a solution: “Our goal must always be to develop a European position. Otherwise, in the game of the Big Powers, we are the ground under the dancing elephants.”
In this year’s Federal Elections, Hakverdi once again received a direct mandate. Whether he will continue to serve as China representative of the SPD parliamentary group is still open. Paul Meerkamp
The new Covid variant Omicron caused headaches over the weekend, not only because of its spread but also because of its name. This is because the World Health Organization (WHO) had skipped some letters of the Greek alphabet when naming it. Before Omicron, it would have been Ny and Xi. Ny was dropped because it sounded too much like “new” in English. And Xi? According to the WHO, it was too similar to the Chinese surname, which may not be very common but does have a weighty bearer in the form of the head of state. Critics then accused the WHO of false political consideration. Whether this would also have applied to a variant called “Scholz” is anyone’s guess.
Dominic Lyncker worked for the Volkswagen Group as Motorsport Director for five years. One of his tasks was also to find a new China-Schumacher, to no avail. A few days ago, competitor Alfa Romeo now signed the first Chinese Formula 1 driver, Zhou Guanyu. ” If it is possible to personalize motorsport in China through Zhou and thus to emotionalize it, a large market will open up,” Lyncker explains in today’s interview with Marcel Grzanna. The 49-year-old also talks about the mammoth task of establishing a motorsport culture in the People’s Republic – and his experiences with clueless track marshals.
Several large nations have recently decided to tap their strategic oil reserves due to the current power crisis. China has expressed that it is open to the idea, but a firm commitment has not yet been made, as our author Christiane Kuehl analyzes. The issue is geopolitically volatile. The US rejects cooperation on raw materials, while Beijing does not want to be restricted in its freedom of action. It is also unclear whether the oil from the People’s Republic will find any buyers at all.
We hope you enjoy today’s issue!
Disclaimer: This interview has been translated into English and is not considered an official translation by any party involved in the interview.
Mr. Lyncker, next year Zhou Guanyu will be the first Chinese to drive for Alfa Romeo in Formula 1, the world’s most prestigious and lucrative motorsport racing series. Did the news come as a surprise to you?
Only to a certain extent. Zhou brings the greatest possible talent. Having started out in karting, he has made steady progress over the past seven years through the various Formula series, and in the current Formula 2 season, he also still has a chance of winning the title. As a test driver for Renault, he already sat over 6,500 kilometers in a Formula 1 car. It was only a matter of time before a team signed him.
What do you expect from the young man?
The pressure on a Chinese driver is unimaginably high because an entire nation with 1.4 billion landsmen will be watching him. He first has to process this and live up to the expectations.
What does his promotion to the super league mean for Chinese motorsport?
That could trigger a real boom. If it is possible to personalize motorsport in China through Zhou and thus to emotionalize it, a large market will open up. Yao Ming has shown how it is done. In the wake of his popularity, basketball courts were built all over China. But a challenge for Zhou will be to take full advantage of the momentum in China, even though there is no race in China next season and travel is limited due to Corona. That means any marketing efforts targeting the Chinese market will also be limited.
You also spent almost five years looking for a potential motorsport hero from China on behalf of the Volkswagen Group. Do you look at Alfa Romeo with envy?
No. Zhou has lived in the UK for ten years. He’s not a product of Chinese scouting but has been racing in Europe since he was a junior. For us in China, five years was simply not enough time to build up a motorsport culture in the country that would have spat out such a China Schumacher sooner or later.
How much time would you have needed?
Hard to say. Driving has only become popular in China over the past three decades. The appreciation for motorsports, the love for driving, but also the infrastructure for a low-threshold entry into the sport came delayed. Our plan was to develop a broad magnetic effect in China via a Group initiative including the Star Racing Academy and a Formula Junior racing series. However, the program was discontinued in 2016 because the Group had to reassess its priorities due to the Diesel scandal.
Otherwise, VW would have brought about the first Chinese racing driver with star potential?
The chances would certainly have been greater. Our academy trained three to four drivers every year. There, they not only got to know racing better, but also the technology and physical forces that act on the vehicles. The academy was rock-solid training, supported by all six of the Group’s sports car manufacturers.
Training sounds good. But isn’t there more to establishing a motorsport culture than an academy for three or four drivers?
Of course. Our strategy was to have a lot more motorsport take place in China and to find Chinese drivers who could have competed for victories. We flanked racing with road safety initiatives, but also with sports car or classic car events. It was a complete package, with which we wanted to establish a connection to sports cars and motorsport culture in the country. And ideally, a driver like Zhou Guanyu would have emerged from our racing series.
Why hasn’t that worked in five years?
There are many reasons for this. For example, the level from which we had to push motorsport. I remember a press release in the beginning. It said, ‘The players are getting ready for the game.’ You can guess how much groundwork you have to lay before motorsport becomes a mass phenomenon in China.
But that was certainly not only due to poor public relations.
No, but where few people are interested in motorsport, you inevitably find less talent. In China, many parents don’t support their children in a risky sport because they’re afraid that something might happen. Others forbid it because they see their academic education in jeopardy. This attitude has been encouraged in China by the one-child policy of the past decades. In today’s Chinese meritocracy, hardly anyone takes risks. Instead, life paths are often determined by parents and grandparents. Sons especially have to provide for the parent’s retirement. That was already a big hurdle for us. That’s why we were also looking at young people who have made their mark in national online racing championships.
Do you mean you let best at Super Mario Kart drive a 300-horsepower vehicle?
Not necessarily Super Mario Kart, but very realistic racing simulators have already given us clues whether someone can control a real car at high speeds. In China, there are simply too few opportunities for children and young people to find out whether racing is a suitable sport for them. So we had to find other ways and means.
Who financed the Chinese drivers who competed in your racing series?
We financed the drivers of the academy. Otherwise, you’d have to budget over 100,000 euros per season to be able to participate. In return, they received all-around service from us. That means the drivers only had to bring their helmets to the race weekend. We took care of the rest.
So you sold cockpits instead of placing the best drivers in them?
Inevitably. With us, anyone who was willing to afford it could buy their way into the racing series. There was no other way we could have financed it. But that also meant that a social pre-selection was already made, which automatically left many potential talents undiscovered.
If you had found a hero, what would that have meant for car sales?
A motorsport hero could have been built up as a mouthpiece for the entire car sector, including issues such as consideration, safety, or discipline on the road. A Chinese driver can also boost the self-esteem of a large segment of the population, and Alfa Romeo can position itself as the brand that promotes just that. But attributing the decision to buy a car to enthusiasm for motorsport is difficult in this environment.
Nevertheless, millions of euros have been poured into the project every year. How exactly were you able to measure the success of your work?
We evaluated media contacts and found that there is a growing interest in motorsport. Click rates and follower numbers in social media also provided information. And of course, the viewer numbers at all events and races were also an indication. In Shanghai, we had a crowd of over 50,000 on some weekends.
That sounds like a solid foundation.
It was. Nevertheless, China-specific challenges came along. To attract people to the race weekend, we always had to come up with new ideas. For example, we sometimes offered free lunches, which we distributed in lunch boxes in the grandstands.
Good idea, the Chinese love food.
Yes, so much so that they often just went back home after getting the food without even bothering to stay and watch the rest of the race
Oh, then that must have been the wrong point of appeal.
Well, we just handed out the food at a later time to keep people longer at the track.
So every race weekend you sponsored 50,000 lunch boxes?
No. Elsewhere, there were far fewer viewers. In Ordos in Inner Mongolia, for example, we had counted on this town, which was created on the drawing board, to still receive a lot of influx. Ordos, however, has always remained something of a ghost town. Of the hoped-for 1.5 million people, only 70,000 lived there. Accordingly, we had little response to our offer on-site.
Wouldn’t you rather have stayed in Shanghai?
The idea was, after all, a nationwide race series. But in fact, that brought other challenges. For example, some marshals had no experience. That was a problem because it was about the safety of the drivers. If someone forgets to wave the yellow flag when there’s danger on the track, that can have a nasty outcome.
However, during your five years of work, no tragic accident has ever happened.
At least nothing serious. But that could well have been the case in Ordos. On one race day, the situation on the track even escalated because we complained about the safety of the track.
Were the curves too steep?
No, a cover grille over a water drain on the track was not welded on properly. When racing cars speed over it with the downforce they generate, such an iron grille could even be catapulted into the air.
The Chinese hosts didn’t care?
At least the awareness of the problem was not there. Their suggestion was that they just run their race series first. But that wouldn’t have solved the problem and, secondly, it would have messed up the schedule. We couldn’t accept that because our organization and marketing were geared to that schedule. After all, this is also about money that we had invested as a group.
What did you do?
We parked up the pit lane exit with our cars so that nobody could get onto the track. That’s when things got pretty emotional, with a lot of discussion and a lack of understanding on both sides. Suddenly, a squad from Bao’an (Chinese security service) even set up in front of us in military-style. But I was in charge of our drivers. Eventually, we were able to convince the Chinese organizers that welding would have to be done first. I certainly didn’t make any friends back then.
Things are moving pretty fast now. Several big countries have decided to tap their strategic oil reserves because of the current power crisis. The US is about to open the oil taps: Around 50 million barrels are expected to flow out of reserves in the next few months. India, Japan, and the UK have also announced an opening of their reserves. With that, the world is now looking to China. An announcement is expected from Beijing over the next few days. The US government had talked about an internationally coordinated release measure.
A few weeks ago, hopes were dashed that Opec, the club of oil-producing states, would significantly boost crude oil production to counteract the rapidly rising commodity prices. So far, the 23 producing countries of the Opec+ oil group are only expanding their production at a moderate pace. They have no interest in flooding the market, as this would hurt their revenue. This is why many countries are now looking to their own emergency reserves because that’s exactly what they’re there for. Back home, US President Joe Biden is struggling with high inflation, to which rising oil prices are a major contributor. At his video summit with China’s leader Xi Jinping, Biden asked the People’s Republic to also tap its oil reserves in view of rising oil prices.
China subsequently expressed willingness but did not initially give a clear commitment. A week ago, the State Reserves Bureau in Beijing announced that it was working on a release of crude oil reserves. However, the agency did not comment on the US request.
As with climate protection, geopolitics also plays a part when it comes to oil reserves. Beijing’s argument: The US has no right to demand cooperation from China if, at the same time, it is trying to isolate the country. “China might do the US a favor to open its crude oil reserves,” writes the state newspaper Global Times, for example. However, China will “prioritize own interests” amid strained relations with Washington. Only on Tuesday, the US demonstratively invited Taiwan to Biden’s virtual summit of democracies. China is, of course, qua its system, excluded. But inviting Taiwan, which Beijing sees as a rogue province, is an affront in the eyes of the government.
China’s government, meanwhile, is well aware that the inflation back home is putting Biden under great domestic pressure – pressure that Beijing has not yet felt to the same extent. The current crude oil price of around $80 per barrel does not necessarily require China to immediately release strategic reserves, the South China Morning Post quotes energy expert Wang Yongzhong of the Chinese Academy of Social Sciences as saying. But Wang acknowledges that both the US and China, as major consumers, have an interest in lowering the price.
At 727 million barrels, the USA has the world’s largest reported strategic oil reserves. China, on the other hand, only began storing oil reserves in 2007. It has not published the volume of its reserves regularly ever since: The latest data published by the National Bureau of Statistics is from 2017, when China held a total of around 280 million barrels at seven locations, including Dalian, Qingdao, or the coast of the province of Zhejiang. However, experts believe that China stockpiled a large additional amount, especially in March and April 2020. Back then, at the beginning of the Covid pandemic, oil prices were at their lowest.
Oil security has been of great strategic importance to China for decades. The People’s Republic is by far the world’s largest oil importer, as it has only small reserves of its own. In 2020, China imported just under three-quarters of the oil it consumed. Wang Yongzhong estimates that China’s crude oil reserves are currently roughly equivalent to 40-50 days’ worth of imports. That’s not a lot. The International Energy Agency recommends reserves equal to at least 90 days of net imports. But if it comes down to it, China can also draw on the stockpiles of its three oil companies, all of which are majority state-owned.
Whether China will be able to sell large quantities of released oil reserves, however, is uncertain. In September, Beijing had already announced that it would sell parts of its reserves to refineries via auctions. But only one of these auctions took place at all. It met with only moderate interest. If another auction of oil reserves were to take place, refiners might have little interest in bidding, analysts at S&P Global Platts said, citing sources within China’s oil sector. That is because “domestic demand slows down amid pandemic-related curbs ahead of Winter Olympics.”
Indeed, Beijing is expected to curtail refining activities in northern China to limit their emissions ahead of the Beijing Winter Olympics in February 2022. The ongoing zero-covid policy, with its numerous restrictions, is also currently severely limiting Chinese mobility. And this, in turn, is reducing demand for transport fuels. This trend is confirmed by import data from this year: Between January and October, China’s oil imports were 7.2, percent lower than in the same period last year. So it is an open question to what extent China will actually be able to contribute to the fight against the high oil prices.
Metin Hakverdis’ constituency of Hamburg-Bergedorf-Harburg has a very direct link to China: the Container Terminal Altenwerder. Several million containers are handled there every year – many from the Middle Kingdom. “It’s impressive when you stand up there on the bridge for half an hour and look at all the arrivals,” reports the Member of the Bundestag. The Hanseatic city has close contacts in the People’s Republic – as does Hakverdi. During the last legislative period, he was responsible for German-Chinese relations as the SPD parliamentary group’s China representative.
He has represented Hamburg’s south, where he grew up, in the German Bundestag since 2013. However, it was anything but sure that Hakverdi would one day become a politician. His father worked as a taxi driver, his mother was a secretary. Politics, he says, was not a big topic in his family. “My parents were especially united by the idea of advancement,” Hakverdi recalls. “They wanted the best for their children.” They were successful: Hakverdi studied law and became a lawyer. In 2002, he joined the SPD, and a few years later he won his first direct mandate for the Hamburg parliament.
In the Bundestag, he has so far been primarily concerned with international relations, and in recent years he has been a member of the Europe Committee, among other things. There he also received his function as China rapporteur for the Social Democrats. “At the beginning of the legislature, the position did not even exist, because no one in the committee felt responsible for China,” he says. Hakverdi wanted to change that, and he was quickly put to the test: 5G. Should technology from the Chinese company Huawei also be used to build the networks?
“Such major issues are very difficult to address in parliament because they affect so many areas,” says Hakverdi. He tried to get the members of all the committees involved to the table, and in the end, he succeeded. German politicians agreed on an update of the IT security law. The 52-year-old believes that the dispute over 5G has brought a debate to Germany that has been going on in the US for some time: What is the relationship with China?
This question cannot simply be answered with a buzzword such as competitor or partner. “A differentiated analysis is needed”. In it, he says, it is important to keep a level head and not lose sight of the bigger picture. “This is really a difficult discipline.” Hakverdi, who is also concerned about the transatlantic relationship, sees a solution: “Our goal must always be to develop a European position. Otherwise, in the game of the Big Powers, we are the ground under the dancing elephants.”
In this year’s Federal Elections, Hakverdi once again received a direct mandate. Whether he will continue to serve as China representative of the SPD parliamentary group is still open. Paul Meerkamp
