Table.Briefing: China

German delegation to Taiwan + Border traffic

  • Interview with FDP politician Johannes Vogel
  • Travel without quarantine
  • Worker protests in Chongqing
  • Jack Ma withdraws
  • High mortality rate among elderly engineers
  • Taiwan wants a say in WTO talks
  • Japan could stockpile weapons near Taiwan
  • Xi meets Turkmenian president
  • Deaths after truck accident
  • Columbia professor Wei on GDP growth
  • So to Speak: secret weapon canned peaches
Dear reader,

Delegation trips to Taiwan experienced a real upswing last year. Probably the most prominent visit was the trip by Nancy Pelosi, then Speaker of the US House of Representatives. Her visit to Taipei and China’s reaction kept the world’s attention for several days in August. After Pelosi, other US congressmen visited Taiwan. EU delegation trips to the island also gained momentum last year.

Now Berlin is also sending politicians to Taipei: A high-ranking delegation of the liberal FDP parliamentary group is officially visiting Taiwan on Monday. Finn Mayer-Kuckuk spoke with deputy head of delegation Johannes Vogel about the political message of the visit, as well as the position of the German government in the Taiwan debate and vis-à-vis Beijing. “Thinking about a new direction has begun on a broad front in the coalition,” Vogel said. “However, we still need to talk in-depth about the details.”

After almost three years, travel to China without quarantine is finally possible as of Sunday. As a result, border traffic between Hong Kong and the mainland is also increasing. We take a look at the border posts between Hong Kong and Shenzhen, where families, friends, and couples can embrace each other again without quarantine. When foreign tourists will be able to enter China with visas remains to be seen. So far, business travel has taken priority. The German Foreign Office still advises against trips to the People’s Republic.

In today’s So to Speak section we inform you about the healing powers of “Dongbei Penicillin“. In the current flu, cold and Covid wave, the wonder cure out of the can may also help you or your friends and family.

Your
Amelie Richter
Image of Amelie  Richter

Interview

‘We must take Xi Jinping’s statements literally’

Johannes Vogel zu seiner China-Erfahrung
Johannes Vogel is Vice Chairman of the FDP at the federal level and First Parliamentary Secretary of the FDP parliamentary group in the Bundestag.

What is the political message of this visit?

The new systemic competition between democracies and autocracies requires a comprehensive approach. One of the dimensions is that we have to take statements of autocrats like Xi Jinping seriously and literally, and he now also openly speaks of military aggression to reunify Taiwan. It is therefore necessary to send a clear signal of support to Taiwan.

China takes these visits very seriously.

We do what we believe is politically right as self-confident parliamentarians. After all, we are not talking about turning away from the One China policy. Our approach is consistent with the line adopted by the German government.

Still, you are a high-level delegation.

Indeed, but this is also an important issue. Marie-Agnes Strack-Zimmermann, the Chairwoman of the Defense Committee, is traveling with us, and I am the First Parliamentary Secretary of the parliamentary group and Deputy Federal Chairman of a governing party. In addition, we have other high-profile colleagues from the parliamentary group executive committee and our foreign policy working group with us. That is a sign in the sense of the first answer.

Are there any specific offers that Germany and Europe should now make to Taiwan, for instance full memberships in international bodies?

In the coalition agreement, we set out to strengthen Taiwan’s involvement below the level of state recognition. We are committed to this.

The goal, however, is to ultimately avoid war.

Yes, and in the sense of avoiding a confrontation, the West as a whole must position itself in such a way that it also makes such a crisis event unlikely through deterrence.

Does it make sense from the perspective of the Western alliances to draw red lines: If China does thing A, then thing B happens?

It is not wise to think in would-be scenarios here. However, it has already been clearly formulated that reunification with military force would not remain without consequences.

‘It is not about decoupling fantasies’

What considerations are currently necessary and required for this?

Above all, it includes an economic dimension in addition to a security policy dimension. I have already spoken about this with smart interlocutors of our allies in Washington, who emphasize this point in particular for Europe as well. 

What change in the economic policy of the EU and Germany is the FDP striving for?

We need to make ourselves more independent of the Chinese market and act from a position of economic strength. This includes, on the one hand, bringing our own innovative strength back to the forefront and, on the other hand, reducing dependencies by promoting more free trade with free-market democracies right now. So this is not about decoupling fantasies but an economic strategy ‘beyond China’. There are many market-economy partners for such a policy, including around the Pacific, such as the ASEAN states, Australia, and India, in addition to South Korea and Japan.

Volkswagen and BASF are making no effort to reduce their dependence on China. In fact, they want to invest more to maintain their market share. What is your assessment of this?

Overall, I notice that German companies – including SMEs in the Sauerland region where I live – are increasingly thinking about their own dependencies when making such decisions. But the process is certainly only just beginning. The China stress test I have called for can help because it increases transparency and sensitivity.

When you outline their ideas, you sound very similar to the China strategies from Green-led ministries.

Thinking about a new direction has begun on a broad front in the coalition. That is good because here, the coalition partners are following our line. However, we still need to talk in-depth about the details.

However, it seems as if the FDP is particularly committed to Taiwan. The SPD and the Greens have not sent their own delegations recently.

The fact that the party of freedom is committed to freedom issues should come as a surprise to you. But this is also a matter of the new systematic competition. We have to approach the challenges posed by the CCP much more systematically.

  • FDP
  • Geopolitics
  • Taiwan

Feature

Border traffic without quarantine

Travel between Hong Kong and the mainland

When Alvin crossed the border from Hong Kong to Shenzhen on Sunday morning, his wife immediately welcomed him on the other side with a hug. After nearly three years where entering China was only possible with hotel quarantine, life has finally become easier again for the couple.

“Quarantine? We’ll never do that again,” the 36-year-old says before entering a cab with his wife. While Alvin has a job in Hong Kong, his partner works in Shenzhen. Both have endured countless stays in quarantine hotels over the past few years. That was the only way they could see each other, at least sometimes. But that is over now.

No more tests after arrival

Not all border crossings between Hong Kong and Shenzhen have been reopened. The express train line connecting the two metropolises is expected to slowly resume operations only in the coming days. A quota also applies initially to prevent overcrowding. In each case, 60,000 people are allowed to cross the border per day in both directions. This excludes people from Hong Kong and Mainland China, who are returning home. At the Shenzhen Bay border post on Sunday, however, it almost looks like it did before the pandemic.

The border police no longer wear white full-body protective suits. Also gone are the containers in which travelers had to take their Covid tests on arrival. Workers have dismantled the high fences around the border post where arrivals had to wait for the bus to the quarantine hotel.

On Sunday, travelers at Chinese airports also rejoiced over the lifting of quarantine requirements. Air China Flight 932, the first quarantine-free direct flight from Germany, landed in Beijing on Sunday morning. At times, travelers to China had to spend three weeks in strict isolation in a hotel room. Most recently, five days plus three days of isolation at home were still required. Now, all that is required is a negative PCR test 48 hours before departure.

Large travel wave not expected

Despite the drastically simplified rules, observers do not initially expect a massive travel wave in either direction, except the Hong Kong border. There are not enough flight connections so far. Both Chinese and international airlines need time to adjust their schedules. China is also just beginning to issue new passports. Chinese consulates and embassies abroad also want to approve more visa applications. However, it is not yet known when foreign tourists will be allowed to travel to China again. For the time being, business trips have priority.

Despite only a few available flights, the German Foreign Office advised against unnecessary travel to the People’s Republic over the weekend. The warning was justified by the massive Covid wave in China, which overwhelmed hospitals. The federal government classified China in a newly created risk class. Virus variants areas have been around for a while. What is new is the “virus variant area in which a virus variant of concern threatens to emerge.”

Paxlovid talks failed

The number of infections in China is at its highest level since the pandemic began in 2020, “the Chinese health care system is overwhelmed, and adequate care in medical emergencies is also affected,” the State Department’s travel and security advisories said. On Saturday, Chinese authorities officially reported two new deaths related to the COVID-19 infectious disease caused by the Coronavirus, up from three deaths the day before, according to the Center for Disease Control and Prevention.

Talks about including the Covid drug Paxlovid in the drug list of the state’s basic health insurance had failed over the weekend. The health authority cited the conditions set by supplier Pfizer as the reason. Germany and the EU offered Beijing to supply the Biontech vaccine. The offer initially remained unanswered. Joern Petring

News

Worker protests in Chongqing

According to South China Morning Post reports, violent protests broke out at a factory in Chongqing over the weekend. Videos on social media show workers throwing objects at security forces in an industrial park. A police loudspeaker sounds the announcement “illegal activities” must be stopped immediately.

According to comments on social media and image analysis by AFP, the protesters could be workers from the pharmaceutical manufacturer Zybio, which produces Covid test kits, among other things. According to reports, the company has recently laid off several thousand workers and failed to pay wages. The company has not yet commented on the incidents. Authorities have censored hashtags related to the protests. fpe

  • Coronavirus
  • Health
  • Protests
  • Society

Jack Ma relinquishes control of Ant Group

Jack Ma will relinquish control of Ant Financial, the financial services company he founded. This was announced by Ant Group in a statement on Saturday. The 58-year-old multi-billionaire and founder of the e-commerce platform Alibaba last held only ten percent of the shares in Ant Financial but still had over half of the voting rights. Now his voting rights are to be reduced arithmetically to around six percent. This means that no shareholder will have sole control over the company in the future.

Two years ago, the Chinese supervisory authorities had briefly prevented the planned IPO of the fintech group (China.Table reported). According to observers, Ma’s withdrawal could revive plans for an IPO of Ant Group. However, Chinese stock markets require a waiting period of two to three years after such changes in corporate management. Hong Kong, on the other hand, requires only one year.

Ant Group operates Alipay, a ubiquitous mobile payment service in China, as well as a lending platform and insurance businesses. Over the years, the company had become too powerful for the state in the tightly controlled financial sector. Ma was also the focus of a state crackdown on China’s tech companies because of a critical speech about the financial authorities (China.Table reported). Last year, he reportedly moved his residence from China to Japan. fpe

  • Jack Ma
  • Tech Crackdown
  • Technology

Academy of Engineering laments high mortality rate

The Chinese Academy of Engineering (CAE) reports a spike in deaths among its members following the abrupt Covid openings in mid-December. From Dec. 15 to Jan. 04, 22 aged engineers and scientists among the 900 academicians died. On average, only 16 members died in the entire year in previous years.

The CAE did not violate the party line in that it only made a temporal, not a causal, connection to the Covid opening. In China, only patients with absolutely no other cause of death, such as advanced age, pneumonia, or pre-existing conditions, are considered to have “died of Covid.”

Among the prominent deceased in recent weeks are:

  • Xu Mi, developer of the Chinese breeder reactor,
  • Zhang Guocheng, a pioneer in the development of industrial metals, or
  • Zhao Yinjun, developer of laser weapons.

In the case of the high-profile civil engineer Long Yuqiu, the obituary on the academy website specifically cites inadequate medical treatment” as the cause of death. Beijing’s hospitals are currently flooded with Covid patients, so other illnesses fall short. fin

  • Coronavirus
  • Covid-19
  • Health
  • Research
  • Science

Taiwan to participate in WTO talks on chip embargo

Taiwan wants to participate in WTO consultations in the wake of China’s lawsuit against the US chip embargo. Beijing had filed a complaint with the World Trade Organization (WTO) against the US over restrictions on exports of semiconductors and other high-tech products (China.Table reported).

Because of its global importance to the chip market, Taiwan, the largest producer, now wants to participate in the talks, Taipei said in a statement to the organization. The island has no intention of supporting China’s WTO complaint, the statement said. The move also did not imply “dissatisfaction with the measures taken by the United States,” it said.

In late December, Russia had also announced that it would join the consultations. It has not yet been officially announced when they will begin. ari

  • Chips
  • Taiwan
  • Technology
  • Trade
  • WTO

Japan considers ammunition and weapons depots near Taiwan

Japan is considering setting up dozens of ammunitions and weapons depots on islands off China in preparation for a possible conflict over Taiwan, according to a media report. Japanese forces defending the country’s China-facing islands would have better access to supplies, the Japanese business daily Nikkei Asia reported, citing considerations in the Japanese Defense Ministry. It said Japan currently has about 1,400 ammunition depots nationwide, but 70 percent are located on the northernmost main island of Hokkaido.

The Defense Ministry estimates that Japan’s land forces will need about 90 additional ammunition depots within the next decade. About 40 such depots are also needed by the navy. A proposal calls for the construction of nearly 70 ammunition depots within the next five years, the newspaper reported. According to the report, the new depots would be established on islands stretching from the southern tip of the southwesternmost main island of Kyushu toward Taiwan. The report said that the Tokyo government is to begin talks with local authorities and residents of the islands in this regard.

Japan is currently making a historic change of course in its security policy and plans to massively increase its defense spending (China.Table reported). In the future, the defense budget will amount to two percent of the country’s economic output instead of the current one percent. ari

  • Geopolitics
  • Japan
  • Military

Xi to expand gas cooperation with Turkmenistan

Chinese President Xi Jinping has expressed his support for closer energy cooperation with Turkmenistan. “Natural gas cooperation is the cornerstone of the China-Turkmenistan relationship,” Xi told Turkmen President Serdar Berdimuhamedov at a meeting in Beijing. Central Asian Turkmenistan is China’s largest single supplier of pipeline natural gas. Xi did not provide specific details on future energy cooperation between the two countries.

China’s import of Turkmenian gas is increasing. According to customs data, China imported about $9.3 billion worth of gas in the first 11 months of 2022. The year before, it was $6.79 billion, according to the same source. That represents just over 50 percent of China’s pipeline gas imports, according to Norwegian energy research firm Rystad Energy. At Friday’s meeting, Xi and Berdimuhamedov agreed to expand bilateral ties into a “comprehensive strategic partnership.” ari/rtr

  • Energy
  • Natural gas
  • Turkmenistan

Several dead in truck accident

A truck crashed into a queue on the road outside a crematorium in southeast China. Nineteen people were killed in the incident. Another 20 were injured, state news agency Xinhua reported. According to the report, the accident happened shortly after midnight on Sunday in Taoling village, southeast of Nanchang city in Jiangxi province. State media reported that relatives and friends were waiting outside the building and had placed offerings for the dead on the roadside. People wanted to attend a mass cremation the next morning. Further details on the course of events of the accident were not available yet. ari

  • Infrastructure
  • Society

Opinion

Can China save its economic miracle?

By Shang-Jin Wei
Shang-Jin Wei is a Professor of Finance and Economics at Columbia Business School.

China’s recent decision to abandon its strict zero-COVID policy has led many to believe that its economy will bounce back. The Economist Intelligence Unit, for example, has revised its forecast for Chinese GDP growth in 2023 upward, to 5.2 percent. But growth recovery is not automatic, and China must contend with several challenges, including declining confidence among firms and households about their future incomes in the short run, insufficient productivity growth in the medium run, and an unfavorable demographic transition in the long run.

Restoring confidence may be more important than expanding credit in the short run. Following a sustained period of repeated lockdowns, many small entrepreneurs and workers in traditional service sectors who have feared for their jobs and incomes are reluctant to make purchases. Likewise, many firms are wary of investing, after recent revenue disruptions and tighter regulatory scrutiny in education, tech, and other sectors. In a recent survey of domestic and foreign firms operating in China, the Shanghai-based China Europe International Business School found that Chinese business confidence has sunk to a new low.

Pessimism can be self-fulfilling. If enough businesses and households lose confidence and cut their spending, there will be lower demand for products and services by other firms. But lower revenues would eventually hurt these firms’ own upstream suppliers. To break the cycle of pessimism, Chinese policymakers must restore confidence in the short term. But their options are constrained. Making future policies more predictable would be very useful to enhance confidence, but policy predictability cannot be achieved by a simple government proclamation. While credit expansion would boost aggregate demand, it could have the undesirable effect of driving up inflation. Meanwhile, costly Covid-19 testing and quarantines have strained China’s fiscal capacity.

Confidence in policy decisions waned

One policy to consider is a time-limited reduction in sales and corporate income taxes. By reducing these taxes only temporarily, China could reduce its government debt burden and stimulate household consumption. Similarly, a limited-term corporate income-tax cut could encourage more private-sector investment than an equivalent permanent reduction would.

To increase the pace of productivity growth over the medium term, the Chinese economy needs more than additional patents and software. It needs better allocation of resources across individuals, firms, and sectors. For example, by reforming the hukou household registration system, China could deploy the same amount of human resources more efficiently while improving social equity. Another step that could help boost productivity is leveling the playing field between state-owned and private-sector firms in obtaining bank credit and government licenses.

China’s biggest challenge: a shrinking workforce

To improve medium-term growth, China must heed the lessons of its own history and focus on removing barriers to market entry and entrepreneurship. An economy’s growth rate comes from a combination of an increase in the average size of existing firms (intensive-margin growth) and an increase in the number of firms (extensive-margin growth). A study of the Chinese manufacturing sector that I co-authored with Xiaobo Zhang suggests that during the last few decades, extensive-margin growth accounted for about 70 percent of overall GDP expansion.

In the long run, the biggest economic challenge facing China is the country’s shrinking workforce. In contrast to economic competitors like Vietnam and India, China’s working-age population has been declining for almost a decade. Even if productivity growth remains constant, this demographic shift would lead to ever-declining GDP growth. Some policy measures, such as importing foreign labor en masse, might work but will likely lead to social or political complications. Others, such as attempts at increasing the birth rate, raising the retirement age, or boosting female participation in the labor force, do not look very promising.

Instead of GDP, per capita income should increase

Increasing the quality of the labor force, however, is a more realistic goal. For example, China could increase the average education level of its workforce by enhancing the retention and completion rates in high schools and vocational schools in rural areas. The ubiquity of smartphones and tablets offers a new potential avenue to improve workers’ skills. But, after a period of tightening regulations on online education services, this may require a more permissive policy environment that encourages entrepreneurship in this area.

Finally, China should not be too obsessed with rapid GDP growth. It must instead focus on increasing per capita income and improving the quality of life. These intrinsically matter more to the Chinese people than GDP growth and do not depend as much on population size.

Shang-Jin Wei, a former chief economist at the Asian Development Bank, is Professor of Finance and Economics at Columbia Business School and Columbia University’s School of International and Public Affairs.

Copyright: Project Syndicate, 2023.
www.project-syndicate.org

  • Coronavirus
  • Growth
  • Society
  • Trade

Executive Moves

Jutta Ludwig is a new member of the executive board at medical technology manufacturer Eckert & Ziegler. The China expert, who has her own consulting firm, was previously a member of the company’s supervisory board.

Mohamed Zied Aouini has been Section Lead – Project Management at Mercedes-Benz China in Shanghai since the beginning of the month. He previously worked in the project management cooperation engine at Mercedes in Stuttgart.

Is something changing in your organization? Why not let us know at heads@table.media!

So to speak

Canned Peaches

黄桃罐头 – huángtáo guàntóu – canned peaches

Hot lemon, onion syrup, ginger tea, and chicken broth, cold baths, and calf wraps … you might want to add another home remedy to your repertoire the next time you have the flu or a Covid knockout: canned peaches.

As the corona tsunami surges through China, not only fever medication such as ibuprofen (布洛芬 bùluòfēn), cough syrups (咳嗽糖浆 késòu tángjiāng) and antigen test kits (抗原 kàngyuán) have become scarce in some hotspots, but also canned or jarred peaches (黄桃罐头 huángtáo guàntóu). In Dongbei (东北 dōngběi), i.e. northeast China, they are considered a miracle drug against flu-like infections. The net community jokingly dubbed it “Dongbei Penicillin” (东北青霉素 dōngběi qīngméisù). In the wake of the Covid wave, the golden-yellow canned fruit experienced a hype in the Middle Kingdom and helped many Chinese to get through the gray days of fever – if they managed to get hold of some.

Some canned fruit fans believe it stimulates the appetite and supports the Covid recovery process. In reality, however, it is probably primarily a peach placebo, a classic comfort food (安慰食品ānwèi shípǐn) that evokes childhood memories. For a long time, northeastern Chinese grannies and mommies lovingly nursed their young ones back to health with these sweet fruit. In the seventies and eighties, and even into the nineties, canned food was considered a precious commodity in northern China. This was especially true during the barren winter months, when fresh fruit and vegetables were rare. Canned food was expensive. At that time, a can of peaches cost as much as a pound of pork. Accordingly, the sweet little fruits were only brought out on special occasions – for example, when visiting relatives or for the annual spring festival, on birthdays or even when the offspring was stuck in bed with a cough and high temperature.

But even in the country’s south, where fresh fruit is abundant all year round, many a Chinese feels taken back to childhood days when sugary canned fruit melts in their mouths. Because of their high sugar concentration, the canned fruit had a hint of sweets and thus of the “forbidden”. Canned fruit was considered unhealthy sugar stuff full of preservatives, and concerned parents kept a wary eye on them. So even in southern China, canned fruit was not on the table every day. The little ones liked it anyway, of course. So it is no wonder that China’s online community jokingly celebrates peaches as a “miracle cure for Covid” (抗疫神器 kàng yì shénqì), thanks to the nostalgic memory factor.

But even among the older generation, the jars bring back special associations. In ancient China, people believed that peach branches could ward off evil spirits. To this day, the Chinese regard peaches as a symbol of health and longevity. As is often the case, this is also connected with a homophone. The character for peach 桃 (táo) sounds exactly like 逃 (táo) “to flee”. Thus, according to popular belief, those who surround themselves with peaches escape illness, death and other misfortunes. The custom of giving “longevity peaches” (寿桃shòutáo – literally “human life peaches”) as gifts on birthdays persists to this day – either as real, fresh fruit or as peach-shaped pastries symbolizing long life.

Chinese supermarkets also picked up the pun during the pandemic. On social media, photos of advertising signs on peach jar pallets circulated. They read “桃过疫情 táoguò yìqíng” – “Escape the epidemic!” Where, of course, the hanzi for “flee” was replaced by the one for “peach.” So if you have a Chinese loved one by your side: Forget the onions and hot lemon and treat them with a peach.

Verena Menzel runs the online language school New Chinese in Beijing.

China.Table editorial office

CHINA.TABLE EDITORIAL OFFICE

Licenses:
    • Interview with FDP politician Johannes Vogel
    • Travel without quarantine
    • Worker protests in Chongqing
    • Jack Ma withdraws
    • High mortality rate among elderly engineers
    • Taiwan wants a say in WTO talks
    • Japan could stockpile weapons near Taiwan
    • Xi meets Turkmenian president
    • Deaths after truck accident
    • Columbia professor Wei on GDP growth
    • So to Speak: secret weapon canned peaches
    Dear reader,

    Delegation trips to Taiwan experienced a real upswing last year. Probably the most prominent visit was the trip by Nancy Pelosi, then Speaker of the US House of Representatives. Her visit to Taipei and China’s reaction kept the world’s attention for several days in August. After Pelosi, other US congressmen visited Taiwan. EU delegation trips to the island also gained momentum last year.

    Now Berlin is also sending politicians to Taipei: A high-ranking delegation of the liberal FDP parliamentary group is officially visiting Taiwan on Monday. Finn Mayer-Kuckuk spoke with deputy head of delegation Johannes Vogel about the political message of the visit, as well as the position of the German government in the Taiwan debate and vis-à-vis Beijing. “Thinking about a new direction has begun on a broad front in the coalition,” Vogel said. “However, we still need to talk in-depth about the details.”

    After almost three years, travel to China without quarantine is finally possible as of Sunday. As a result, border traffic between Hong Kong and the mainland is also increasing. We take a look at the border posts between Hong Kong and Shenzhen, where families, friends, and couples can embrace each other again without quarantine. When foreign tourists will be able to enter China with visas remains to be seen. So far, business travel has taken priority. The German Foreign Office still advises against trips to the People’s Republic.

    In today’s So to Speak section we inform you about the healing powers of “Dongbei Penicillin“. In the current flu, cold and Covid wave, the wonder cure out of the can may also help you or your friends and family.

    Your
    Amelie Richter
    Image of Amelie  Richter

    Interview

    ‘We must take Xi Jinping’s statements literally’

    Johannes Vogel zu seiner China-Erfahrung
    Johannes Vogel is Vice Chairman of the FDP at the federal level and First Parliamentary Secretary of the FDP parliamentary group in the Bundestag.

    What is the political message of this visit?

    The new systemic competition between democracies and autocracies requires a comprehensive approach. One of the dimensions is that we have to take statements of autocrats like Xi Jinping seriously and literally, and he now also openly speaks of military aggression to reunify Taiwan. It is therefore necessary to send a clear signal of support to Taiwan.

    China takes these visits very seriously.

    We do what we believe is politically right as self-confident parliamentarians. After all, we are not talking about turning away from the One China policy. Our approach is consistent with the line adopted by the German government.

    Still, you are a high-level delegation.

    Indeed, but this is also an important issue. Marie-Agnes Strack-Zimmermann, the Chairwoman of the Defense Committee, is traveling with us, and I am the First Parliamentary Secretary of the parliamentary group and Deputy Federal Chairman of a governing party. In addition, we have other high-profile colleagues from the parliamentary group executive committee and our foreign policy working group with us. That is a sign in the sense of the first answer.

    Are there any specific offers that Germany and Europe should now make to Taiwan, for instance full memberships in international bodies?

    In the coalition agreement, we set out to strengthen Taiwan’s involvement below the level of state recognition. We are committed to this.

    The goal, however, is to ultimately avoid war.

    Yes, and in the sense of avoiding a confrontation, the West as a whole must position itself in such a way that it also makes such a crisis event unlikely through deterrence.

    Does it make sense from the perspective of the Western alliances to draw red lines: If China does thing A, then thing B happens?

    It is not wise to think in would-be scenarios here. However, it has already been clearly formulated that reunification with military force would not remain without consequences.

    ‘It is not about decoupling fantasies’

    What considerations are currently necessary and required for this?

    Above all, it includes an economic dimension in addition to a security policy dimension. I have already spoken about this with smart interlocutors of our allies in Washington, who emphasize this point in particular for Europe as well. 

    What change in the economic policy of the EU and Germany is the FDP striving for?

    We need to make ourselves more independent of the Chinese market and act from a position of economic strength. This includes, on the one hand, bringing our own innovative strength back to the forefront and, on the other hand, reducing dependencies by promoting more free trade with free-market democracies right now. So this is not about decoupling fantasies but an economic strategy ‘beyond China’. There are many market-economy partners for such a policy, including around the Pacific, such as the ASEAN states, Australia, and India, in addition to South Korea and Japan.

    Volkswagen and BASF are making no effort to reduce their dependence on China. In fact, they want to invest more to maintain their market share. What is your assessment of this?

    Overall, I notice that German companies – including SMEs in the Sauerland region where I live – are increasingly thinking about their own dependencies when making such decisions. But the process is certainly only just beginning. The China stress test I have called for can help because it increases transparency and sensitivity.

    When you outline their ideas, you sound very similar to the China strategies from Green-led ministries.

    Thinking about a new direction has begun on a broad front in the coalition. That is good because here, the coalition partners are following our line. However, we still need to talk in-depth about the details.

    However, it seems as if the FDP is particularly committed to Taiwan. The SPD and the Greens have not sent their own delegations recently.

    The fact that the party of freedom is committed to freedom issues should come as a surprise to you. But this is also a matter of the new systematic competition. We have to approach the challenges posed by the CCP much more systematically.

    • FDP
    • Geopolitics
    • Taiwan

    Feature

    Border traffic without quarantine

    Travel between Hong Kong and the mainland

    When Alvin crossed the border from Hong Kong to Shenzhen on Sunday morning, his wife immediately welcomed him on the other side with a hug. After nearly three years where entering China was only possible with hotel quarantine, life has finally become easier again for the couple.

    “Quarantine? We’ll never do that again,” the 36-year-old says before entering a cab with his wife. While Alvin has a job in Hong Kong, his partner works in Shenzhen. Both have endured countless stays in quarantine hotels over the past few years. That was the only way they could see each other, at least sometimes. But that is over now.

    No more tests after arrival

    Not all border crossings between Hong Kong and Shenzhen have been reopened. The express train line connecting the two metropolises is expected to slowly resume operations only in the coming days. A quota also applies initially to prevent overcrowding. In each case, 60,000 people are allowed to cross the border per day in both directions. This excludes people from Hong Kong and Mainland China, who are returning home. At the Shenzhen Bay border post on Sunday, however, it almost looks like it did before the pandemic.

    The border police no longer wear white full-body protective suits. Also gone are the containers in which travelers had to take their Covid tests on arrival. Workers have dismantled the high fences around the border post where arrivals had to wait for the bus to the quarantine hotel.

    On Sunday, travelers at Chinese airports also rejoiced over the lifting of quarantine requirements. Air China Flight 932, the first quarantine-free direct flight from Germany, landed in Beijing on Sunday morning. At times, travelers to China had to spend three weeks in strict isolation in a hotel room. Most recently, five days plus three days of isolation at home were still required. Now, all that is required is a negative PCR test 48 hours before departure.

    Large travel wave not expected

    Despite the drastically simplified rules, observers do not initially expect a massive travel wave in either direction, except the Hong Kong border. There are not enough flight connections so far. Both Chinese and international airlines need time to adjust their schedules. China is also just beginning to issue new passports. Chinese consulates and embassies abroad also want to approve more visa applications. However, it is not yet known when foreign tourists will be allowed to travel to China again. For the time being, business trips have priority.

    Despite only a few available flights, the German Foreign Office advised against unnecessary travel to the People’s Republic over the weekend. The warning was justified by the massive Covid wave in China, which overwhelmed hospitals. The federal government classified China in a newly created risk class. Virus variants areas have been around for a while. What is new is the “virus variant area in which a virus variant of concern threatens to emerge.”

    Paxlovid talks failed

    The number of infections in China is at its highest level since the pandemic began in 2020, “the Chinese health care system is overwhelmed, and adequate care in medical emergencies is also affected,” the State Department’s travel and security advisories said. On Saturday, Chinese authorities officially reported two new deaths related to the COVID-19 infectious disease caused by the Coronavirus, up from three deaths the day before, according to the Center for Disease Control and Prevention.

    Talks about including the Covid drug Paxlovid in the drug list of the state’s basic health insurance had failed over the weekend. The health authority cited the conditions set by supplier Pfizer as the reason. Germany and the EU offered Beijing to supply the Biontech vaccine. The offer initially remained unanswered. Joern Petring

    News

    Worker protests in Chongqing

    According to South China Morning Post reports, violent protests broke out at a factory in Chongqing over the weekend. Videos on social media show workers throwing objects at security forces in an industrial park. A police loudspeaker sounds the announcement “illegal activities” must be stopped immediately.

    According to comments on social media and image analysis by AFP, the protesters could be workers from the pharmaceutical manufacturer Zybio, which produces Covid test kits, among other things. According to reports, the company has recently laid off several thousand workers and failed to pay wages. The company has not yet commented on the incidents. Authorities have censored hashtags related to the protests. fpe

    • Coronavirus
    • Health
    • Protests
    • Society

    Jack Ma relinquishes control of Ant Group

    Jack Ma will relinquish control of Ant Financial, the financial services company he founded. This was announced by Ant Group in a statement on Saturday. The 58-year-old multi-billionaire and founder of the e-commerce platform Alibaba last held only ten percent of the shares in Ant Financial but still had over half of the voting rights. Now his voting rights are to be reduced arithmetically to around six percent. This means that no shareholder will have sole control over the company in the future.

    Two years ago, the Chinese supervisory authorities had briefly prevented the planned IPO of the fintech group (China.Table reported). According to observers, Ma’s withdrawal could revive plans for an IPO of Ant Group. However, Chinese stock markets require a waiting period of two to three years after such changes in corporate management. Hong Kong, on the other hand, requires only one year.

    Ant Group operates Alipay, a ubiquitous mobile payment service in China, as well as a lending platform and insurance businesses. Over the years, the company had become too powerful for the state in the tightly controlled financial sector. Ma was also the focus of a state crackdown on China’s tech companies because of a critical speech about the financial authorities (China.Table reported). Last year, he reportedly moved his residence from China to Japan. fpe

    • Jack Ma
    • Tech Crackdown
    • Technology

    Academy of Engineering laments high mortality rate

    The Chinese Academy of Engineering (CAE) reports a spike in deaths among its members following the abrupt Covid openings in mid-December. From Dec. 15 to Jan. 04, 22 aged engineers and scientists among the 900 academicians died. On average, only 16 members died in the entire year in previous years.

    The CAE did not violate the party line in that it only made a temporal, not a causal, connection to the Covid opening. In China, only patients with absolutely no other cause of death, such as advanced age, pneumonia, or pre-existing conditions, are considered to have “died of Covid.”

    Among the prominent deceased in recent weeks are:

    • Xu Mi, developer of the Chinese breeder reactor,
    • Zhang Guocheng, a pioneer in the development of industrial metals, or
    • Zhao Yinjun, developer of laser weapons.

    In the case of the high-profile civil engineer Long Yuqiu, the obituary on the academy website specifically cites inadequate medical treatment” as the cause of death. Beijing’s hospitals are currently flooded with Covid patients, so other illnesses fall short. fin

    • Coronavirus
    • Covid-19
    • Health
    • Research
    • Science

    Taiwan to participate in WTO talks on chip embargo

    Taiwan wants to participate in WTO consultations in the wake of China’s lawsuit against the US chip embargo. Beijing had filed a complaint with the World Trade Organization (WTO) against the US over restrictions on exports of semiconductors and other high-tech products (China.Table reported).

    Because of its global importance to the chip market, Taiwan, the largest producer, now wants to participate in the talks, Taipei said in a statement to the organization. The island has no intention of supporting China’s WTO complaint, the statement said. The move also did not imply “dissatisfaction with the measures taken by the United States,” it said.

    In late December, Russia had also announced that it would join the consultations. It has not yet been officially announced when they will begin. ari

    • Chips
    • Taiwan
    • Technology
    • Trade
    • WTO

    Japan considers ammunition and weapons depots near Taiwan

    Japan is considering setting up dozens of ammunitions and weapons depots on islands off China in preparation for a possible conflict over Taiwan, according to a media report. Japanese forces defending the country’s China-facing islands would have better access to supplies, the Japanese business daily Nikkei Asia reported, citing considerations in the Japanese Defense Ministry. It said Japan currently has about 1,400 ammunition depots nationwide, but 70 percent are located on the northernmost main island of Hokkaido.

    The Defense Ministry estimates that Japan’s land forces will need about 90 additional ammunition depots within the next decade. About 40 such depots are also needed by the navy. A proposal calls for the construction of nearly 70 ammunition depots within the next five years, the newspaper reported. According to the report, the new depots would be established on islands stretching from the southern tip of the southwesternmost main island of Kyushu toward Taiwan. The report said that the Tokyo government is to begin talks with local authorities and residents of the islands in this regard.

    Japan is currently making a historic change of course in its security policy and plans to massively increase its defense spending (China.Table reported). In the future, the defense budget will amount to two percent of the country’s economic output instead of the current one percent. ari

    • Geopolitics
    • Japan
    • Military

    Xi to expand gas cooperation with Turkmenistan

    Chinese President Xi Jinping has expressed his support for closer energy cooperation with Turkmenistan. “Natural gas cooperation is the cornerstone of the China-Turkmenistan relationship,” Xi told Turkmen President Serdar Berdimuhamedov at a meeting in Beijing. Central Asian Turkmenistan is China’s largest single supplier of pipeline natural gas. Xi did not provide specific details on future energy cooperation between the two countries.

    China’s import of Turkmenian gas is increasing. According to customs data, China imported about $9.3 billion worth of gas in the first 11 months of 2022. The year before, it was $6.79 billion, according to the same source. That represents just over 50 percent of China’s pipeline gas imports, according to Norwegian energy research firm Rystad Energy. At Friday’s meeting, Xi and Berdimuhamedov agreed to expand bilateral ties into a “comprehensive strategic partnership.” ari/rtr

    • Energy
    • Natural gas
    • Turkmenistan

    Several dead in truck accident

    A truck crashed into a queue on the road outside a crematorium in southeast China. Nineteen people were killed in the incident. Another 20 were injured, state news agency Xinhua reported. According to the report, the accident happened shortly after midnight on Sunday in Taoling village, southeast of Nanchang city in Jiangxi province. State media reported that relatives and friends were waiting outside the building and had placed offerings for the dead on the roadside. People wanted to attend a mass cremation the next morning. Further details on the course of events of the accident were not available yet. ari

    • Infrastructure
    • Society

    Opinion

    Can China save its economic miracle?

    By Shang-Jin Wei
    Shang-Jin Wei is a Professor of Finance and Economics at Columbia Business School.

    China’s recent decision to abandon its strict zero-COVID policy has led many to believe that its economy will bounce back. The Economist Intelligence Unit, for example, has revised its forecast for Chinese GDP growth in 2023 upward, to 5.2 percent. But growth recovery is not automatic, and China must contend with several challenges, including declining confidence among firms and households about their future incomes in the short run, insufficient productivity growth in the medium run, and an unfavorable demographic transition in the long run.

    Restoring confidence may be more important than expanding credit in the short run. Following a sustained period of repeated lockdowns, many small entrepreneurs and workers in traditional service sectors who have feared for their jobs and incomes are reluctant to make purchases. Likewise, many firms are wary of investing, after recent revenue disruptions and tighter regulatory scrutiny in education, tech, and other sectors. In a recent survey of domestic and foreign firms operating in China, the Shanghai-based China Europe International Business School found that Chinese business confidence has sunk to a new low.

    Pessimism can be self-fulfilling. If enough businesses and households lose confidence and cut their spending, there will be lower demand for products and services by other firms. But lower revenues would eventually hurt these firms’ own upstream suppliers. To break the cycle of pessimism, Chinese policymakers must restore confidence in the short term. But their options are constrained. Making future policies more predictable would be very useful to enhance confidence, but policy predictability cannot be achieved by a simple government proclamation. While credit expansion would boost aggregate demand, it could have the undesirable effect of driving up inflation. Meanwhile, costly Covid-19 testing and quarantines have strained China’s fiscal capacity.

    Confidence in policy decisions waned

    One policy to consider is a time-limited reduction in sales and corporate income taxes. By reducing these taxes only temporarily, China could reduce its government debt burden and stimulate household consumption. Similarly, a limited-term corporate income-tax cut could encourage more private-sector investment than an equivalent permanent reduction would.

    To increase the pace of productivity growth over the medium term, the Chinese economy needs more than additional patents and software. It needs better allocation of resources across individuals, firms, and sectors. For example, by reforming the hukou household registration system, China could deploy the same amount of human resources more efficiently while improving social equity. Another step that could help boost productivity is leveling the playing field between state-owned and private-sector firms in obtaining bank credit and government licenses.

    China’s biggest challenge: a shrinking workforce

    To improve medium-term growth, China must heed the lessons of its own history and focus on removing barriers to market entry and entrepreneurship. An economy’s growth rate comes from a combination of an increase in the average size of existing firms (intensive-margin growth) and an increase in the number of firms (extensive-margin growth). A study of the Chinese manufacturing sector that I co-authored with Xiaobo Zhang suggests that during the last few decades, extensive-margin growth accounted for about 70 percent of overall GDP expansion.

    In the long run, the biggest economic challenge facing China is the country’s shrinking workforce. In contrast to economic competitors like Vietnam and India, China’s working-age population has been declining for almost a decade. Even if productivity growth remains constant, this demographic shift would lead to ever-declining GDP growth. Some policy measures, such as importing foreign labor en masse, might work but will likely lead to social or political complications. Others, such as attempts at increasing the birth rate, raising the retirement age, or boosting female participation in the labor force, do not look very promising.

    Instead of GDP, per capita income should increase

    Increasing the quality of the labor force, however, is a more realistic goal. For example, China could increase the average education level of its workforce by enhancing the retention and completion rates in high schools and vocational schools in rural areas. The ubiquity of smartphones and tablets offers a new potential avenue to improve workers’ skills. But, after a period of tightening regulations on online education services, this may require a more permissive policy environment that encourages entrepreneurship in this area.

    Finally, China should not be too obsessed with rapid GDP growth. It must instead focus on increasing per capita income and improving the quality of life. These intrinsically matter more to the Chinese people than GDP growth and do not depend as much on population size.

    Shang-Jin Wei, a former chief economist at the Asian Development Bank, is Professor of Finance and Economics at Columbia Business School and Columbia University’s School of International and Public Affairs.

    Copyright: Project Syndicate, 2023.
    www.project-syndicate.org

    • Coronavirus
    • Growth
    • Society
    • Trade

    Executive Moves

    Jutta Ludwig is a new member of the executive board at medical technology manufacturer Eckert & Ziegler. The China expert, who has her own consulting firm, was previously a member of the company’s supervisory board.

    Mohamed Zied Aouini has been Section Lead – Project Management at Mercedes-Benz China in Shanghai since the beginning of the month. He previously worked in the project management cooperation engine at Mercedes in Stuttgart.

    Is something changing in your organization? Why not let us know at heads@table.media!

    So to speak

    Canned Peaches

    黄桃罐头 – huángtáo guàntóu – canned peaches

    Hot lemon, onion syrup, ginger tea, and chicken broth, cold baths, and calf wraps … you might want to add another home remedy to your repertoire the next time you have the flu or a Covid knockout: canned peaches.

    As the corona tsunami surges through China, not only fever medication such as ibuprofen (布洛芬 bùluòfēn), cough syrups (咳嗽糖浆 késòu tángjiāng) and antigen test kits (抗原 kàngyuán) have become scarce in some hotspots, but also canned or jarred peaches (黄桃罐头 huángtáo guàntóu). In Dongbei (东北 dōngběi), i.e. northeast China, they are considered a miracle drug against flu-like infections. The net community jokingly dubbed it “Dongbei Penicillin” (东北青霉素 dōngběi qīngméisù). In the wake of the Covid wave, the golden-yellow canned fruit experienced a hype in the Middle Kingdom and helped many Chinese to get through the gray days of fever – if they managed to get hold of some.

    Some canned fruit fans believe it stimulates the appetite and supports the Covid recovery process. In reality, however, it is probably primarily a peach placebo, a classic comfort food (安慰食品ānwèi shípǐn) that evokes childhood memories. For a long time, northeastern Chinese grannies and mommies lovingly nursed their young ones back to health with these sweet fruit. In the seventies and eighties, and even into the nineties, canned food was considered a precious commodity in northern China. This was especially true during the barren winter months, when fresh fruit and vegetables were rare. Canned food was expensive. At that time, a can of peaches cost as much as a pound of pork. Accordingly, the sweet little fruits were only brought out on special occasions – for example, when visiting relatives or for the annual spring festival, on birthdays or even when the offspring was stuck in bed with a cough and high temperature.

    But even in the country’s south, where fresh fruit is abundant all year round, many a Chinese feels taken back to childhood days when sugary canned fruit melts in their mouths. Because of their high sugar concentration, the canned fruit had a hint of sweets and thus of the “forbidden”. Canned fruit was considered unhealthy sugar stuff full of preservatives, and concerned parents kept a wary eye on them. So even in southern China, canned fruit was not on the table every day. The little ones liked it anyway, of course. So it is no wonder that China’s online community jokingly celebrates peaches as a “miracle cure for Covid” (抗疫神器 kàng yì shénqì), thanks to the nostalgic memory factor.

    But even among the older generation, the jars bring back special associations. In ancient China, people believed that peach branches could ward off evil spirits. To this day, the Chinese regard peaches as a symbol of health and longevity. As is often the case, this is also connected with a homophone. The character for peach 桃 (táo) sounds exactly like 逃 (táo) “to flee”. Thus, according to popular belief, those who surround themselves with peaches escape illness, death and other misfortunes. The custom of giving “longevity peaches” (寿桃shòutáo – literally “human life peaches”) as gifts on birthdays persists to this day – either as real, fresh fruit or as peach-shaped pastries symbolizing long life.

    Chinese supermarkets also picked up the pun during the pandemic. On social media, photos of advertising signs on peach jar pallets circulated. They read “桃过疫情 táoguò yìqíng” – “Escape the epidemic!” Where, of course, the hanzi for “flee” was replaced by the one for “peach.” So if you have a Chinese loved one by your side: Forget the onions and hot lemon and treat them with a peach.

    Verena Menzel runs the online language school New Chinese in Beijing.

    China.Table editorial office

    CHINA.TABLE EDITORIAL OFFICE

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