Germany’s China strategy is almost one year old, and the government is still trying to fill it with life. And the debate about the right way to engage with Beijing continues. Political scientist and China expert Andreas Fulda believes that the old concept of “change through trade” is a mistake and calls for a rapid paradigm shift in an interview with Marcel Grzanna.
Fulda believes that Germany must abandon the “false basic assumptions” of its foreign policy, which have led to a psychological dependence on China. A new paradigm will “develop dynamically in the dialog between state, economy and society.”
Meanwhile, the German government has decided to water down the Supply Chain Act. As Caspar Dohmen reports, this would mean that two-thirds of the companies previously subject to the law would no longer be affected in 2025. This means that fewer than one thousand companies would still be affected by the regulations of the Supply Chain Cat. Furthermore, the risk assessment reports originally required by the Act would become voluntary.
The government does not want to put German companies at a competitive disadvantage in Europe, as the EU supply chain law CSDDD, which has just been published in the Official Journal, is not expected to come into effect for another two years, until all EU states have transposed it into law. These laws mainly affect business in China, partly because of the allegations of state-run forced labor programs in Xinjiang.
Your Christiane Kühl
Interview
‘If we don’t change our China policy, we will pay dearly’
Andreas Fulda is an Associate Professor at the University of Nottingham.
Mr. Fulda, in your book “Germany and China: How Entanglement Undermines Freedom, Prosperity and Security,” you identify the paradigm of “change through trade” as the driving force behind the unconditional entanglement of German elites with the People’s Republic of China. Why is that?
Paradigms such as “change through trade” and Frank-Walter Steinmeier’s “interdependence and integration” were used to play down the repressive nature of autocracies and create the false expectation among the German population that economic progress in China would result in democracy. However, rigid and dogmatic paradigms limit strategic options if they are not constantly evaluated and questioned. German politicians have ignored criticism and warnings of growing dependencies.
However, there were certainly liberalization tendencies in China for a while. Was the idea of “change through trade” not justified at the time?
There was indeed a period in which “change through trade” seemed promising. But there were also drastic events that should have caused us to adjust our paradigm much earlier. Even before Xi Jinping’s neo-totalitarian course crystallized. But we didn’t do that; perhaps we didn’t even want to.
What events are you talking about specifically?
The ethnic unrest in Xinjiang in 2009 could have been recognized as a foreshadowing of an extremely discriminatory minority policy. Then, there were clear warnings from the harsh reactions of the party-state to the growing strength of the Chinese democracy movement in 2010. By the time the anti-democratic and anti-Western Document No. 9 became public in 2013 at the latest, the political and economic elites in Germany should have realized that “change through trade” was nothing more than a cognitive dissonance. Not to mention the developments after 2013. If you refuse to adapt a paradigm for so long, it becomes a life lie.
What do you think would be a suitable paradigm?
I have no intention of formulating one. That will develop dynamically in the dialog between the state, business and society. Instead, I want to create an awareness of the central role of paradigms in German China policy and their consequences. A paradigm can be understood as a worldview – an instrument to reduce the complexity of reality. We must acknowledge that false basic assumptions in German foreign policy have led us into a psychological dependency and entanglement with autocratic China, making it extremely difficult for us to free ourselves from it today. We have to recognize this problem. If we don’t, things will only get worse.
What exactly is our problem?
Open societies like Germany’s pose a threat to the CCP. So it is trying to use hybrid influence to drive wedges into our society and between us and our democratic partners and NATO allies. In parallel, it has built up a network of agreeable figures in Germany. In combination, this weakens our ability to fend off the CCP’s influence. We are often not even fully aware of the threat because influence is mainly exerted in secret. And our politicians only react very passively, even though this endangers our freedom, prosperity and security.
German President Steinmeier once declared “interdependence and integration” to be the guiding principle for relations with countries such as China. What speaks against this?
There is a key difference between democratic countries such as Germany and France pursuing mutual integration after the Second World War – and attempting to do so with a state where a political party is not interested in sharing its power monopoly. If you become entangled with an autocracy, you have to accept censorship and a red line to a certain extent. However, an open-ended approach is no longer possible at that point.
‘The fundamental problem is the German Chancellor’
Your book also examines whether the China discourse in Germany is already undergoing a paradigm shift. Is it?
The public discourse has changed and become much more critical. Unfortunately, we are still flying blind when it comes to concrete China policy. The fundamental problem is the German Chancellor, who is enforcing his overly cautious approach to China and marginalizing the role of the Foreign Office. The Chancellery is in a bubble in which, whenever in doubt, the CEOs of large companies are listened to first and foremost.
They argue that international criticism of Germany’s lack of geopolitical responsibility, as well as the forces of civil society and the middle class, can lead to a China policy change. Everything is there. Apparently, that is not enough.
That is why we must also reduce the amount of lobbying that prevents German industrial policy from focusing on SMEs and instead ensures that all the trump cards go to the large DAX companies. To do this, however, we must do our homework and acknowledge our foreign and security policy mistakes. We must name the damage that these mistakes have caused.
Such as?
The demise of our solar industry or the sale of industrial jewels such as the robot manufacturer Kuka – which we must fear has now been integrated into the military-civilian fusion program in China. The damage also includes the external control of German development organizations, the neutralization of German foundations in China, and the restriction of research and freedom of expression in scientific cooperation. These are all very concrete violations of German sovereignty. This brings me to a logical conclusion: If we do not fundamentally change our China policy, we will pay dearly.
Give us a price tag, please.
We run the risk that the CCP is fostering deindustrialization in Germany and that our democracy is not resilient enough to withstand the influence of a strong authoritarian state. Through united front politics, the CCP is using its subtle propaganda to plant the idea in our heads that our technological decline is unstoppable – but that it is willing to help us. But a look at Ukraine debunks this supposedly forthcoming aid.
In what way?
The war in Ukraine is forcing us out of our ideological tunnel vision once and for all. After all, China is supporting Russia in this war and this creates a security risk for all of Europe. If Putin wins, Poland and the Baltic States will also be at risk. All of this is happening right before our eyes. That’s why we don’t have the luxury of spending years drafting China strategies. Instead, we should self-critically acknowledge our past mistakes, relentlessly analyze our current vulnerabilities and future threats and then quickly develop new strategic approaches. This needs to happen now.
Andreas Fulda is a political scientist and China expert. He is an associate professor at the University of Nottingham. His latest book, “Germany and China: How Entanglement Undermines Freedom, Prosperity and Security,” was published by Bloomsbury on May 30.
China strategy
Foreign policy
Geopolitik
KMU
Security policy
Feature
Why the German government softens the Supply Chain Act
At the Federal Press Conference, Christian Lindner, Olaf Scholz, and Robert Habeck, the leaders of German government coalition parties, announced plans to weaken the Supply Chain Act.
The German government intends to significantly weaken the German Chain Act (LkSG): Two-thirds of the companies previously subject to it would no longer fall under it as of 2025, said Federal Minister of Finance Christian Lindner. This would mean the law would apply to fewer than one thousand companies. In addition, companies will be at liberty to decide whether they wish to prepare the risk assessment reports initially stipulated in the LkSG. Companies not preparing reports will “not be sanctioned,” Table.Briefings learned from government circles.
The German government has already watered down the LkSG in this regard. Until the introduction of the European Corporate Sustainability Due Diligence Directive (CSDD), companies will continue to be able to decide for themselves whether to voluntarily submit a report. They can choose whether to do so in accordance with the LkSG or the European Corporate Sustainability Reporting Directive (CSRD). Lindner spoke of a “significant reduction in bureaucratic costs” for companies. Other government representatives spoke of SMEs being relieved of “excessive national rules.”
Two years to implement the EU supply chain law
The LkSG mainly affects business in China – partly due to reports of forced labor programs in the Xinjiang region. The solar industry, for example, is already working to establish a Xinjiang-free supply chain in China specifically to exclude forced labor and thus meet the requirements of the LkSG.
After the EU published Brussels’ variation of a supply chain law called CSDDD in the Official Journal today (Friday), it will come into force in 20 days. The 27 EU member states have two years to implement the directive. The German government wants to hurry: The directive will be transposed into German law before the end of this legislative period, i.e., by next fall, “with as little bureaucracy as possible.”
The German government also wants to prevent the CSDDD from applying to German companies earlier than to companies from other EU countries. Lindner said the CSDDD would be implemented by the “latest possible date under European law.” Specifically, this means, according to a spokesperson for the Federal Ministry of Justice:
for companies with more than 5,000 employees worldwide and a revenue of 1,500 million euros from 2027 ;
for companies with more than 3,000 workers worldwide and a revenue of 900 million euros from 2028;
and for companies with more than1,000 employees worldwide and a revenue of 450 million euros from 2029.
Criticism of government plans
The German government also wants to define what information large companies are allowed to request from small and medium-sized enterprises. “We will set binding standards,” a BMJ spokesperson told Table.Briefings. The intention is to notably ease the burden on many small companies “that are only affected downstream.”
So far, many companies have passed on their obligations to suppliers, although the LkSG forbids this. The European directive is even stricter in this respect. Despite this, many suppliers have accepted the requirements of their large clients, often for fear of losing contracts.
The organization “Initiative Lieferkettengesetz” criticized Germany’s plans. “We sharply criticize the announced limitation of the German Supply Chain Act to only one-third of the affected companies,” said Heike Drillisch. It accuses the German government of bowing to business associations. However, the civil society initiative, backed by around 130 organizations, welcomes the plans to implement the EU Supply Chain Act quickly. “However, it must be implemented ambitiously and in accordance with European law,” without lowering the existing national protection standards under German law.
Critics fear weaker require
The plan is to “massively water down” the Supply Chain Act, economist Armin Truger also criticized on X. The fact that human rights in developing countries are being played off against an alleged reduction in bureaucracy “is a success for some lobbyists and truly no credit to the government coalition!” The Confederation of German Employers’ Associations was unable to respond to questions from Table.Briefings due to the high number of inquiries. The metallurgy and electrical industry association “Gesamtmetall” also did not respond. Both associations had previously publicly criticized the LkSG and the CSDDD.
Staunch supporters of the LkSG in the German government told Table.Briefings behind closed doors that the number of MPs in the government parliamentary groups supporting the Supply Chain Act has fallen. However, protecting people in supply chains against human and environmental rights abuses remains important to many citizens. In a February poll, two-thirds of respondents in Germany had still supported a European supply chain law.
CSRD
Lieferkettengesetz
News
EVs: Why Turkey will not impose extra tariffs after all
Turkey has announced a change of direction regarding its policy on Chinese EVs. According to Bloomberg, Ankara announced on Friday that it would not impose extra tariffs on all imported cars from China after all. The reason for this was to encourage investment. Turkey had announced extra tariffs of 40 percent in June. The decision to make a U-turn followed talks between Turkish President Recep Tayyip Erdoğan and Chinese President Xi Jinping on Thursday on the sidelines of the Shanghai Cooperation Organization (SCO) summit in Kazakhstan’s capital Astana.
According to Bloomberg, Turkish officials said Erdogan would also announce an agreement on Monday with China’s EV market leader, BYD, regarding constructinga plant in the western Turkish province of Manisa. A total of one billion US dollars will be invested in the plant. BYD representatives and the President’s office declined to comment. BYD is already building an EV plant in Hungary. An additional plant in Turkey would significantly facilitate the company’s access to Europe. Moreover, with a population of 90 million, Turkey has an attractive domestic market. In 2023, electric vehicles accounted for 7.5 percent of car sales in Turkey. ck
Autoindustrie
E-Autos
Ex-ASML boss: Why the chip dispute could drag on
The former CEO of Dutch chip supplier ASML, Peter Wennink, sees no sign of an end to the dispute between the United States and China over computer chips any time soon. As geopolitical interests are at stake, the conflict could drag on for decades, Wennink told Dutch radio station BNR, adding that the dispute was ideological and not based on facts.
This is difficult for ASML, which has had customers and employees in China for 30 years, as it also has obligations, he continued. “You can think whatever you want about that, but we’re a business where the interests of your stakeholders have to be managed in balance … If ideology cuts straight through that, I have problems with that.” Wennink retired from ASML in April after ten years at the helm. ASML is the world’s leading supplier of manufacturing equipment for the production of cutting-edge computer chips.
In an attempt to slow down China’s technological and military rise, the United States has restricted the export of modern computer chips, manufacturing equipment and other high-tech in recent months. Japan and the Netherlands, where ASML is headquartered, have also joined this initiative. The USA also attempted to prevent ASML from servicing equipment already sold to Chinese customers. rtr
ASML
New data: Why more foreigners visit China again
The number of foreigners entering China more than doubled in the first half of the year compared to the same period last year. According to the National Immigration Administration, 14.64 million foreigners entered the country between January and June, an increase of 152.7 percent year-on-year. This means that the visa-free regime introduced by Beijing after the pandemic has apparently been worthwhile for many countries – including Germany. It applies to more than a dozen European countries and Australia. Another 23 countries, including Thailand, have been exempt from the visa requirement by reciprocity since this year. Singaporeans and Malaysians can enter the country for up to 30 days each.
According to a report by the South China Morning Post, the number of visa-free arrivals by foreigners exceeded 8.5 million, accounting for 58 percent of arrivals and a 190 percent increase compared to the previous year. However, the number of foreign visitors is still below the pre-pandemic level. In the first half of 2019, 15.53 million foreign travelers visited the country. ck
Tools
New regulation: How China wants to better regulate generative AI
The draft, open for public comments until July 22, 2024, outlines several security measures for generative AI services. It covers important areas such as securing training data, protecting AI models, and implementing overall security protocols. It also provides guidelines for conducting security assessments.
In this article, we provide an overview of the comprehensive security requirements for generative AI services as outlined in the draft.
What the draft is about
The draft delineates critical security requirements for generative AI services, encompassing:
Training data security: Ensuring the safety and integrity of data utilized to train AI models.
Model security: Safeguarding AI models against potential threats and ensuring their integrity throughout their lifecycle.
Security measures: Specifies essential security measures to be implemented to effectively mitigate risks.
Additionally, in the context of the draft, the following key terms are clarified to ensure clarity and consistency:
Generative AI service: Refers to services that utilize generative AI technology to produce various types of content like text, images, audio, and video for public consumption.
Service provider: Refers to organizations or individuals who offer generative AI services through interfaces like interactive or programmable interfaces.
Training data: Includes all data directly used to train AI models, covering both pre-training data and optimized training data.
The draft serves as a reference for both service providers and regulatory authorities. It offers guidance for conducting security assessments and establishing pertinent regulations.
Security requirements for training data
Before gathering data from specific sources, service providers must conduct a comprehensive security assessment. If a source contains more than 5 percent illegal or “harmful” content (explained in the next section), data collection from that source should be avoided.
After data collection, it’s essential to verify the collected data:
If over 5 percent of the data contains illegal or harmful information, it should not be used for training purposes.
Diversity in training data sources should be emphasized. Multiple training data sources should be utilized for each language (e.g., Chinese, English) and each data type (e.g., text, images, audio, video). If training data from overseas sources is required, it should be reasonably combined with training data from domestic sources.
Which data is deemed ‘harmful’
The draft categorizes “harmful data” into the following risk areas:
Violations of core socialist values: Content that incites secession or undermines national unity and social stability is considered harmful. Extremism, in any form, including the promotion of terrorism, extremism, or ethnic hatred, is particularly dangerous and must be excluded from training data.
Obscenity and violence: Any data advocating violence, obscenity, or pornography is deemed harmful and should not be included.
Illegal content: Any content that is prohibited by laws and regulations is inherently harmful and should be carefully screened out of AI training datasets.
Discriminatory content: This refers to content that encompasses various forms of discrimination, including ethnic discrimination against specific groups, religious discrimination based on beliefs, and nationality discrimination targeting certain nationalities. Equally critical are regional discrimination based on geographic origin, gender discrimination, age discrimination, occupational discrimination, and health discrimination.
Commercial violations: This refers to content that encompass infringements on intellectual property rights, breaches of business ethics, and the disclosure of commercial secrets.
Infringement of legal rights: Harmful data also includes actions that infringe upon individuals’ rights and well-being. This encompasses harming the physical or mental health of others and violating portrait rights. Moreover, defamation, infringement on personal honor, and breaches of privacy rights are significant concerns. Additionally, violating personal information rights and other legal rights of individuals must be rigorously avoided to uphold ethical standards in AI development.
How to ensure the safety of training data
According to the draft, data content for all types of training data (e.g., text, images, audio, video) must be filtered before use. This can be done through keyword filtering, classification models, or manual inspection to remove illegal or harmful information.
With regard to intellectual property rights, data providers must implement a management strategy with a designated responsible party. They need to identify and address major intellectual property risks before using data for training, especially for literary, artistic, or scientific works. Providers should also establish channels for complaints and reports, inform users about potential risks through service agreements, and update their strategies based on policies and complaints.
For personal information, data providers must obtain consent from individuals before using training data that includes personal information, ensuring compliance with legal or regulatory requirements. For sensitive personal information, explicit consent must be obtained, or the use must comply with relevant legal or regulatory standards.
Security requirements for AI models
The draft highlights the importance of robust security measures throughout the entire lifecycle of generative AI model development and deployment. The following guidelines are proposed for each phase:
Model training: Security should be prioritized as a key metric during training, and regular security audits should be conducted to identify and fix vulnerabilities, particularly in open-source frameworks.
Model output: Technical measures should be implemented to align generated content with user intentions and mainstream understanding.
Model monitoring: Inputs should be continuously monitored to prevent malicious attacks, and ongoing evaluation methods and emergency management measures should be established to promptly address security issues.
Model updates and upgrades: A comprehensive security management strategy should be developed for updates or upgrades and security evaluations should be conducted post updates.
As generative AI evolves, the draft urges service providers to prioritize safety and security throughout the user experience.
Implications for generative AI service providers
The introduction of the draft regulations marks a key moment for generative AI service providers in China, signaling a shift towards more stringent security standards and regulatory oversight.
One of the primary impacts of these regulations is likely to be felt in the operational and compliance costs for AI service providers. Compliance with the outlined security measures, such as data filtering, consent acquisition, and ongoing monitoring, will require significant investments in technology, personnel, and process development. Small and medium-sized providers, in particular, may face challenges in meeting these requirements, potentially leading to market consolidation as larger players with greater resources absorb compliance costs more easily.
Another significant impact of these regulations is likely to be on user trust and confidence in generative AI services. By establishing clear security standards and compliance requirements, the regulations aim to enhance transparency and accountability within the industry. Providers that demonstrate adherence to these standards may benefit from increased user trust and loyalty, as consumers prioritize security and privacy in their interactions with AI-powered platforms.
Overall, while the new security requirements may pose initial challenges for generative AI service providers, they present greater opportunities for differentiation, innovation, and enhanced user trust in the long run. By embracing these regulations as a framework for responsible AI development, providers can position themselves for long-term success in an increasingly regulated market.
Giulia Interesse, Dezan Shira & Associates
Sicherheit
Executive Moves
Jordi Torres has been Marketing Director Greater China at Tetra Pak since May. Torres has been working for the Swiss packaging company for almost 21 years. His new location is Shanghai.
Daniel Li becomes the new China head of PricewaterhouseCoopers. Li has worked for the auditing firm since 1993. He succeeds Raymund Chao, who is retiring on June 30.
Is something changing in your organization? Let us know at heads@table.media!
Dessert
At the guest performance in the auditorium of the Polytechnic University of Bucharest, the Beijing Dance Academy introduced the audience to Chinese history using perfectly illuminated poses. One of the dances was dedicated to the life of Li Bai, the famous poet of the Tang dynasty. The troupe visited Romania for this year’s Sibiu International Theater Festival, one of the most important theater festivals in the world.
Germany’s China strategy is almost one year old, and the government is still trying to fill it with life. And the debate about the right way to engage with Beijing continues. Political scientist and China expert Andreas Fulda believes that the old concept of “change through trade” is a mistake and calls for a rapid paradigm shift in an interview with Marcel Grzanna.
Fulda believes that Germany must abandon the “false basic assumptions” of its foreign policy, which have led to a psychological dependence on China. A new paradigm will “develop dynamically in the dialog between state, economy and society.”
Meanwhile, the German government has decided to water down the Supply Chain Act. As Caspar Dohmen reports, this would mean that two-thirds of the companies previously subject to the law would no longer be affected in 2025. This means that fewer than one thousand companies would still be affected by the regulations of the Supply Chain Cat. Furthermore, the risk assessment reports originally required by the Act would become voluntary.
The government does not want to put German companies at a competitive disadvantage in Europe, as the EU supply chain law CSDDD, which has just been published in the Official Journal, is not expected to come into effect for another two years, until all EU states have transposed it into law. These laws mainly affect business in China, partly because of the allegations of state-run forced labor programs in Xinjiang.
Your Christiane Kühl
Interview
‘If we don’t change our China policy, we will pay dearly’
Andreas Fulda is an Associate Professor at the University of Nottingham.
Mr. Fulda, in your book “Germany and China: How Entanglement Undermines Freedom, Prosperity and Security,” you identify the paradigm of “change through trade” as the driving force behind the unconditional entanglement of German elites with the People’s Republic of China. Why is that?
Paradigms such as “change through trade” and Frank-Walter Steinmeier’s “interdependence and integration” were used to play down the repressive nature of autocracies and create the false expectation among the German population that economic progress in China would result in democracy. However, rigid and dogmatic paradigms limit strategic options if they are not constantly evaluated and questioned. German politicians have ignored criticism and warnings of growing dependencies.
However, there were certainly liberalization tendencies in China for a while. Was the idea of “change through trade” not justified at the time?
There was indeed a period in which “change through trade” seemed promising. But there were also drastic events that should have caused us to adjust our paradigm much earlier. Even before Xi Jinping’s neo-totalitarian course crystallized. But we didn’t do that; perhaps we didn’t even want to.
What events are you talking about specifically?
The ethnic unrest in Xinjiang in 2009 could have been recognized as a foreshadowing of an extremely discriminatory minority policy. Then, there were clear warnings from the harsh reactions of the party-state to the growing strength of the Chinese democracy movement in 2010. By the time the anti-democratic and anti-Western Document No. 9 became public in 2013 at the latest, the political and economic elites in Germany should have realized that “change through trade” was nothing more than a cognitive dissonance. Not to mention the developments after 2013. If you refuse to adapt a paradigm for so long, it becomes a life lie.
What do you think would be a suitable paradigm?
I have no intention of formulating one. That will develop dynamically in the dialog between the state, business and society. Instead, I want to create an awareness of the central role of paradigms in German China policy and their consequences. A paradigm can be understood as a worldview – an instrument to reduce the complexity of reality. We must acknowledge that false basic assumptions in German foreign policy have led us into a psychological dependency and entanglement with autocratic China, making it extremely difficult for us to free ourselves from it today. We have to recognize this problem. If we don’t, things will only get worse.
What exactly is our problem?
Open societies like Germany’s pose a threat to the CCP. So it is trying to use hybrid influence to drive wedges into our society and between us and our democratic partners and NATO allies. In parallel, it has built up a network of agreeable figures in Germany. In combination, this weakens our ability to fend off the CCP’s influence. We are often not even fully aware of the threat because influence is mainly exerted in secret. And our politicians only react very passively, even though this endangers our freedom, prosperity and security.
German President Steinmeier once declared “interdependence and integration” to be the guiding principle for relations with countries such as China. What speaks against this?
There is a key difference between democratic countries such as Germany and France pursuing mutual integration after the Second World War – and attempting to do so with a state where a political party is not interested in sharing its power monopoly. If you become entangled with an autocracy, you have to accept censorship and a red line to a certain extent. However, an open-ended approach is no longer possible at that point.
‘The fundamental problem is the German Chancellor’
Your book also examines whether the China discourse in Germany is already undergoing a paradigm shift. Is it?
The public discourse has changed and become much more critical. Unfortunately, we are still flying blind when it comes to concrete China policy. The fundamental problem is the German Chancellor, who is enforcing his overly cautious approach to China and marginalizing the role of the Foreign Office. The Chancellery is in a bubble in which, whenever in doubt, the CEOs of large companies are listened to first and foremost.
They argue that international criticism of Germany’s lack of geopolitical responsibility, as well as the forces of civil society and the middle class, can lead to a China policy change. Everything is there. Apparently, that is not enough.
That is why we must also reduce the amount of lobbying that prevents German industrial policy from focusing on SMEs and instead ensures that all the trump cards go to the large DAX companies. To do this, however, we must do our homework and acknowledge our foreign and security policy mistakes. We must name the damage that these mistakes have caused.
Such as?
The demise of our solar industry or the sale of industrial jewels such as the robot manufacturer Kuka – which we must fear has now been integrated into the military-civilian fusion program in China. The damage also includes the external control of German development organizations, the neutralization of German foundations in China, and the restriction of research and freedom of expression in scientific cooperation. These are all very concrete violations of German sovereignty. This brings me to a logical conclusion: If we do not fundamentally change our China policy, we will pay dearly.
Give us a price tag, please.
We run the risk that the CCP is fostering deindustrialization in Germany and that our democracy is not resilient enough to withstand the influence of a strong authoritarian state. Through united front politics, the CCP is using its subtle propaganda to plant the idea in our heads that our technological decline is unstoppable – but that it is willing to help us. But a look at Ukraine debunks this supposedly forthcoming aid.
In what way?
The war in Ukraine is forcing us out of our ideological tunnel vision once and for all. After all, China is supporting Russia in this war and this creates a security risk for all of Europe. If Putin wins, Poland and the Baltic States will also be at risk. All of this is happening right before our eyes. That’s why we don’t have the luxury of spending years drafting China strategies. Instead, we should self-critically acknowledge our past mistakes, relentlessly analyze our current vulnerabilities and future threats and then quickly develop new strategic approaches. This needs to happen now.
Andreas Fulda is a political scientist and China expert. He is an associate professor at the University of Nottingham. His latest book, “Germany and China: How Entanglement Undermines Freedom, Prosperity and Security,” was published by Bloomsbury on May 30.
China strategy
Foreign policy
Geopolitik
KMU
Security policy
Feature
Why the German government softens the Supply Chain Act
At the Federal Press Conference, Christian Lindner, Olaf Scholz, and Robert Habeck, the leaders of German government coalition parties, announced plans to weaken the Supply Chain Act.
The German government intends to significantly weaken the German Chain Act (LkSG): Two-thirds of the companies previously subject to it would no longer fall under it as of 2025, said Federal Minister of Finance Christian Lindner. This would mean the law would apply to fewer than one thousand companies. In addition, companies will be at liberty to decide whether they wish to prepare the risk assessment reports initially stipulated in the LkSG. Companies not preparing reports will “not be sanctioned,” Table.Briefings learned from government circles.
The German government has already watered down the LkSG in this regard. Until the introduction of the European Corporate Sustainability Due Diligence Directive (CSDD), companies will continue to be able to decide for themselves whether to voluntarily submit a report. They can choose whether to do so in accordance with the LkSG or the European Corporate Sustainability Reporting Directive (CSRD). Lindner spoke of a “significant reduction in bureaucratic costs” for companies. Other government representatives spoke of SMEs being relieved of “excessive national rules.”
Two years to implement the EU supply chain law
The LkSG mainly affects business in China – partly due to reports of forced labor programs in the Xinjiang region. The solar industry, for example, is already working to establish a Xinjiang-free supply chain in China specifically to exclude forced labor and thus meet the requirements of the LkSG.
After the EU published Brussels’ variation of a supply chain law called CSDDD in the Official Journal today (Friday), it will come into force in 20 days. The 27 EU member states have two years to implement the directive. The German government wants to hurry: The directive will be transposed into German law before the end of this legislative period, i.e., by next fall, “with as little bureaucracy as possible.”
The German government also wants to prevent the CSDDD from applying to German companies earlier than to companies from other EU countries. Lindner said the CSDDD would be implemented by the “latest possible date under European law.” Specifically, this means, according to a spokesperson for the Federal Ministry of Justice:
for companies with more than 5,000 employees worldwide and a revenue of 1,500 million euros from 2027 ;
for companies with more than 3,000 workers worldwide and a revenue of 900 million euros from 2028;
and for companies with more than1,000 employees worldwide and a revenue of 450 million euros from 2029.
Criticism of government plans
The German government also wants to define what information large companies are allowed to request from small and medium-sized enterprises. “We will set binding standards,” a BMJ spokesperson told Table.Briefings. The intention is to notably ease the burden on many small companies “that are only affected downstream.”
So far, many companies have passed on their obligations to suppliers, although the LkSG forbids this. The European directive is even stricter in this respect. Despite this, many suppliers have accepted the requirements of their large clients, often for fear of losing contracts.
The organization “Initiative Lieferkettengesetz” criticized Germany’s plans. “We sharply criticize the announced limitation of the German Supply Chain Act to only one-third of the affected companies,” said Heike Drillisch. It accuses the German government of bowing to business associations. However, the civil society initiative, backed by around 130 organizations, welcomes the plans to implement the EU Supply Chain Act quickly. “However, it must be implemented ambitiously and in accordance with European law,” without lowering the existing national protection standards under German law.
Critics fear weaker require
The plan is to “massively water down” the Supply Chain Act, economist Armin Truger also criticized on X. The fact that human rights in developing countries are being played off against an alleged reduction in bureaucracy “is a success for some lobbyists and truly no credit to the government coalition!” The Confederation of German Employers’ Associations was unable to respond to questions from Table.Briefings due to the high number of inquiries. The metallurgy and electrical industry association “Gesamtmetall” also did not respond. Both associations had previously publicly criticized the LkSG and the CSDDD.
Staunch supporters of the LkSG in the German government told Table.Briefings behind closed doors that the number of MPs in the government parliamentary groups supporting the Supply Chain Act has fallen. However, protecting people in supply chains against human and environmental rights abuses remains important to many citizens. In a February poll, two-thirds of respondents in Germany had still supported a European supply chain law.
CSRD
Lieferkettengesetz
News
EVs: Why Turkey will not impose extra tariffs after all
Turkey has announced a change of direction regarding its policy on Chinese EVs. According to Bloomberg, Ankara announced on Friday that it would not impose extra tariffs on all imported cars from China after all. The reason for this was to encourage investment. Turkey had announced extra tariffs of 40 percent in June. The decision to make a U-turn followed talks between Turkish President Recep Tayyip Erdoğan and Chinese President Xi Jinping on Thursday on the sidelines of the Shanghai Cooperation Organization (SCO) summit in Kazakhstan’s capital Astana.
According to Bloomberg, Turkish officials said Erdogan would also announce an agreement on Monday with China’s EV market leader, BYD, regarding constructinga plant in the western Turkish province of Manisa. A total of one billion US dollars will be invested in the plant. BYD representatives and the President’s office declined to comment. BYD is already building an EV plant in Hungary. An additional plant in Turkey would significantly facilitate the company’s access to Europe. Moreover, with a population of 90 million, Turkey has an attractive domestic market. In 2023, electric vehicles accounted for 7.5 percent of car sales in Turkey. ck
Autoindustrie
E-Autos
Ex-ASML boss: Why the chip dispute could drag on
The former CEO of Dutch chip supplier ASML, Peter Wennink, sees no sign of an end to the dispute between the United States and China over computer chips any time soon. As geopolitical interests are at stake, the conflict could drag on for decades, Wennink told Dutch radio station BNR, adding that the dispute was ideological and not based on facts.
This is difficult for ASML, which has had customers and employees in China for 30 years, as it also has obligations, he continued. “You can think whatever you want about that, but we’re a business where the interests of your stakeholders have to be managed in balance … If ideology cuts straight through that, I have problems with that.” Wennink retired from ASML in April after ten years at the helm. ASML is the world’s leading supplier of manufacturing equipment for the production of cutting-edge computer chips.
In an attempt to slow down China’s technological and military rise, the United States has restricted the export of modern computer chips, manufacturing equipment and other high-tech in recent months. Japan and the Netherlands, where ASML is headquartered, have also joined this initiative. The USA also attempted to prevent ASML from servicing equipment already sold to Chinese customers. rtr
ASML
New data: Why more foreigners visit China again
The number of foreigners entering China more than doubled in the first half of the year compared to the same period last year. According to the National Immigration Administration, 14.64 million foreigners entered the country between January and June, an increase of 152.7 percent year-on-year. This means that the visa-free regime introduced by Beijing after the pandemic has apparently been worthwhile for many countries – including Germany. It applies to more than a dozen European countries and Australia. Another 23 countries, including Thailand, have been exempt from the visa requirement by reciprocity since this year. Singaporeans and Malaysians can enter the country for up to 30 days each.
According to a report by the South China Morning Post, the number of visa-free arrivals by foreigners exceeded 8.5 million, accounting for 58 percent of arrivals and a 190 percent increase compared to the previous year. However, the number of foreign visitors is still below the pre-pandemic level. In the first half of 2019, 15.53 million foreign travelers visited the country. ck
Tools
New regulation: How China wants to better regulate generative AI
The draft, open for public comments until July 22, 2024, outlines several security measures for generative AI services. It covers important areas such as securing training data, protecting AI models, and implementing overall security protocols. It also provides guidelines for conducting security assessments.
In this article, we provide an overview of the comprehensive security requirements for generative AI services as outlined in the draft.
What the draft is about
The draft delineates critical security requirements for generative AI services, encompassing:
Training data security: Ensuring the safety and integrity of data utilized to train AI models.
Model security: Safeguarding AI models against potential threats and ensuring their integrity throughout their lifecycle.
Security measures: Specifies essential security measures to be implemented to effectively mitigate risks.
Additionally, in the context of the draft, the following key terms are clarified to ensure clarity and consistency:
Generative AI service: Refers to services that utilize generative AI technology to produce various types of content like text, images, audio, and video for public consumption.
Service provider: Refers to organizations or individuals who offer generative AI services through interfaces like interactive or programmable interfaces.
Training data: Includes all data directly used to train AI models, covering both pre-training data and optimized training data.
The draft serves as a reference for both service providers and regulatory authorities. It offers guidance for conducting security assessments and establishing pertinent regulations.
Security requirements for training data
Before gathering data from specific sources, service providers must conduct a comprehensive security assessment. If a source contains more than 5 percent illegal or “harmful” content (explained in the next section), data collection from that source should be avoided.
After data collection, it’s essential to verify the collected data:
If over 5 percent of the data contains illegal or harmful information, it should not be used for training purposes.
Diversity in training data sources should be emphasized. Multiple training data sources should be utilized for each language (e.g., Chinese, English) and each data type (e.g., text, images, audio, video). If training data from overseas sources is required, it should be reasonably combined with training data from domestic sources.
Which data is deemed ‘harmful’
The draft categorizes “harmful data” into the following risk areas:
Violations of core socialist values: Content that incites secession or undermines national unity and social stability is considered harmful. Extremism, in any form, including the promotion of terrorism, extremism, or ethnic hatred, is particularly dangerous and must be excluded from training data.
Obscenity and violence: Any data advocating violence, obscenity, or pornography is deemed harmful and should not be included.
Illegal content: Any content that is prohibited by laws and regulations is inherently harmful and should be carefully screened out of AI training datasets.
Discriminatory content: This refers to content that encompasses various forms of discrimination, including ethnic discrimination against specific groups, religious discrimination based on beliefs, and nationality discrimination targeting certain nationalities. Equally critical are regional discrimination based on geographic origin, gender discrimination, age discrimination, occupational discrimination, and health discrimination.
Commercial violations: This refers to content that encompass infringements on intellectual property rights, breaches of business ethics, and the disclosure of commercial secrets.
Infringement of legal rights: Harmful data also includes actions that infringe upon individuals’ rights and well-being. This encompasses harming the physical or mental health of others and violating portrait rights. Moreover, defamation, infringement on personal honor, and breaches of privacy rights are significant concerns. Additionally, violating personal information rights and other legal rights of individuals must be rigorously avoided to uphold ethical standards in AI development.
How to ensure the safety of training data
According to the draft, data content for all types of training data (e.g., text, images, audio, video) must be filtered before use. This can be done through keyword filtering, classification models, or manual inspection to remove illegal or harmful information.
With regard to intellectual property rights, data providers must implement a management strategy with a designated responsible party. They need to identify and address major intellectual property risks before using data for training, especially for literary, artistic, or scientific works. Providers should also establish channels for complaints and reports, inform users about potential risks through service agreements, and update their strategies based on policies and complaints.
For personal information, data providers must obtain consent from individuals before using training data that includes personal information, ensuring compliance with legal or regulatory requirements. For sensitive personal information, explicit consent must be obtained, or the use must comply with relevant legal or regulatory standards.
Security requirements for AI models
The draft highlights the importance of robust security measures throughout the entire lifecycle of generative AI model development and deployment. The following guidelines are proposed for each phase:
Model training: Security should be prioritized as a key metric during training, and regular security audits should be conducted to identify and fix vulnerabilities, particularly in open-source frameworks.
Model output: Technical measures should be implemented to align generated content with user intentions and mainstream understanding.
Model monitoring: Inputs should be continuously monitored to prevent malicious attacks, and ongoing evaluation methods and emergency management measures should be established to promptly address security issues.
Model updates and upgrades: A comprehensive security management strategy should be developed for updates or upgrades and security evaluations should be conducted post updates.
As generative AI evolves, the draft urges service providers to prioritize safety and security throughout the user experience.
Implications for generative AI service providers
The introduction of the draft regulations marks a key moment for generative AI service providers in China, signaling a shift towards more stringent security standards and regulatory oversight.
One of the primary impacts of these regulations is likely to be felt in the operational and compliance costs for AI service providers. Compliance with the outlined security measures, such as data filtering, consent acquisition, and ongoing monitoring, will require significant investments in technology, personnel, and process development. Small and medium-sized providers, in particular, may face challenges in meeting these requirements, potentially leading to market consolidation as larger players with greater resources absorb compliance costs more easily.
Another significant impact of these regulations is likely to be on user trust and confidence in generative AI services. By establishing clear security standards and compliance requirements, the regulations aim to enhance transparency and accountability within the industry. Providers that demonstrate adherence to these standards may benefit from increased user trust and loyalty, as consumers prioritize security and privacy in their interactions with AI-powered platforms.
Overall, while the new security requirements may pose initial challenges for generative AI service providers, they present greater opportunities for differentiation, innovation, and enhanced user trust in the long run. By embracing these regulations as a framework for responsible AI development, providers can position themselves for long-term success in an increasingly regulated market.
Giulia Interesse, Dezan Shira & Associates
Sicherheit
Executive Moves
Jordi Torres has been Marketing Director Greater China at Tetra Pak since May. Torres has been working for the Swiss packaging company for almost 21 years. His new location is Shanghai.
Daniel Li becomes the new China head of PricewaterhouseCoopers. Li has worked for the auditing firm since 1993. He succeeds Raymund Chao, who is retiring on June 30.
Is something changing in your organization? Let us know at heads@table.media!
Dessert
At the guest performance in the auditorium of the Polytechnic University of Bucharest, the Beijing Dance Academy introduced the audience to Chinese history using perfectly illuminated poses. One of the dances was dedicated to the life of Li Bai, the famous poet of the Tang dynasty. The troupe visited Romania for this year’s Sibiu International Theater Festival, one of the most important theater festivals in the world.
