Table.Briefing: China

Eileen Gu and geopolitics + When will regulators discover NFTs?

  • Ski star Eileen Gu in political minefield
  • NFTs – only under Beijing’s control
  • Xi instructs on COVID situation in Hong Kong
  • China expands offshore oil production
  • Investment screening scares off investors
  • CATL plans more overseas locations
  • Olympic ticker: no precious metal and freezing temperatures
  • Johnny Ehrling on China’s numbers magic and the effect on the West
  • Profile: lawyer Patrick Heid on changes in Shanghai
Dear reader,

China has defended the apolitical Winter Olympics fairy tale for years. On Thursday, just three days before the end of the masquerade, the veils finally came off on the home stretch. A spokeswoman for the organizing committee BOCOG told the international press that the island state of Taiwan is an “inseparable part” of the People’s Republic and called the evidence of systematic forced labor by Uyghurs in Xinjiang a “lie”.

The statements were a slap in the face for the International Olympic Committee. For so long, the association with its German president Thomas Bach had placed itself protectively in front of the host country, parroting Beijing’s propaganda and, in the case of Peng Shuai, even refraining from asking China’s leadership for clarification.

How things stand with the numbers around the Winter Games remains a black box. Johnny Erling reveals how everyone from Karl-Heinz Rummenigge to IOC chief Thomas Bach, as well as major companies and investors, have been gullibly seduced by China’s magic of big numbers coupled with even bigger promises.

The most controversial Winter Games of modern times are also increasingly becoming a political minefield for up-and-coming star Eileen Gu. After accusations of betrayal in the US, there is now resentment in China about the privileged life of the 18-year-old athlete, who apparently has both passports in her pocket – Gu continues to avoid the question of her citizenship. Christiane Kühl wonders: Is the Eileen Gu hype already over? Because even in the People’s Republic, criticism of the high-flyer from California is increasing in the social networks. To at least get on the leadership in Beijing’s good side, Gu gave her first Olympic interview to the magazine of the Central Disciplinary Commission of the Communist Party.

China’s tech giants are also using the Winter Games to get the government on their side in a major venture: No sooner had the Beijing Winter Olympics begun than Alibaba unveiled a series of Olympic NFTs. The “Non-Fungible Tokens” are booming in the People’s Republic because they fuel hopes of big profits in a short time, as Ning Wang reports. Companies like Alibaba and Tencent are jumping on the bandwagon, worried about missing out on the next big digital trend. However, NFTs also function as speculative objects – and that is anything but welcome in Beijing. Will the regulators intervene here soon?

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Amelie Richter
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Feature

Eileen Gu in the maelstrom of geopolitics

Eileen Gu zieht eine Grimasse vor einem Olympia-Logo
Eileen Gu grimaces during the slopestyle competition in Beijing. She only won silver in her last attempt. Overall things aren’t coming up aces for Gu.

If it’s up to the exceptional athlete Eileen Gu, then sport alone will be the focus at the Olympics in Beijing. On Tuesday, she already won two medals, gold in big air and silver in slopestyle. Today, Thursday, she won the qualification in the halfpipe, it is her parade discipline. The medals will be decided on Friday. But the Chinese-American ski freestyle ace is getting more and more entangled in political controversies. On the one hand, this is due to clumsy to ignorant behavior. But the geopolitical system conflict between the West and China also plays a role. An identity both as Chinese and US-American seems impossible in these times. The home country of Gu’s mother is not just any country but an emerging great power that is under fire in the West for its human rights violations.

In this environment, trying to simply be an apolitical athlete during the most controversial Olympic Games in recent history is a hopeless endeavor. Especially after Eileen Gu had consciously decided to win medals and prestige for this very great power.

In the USA, Eileen Gu felt the force of her decision even before the Games. Critics spoke of “betrayal”. There, a corresponding hashtag was trending in social media for a long time. Users demanded that she gets kicked out of the US, that her admission to Stanford University is taken away, or reviled her in far worse ways. The conservative TV channel Fox News called her the “ungrateful child of America”. Another accusation is that Gu puts profit and fame above respect for human rights. She allowed herself to be instrumentalized by China at the Olympics and was thus the new face of communist oppression.

Eileen Gu: criticism now also in China

What is new, is that the 18-year-old is now also feeling the headwind of social media in China – albeit for completely different reasons. Just in the last few days, Gu got caught up in a debate about Internet censorship in China through an insensitive post on Instagram. An Instagram user had accused her of double standards, saying, “Why can you use Instagram and millions of mainland Chinese can’t, why do you get such special treatment as a Chinese citizen? It’s not fair, can you stand up for the millions of Chinese who don’t have internet freedom?” Instagram is blocked in China, as are other international social media apps such as Twitter, Facebook, and WhatsApp.

Gu replied succinctly, “Anyone can download a vpn its literally free on the App Store,” followed by a “thumbs up” emoji. Such “virtual private network” tunnels make it possible to bypass state servers on the Internet and thus visit blocked sites undetected. Therefore, Gu’s critic must also have either used a VPN – or be abroad. The catch: VPNs are forbidden in China. Their use is only tolerated by foreigners and some companies.

The reaction to Gu’s condescending response, therefore, followed not on Instagram but on the Chinese platform Weibo. Users shared a screenshot of the Instagram dialogue and commented. Some supported Gu in her defense of “the motherland” against “keyboard warriors”. Others, however, appeared disturbed. Some compared Gu’s post to a Chinese emperor’s quote about starving subjects, “Why don’t they eat minced meat?” The sentence reflected the emperor’s lack of understanding of the plight of many citizens. In the end, censors put an end to the heated banter by blocking the screenshot on Weibo. The authorities don’t want a dispute over China’s sporting figurehead.

Is the Eileen Gu hype over yet?

In China, Eileen Gu has actually been frenetically celebrated so far. On Weibo, she has almost two million followers. State media praise her top performances as well as her fresh demeanor. The Global Times praised Gu’s “confidence, passion, and courage” and quoted a 14-year-old student surnamed Fu: “I think she is very cool. She inspired many of my friends to do ‘exciting and dangerous’ sports such as skiing, ice hockey, and motorcycle scrambling.” Mission accomplished, so to speak.

But now, for the first time, thoughtful voices are mingling with the Gu euphoria. The web has been discussing her possible dual passport for a while now. According to all that is known so far, Eileen Gu still has US citizenship in addition to her Chinese passport. She does not comment on this, and no one has yet found evidence of denaturalization. (China.Table reported). Then, in recent days, the net debate about Gu’s privileged life expanded into a broader discussion about China’s persistent social inequality. For example, a post went viral comparing Eileen Gu’s life to the fate of a woman chained in a shed by her husband (China.Table reported). A video of the apparently mentally ill woman has been causing outrage across the country since January. “The reality is that the vast majority of women have no chance of becoming Eileen Gu,” the post reads.

The athlete grew up in affluent circumstances in California. She attended only the best schools there, as well as math courses at private schools in China during the summer. Her mother Gu Yan is a graduate of Peking University and, as the daughter of a former government official, is very well connected in China. In the US, her mother worked in an investment bank and made a lot of money. The daughter wants to study at the elite Stanford University after the Olympics. More than 20 sponsorship and advertising contracts in the US and China bring her more than the necessary money.

USA and China: minefield for Eileen Gu

Only those who experience it for themselves know what it’s really like to grow up in a family with two different cultural backgrounds. But Eileen Gu’s decision in 2019 to compete for China with immediate effect put her unwillingly in the minefield of conflict between Washington and Beijing. Many athletes from the US have competed for their ancestral countries in the past, notes Lincoln Mitchell, a sports expert at Columbia University’s School of International and Public Affairs in New York. “But never has there been such an outcry as with Gu.” This can only be explained by the intensity of systemic competition between the two powers and legitimate criticism of China for human rights abuses. Critics on social media and commentary sites have portrayed Gu’s decision to start for China as if she was “turning her back on the country that raised her and casting her lot with an authoritarian regime,” Mitchell wrote in a commentary for CNN.

“Media outlets have portrayed her as a bratty Gen Zer who is oblivious to the world around her. She may be a little bit of all these things, but she is also not entirely any of them,” Mitchell said. He is also convinced that the criticism of Gu cannot be separated from the growing racism against Asian Americans in the last year or two. Former President Trump has repeatedly referred to the COVID-19 pandemic as a “China virus” and has at least condoned the subsequent rise in violence against Asian immigrants and Americans of Asian descent. Whether that influenced the Gu family’s decision, no one knows.

Is Eileen Gu just a spoiled brat?

Gu obviously can’t really deal with this situation. Her mantra, “In China I’m Chinese, in the US I’m American” no longer holds water. Both countries are pushing for more unconditional loyalty than Gu has been willing to give so far. When asked during the Games why she had decided against the US and in favor of China, she replied almost defiantly that she had made the decision with the best of intentions. “If people don’t believe me and don’t like me, then that’s their loss.”

The West outside the US is looking primarily at Gu’s statements on the human rights situation in China. If the 18-year-old were to continue competing for the US, no one would probably ask her about it – on the contrary: Foreign athletes have been warned about the risks of making political statements during their stay in Beijing. Conversely, Chinese athletes such as the new snowboarding teen star Su Yiming are also not questioned about political issues because they would also put themselves in danger through criticism. But because Eileen Gu – albeit at the tender age of 15 – consciously decided to start for China, she is taken to task for taking a stand, according to the motto: If she does not distance herself, she is an accomplice.

Eileen Gu: no criticism of China

And criticism of China does not cross Eileen Gu’s lips. Time and again, it seems as if she is controlled in public by others – by her mother, perhaps, or by China’s sports and political officials. Gu gave her first interview at the Games to , of all things, the magazine of the Communist Party’s Central Disciplinary Commission, which prosecutes corrupt cadres. It was about innocuous things like her preparations for the Games, why she has a dragon symbol on her ski coats, and her commitment to extreme sports.

This choice does not seem natural for a trendy female skier but looks more like a controlling hand in the background. After a brief meeting with tennis player Peng Shuai, who has been under massive pressure for months in the opinion of virtually all observers, Gu said she was glad Peng was doing well “and doing her thing”. That sounded like she was simply parroting IOC chief Thomas Bach. Sometimes silence is better.

After all, it is relatively normal for an 18-year-old to not yet be able to confidently express a firm opinion. But China is a dictatorship that, at least from a Western perspective, cannot be viewed and commented on with such impartiality as Eileen Gu repeatedly tries to do. The fact that China is her mother’s home country counts for little in this context: No one in the West can imagine that anyone could feel emotional closeness to China unless they also support the authoritarian political system. In China itself, this is certainly seen differently, and so this may not be an issue for Gu as long as she is in Beijing. After she returns to the US, however, it could become a problem for her.

Eileen Gu: risk of hostility in the USA

Whether Gu really wanted to start for China of her own free will – or whether she had been subtly pushed in this direction for years by her mother – we may never know. But it is unlikely that even at the age of 15 in 2019, she has overestimated the political dimension of her move.

In any case, Gu’s case shows that the much-maligned “politicization of sport” has long been a reality: Even athletes do not move in a politics-free zone. As much as Eileen Gu wants to preserve both identities and stay away from politics, the world won’t let her. That must be clear to her from now on. It is even possible that the call for the US passport to be surrendered in China will become louder after the Olympics. Then, at the latest, Eileen Gu would have to make a final decision. And then perhaps she will also have to take a political stance.

  • Geopolitics
  • Olympia
  • Sports
  • USA

Beijing’s worries about digital cat images

The timing was no coincidence. No sooner had the Winter Olympics begun in Beijing than China’s tech giant Alibaba unveiled a series of Olympic NFTs – digital badges of the ongoing competitions to trade and invest online. NFTs are booming in the People’s Republic because they raise hopes of big profits in a short time. Companies like Alibaba and Tencent are jumping on the bandwagon, worried about missing out on the next big digital trend.

Olympic motifs seem to be a concession to regulators. They are probably intended to appease them before the authorities deal the tech companies the next blow. That’s because NFTs work like cryptocurrencies via blockchain. So anyone can verify who is the rightful owner of a token. But control by the masses is frowned upon by authoritarian governments. Is NFT therefore threatened with the same fate as cryptocurrency?

As the Chinese government cracked down on bitcoin cryptocurrency (China.Table reported), NFTs in China received their first damper. Last fall, the government banned transactions in the country when cryptocurrencies were involved. De facto, they have thus been banned from China.

Market volume already at over $12 billion

In September, the People’s Daily, the Communist Party’s mouthpiece, predicted that a “huge bubble” was developing in the NFT market. Officials from the People’s Bank of China (PBOC) also argued that the NFT market should be regulated because it could become a loophole for illegal activities such as money laundering and tax evasion. This means that NFTs are officially counted on, and it seems to be only a matter of time before the government puts a stop to this as well.

Behind the term NFT (Non-Fungible Token) lies the possibility of creating digital, non-exchangeable objects (in the jargon of the industry: minten). The business has really boomed in the recent past. The volume of the NFT market reached $12.7 billion in the first half of last year, according to Citic Securities – 310 times more than in 2018. Logically, such growth rates arouse desire among Alibaba and Co. But the concern resonates that Beijing will soon see “red lines” crossed.

The NFT boom was fueled by the art scene, which recognized an opportunity to create something distinctive with those tokens. The uniqueness that the works gain from NFT status is that the images become digital objects that do not exist again like this in the world. Blockchain technology provides the proof of uniqueness.

Beijing fears a strong capital outflow

So each of the digital images comes with a digitally securitized certificate that resides on a decentralized database. But here comes the sticking point: While artists and collectors have a new opportunity to earn from resales of these digital works since the production and proof of ownership are mapped on the blockchain, it does not specify what the trade and ownership explicitly express. Beijing thus wants to prevent and, above all, control manipulation of this gray area.

Badiucao, an artist censored for his political messages in China, recognizes political concern above all in Beijing’s NFT skepticism: “Blockchain technologies not only provide a secure way to offer important financial support to dissidents but also serve as an important immutable public record outside of authoritarian manipulation and control.”

Moreover, large amounts of capital could flow out via the NFT boom and destabilize China’s currency. And even the climate offers Beijing cause for action because blockchain technology involves complex computing tasks and consumes a lot of electricity for this purpose. The operators of so-called Bitcoin mining farms were simply cut off from electricity for this reason. As a result, the Bitcoin price crashed worldwide, and other cryptocurrencies such as Ethereum also came under pressure (China.Table reported).

There is also criticism in the West about the technology’s carbon footprint: In January, for example, a single transaction on the Ethereum blockchain had required more than 200 kilowatts of electricity, about as much as a two-person household in Germany uses per month on average. Ethereum is the currency used to pay for many NFTs as well.

The authorities want to prevent a speculative bubble because they fear social unrest. With the Evergrande case, the real estate market shows all too clearly how quickly residential space is misused for speculation (China.Table reported), and ordinary citizens have to fear for their existence from one day to the next.

Motor vehicle documents as digital certificates

This is one reason why China’s regulators are already working on their own NFTs and have dubbed them Distributed Digital Collectibles (DDC). This is to make it clear that the focus is no longer on tokens but on collectibles. Instead of cryptocurrency, the DDC can only be paid for with the Chinese yuan. In addition, the China Blockchain Services Network (BSN) has been in existence since the end of January. It is intended to serve as a cornerstone to establish its own NFT infrastructure. Industry experts see this “as an important step toward building a Chinese NFT economy”.

He Yifan, director of Red Date Technology, which is providing technical support for the government’s BSN project, believes NFT “have no legal problems in China”, provided they avoid cryptocurrencies such as Bitcoin. China-based consultancy Dezan Shira experts say the Chinese NFT economy is expected to look different from its Western counterparts. According to CCTV, the three largest tech companies have committed to keeping their NFT markets away from cryptocurrencies. Even the terms commonly used in the industry (minting, dropping, sweeping, or flipping) would be avoided at all costs.

But even if it seems at first glance that NFTs will no longer have much of a future on the Chinese market, tech companies are already discovering a new business opportunity. They see an opportunity to earn money with digital certificates in everyday things like university diplomas or car license plates. Not millions in one fell swoop, but a penny saved is a penny earned. And every year, around ten million young people graduate from university.

  • Blockchain
  • Finance
  • Technology

News

Hong Kong to house COVID patients in hotels

Hong Kong’s Chief Executive Carrie Lam has urged the city’s residents to “remain confident” and support anti-COVID measures. “With utmost concern and unwavering support from President Xi Jinping […] Everyone in society must now unite to weather the fifth wave of the epidemic and show the spirit of Hong Kong to the fullest,” Lam said. According to reports, she spoke with local hotel operators to vacate up to 10,000 hotel rooms for the isolation of patients with mild symptoms and close contacts. Security chief Chris Tang was to oversee the operation of participating isolation hotels, according to Lam.

China’s President Xi Jinping had addressed Hong Kong’s leadership on Tuesday and publicly issued instructions. The “overriding mission” must be to stabilize and control the spread of coronavirus in Hong Kong, Xi said, according to state media. China had also announced to support Hong Kong with testing and quarantine capacities and to send antigen tests, protective equipment, and food. The South China Morning Post reported Wednesday that the central government had formed a high-level coordination task force. Its purpose is to supervise COVID measures in Hong Kong.

The highly contagious Omicron variant currently has the financial metropolis firmly in its grip. Hospitals are at full capacity or overloaded, and some patients had to be treated in makeshift rooms and outdoors in cold and rainy conditions. Authorities are struggling to keep up with testing and tracing infections (China.Table reported).

On Thursday, health officials reported a record 6,100 confirmed new infections and another 6,3000 preliminary positive cases – a massive increase from about 100 newly registered cases per day in early February, but still lower than in other major cities worldwide. However, a further surge in new infections is expected. rtr/ari

  • Coronavirus
  • Health
  • Hongkong
  • Xi Jinping

China expands offshore oil production

China National Offshore Oil (CNOOC) will invest $13 billion to secure the country’s oil and gas supply. This is according to a report by China’s largest offshore oil and gas drilling company, as reported by Bloomberg. The company has signed contracts with 12 international corporations. Four of these contracts involve the expansion of oil production off China’s coasts. Partners include companies such as Total Energies SE and Conoco Phillips. Other contracts include oil and liquefied natural gas supplies from Kuwait and the USA.

CNOOC plans to increase its production by as much as 40 million barrels of crude oil this year, according to Bloomberg. China’s two larger national oil producers, Petrochina and Sinopec, also plan to expand production. The goal is to guarantee the country’s power security. Beijing has given power security new priority on its political agenda after last year’s energy crisis. nib

  • Energy
  • Raw materials

IfW talk: Investment screening deters potential buyers

The review of planned company acquisitions in Germany is having an increasingly deterring effect on Chinese investors. That is the summary of an online discussion event held by the Kiel Institute for the World Economy (IfW) entitled “How do investment reviews affect (Chinese) direct investments?” on Thursday.

Even though the German Federal Ministry of Economics has not yet issued an explicit ban, the very existence of a bureaucratic review process puts a strain on acquisitions in Germany. “The mere fact that a procedure is required leads to delays and uncertainty, and that causes a certain reluctance,” observes lawyer Alexander Honrath of the law firm Eversheds Sutherland in Munich. When acquiring a company, it is important to act quickly. A European potential buyer whose bid is not subject to review has a clear advantage over a buyer from China.

The German government had amended the Foreign Trade and Payments Ordinance in May 2020. It has introduced significant monitoring for company takeovers by actors outside the EU. Mandatory declaration and approval requirements are now in place. Previously, such transactions could proceed largely without government intervention. Procedures now sometimes take up to several months. The sale of Siltronic to Globalwafers (China.Table reported) fell through because the Ministry of Economy still had not granted approval even after a year. “You don’t need to ban something to achieve an effect,” Honrath said. The ministry had not issued an objection but had merely let the deadline pass.

At the global level, the OECD observes a sharp increase in regulations targeting potential buyers from other parts of the world. “We are seeing dramatic changes in the quality of regulations here, which suddenly have much more practical relevance,” says Joachim Pohl of the OECD’s Investment Committee. Until a few years ago, most investment controls were only on paper and played no role in administrative practice. Since 2009, the organization has now noted an increase of detailed regulations in major economies and their consistent implementation in practice. There are now deadlines, competencies, and criteria.

On top of that, Covid created yet another new situation, as goods such as masks that were previously considered to be in abundance suddenly became scarce. So while up until the 1990s, the defense sector was primarily monitored, today it is often pharmaceuticals, technology, and numerous other industries as well. The perception of risk has widened dramatically, says Pohl.

In the historical context, the situation has thus completely changed within one generation. In the 1970s, acquisitions mainly took place between allied countries, such as Germany and the USA. At that time, no one seriously considered regulating acquisitions. In the future, says Pohl, a wide variety of commodity groups could also be classified as critical. If, for example, climate change leads to food shortages, investment controls for reasons of national security could be expected here as well. fin

The next event in the IfW’s Global China Conversations series will be held on March 24, 2022, entitled “EU-China Trade Conflicts and the case of Lithuania: What Role does the WTO play?” will take place. Speakers are Prof. Dr. Christian Hederer (Wildau University of Applied Sciences) and Juergen Matthes (IW Cologne). China.Table is media partner of the event series.

  • Geopolitics
  • Germany
  • Health
  • Trade

CATL plans additional expansion overseas

Chinese EV battery manufacturer CATL is looking to expand facilities outside China. “The company plans to expand overseas production facilities and improve training for foreign employees in the future,” CATL said in a statement released after an investor meeting on Monday. According to the business magazine Caixin, CATL has been in talks with clients in the US about developing production plants. Against the backdrop of supply chain problems caused by the aftermath of the global Covid pandemic, CATL wants to produce “closer” to its key markets, according to the statement.

Of CATL’s ten production sites, most are located in the People’s Republic. In Germany, CATL is currently building a factory in Thuringia: CATL plans to start manufacturing lithium-ion batteries near Erfurt before the end of this year (China.Table reported).

According to Caixin’s calculations, CATL currently holds more than 30 percent of the global EV battery market. In China, the company even dominates more than half of the battery market. niw

  • Autoindustrie

Olympics ticker

The Chinese team failed to win any medals on Thursday. However, ski freestyle star Eileen Gu won the qualification in the halfpipe and thus stoked medal hopes for Friday. Meanwhile, the weather is getting colder and colder. Even if winter athletes are generally considered to be hardened: The icy temperatures are causing problems. The last women’s biathlon competition in Zhangjiakou scheduled for Saturday was moved forward to Friday as a precautionary measure.

  • China’s freestyle star Eileen Gu has positioned herself for the medal fight in the ski freestyle halfpipe on Friday. On Thursday, she won the qualification. The halfpipe is her signature discipline. So far, Gu has not been able to win any qualification. In the end, however, only medals count anyway: Gu already won one gold and one silver medal. Two other Chinese women also qualified with good results: Zhang Kexin ranked 5th, Li Fanghui 7th. China’s men also went into the qualification on Thursday. However, none of the four athletes made it to the final.
  • In curling, all preliminary rounds of women and men are now finished. Team China missed the semifinals in both events. For the men’s event, the semi-final will take place on Thursday, for the women’s event on Friday.
  • The freezing cold at the outdoor events in Yanqing and Zhangjiakou is rapidly becoming a problem for athletes and organizers. Many of the athletes apply tape to the exposed parts of their bodies, such as their faces, or wrap scarves around their necks and heads. The FFP2 mask also provides a little warmth before and after the competition. The venues of Zhangjiakou are located at an altitude of around 1,700 meters, so it is still much colder there than in the capital itself. This is not only unpleasant, but can also be dangerous for the athletes’ body temperature and respiratory system. Hermann Weinbuch, national coach of the nordic combined, described the temperatures as “borderline” in an interview with German broadcaster ZDF on Tuesday after his athletes competed in ski jumping and cross-country skiing at minus 18 Degrees Celsius. Over the weekend, temperatures are expected to drop even further. The organizers therefore decided to move up the women’s biathlon mass start from Saturday to Friday. The women will thus start on the same day as the men.
  • Three days before the closing ceremony of the Olympics, the organizing committee BOCOG reported no new Covid cases for the first time on Thursday. In the first days after the arrival wave, BOCOG had still registered more than 30 new cases daily. Athletes such as the nordic combined athlete Eric Frenzel missed many events due to their infections. Only at the final relay on Thursday, Frenzel was able to compete. Due to the strict isolation of the Olympic bubble and daily PCR tests of all athletes, attendants or reporters, the number of cases dropped rapidly after the start of the Olympics.
  • The daily press conference of the organizing committee BOCOG and the IOC turned into a farce on Thursday. BOCOG spokeswoman Yan Jiarong repeatedly interrupted IOC spokesman Mark Adams. While Adams was talking about the role of Taiwanese athletes in the opening ceremony, she interrupted, “what I want to say is that there is only one China in the world.” When the issue of forced labor and internment camps for Uyghurs in Xinjiang came up, Yan said, “I think these questions are based on lies, some authorities have already disputed such false information with a lot of solid evidence.” With that, she put the IOC on the spot. Sometime later Adams said, “it’s a view from Madam Yan. I don’t think it’s particularly relevant to this press conference. It’s certainly not relevant to the IOC. We are very, very concerned about protecting human rights within our sphere, which is within the Olympic Games.” Fo years, democtratic nations had critized the IOC for its refusal to call out China’s human rights abuses. ck
  • Civil Society
  • Olympia
  • Sports

Column

The magic of Chinese numbers

By Johnny Erling
Ein Bild von Johnny Erling

In 1937, Carl Crow’s amusing guidebook on doing business in the Middle Kingdom became a bestseller thanks to its title “400 Million Customers”. Australia’s Ross Terrill also managed a sales hit in 1971, calling his book “800 Million”. Whenever Beijing entices with three-digit numbers, they trigger Pavlovian reflexes even in sober contemporaries such as sports managers Karl-Heinz Rummenigge or Thomas Bach.

How many people live in China? According to the census conducted by Beijing every ten years, for which seven million census takers (most recently in 2020) visited all households nationwide, there were 1.4 billion.
Really? Even Mao Zedong once had his doubts. When US reporter Edgar Snow asked him on January 9, 1965, how large the population was in the People’s Republic, the Great Chairman told him a state secret: He had been told, “680 to 690 million”. But he did not believe that: “How can we be so many?” With statistics it is such a special thing. Farm families have an advantage if they only report their births, but not all deaths.

Chinese figures are therefore often accompanied by the addition “左右” (left and right), are therefore only an “approximate” approximation of reality. But it is precisely the superlatives that make foreigners rave about the potential of China and its market.

This also applies to sports. At the beginning of 2017, FC Bayern München invited us correspondents to the opening of its China representation in the “German Center” Shanghai. Club boss Karl-Heinz Rummenigge explained why his club was so late in gaining a foothold in China, when Barcelona, Real Madrid and Manchester United had long been flying the flag: He had a good reason for this: His Bavarians had now reached “136 million fans” in China’s social media. Now they can get started and ensure “sustainable background noise”. Rummenigge did not say how he arrived at the figures. According to the statistics, one in ten Chinese would be enthusiastic about the German record champion. The FC doesn’t even dare dream of such a ratio at home. As of February 1, 2022, the club had 358,399 registered club members in Germany.

The magic emanating from China’s sheer masses also worked on IOC chief Thomas Bach. After meeting President Xi Jinping in 2015, he told everyone that Xi wanted to turn 300 million of his countrymen into active fans of ice and snow by the start of the 2022 Winter Games. Bach spread these glad tidings everywhere as if it were a matter of proselytizing infidels.

Xi actually kept his word. During the virtual exchange of New Year’s greetings with Bach, he announced on January 25, 2022, that he succeeded. “Early on, while we were still bidding to host, I once told you: For China, the biggest goal of these Winter Games is to get 300 million people to participate in ice and snow sports. (早在申办时,我就提出,中国这次办奥的最大目的,就是带动3亿人参与冰雪运动). Bach reacted with delight, saying this would open a new “era for global winter sports… This is an unprecedented, great achievement and will become an important legacy of Beijing 2022 for the Chinese people and for the Olympic Movement.”

Beijing had a two-meter-high monument with a 72-centimeter bronze bust of IOC chief Thomas Bach erected in the “Beijing Dongsi Olympic Park” (东四奥林匹克社区公园) in mid-January in gratitude for the Winter Games.

Beijing ensnared Bach by every trick in the book of Chinese attention. First, in mid-January, it had a two-meter-high monument erected to the IOC chief with his 72-centimeter bronze bust in the “Beijing Dongsi Olympic Park” (东四奥林匹克社区公园). Bach stands there as third in line alongside his predecessors Rogge and Samaranch on an equal footing. At the inauguration ceremony, it was said that Bach had brought the “splendor of the Games” to China’s capital for the second time.

As a third surprise, Xinhua reported on February 12 that China, in good socialist tradition, had overachieved its plan: Xi had once promised 300 million winter sports fans. But by the end of January – according to the statistics bureau – “more than 346 million Chinese had participated in winter sports activities since 2015”.

The IOC reported the figures triumphantly in its press release: China had “smashed” its once ambitious target figure of 300 million. In addition, it generously rounded up another record figure: “Winter sports have been included in the curriculum in almost 3,000 schools in China. But China’s “People’s Newspaper” had only written the day before about “more than 2,000 schools“.

China’s dream is written on the wall plaque erected in 2015 directly in front of Taizicheng village (太子城) in Chongli district. The village is fully developed as a venue for the Winter Games, with a high-speed railroad station. On the blackboard in front of the bare mountains is the dream wish: “We want to become China’s Davos.”

It’s no wonder that not a single critical word can be heard from the IOC about the Games. A little more skepticism about the figures would have been welcome. Even state media, such as the English-language China Daily, kept their distance. It reported that the statistics bureau had just surveyed 40,100 people from October. The results, China Daily said, “suggest” that 346 million people were attracted to winter sports. Foreign media warned more directly to better scrutinize China’s success stories. Britain’s Economist wrote of an “avalanche of risks threatening China’s ski industry”. Investors had “poured mountains of money into the snow business. Will it melt away?”

The Chinese figures also delighted the international organizers of boxing world championships in Beijing and Formula One races, for which Shanghai built an extravagant arena. But the wildest hypes at home and abroad were for soccer. President Xi had declared kicking a state duty for China’s image and demanded the nation’s rise to world soccer power by 2050. He had a football reform steering group established in 2015 to include soccer in the curriculum for elementary and middle schools. Xi called for introducing the sport to 50,000 schools and building 60,000 soccer fields nationwide.

Sport as a political task: Chinese caricature of the kicking Head of State Xi Jinping, who before he started China’s winter sports fever, fueled the soccer fever.

Money poured in for the import and transfer of international soccer stars and coaches. Super-rich corporate leaders from Alibaba, Wanda to Evergrande bought into or outright took over more than three dozen illustrious soccer clubs at home and abroad for billions of US dollars. Today, almost all of the clubs have been sold again at a loss. The awakening ended in bankruptcy. Seven years have passed since Beijing established the football reform steering group in 2015. Unfortunately, little remains of all its plans other than the news of its establishment, as if it never existed,” wrote the online website “Duowei Xinwen”. 今天,距离中国足球改革领导小组成立已经过去了7年,很遗憾,除了成立,很难再查到任何消息,仿佛不曾存在一般.

China’s magic of big numbers coupled with even bigger promises continues to captivate the gullible. This is also true for businessmen and investors. In their own way, large Western entrepreneurs have tried to make the numbers at least add up for them. Under the name “Oil for China’s Lamps,” John D. Rockefeller, for example, had his company, Standard Oil, deliver kerosene oil lamps to more than ten million Chinese for free or for a few cents after 1900. He then exported and sold them expensive lamp oil, on which he had a monopoly.

Almost 100 years later, the Anglo-Dutch conglomerate Unilever copied the business model. It gave away ice cream chests to tens of thousands of stores in China’s major cities, with the stipulation that only its Wall’s ice cream (known as Langnese in Germany) be sold in them. Unilever supplied them through franchising from its ice cream joint ventures in China.

As with Rockefeller, the math worked out for Unilever, but only until countless competitors made life difficult for them. China’s large numbers lose their magnetic power just as quickly when the conditions are no longer met. Or, as in the case of sports officials, when they weren’t right in the first place.

  • Olympia
  • Society
  • Xi Jinping

Profile

Patrick Heid – misses the colorful Shanghai

Patrick Heid, Head of the Shanghai Office at the law firm Graf von Westphalen

After Patrick Heid returned from his first trip to China in the summer of 1998, he had more questions in his luggage than answers. While studying law in Cologne, Heid, then 22, had accompanied a buddy to Beijing for an internship. “After that, I started learning Mandarin right away,” Heid says, “and backpacked through the Chinese provinces almost every year.”

Since 2010, the 45-year-old Berliner has headed the Shanghai office of the law firm Graf von Westphalen. He specializes in advising medium-sized companies from German-speaking countries that have invested in China. Heid enjoys his work unabatedly. “Every day, I learn something new about China’s culture and social peculiarities,” he says. Every day offers surprises with new topics, new problems to solve. He says he feels life happens twice as fast here as in Europe. “I am therefore never bored.”

His fascination for China influenced Patrick Heid’s professional career from the very beginning: After graduating from law school in 2003, he spent a year learning Chinese at the University of Taipei. He then deliberately applied to law firms with an office in the People’s Republic. He first gained a foothold in China in 2009 in the Beijing office of a US law firm, after which he built up the Shanghai office for Graf von Westphalen from scratch.

Intercultural consulting between China and Europe

Today, Heid spends only about a third of his time on legal work. He is more concerned with strategic issues and intercultural consulting, as he calls it. “Companies in Europe know a lot more about China today than they used to,” he says, “but they’re still less and less able to make sense of this country.” Therefore, the need for explanations and interpretations is greater than ever.

The question of how to generate more China expertise in Europe has been on Heid’s mind for some time. Germany has “fortunately” developed a more realistic and critical view of the country. “But unfortunately, politicians have not yet understood how to react to the new pace in Beijing.” The fact that hardly any journalists and fewer and fewer expats are able to report from China fills him with concern. It is increasingly difficult or impossible to obtain information from independent or foreign media in China. For companies, associations, and politicians in Germany and Europe, Heid, therefore, sees not only an information crisis but also an interpretation crisis.

Life has become more monotonous and uniform

What Heid regrets most is that even in everyday life, one can hardly talk openly with the Chinese about their country and the cultural or social differences to Western countries: “Once, I could openly address everything in a personal conversation, but today any dissenting opinion is dismissed as Western ideology and China-bashing.” But if there is a lack of open exchange and mutual learning, China loses more and more of its appeal for a curious person like him, says Heid.

In addition, everyday life in Shanghai has lost much of its colorful and exciting corners. Like all the city’s residents, he is constantly filmed in public. The places and activities that once gave Shanghai its distinctive aura have almost all disappeared or been banned in an effort to give the city as flawless a face as possible. “The only place you can really go in your free time now is to a theme park or one of the many flashing shopping malls.” So for all the enthusiasm for his work, Heid has to conclude, “The bottom line is that life for a foreign person in China has become more monotonous and uniform in the past five years.” Adrian Meyer

  • Society

Executive Moves

As Managing Director of Audi China, Helmut Stettner will also head the new EV plant in China. Work on the construction of the roughly €3 billion factory in Changchun is scheduled to begin as early as April (China.Table reported). The Audi manager with experience in China had taken over as head of the joint venture between Audi and China FAW Group, which was founded in 2020, in May 2021 (China.Table reported). Stettner already worked for the Volkswagen Group in China from 2011 to 2015.

Jens Puttfarcken, the former CEO of Porsche in China, is moving to sister brand Audi to become Audi’s new head of sales for Europe. Puttfarcken has been with Porsche for almost 25 years. After holding positions in customer relationship management, sales Europe, After Sales, he headed the home market Germany from 2015 to 2018. Puttfarcken then moved to Shanghai as president and CEO of Porsche China Motors Ltd. Puttfarcken will take over from Martin Sander, who has moved to Ford Europe, on June 1.

Dessert

Blue mountains: Photovoltaic panels cover the hills in Yongren in southwest China’s Yunnan province. The sunny Yongren county has encouraged companies to build photovoltaic power plants to create jobs for local villagers, state media reported.

China.Table editorial office

CHINA.TABLE EDITORIAL OFFICE

Licenses:
    • Ski star Eileen Gu in political minefield
    • NFTs – only under Beijing’s control
    • Xi instructs on COVID situation in Hong Kong
    • China expands offshore oil production
    • Investment screening scares off investors
    • CATL plans more overseas locations
    • Olympic ticker: no precious metal and freezing temperatures
    • Johnny Ehrling on China’s numbers magic and the effect on the West
    • Profile: lawyer Patrick Heid on changes in Shanghai
    Dear reader,

    China has defended the apolitical Winter Olympics fairy tale for years. On Thursday, just three days before the end of the masquerade, the veils finally came off on the home stretch. A spokeswoman for the organizing committee BOCOG told the international press that the island state of Taiwan is an “inseparable part” of the People’s Republic and called the evidence of systematic forced labor by Uyghurs in Xinjiang a “lie”.

    The statements were a slap in the face for the International Olympic Committee. For so long, the association with its German president Thomas Bach had placed itself protectively in front of the host country, parroting Beijing’s propaganda and, in the case of Peng Shuai, even refraining from asking China’s leadership for clarification.

    How things stand with the numbers around the Winter Games remains a black box. Johnny Erling reveals how everyone from Karl-Heinz Rummenigge to IOC chief Thomas Bach, as well as major companies and investors, have been gullibly seduced by China’s magic of big numbers coupled with even bigger promises.

    The most controversial Winter Games of modern times are also increasingly becoming a political minefield for up-and-coming star Eileen Gu. After accusations of betrayal in the US, there is now resentment in China about the privileged life of the 18-year-old athlete, who apparently has both passports in her pocket – Gu continues to avoid the question of her citizenship. Christiane Kühl wonders: Is the Eileen Gu hype already over? Because even in the People’s Republic, criticism of the high-flyer from California is increasing in the social networks. To at least get on the leadership in Beijing’s good side, Gu gave her first Olympic interview to the magazine of the Central Disciplinary Commission of the Communist Party.

    China’s tech giants are also using the Winter Games to get the government on their side in a major venture: No sooner had the Beijing Winter Olympics begun than Alibaba unveiled a series of Olympic NFTs. The “Non-Fungible Tokens” are booming in the People’s Republic because they fuel hopes of big profits in a short time, as Ning Wang reports. Companies like Alibaba and Tencent are jumping on the bandwagon, worried about missing out on the next big digital trend. However, NFTs also function as speculative objects – and that is anything but welcome in Beijing. Will the regulators intervene here soon?

    Your
    Amelie Richter
    Image of Amelie  Richter

    Feature

    Eileen Gu in the maelstrom of geopolitics

    Eileen Gu zieht eine Grimasse vor einem Olympia-Logo
    Eileen Gu grimaces during the slopestyle competition in Beijing. She only won silver in her last attempt. Overall things aren’t coming up aces for Gu.

    If it’s up to the exceptional athlete Eileen Gu, then sport alone will be the focus at the Olympics in Beijing. On Tuesday, she already won two medals, gold in big air and silver in slopestyle. Today, Thursday, she won the qualification in the halfpipe, it is her parade discipline. The medals will be decided on Friday. But the Chinese-American ski freestyle ace is getting more and more entangled in political controversies. On the one hand, this is due to clumsy to ignorant behavior. But the geopolitical system conflict between the West and China also plays a role. An identity both as Chinese and US-American seems impossible in these times. The home country of Gu’s mother is not just any country but an emerging great power that is under fire in the West for its human rights violations.

    In this environment, trying to simply be an apolitical athlete during the most controversial Olympic Games in recent history is a hopeless endeavor. Especially after Eileen Gu had consciously decided to win medals and prestige for this very great power.

    In the USA, Eileen Gu felt the force of her decision even before the Games. Critics spoke of “betrayal”. There, a corresponding hashtag was trending in social media for a long time. Users demanded that she gets kicked out of the US, that her admission to Stanford University is taken away, or reviled her in far worse ways. The conservative TV channel Fox News called her the “ungrateful child of America”. Another accusation is that Gu puts profit and fame above respect for human rights. She allowed herself to be instrumentalized by China at the Olympics and was thus the new face of communist oppression.

    Eileen Gu: criticism now also in China

    What is new, is that the 18-year-old is now also feeling the headwind of social media in China – albeit for completely different reasons. Just in the last few days, Gu got caught up in a debate about Internet censorship in China through an insensitive post on Instagram. An Instagram user had accused her of double standards, saying, “Why can you use Instagram and millions of mainland Chinese can’t, why do you get such special treatment as a Chinese citizen? It’s not fair, can you stand up for the millions of Chinese who don’t have internet freedom?” Instagram is blocked in China, as are other international social media apps such as Twitter, Facebook, and WhatsApp.

    Gu replied succinctly, “Anyone can download a vpn its literally free on the App Store,” followed by a “thumbs up” emoji. Such “virtual private network” tunnels make it possible to bypass state servers on the Internet and thus visit blocked sites undetected. Therefore, Gu’s critic must also have either used a VPN – or be abroad. The catch: VPNs are forbidden in China. Their use is only tolerated by foreigners and some companies.

    The reaction to Gu’s condescending response, therefore, followed not on Instagram but on the Chinese platform Weibo. Users shared a screenshot of the Instagram dialogue and commented. Some supported Gu in her defense of “the motherland” against “keyboard warriors”. Others, however, appeared disturbed. Some compared Gu’s post to a Chinese emperor’s quote about starving subjects, “Why don’t they eat minced meat?” The sentence reflected the emperor’s lack of understanding of the plight of many citizens. In the end, censors put an end to the heated banter by blocking the screenshot on Weibo. The authorities don’t want a dispute over China’s sporting figurehead.

    Is the Eileen Gu hype over yet?

    In China, Eileen Gu has actually been frenetically celebrated so far. On Weibo, she has almost two million followers. State media praise her top performances as well as her fresh demeanor. The Global Times praised Gu’s “confidence, passion, and courage” and quoted a 14-year-old student surnamed Fu: “I think she is very cool. She inspired many of my friends to do ‘exciting and dangerous’ sports such as skiing, ice hockey, and motorcycle scrambling.” Mission accomplished, so to speak.

    But now, for the first time, thoughtful voices are mingling with the Gu euphoria. The web has been discussing her possible dual passport for a while now. According to all that is known so far, Eileen Gu still has US citizenship in addition to her Chinese passport. She does not comment on this, and no one has yet found evidence of denaturalization. (China.Table reported). Then, in recent days, the net debate about Gu’s privileged life expanded into a broader discussion about China’s persistent social inequality. For example, a post went viral comparing Eileen Gu’s life to the fate of a woman chained in a shed by her husband (China.Table reported). A video of the apparently mentally ill woman has been causing outrage across the country since January. “The reality is that the vast majority of women have no chance of becoming Eileen Gu,” the post reads.

    The athlete grew up in affluent circumstances in California. She attended only the best schools there, as well as math courses at private schools in China during the summer. Her mother Gu Yan is a graduate of Peking University and, as the daughter of a former government official, is very well connected in China. In the US, her mother worked in an investment bank and made a lot of money. The daughter wants to study at the elite Stanford University after the Olympics. More than 20 sponsorship and advertising contracts in the US and China bring her more than the necessary money.

    USA and China: minefield for Eileen Gu

    Only those who experience it for themselves know what it’s really like to grow up in a family with two different cultural backgrounds. But Eileen Gu’s decision in 2019 to compete for China with immediate effect put her unwillingly in the minefield of conflict between Washington and Beijing. Many athletes from the US have competed for their ancestral countries in the past, notes Lincoln Mitchell, a sports expert at Columbia University’s School of International and Public Affairs in New York. “But never has there been such an outcry as with Gu.” This can only be explained by the intensity of systemic competition between the two powers and legitimate criticism of China for human rights abuses. Critics on social media and commentary sites have portrayed Gu’s decision to start for China as if she was “turning her back on the country that raised her and casting her lot with an authoritarian regime,” Mitchell wrote in a commentary for CNN.

    “Media outlets have portrayed her as a bratty Gen Zer who is oblivious to the world around her. She may be a little bit of all these things, but she is also not entirely any of them,” Mitchell said. He is also convinced that the criticism of Gu cannot be separated from the growing racism against Asian Americans in the last year or two. Former President Trump has repeatedly referred to the COVID-19 pandemic as a “China virus” and has at least condoned the subsequent rise in violence against Asian immigrants and Americans of Asian descent. Whether that influenced the Gu family’s decision, no one knows.

    Is Eileen Gu just a spoiled brat?

    Gu obviously can’t really deal with this situation. Her mantra, “In China I’m Chinese, in the US I’m American” no longer holds water. Both countries are pushing for more unconditional loyalty than Gu has been willing to give so far. When asked during the Games why she had decided against the US and in favor of China, she replied almost defiantly that she had made the decision with the best of intentions. “If people don’t believe me and don’t like me, then that’s their loss.”

    The West outside the US is looking primarily at Gu’s statements on the human rights situation in China. If the 18-year-old were to continue competing for the US, no one would probably ask her about it – on the contrary: Foreign athletes have been warned about the risks of making political statements during their stay in Beijing. Conversely, Chinese athletes such as the new snowboarding teen star Su Yiming are also not questioned about political issues because they would also put themselves in danger through criticism. But because Eileen Gu – albeit at the tender age of 15 – consciously decided to start for China, she is taken to task for taking a stand, according to the motto: If she does not distance herself, she is an accomplice.

    Eileen Gu: no criticism of China

    And criticism of China does not cross Eileen Gu’s lips. Time and again, it seems as if she is controlled in public by others – by her mother, perhaps, or by China’s sports and political officials. Gu gave her first interview at the Games to , of all things, the magazine of the Communist Party’s Central Disciplinary Commission, which prosecutes corrupt cadres. It was about innocuous things like her preparations for the Games, why she has a dragon symbol on her ski coats, and her commitment to extreme sports.

    This choice does not seem natural for a trendy female skier but looks more like a controlling hand in the background. After a brief meeting with tennis player Peng Shuai, who has been under massive pressure for months in the opinion of virtually all observers, Gu said she was glad Peng was doing well “and doing her thing”. That sounded like she was simply parroting IOC chief Thomas Bach. Sometimes silence is better.

    After all, it is relatively normal for an 18-year-old to not yet be able to confidently express a firm opinion. But China is a dictatorship that, at least from a Western perspective, cannot be viewed and commented on with such impartiality as Eileen Gu repeatedly tries to do. The fact that China is her mother’s home country counts for little in this context: No one in the West can imagine that anyone could feel emotional closeness to China unless they also support the authoritarian political system. In China itself, this is certainly seen differently, and so this may not be an issue for Gu as long as she is in Beijing. After she returns to the US, however, it could become a problem for her.

    Eileen Gu: risk of hostility in the USA

    Whether Gu really wanted to start for China of her own free will – or whether she had been subtly pushed in this direction for years by her mother – we may never know. But it is unlikely that even at the age of 15 in 2019, she has overestimated the political dimension of her move.

    In any case, Gu’s case shows that the much-maligned “politicization of sport” has long been a reality: Even athletes do not move in a politics-free zone. As much as Eileen Gu wants to preserve both identities and stay away from politics, the world won’t let her. That must be clear to her from now on. It is even possible that the call for the US passport to be surrendered in China will become louder after the Olympics. Then, at the latest, Eileen Gu would have to make a final decision. And then perhaps she will also have to take a political stance.

    • Geopolitics
    • Olympia
    • Sports
    • USA

    Beijing’s worries about digital cat images

    The timing was no coincidence. No sooner had the Winter Olympics begun in Beijing than China’s tech giant Alibaba unveiled a series of Olympic NFTs – digital badges of the ongoing competitions to trade and invest online. NFTs are booming in the People’s Republic because they raise hopes of big profits in a short time. Companies like Alibaba and Tencent are jumping on the bandwagon, worried about missing out on the next big digital trend.

    Olympic motifs seem to be a concession to regulators. They are probably intended to appease them before the authorities deal the tech companies the next blow. That’s because NFTs work like cryptocurrencies via blockchain. So anyone can verify who is the rightful owner of a token. But control by the masses is frowned upon by authoritarian governments. Is NFT therefore threatened with the same fate as cryptocurrency?

    As the Chinese government cracked down on bitcoin cryptocurrency (China.Table reported), NFTs in China received their first damper. Last fall, the government banned transactions in the country when cryptocurrencies were involved. De facto, they have thus been banned from China.

    Market volume already at over $12 billion

    In September, the People’s Daily, the Communist Party’s mouthpiece, predicted that a “huge bubble” was developing in the NFT market. Officials from the People’s Bank of China (PBOC) also argued that the NFT market should be regulated because it could become a loophole for illegal activities such as money laundering and tax evasion. This means that NFTs are officially counted on, and it seems to be only a matter of time before the government puts a stop to this as well.

    Behind the term NFT (Non-Fungible Token) lies the possibility of creating digital, non-exchangeable objects (in the jargon of the industry: minten). The business has really boomed in the recent past. The volume of the NFT market reached $12.7 billion in the first half of last year, according to Citic Securities – 310 times more than in 2018. Logically, such growth rates arouse desire among Alibaba and Co. But the concern resonates that Beijing will soon see “red lines” crossed.

    The NFT boom was fueled by the art scene, which recognized an opportunity to create something distinctive with those tokens. The uniqueness that the works gain from NFT status is that the images become digital objects that do not exist again like this in the world. Blockchain technology provides the proof of uniqueness.

    Beijing fears a strong capital outflow

    So each of the digital images comes with a digitally securitized certificate that resides on a decentralized database. But here comes the sticking point: While artists and collectors have a new opportunity to earn from resales of these digital works since the production and proof of ownership are mapped on the blockchain, it does not specify what the trade and ownership explicitly express. Beijing thus wants to prevent and, above all, control manipulation of this gray area.

    Badiucao, an artist censored for his political messages in China, recognizes political concern above all in Beijing’s NFT skepticism: “Blockchain technologies not only provide a secure way to offer important financial support to dissidents but also serve as an important immutable public record outside of authoritarian manipulation and control.”

    Moreover, large amounts of capital could flow out via the NFT boom and destabilize China’s currency. And even the climate offers Beijing cause for action because blockchain technology involves complex computing tasks and consumes a lot of electricity for this purpose. The operators of so-called Bitcoin mining farms were simply cut off from electricity for this reason. As a result, the Bitcoin price crashed worldwide, and other cryptocurrencies such as Ethereum also came under pressure (China.Table reported).

    There is also criticism in the West about the technology’s carbon footprint: In January, for example, a single transaction on the Ethereum blockchain had required more than 200 kilowatts of electricity, about as much as a two-person household in Germany uses per month on average. Ethereum is the currency used to pay for many NFTs as well.

    The authorities want to prevent a speculative bubble because they fear social unrest. With the Evergrande case, the real estate market shows all too clearly how quickly residential space is misused for speculation (China.Table reported), and ordinary citizens have to fear for their existence from one day to the next.

    Motor vehicle documents as digital certificates

    This is one reason why China’s regulators are already working on their own NFTs and have dubbed them Distributed Digital Collectibles (DDC). This is to make it clear that the focus is no longer on tokens but on collectibles. Instead of cryptocurrency, the DDC can only be paid for with the Chinese yuan. In addition, the China Blockchain Services Network (BSN) has been in existence since the end of January. It is intended to serve as a cornerstone to establish its own NFT infrastructure. Industry experts see this “as an important step toward building a Chinese NFT economy”.

    He Yifan, director of Red Date Technology, which is providing technical support for the government’s BSN project, believes NFT “have no legal problems in China”, provided they avoid cryptocurrencies such as Bitcoin. China-based consultancy Dezan Shira experts say the Chinese NFT economy is expected to look different from its Western counterparts. According to CCTV, the three largest tech companies have committed to keeping their NFT markets away from cryptocurrencies. Even the terms commonly used in the industry (minting, dropping, sweeping, or flipping) would be avoided at all costs.

    But even if it seems at first glance that NFTs will no longer have much of a future on the Chinese market, tech companies are already discovering a new business opportunity. They see an opportunity to earn money with digital certificates in everyday things like university diplomas or car license plates. Not millions in one fell swoop, but a penny saved is a penny earned. And every year, around ten million young people graduate from university.

    • Blockchain
    • Finance
    • Technology

    News

    Hong Kong to house COVID patients in hotels

    Hong Kong’s Chief Executive Carrie Lam has urged the city’s residents to “remain confident” and support anti-COVID measures. “With utmost concern and unwavering support from President Xi Jinping […] Everyone in society must now unite to weather the fifth wave of the epidemic and show the spirit of Hong Kong to the fullest,” Lam said. According to reports, she spoke with local hotel operators to vacate up to 10,000 hotel rooms for the isolation of patients with mild symptoms and close contacts. Security chief Chris Tang was to oversee the operation of participating isolation hotels, according to Lam.

    China’s President Xi Jinping had addressed Hong Kong’s leadership on Tuesday and publicly issued instructions. The “overriding mission” must be to stabilize and control the spread of coronavirus in Hong Kong, Xi said, according to state media. China had also announced to support Hong Kong with testing and quarantine capacities and to send antigen tests, protective equipment, and food. The South China Morning Post reported Wednesday that the central government had formed a high-level coordination task force. Its purpose is to supervise COVID measures in Hong Kong.

    The highly contagious Omicron variant currently has the financial metropolis firmly in its grip. Hospitals are at full capacity or overloaded, and some patients had to be treated in makeshift rooms and outdoors in cold and rainy conditions. Authorities are struggling to keep up with testing and tracing infections (China.Table reported).

    On Thursday, health officials reported a record 6,100 confirmed new infections and another 6,3000 preliminary positive cases – a massive increase from about 100 newly registered cases per day in early February, but still lower than in other major cities worldwide. However, a further surge in new infections is expected. rtr/ari

    • Coronavirus
    • Health
    • Hongkong
    • Xi Jinping

    China expands offshore oil production

    China National Offshore Oil (CNOOC) will invest $13 billion to secure the country’s oil and gas supply. This is according to a report by China’s largest offshore oil and gas drilling company, as reported by Bloomberg. The company has signed contracts with 12 international corporations. Four of these contracts involve the expansion of oil production off China’s coasts. Partners include companies such as Total Energies SE and Conoco Phillips. Other contracts include oil and liquefied natural gas supplies from Kuwait and the USA.

    CNOOC plans to increase its production by as much as 40 million barrels of crude oil this year, according to Bloomberg. China’s two larger national oil producers, Petrochina and Sinopec, also plan to expand production. The goal is to guarantee the country’s power security. Beijing has given power security new priority on its political agenda after last year’s energy crisis. nib

    • Energy
    • Raw materials

    IfW talk: Investment screening deters potential buyers

    The review of planned company acquisitions in Germany is having an increasingly deterring effect on Chinese investors. That is the summary of an online discussion event held by the Kiel Institute for the World Economy (IfW) entitled “How do investment reviews affect (Chinese) direct investments?” on Thursday.

    Even though the German Federal Ministry of Economics has not yet issued an explicit ban, the very existence of a bureaucratic review process puts a strain on acquisitions in Germany. “The mere fact that a procedure is required leads to delays and uncertainty, and that causes a certain reluctance,” observes lawyer Alexander Honrath of the law firm Eversheds Sutherland in Munich. When acquiring a company, it is important to act quickly. A European potential buyer whose bid is not subject to review has a clear advantage over a buyer from China.

    The German government had amended the Foreign Trade and Payments Ordinance in May 2020. It has introduced significant monitoring for company takeovers by actors outside the EU. Mandatory declaration and approval requirements are now in place. Previously, such transactions could proceed largely without government intervention. Procedures now sometimes take up to several months. The sale of Siltronic to Globalwafers (China.Table reported) fell through because the Ministry of Economy still had not granted approval even after a year. “You don’t need to ban something to achieve an effect,” Honrath said. The ministry had not issued an objection but had merely let the deadline pass.

    At the global level, the OECD observes a sharp increase in regulations targeting potential buyers from other parts of the world. “We are seeing dramatic changes in the quality of regulations here, which suddenly have much more practical relevance,” says Joachim Pohl of the OECD’s Investment Committee. Until a few years ago, most investment controls were only on paper and played no role in administrative practice. Since 2009, the organization has now noted an increase of detailed regulations in major economies and their consistent implementation in practice. There are now deadlines, competencies, and criteria.

    On top of that, Covid created yet another new situation, as goods such as masks that were previously considered to be in abundance suddenly became scarce. So while up until the 1990s, the defense sector was primarily monitored, today it is often pharmaceuticals, technology, and numerous other industries as well. The perception of risk has widened dramatically, says Pohl.

    In the historical context, the situation has thus completely changed within one generation. In the 1970s, acquisitions mainly took place between allied countries, such as Germany and the USA. At that time, no one seriously considered regulating acquisitions. In the future, says Pohl, a wide variety of commodity groups could also be classified as critical. If, for example, climate change leads to food shortages, investment controls for reasons of national security could be expected here as well. fin

    The next event in the IfW’s Global China Conversations series will be held on March 24, 2022, entitled “EU-China Trade Conflicts and the case of Lithuania: What Role does the WTO play?” will take place. Speakers are Prof. Dr. Christian Hederer (Wildau University of Applied Sciences) and Juergen Matthes (IW Cologne). China.Table is media partner of the event series.

    • Geopolitics
    • Germany
    • Health
    • Trade

    CATL plans additional expansion overseas

    Chinese EV battery manufacturer CATL is looking to expand facilities outside China. “The company plans to expand overseas production facilities and improve training for foreign employees in the future,” CATL said in a statement released after an investor meeting on Monday. According to the business magazine Caixin, CATL has been in talks with clients in the US about developing production plants. Against the backdrop of supply chain problems caused by the aftermath of the global Covid pandemic, CATL wants to produce “closer” to its key markets, according to the statement.

    Of CATL’s ten production sites, most are located in the People’s Republic. In Germany, CATL is currently building a factory in Thuringia: CATL plans to start manufacturing lithium-ion batteries near Erfurt before the end of this year (China.Table reported).

    According to Caixin’s calculations, CATL currently holds more than 30 percent of the global EV battery market. In China, the company even dominates more than half of the battery market. niw

    • Autoindustrie

    Olympics ticker

    The Chinese team failed to win any medals on Thursday. However, ski freestyle star Eileen Gu won the qualification in the halfpipe and thus stoked medal hopes for Friday. Meanwhile, the weather is getting colder and colder. Even if winter athletes are generally considered to be hardened: The icy temperatures are causing problems. The last women’s biathlon competition in Zhangjiakou scheduled for Saturday was moved forward to Friday as a precautionary measure.

    • China’s freestyle star Eileen Gu has positioned herself for the medal fight in the ski freestyle halfpipe on Friday. On Thursday, she won the qualification. The halfpipe is her signature discipline. So far, Gu has not been able to win any qualification. In the end, however, only medals count anyway: Gu already won one gold and one silver medal. Two other Chinese women also qualified with good results: Zhang Kexin ranked 5th, Li Fanghui 7th. China’s men also went into the qualification on Thursday. However, none of the four athletes made it to the final.
    • In curling, all preliminary rounds of women and men are now finished. Team China missed the semifinals in both events. For the men’s event, the semi-final will take place on Thursday, for the women’s event on Friday.
    • The freezing cold at the outdoor events in Yanqing and Zhangjiakou is rapidly becoming a problem for athletes and organizers. Many of the athletes apply tape to the exposed parts of their bodies, such as their faces, or wrap scarves around their necks and heads. The FFP2 mask also provides a little warmth before and after the competition. The venues of Zhangjiakou are located at an altitude of around 1,700 meters, so it is still much colder there than in the capital itself. This is not only unpleasant, but can also be dangerous for the athletes’ body temperature and respiratory system. Hermann Weinbuch, national coach of the nordic combined, described the temperatures as “borderline” in an interview with German broadcaster ZDF on Tuesday after his athletes competed in ski jumping and cross-country skiing at minus 18 Degrees Celsius. Over the weekend, temperatures are expected to drop even further. The organizers therefore decided to move up the women’s biathlon mass start from Saturday to Friday. The women will thus start on the same day as the men.
    • Three days before the closing ceremony of the Olympics, the organizing committee BOCOG reported no new Covid cases for the first time on Thursday. In the first days after the arrival wave, BOCOG had still registered more than 30 new cases daily. Athletes such as the nordic combined athlete Eric Frenzel missed many events due to their infections. Only at the final relay on Thursday, Frenzel was able to compete. Due to the strict isolation of the Olympic bubble and daily PCR tests of all athletes, attendants or reporters, the number of cases dropped rapidly after the start of the Olympics.
    • The daily press conference of the organizing committee BOCOG and the IOC turned into a farce on Thursday. BOCOG spokeswoman Yan Jiarong repeatedly interrupted IOC spokesman Mark Adams. While Adams was talking about the role of Taiwanese athletes in the opening ceremony, she interrupted, “what I want to say is that there is only one China in the world.” When the issue of forced labor and internment camps for Uyghurs in Xinjiang came up, Yan said, “I think these questions are based on lies, some authorities have already disputed such false information with a lot of solid evidence.” With that, she put the IOC on the spot. Sometime later Adams said, “it’s a view from Madam Yan. I don’t think it’s particularly relevant to this press conference. It’s certainly not relevant to the IOC. We are very, very concerned about protecting human rights within our sphere, which is within the Olympic Games.” Fo years, democtratic nations had critized the IOC for its refusal to call out China’s human rights abuses. ck
    • Civil Society
    • Olympia
    • Sports

    Column

    The magic of Chinese numbers

    By Johnny Erling
    Ein Bild von Johnny Erling

    In 1937, Carl Crow’s amusing guidebook on doing business in the Middle Kingdom became a bestseller thanks to its title “400 Million Customers”. Australia’s Ross Terrill also managed a sales hit in 1971, calling his book “800 Million”. Whenever Beijing entices with three-digit numbers, they trigger Pavlovian reflexes even in sober contemporaries such as sports managers Karl-Heinz Rummenigge or Thomas Bach.

    How many people live in China? According to the census conducted by Beijing every ten years, for which seven million census takers (most recently in 2020) visited all households nationwide, there were 1.4 billion.
    Really? Even Mao Zedong once had his doubts. When US reporter Edgar Snow asked him on January 9, 1965, how large the population was in the People’s Republic, the Great Chairman told him a state secret: He had been told, “680 to 690 million”. But he did not believe that: “How can we be so many?” With statistics it is such a special thing. Farm families have an advantage if they only report their births, but not all deaths.

    Chinese figures are therefore often accompanied by the addition “左右” (left and right), are therefore only an “approximate” approximation of reality. But it is precisely the superlatives that make foreigners rave about the potential of China and its market.

    This also applies to sports. At the beginning of 2017, FC Bayern München invited us correspondents to the opening of its China representation in the “German Center” Shanghai. Club boss Karl-Heinz Rummenigge explained why his club was so late in gaining a foothold in China, when Barcelona, Real Madrid and Manchester United had long been flying the flag: He had a good reason for this: His Bavarians had now reached “136 million fans” in China’s social media. Now they can get started and ensure “sustainable background noise”. Rummenigge did not say how he arrived at the figures. According to the statistics, one in ten Chinese would be enthusiastic about the German record champion. The FC doesn’t even dare dream of such a ratio at home. As of February 1, 2022, the club had 358,399 registered club members in Germany.

    The magic emanating from China’s sheer masses also worked on IOC chief Thomas Bach. After meeting President Xi Jinping in 2015, he told everyone that Xi wanted to turn 300 million of his countrymen into active fans of ice and snow by the start of the 2022 Winter Games. Bach spread these glad tidings everywhere as if it were a matter of proselytizing infidels.

    Xi actually kept his word. During the virtual exchange of New Year’s greetings with Bach, he announced on January 25, 2022, that he succeeded. “Early on, while we were still bidding to host, I once told you: For China, the biggest goal of these Winter Games is to get 300 million people to participate in ice and snow sports. (早在申办时,我就提出,中国这次办奥的最大目的,就是带动3亿人参与冰雪运动). Bach reacted with delight, saying this would open a new “era for global winter sports… This is an unprecedented, great achievement and will become an important legacy of Beijing 2022 for the Chinese people and for the Olympic Movement.”

    Beijing had a two-meter-high monument with a 72-centimeter bronze bust of IOC chief Thomas Bach erected in the “Beijing Dongsi Olympic Park” (东四奥林匹克社区公园) in mid-January in gratitude for the Winter Games.

    Beijing ensnared Bach by every trick in the book of Chinese attention. First, in mid-January, it had a two-meter-high monument erected to the IOC chief with his 72-centimeter bronze bust in the “Beijing Dongsi Olympic Park” (东四奥林匹克社区公园). Bach stands there as third in line alongside his predecessors Rogge and Samaranch on an equal footing. At the inauguration ceremony, it was said that Bach had brought the “splendor of the Games” to China’s capital for the second time.

    As a third surprise, Xinhua reported on February 12 that China, in good socialist tradition, had overachieved its plan: Xi had once promised 300 million winter sports fans. But by the end of January – according to the statistics bureau – “more than 346 million Chinese had participated in winter sports activities since 2015”.

    The IOC reported the figures triumphantly in its press release: China had “smashed” its once ambitious target figure of 300 million. In addition, it generously rounded up another record figure: “Winter sports have been included in the curriculum in almost 3,000 schools in China. But China’s “People’s Newspaper” had only written the day before about “more than 2,000 schools“.

    China’s dream is written on the wall plaque erected in 2015 directly in front of Taizicheng village (太子城) in Chongli district. The village is fully developed as a venue for the Winter Games, with a high-speed railroad station. On the blackboard in front of the bare mountains is the dream wish: “We want to become China’s Davos.”

    It’s no wonder that not a single critical word can be heard from the IOC about the Games. A little more skepticism about the figures would have been welcome. Even state media, such as the English-language China Daily, kept their distance. It reported that the statistics bureau had just surveyed 40,100 people from October. The results, China Daily said, “suggest” that 346 million people were attracted to winter sports. Foreign media warned more directly to better scrutinize China’s success stories. Britain’s Economist wrote of an “avalanche of risks threatening China’s ski industry”. Investors had “poured mountains of money into the snow business. Will it melt away?”

    The Chinese figures also delighted the international organizers of boxing world championships in Beijing and Formula One races, for which Shanghai built an extravagant arena. But the wildest hypes at home and abroad were for soccer. President Xi had declared kicking a state duty for China’s image and demanded the nation’s rise to world soccer power by 2050. He had a football reform steering group established in 2015 to include soccer in the curriculum for elementary and middle schools. Xi called for introducing the sport to 50,000 schools and building 60,000 soccer fields nationwide.

    Sport as a political task: Chinese caricature of the kicking Head of State Xi Jinping, who before he started China’s winter sports fever, fueled the soccer fever.

    Money poured in for the import and transfer of international soccer stars and coaches. Super-rich corporate leaders from Alibaba, Wanda to Evergrande bought into or outright took over more than three dozen illustrious soccer clubs at home and abroad for billions of US dollars. Today, almost all of the clubs have been sold again at a loss. The awakening ended in bankruptcy. Seven years have passed since Beijing established the football reform steering group in 2015. Unfortunately, little remains of all its plans other than the news of its establishment, as if it never existed,” wrote the online website “Duowei Xinwen”. 今天,距离中国足球改革领导小组成立已经过去了7年,很遗憾,除了成立,很难再查到任何消息,仿佛不曾存在一般.

    China’s magic of big numbers coupled with even bigger promises continues to captivate the gullible. This is also true for businessmen and investors. In their own way, large Western entrepreneurs have tried to make the numbers at least add up for them. Under the name “Oil for China’s Lamps,” John D. Rockefeller, for example, had his company, Standard Oil, deliver kerosene oil lamps to more than ten million Chinese for free or for a few cents after 1900. He then exported and sold them expensive lamp oil, on which he had a monopoly.

    Almost 100 years later, the Anglo-Dutch conglomerate Unilever copied the business model. It gave away ice cream chests to tens of thousands of stores in China’s major cities, with the stipulation that only its Wall’s ice cream (known as Langnese in Germany) be sold in them. Unilever supplied them through franchising from its ice cream joint ventures in China.

    As with Rockefeller, the math worked out for Unilever, but only until countless competitors made life difficult for them. China’s large numbers lose their magnetic power just as quickly when the conditions are no longer met. Or, as in the case of sports officials, when they weren’t right in the first place.

    • Olympia
    • Society
    • Xi Jinping

    Profile

    Patrick Heid – misses the colorful Shanghai

    Patrick Heid, Head of the Shanghai Office at the law firm Graf von Westphalen

    After Patrick Heid returned from his first trip to China in the summer of 1998, he had more questions in his luggage than answers. While studying law in Cologne, Heid, then 22, had accompanied a buddy to Beijing for an internship. “After that, I started learning Mandarin right away,” Heid says, “and backpacked through the Chinese provinces almost every year.”

    Since 2010, the 45-year-old Berliner has headed the Shanghai office of the law firm Graf von Westphalen. He specializes in advising medium-sized companies from German-speaking countries that have invested in China. Heid enjoys his work unabatedly. “Every day, I learn something new about China’s culture and social peculiarities,” he says. Every day offers surprises with new topics, new problems to solve. He says he feels life happens twice as fast here as in Europe. “I am therefore never bored.”

    His fascination for China influenced Patrick Heid’s professional career from the very beginning: After graduating from law school in 2003, he spent a year learning Chinese at the University of Taipei. He then deliberately applied to law firms with an office in the People’s Republic. He first gained a foothold in China in 2009 in the Beijing office of a US law firm, after which he built up the Shanghai office for Graf von Westphalen from scratch.

    Intercultural consulting between China and Europe

    Today, Heid spends only about a third of his time on legal work. He is more concerned with strategic issues and intercultural consulting, as he calls it. “Companies in Europe know a lot more about China today than they used to,” he says, “but they’re still less and less able to make sense of this country.” Therefore, the need for explanations and interpretations is greater than ever.

    The question of how to generate more China expertise in Europe has been on Heid’s mind for some time. Germany has “fortunately” developed a more realistic and critical view of the country. “But unfortunately, politicians have not yet understood how to react to the new pace in Beijing.” The fact that hardly any journalists and fewer and fewer expats are able to report from China fills him with concern. It is increasingly difficult or impossible to obtain information from independent or foreign media in China. For companies, associations, and politicians in Germany and Europe, Heid, therefore, sees not only an information crisis but also an interpretation crisis.

    Life has become more monotonous and uniform

    What Heid regrets most is that even in everyday life, one can hardly talk openly with the Chinese about their country and the cultural or social differences to Western countries: “Once, I could openly address everything in a personal conversation, but today any dissenting opinion is dismissed as Western ideology and China-bashing.” But if there is a lack of open exchange and mutual learning, China loses more and more of its appeal for a curious person like him, says Heid.

    In addition, everyday life in Shanghai has lost much of its colorful and exciting corners. Like all the city’s residents, he is constantly filmed in public. The places and activities that once gave Shanghai its distinctive aura have almost all disappeared or been banned in an effort to give the city as flawless a face as possible. “The only place you can really go in your free time now is to a theme park or one of the many flashing shopping malls.” So for all the enthusiasm for his work, Heid has to conclude, “The bottom line is that life for a foreign person in China has become more monotonous and uniform in the past five years.” Adrian Meyer

    • Society

    Executive Moves

    As Managing Director of Audi China, Helmut Stettner will also head the new EV plant in China. Work on the construction of the roughly €3 billion factory in Changchun is scheduled to begin as early as April (China.Table reported). The Audi manager with experience in China had taken over as head of the joint venture between Audi and China FAW Group, which was founded in 2020, in May 2021 (China.Table reported). Stettner already worked for the Volkswagen Group in China from 2011 to 2015.

    Jens Puttfarcken, the former CEO of Porsche in China, is moving to sister brand Audi to become Audi’s new head of sales for Europe. Puttfarcken has been with Porsche for almost 25 years. After holding positions in customer relationship management, sales Europe, After Sales, he headed the home market Germany from 2015 to 2018. Puttfarcken then moved to Shanghai as president and CEO of Porsche China Motors Ltd. Puttfarcken will take over from Martin Sander, who has moved to Ford Europe, on June 1.

    Dessert

    Blue mountains: Photovoltaic panels cover the hills in Yongren in southwest China’s Yunnan province. The sunny Yongren county has encouraged companies to build photovoltaic power plants to create jobs for local villagers, state media reported.

    China.Table editorial office

    CHINA.TABLE EDITORIAL OFFICE

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