The sum of $170 billion played a geopolitical role in two different events worldwide. That’s how much money the US Senate wants to spend to upgrade the research and technology sector to compete against China. This comes, not coincidentally, just days before the G7 summit. US President Joe Biden wants to ally against China, as Felix Lee analyses. State and party leader Xi Jinping counters in a congratulatory letter at the start of the China-Central and Eastern Europe Expo: $170 billion is the value of imported goods from participating European countries over the next five years, he promises. Let’s see how the investments pay off.
The circumstances for EV drivers range from annoying to adventurous when they want to charge their batteries. Although it all starts very promisingly: China has installed two-thirds of the world’s public charging points for EVs in recent years. The country is moving strictly along the path of progress and has set ambitious goals for itself. But even the self-proclaimed home of electromobility suffers from the pitfalls of everyday life, reports Nico Beckert. Many of the charging stations are defective – or they only provide electricity after long phone calls with the operator.
The G7 call themselves the world’s leading industrialized nations. Yet one particularly big player is not among them: China. At least not as a participant; as a topic, however, it will dominate. When the heads of government of the US, Japan, Germany, France, the UK, Canada and Italy convene for their three-day meeting in Carbis Bay in Cornwall, the People’s Republic will be the main topic of discussion alongside the pandemic.
The seven Western industrialized nations want to agree on a global infrastructure partnership at the summit. The aim is to drive forward major construction projects in emerging and developing countries, reports Handelsblatt, which has a paper to this effect that the G7 states are currently negotiating. At first glance, this sounds harmless. But what lies behind it is nothing less than a counter-model of the Western industrialized countries to China’s Belt and Road Initiative, officially known as the Belt and Road Initiative.
The Chinese leadership, pursuing this program since 2013, wants to span much of the world with a trade network: building ports, airports, railways, pipelines and roads – all with Chinese money. What many thought unimaginable until recently is already a reality. The leadership in Beijing had announced around $1 trillion for this comprehensive program by 2025. It has already invested or firmly planned nearly $730 billion until 2019, suspects trade economist Alexander Sandkamp of the Kiel Institute for the World Economy (IfW). “Fact is that a lot of money has already been put in hand and will continue to be.”
So now the G7’s counter-program. “There is a huge need for infrastructure in low- and middle-income countries, exacerbated by the Covid-19 pandemic,” says the paper for the summit, quoted by Handelsblatt. The German government does not want to disclose details before the summit. The topics and contents are currently still being intensively discussed among the G7 staff of the countries, a spokesman for the German government replied to an inquiry from China.Table. Only this much: “Of course, the relationship with China will also be an important topic, and we are also discussing sustainable approaches to financing infrastructure in developing countries in this context.”
Yet China is not officially on the G7 agenda. But US President Joe Biden has made no secret of what he sees as the central issue before his departure for Europe. According to reports from Washington, he wants to repair transatlantic relations, which suffered greatly under his predecessor Donald Trump, in particular “to confront the adversaries Russia and China together with our allies.”
Immediately following the G7 summit in the UK, he will travel on to Brussels, where he will meet with all NATO partners on June 14. A summit of the US and the EU is also planned there. At the G7 foreign ministers’ meeting in London in April, Biden’s Foreign Minister, Antony Blinken, had already stressed how important it was to his government to maintain “the order based on international rules,” mentioning China by name. “If any country – be it China or any other state – challenges this order, we will stand up and defend it,” he said.
Economist Sandkamp believes this move is a “sensible decision by the G7” to offer an alternative for countries “so that they don’t just depend on China to develop their infrastructure.” In addition, he says, it’s nice to see that the US is willing to take the role of leadership again and return to the multilateral structure. “Of course, the ideal would be cooperation with China on the major infrastructure projects of the future.”
To counter China’s technological strategy, the US already took action. On Tuesday, the US Senate approved on a bipartisan basis a vast $170 billion research and technology investment program to strengthen the US economy to compete with China. Among other things, it aims to boost the production of semiconductors in the US and research into artificial intelligence. It is the “largest investment in research and technological innovation in generations,” insisted Senate Democratic Majority Leader Chuck Schumer. “We are in a competition with China and other countries to win the 21st century, and the starting shot has been fired,” Biden had said earlier in promoting the program. The US must assert its position as the “most innovative and productive nation in the world.”
The Europeans seem hesitant so far, especially the German government. “We have no interest in dividing the world into two spheres,” Angela Merkel had said at a transatlantic congress of the CDU/CSU parliamentary group at the end of April. It is true that Western democracies must address sensitive issues such as human rights together and everywhere, the Chancellor stressed. However, she said, the interest was clear: a country as large as China should be part of a multilateral world order. Major challenges such as climate change cannot be mastered otherwise. Merkel explicitly defended the EU-China Comprehensive Agreement on Investment (CAI), which has been concluded but not yet ratified by the EU Parliament. This was a “very important undertaking because it gives us more reciprocity in market access.”
So far, however, the Europeans do not have a counter-program to China’s Belt and Road Initiative. “Perhaps it was strategically intended to wait for Biden to show that they are also prepared to work together,” economist Sandkamp suspects. Because, of course, the European Union and the United States together have much more room for maneuver and negotiating power than they do alone. This weekend’s G7 could be a good starting point.
Germany often discusses the chicken and egg situation when it comes to electromobility. What is needed first: charging points or EVs? Without a charging infrastructure, EVs make little sense. But for charging stations to operate profitably, there needs to be a sufficiently high demand – in other words, a corresponding number of EVs. China is brushing aside such concerns with a dual strategy: The People’s Republic is investing in the expansion of e-mobility and new charging stations simultaneously.
As is typical for China, it relies on mass. The positive effect is a fundamentally high availability of charging stations. The downside, however, is negligent maintenance and a lack of quality in practice. China’s expansion plans are thus ambitious and are progressing in record time – but the reality for EV drivers is still lacking.
The People’s Republic has two-thirds of the world’s public charging points. In comparison, Germany has only 41,000, which is how many China built in just four months. The expansion in China is even picking up speed.
Private suppliers, the two state-owned power grid operators, and Chinese car companies are vying for the best market position. They are creating supply before demand explodes. In China, there are five EVs for every public charging point. In the European Union, an average of nine cars compete for one charging point. In Germany, in particular, the expansion of charging infrastructure has not kept pace with the recent sales boom. In this country, 17 EVs share one public charging point. The EU recommends a maximum of ten. Germany is therefore performing poorly.
China has also seen rapid development in private charging points. In private households, mostly in apartment blocks, there are now a good 800,000 charging points, which still supplement the network of public ones. Comparative figures for Germany are unavailable, as private charging points are not centrally recorded.
The reason for the success of the expansion is that it is wanted from the very top. For Beijing, the expansion of the charging infrastructure has been a political priority since 2014 and is being pursued with increasing seriousness. The central government sets expansion targets, provides numerous subsidies, and sets uniform charging standards.
The implementation of the national targets takes place at the provincial and municipal levels. Numerous provinces and cities subsidize the high initial investment in charging stations and assume up to 30 percent of the installation costs. Operation is also subsidized. Since 2014, operators of public charging stations have fallen under the cheapest of China’s three electricity tariffs. They are allowed to purchase electricity at the industrial tariff.
To ensure that the subsidies reach the customers, some provinces and many cities have introduced a price cap. The maximum charging fee was between €0.06 and €0.30 per kilowatt hour, depending on the region. This was another incentive to buy EVs. However, the municipal government of Beijing lifted this price cap at the beginning of 2018 because many charging stations were not profitable.
In general, charging station operators are notoriously writing red numbers. It takes six to ten years for a charging station to make a profit. At least government subsidies shorten this period somewhat. Many operators invest anyway because the provinces want to meet government targets, and operators “want to capture market share to take advantage of future market developments,” as a study by the Columbia Center on Global Energy Policy notes.
In March 2020, the central government also included the expansion of charging infrastructure in its Covid stimulus package. It is providing the equivalent of $1.4 billion to promote the construction of 600,000 new charging points – two-thirds of which will be private.
In addition to financial support, Beijing also imposes regulations on the expansion of the charging infrastructure. Since 2015, all new residential buildings and ten percent of the parking spaces in large public buildings must have charging points for EVs. Many provinces and municipalities also stipulate that commercial parking lots have certain percentages of charging points. In May 2021, additional requirements were enacted: When new residential complexes are built, charging points and the necessary power supply infrastructure must be installed at all parking spaces.
There has been a uniform charging standard (GB/T) mandatory for all newly sold EVs since 2015. International car companies had to adopt this standard for their Chinese models. In Europe, there has been a uniformly prescribed standard (CCS) since 2014, which is mandatory for all charging points. According to the German Association of the Automotive Industry, the Chinese standard has been revised several times and is soon to be replaced by the new ChaoJi system, as it is not sufficiently powerful. This could mean a massive effort on the part of Chinese providers to upgrade the existing infrastructure.
Despite all the financial support and strict regulations, China has fallen short of its 2015 target of installing 4.8 million charging points by 2020. The expansion is stalling in a number of places: A recent government document, for example, calls for the reduction of bureaucratic hurdles in the construction of charging stations in residential areas.
And at least initially, some companies seemed to abuse the high subsidies. They installed charging stations in regions of China that have hardly any traffic. In recent years, however, the subsidies have been made more performance-based. Some incentives have been redesigned so that energy consumption at charging points determines the number of subsidies. Thus, the construction of heavily used charging stations in places with high demand should be particularly encouraged.
The Columbia Center on Global Energy Policy’s research also shows that too “slow grid upgrades to support the charging network are a problem.” In other words, utilities often can’t provide enough power for all those charging stations. Grid expansion is the responsibility of two state-owned power grid operators, State Grid and China Southern Grid. State Grid has an annual infrastructure expansion plan. “Requests for grid upgrades must be submitted early or they will not be included in the following year’s plan,” the Columbia researchers write. Delays occur, they say.
Field reports from China also show frequent problems with the charging points. As a result, on a 1,400-kilometer test tour between Beijing and Inner Mongolia, many charging points were defective or difficult to use. At one State Grid station, there was a power failure and the car had to be towed away, reports an employee of a German institution to China.Table.
The charging apps are often confusing and do not provide sufficient information on initiating charging processes or where charging stations are located at all, according to the practical tester. In many cases, it was also necessary to make phone calls to the respective providers to activate the charging process. The conclusion of the test drive: The charging infrastructure in China is inadequate in practice. The interoperability and maintenance of the facilities are obstacles to a good process.
Despite the practical weaknesses, China is at least making rapid progress with the expansion. In Germany, on the other hand, the charging infrastructure is lagging behind car sales. The German Association of the Automotive Industry complains that the addition of just under 1,000 charging points per month is not enough. The demand is 2,000 per month. But even that could be too slow: According to a study commissioned by the Ministry of Transport, between 440,000 and 843,000 public charging points are needed by 2030.
Stefan Bratzel, Director of the Center of Automotive Management (CAM), also says that the “speed of expansion would have to be increased significantly” to keep up with the rising demand. He sees a lot of catching up to do, especially in terms of fast-charging infrastructure. According to Bratzel, the problem of the reliability of the charging infrastructure is even greater. It is not uncommon for public charging stations not to work or to be located behind closed factory yards on Saturdays. Unfortunately, there are no representative studies on the subject yet. An ADAC spokeswoman also explains: “To take away consumers’ range anxiety, more transparency must be created about the existing public charging points and their actual availability.” When it comes to the economic viability of the charging infrastructure, Bratzel sees similar problems as in China. Politicians have neglected this topic for too long.
In an effort to address rapid population aging, China has just announced that it will allow all families to have up to three children. The decision comes on the heels of widely publicized new data showing that the Chinese fertility rate in 2020 was only 1.3 per woman, which is similar to that of Japan (1.36 in 2019) and notably lower than that of the United States (1.7).
But a below-replacement fertility rate is only one part of China’s demographic problem. (China.Table reported). A second issue is the sheer size of its older population (China.Table reported). Before 1971, Chinese family-planning policies were pro-natal, restricting access to contraceptives and family-planning education. As a result, the country’s current or soon-to-be elderly population has grown particularly large: the size of the population aged 15-24 is only around 72 percent that of those aged 45-54, compared to 79 percent in Japan and 100 percent in the United States. This top-heavy demographic structure makes the problem of declining fertility even more acute, because new, younger workers are needed to replace those who will retire and require support.
A third problem is urban-rural inequality. China’s rural population is generally prohibited from moving to urban areas by the country’s hukou system of residency permits. Rural residents thus have had fewer opportunities to access education and health care. In 2010 to 2012, the urban enrollment rate was 100 percent for middle school, 63 percent for high school, and 54 percent for university; in rural areas, it was 70 percent, three percent, and two percent, respectively.
Likewise, urban areas had 2.68 doctors per 1,000 people in 2008, compared to just 1.26 per 1,000 people in rural areas. Not surprisingly, rural areas suffer worse health outcomes, with lower life expectancy and higher morbidity rates than urban areas.
Chinese policymakers tend to discuss each of these issues separately. But that is a mistake. Low fertility, the legacy of pro-natal policies, and rural-urban divides all affect a population-age structure that has a direct bearing on China’s long-run economic development.
Economic growth depends heavily on the quality of the labor force. If workers cannot access health care or acquire skills in school or on the job, the economy will suffer. Worldwide, differences in worker quality can explain about half of all cross-country differences in income and growth.
Telling Chinese couples that they may have three children will not automatically increase the fertility rate, nor will it necessarily help with the larger economic challenge. Fertility is determined by socioeconomic factors, such as the cost of raising children and the economic opportunities that parents foresee for their offspring. These costs are exceptionally high in urban China, where residential real estate is more expensive than in any other country at a similar income level.
Moreover, academic competition is intense. Children and their parents begin feeling the pressure of the nationwide gaokao exam for university admission in primary school. A 1999 reform that expanded the number of university slots could have partly relieved this pressure, except that job growth has not kept up; unemployment rates for college graduates have duly increased.
Urban parents also face the burden of caring for their own aging parents. This is no small task in a country where pensions are limited, and where few people move to retirement communities later in life. Most aging Chinese expect their adult children to care for them. And because the one-child policy in place from 1979 to 2016 was enforced more strictly in urban areas, most young urban parents grew up as only children. With no siblings to share the load, couples can expect to spend the next one or two decades caring for four aging parents in addition to rearing their own child. Adding two more children would increase the average couple’s dependents from five to seven.
By contrast, fertility is higher in rural areas, and the cost of rearing children is lower. Housing is cheaper, and the fact that there are fewer schooling opportunities are limited means that parents can worry less about the costs of education. Rural Chinese of childbearing age are much more likely to have siblings with whom they can work together in caring for elderly parents.
Under these circumstances, allowing families to have three children without also making other changes would likely not achieve the intended economic result, and could even make things worse. With the urban population unlikely to have many more children unless the financial burdens of child-rearing and elder care are reduced, it is only rural fertility that will increase. And without improvements in rural health and education, the size and share of the unskilled working population will grow.
A labor force with a growing share of unskilled workers is the last thing China needs as it strives to push the frontiers of technological innovation and advance beyond middle-income status. While improving schools and public health in rural areas is straightforward (albeit expensive), generating employment for graduates will be much more difficult. And without employment, young people will not be able to help support the aging population.
Chinese policymakers have shown awareness of some of these issues. In addition to increasing the fertility limit, they have acknowledged the need to reduce housing costs and to provide education subsidies. But these proposals remain vague, because there really are no simple solutions. Chinese policymakers will need to be mindful of the economic ramifications of the country’s demographic trends in tandem with its urban-rural divide – and take care to avoid making a difficult problem worse.
Nancy Qian is Professor of Managerial Economics and Decision Sciences at Northwestern University’s Kellogg School of Management and Co-Director of Northwestern University’s Global Poverty Research Lab and the Founding Director of China Econ Lab.
Copyright: Project Syndicate, 2021.
www.project-syndicate.org
The rice dumplings come in sweet and savory forms, with dates, red bean paste, or meat and egg yolk. And they are always wrapped in bamboo or reed leaves – zongzi (粽子) are a must for the Dragon Boat Festival. According to legend, the festival itself dates back to the attempted rescue of the poet Qu Yuan, who lived in the Warring States period (475-221 BC) and drowned himself in the river because of the injustices he had suffered. The rice dumplings were thrown into the river to prevent the fish from nibbling on Qu Yuan’s corpse. The Dragon Boat Festival is always celebrated on the fifth day of the fifth month according to the lunar calendar, and this year it falls on the coming Monday. Until then, however, everyone is already pitching in to prepare the traditional holiday dish. flee
The sum of $170 billion played a geopolitical role in two different events worldwide. That’s how much money the US Senate wants to spend to upgrade the research and technology sector to compete against China. This comes, not coincidentally, just days before the G7 summit. US President Joe Biden wants to ally against China, as Felix Lee analyses. State and party leader Xi Jinping counters in a congratulatory letter at the start of the China-Central and Eastern Europe Expo: $170 billion is the value of imported goods from participating European countries over the next five years, he promises. Let’s see how the investments pay off.
The circumstances for EV drivers range from annoying to adventurous when they want to charge their batteries. Although it all starts very promisingly: China has installed two-thirds of the world’s public charging points for EVs in recent years. The country is moving strictly along the path of progress and has set ambitious goals for itself. But even the self-proclaimed home of electromobility suffers from the pitfalls of everyday life, reports Nico Beckert. Many of the charging stations are defective – or they only provide electricity after long phone calls with the operator.
The G7 call themselves the world’s leading industrialized nations. Yet one particularly big player is not among them: China. At least not as a participant; as a topic, however, it will dominate. When the heads of government of the US, Japan, Germany, France, the UK, Canada and Italy convene for their three-day meeting in Carbis Bay in Cornwall, the People’s Republic will be the main topic of discussion alongside the pandemic.
The seven Western industrialized nations want to agree on a global infrastructure partnership at the summit. The aim is to drive forward major construction projects in emerging and developing countries, reports Handelsblatt, which has a paper to this effect that the G7 states are currently negotiating. At first glance, this sounds harmless. But what lies behind it is nothing less than a counter-model of the Western industrialized countries to China’s Belt and Road Initiative, officially known as the Belt and Road Initiative.
The Chinese leadership, pursuing this program since 2013, wants to span much of the world with a trade network: building ports, airports, railways, pipelines and roads – all with Chinese money. What many thought unimaginable until recently is already a reality. The leadership in Beijing had announced around $1 trillion for this comprehensive program by 2025. It has already invested or firmly planned nearly $730 billion until 2019, suspects trade economist Alexander Sandkamp of the Kiel Institute for the World Economy (IfW). “Fact is that a lot of money has already been put in hand and will continue to be.”
So now the G7’s counter-program. “There is a huge need for infrastructure in low- and middle-income countries, exacerbated by the Covid-19 pandemic,” says the paper for the summit, quoted by Handelsblatt. The German government does not want to disclose details before the summit. The topics and contents are currently still being intensively discussed among the G7 staff of the countries, a spokesman for the German government replied to an inquiry from China.Table. Only this much: “Of course, the relationship with China will also be an important topic, and we are also discussing sustainable approaches to financing infrastructure in developing countries in this context.”
Yet China is not officially on the G7 agenda. But US President Joe Biden has made no secret of what he sees as the central issue before his departure for Europe. According to reports from Washington, he wants to repair transatlantic relations, which suffered greatly under his predecessor Donald Trump, in particular “to confront the adversaries Russia and China together with our allies.”
Immediately following the G7 summit in the UK, he will travel on to Brussels, where he will meet with all NATO partners on June 14. A summit of the US and the EU is also planned there. At the G7 foreign ministers’ meeting in London in April, Biden’s Foreign Minister, Antony Blinken, had already stressed how important it was to his government to maintain “the order based on international rules,” mentioning China by name. “If any country – be it China or any other state – challenges this order, we will stand up and defend it,” he said.
Economist Sandkamp believes this move is a “sensible decision by the G7” to offer an alternative for countries “so that they don’t just depend on China to develop their infrastructure.” In addition, he says, it’s nice to see that the US is willing to take the role of leadership again and return to the multilateral structure. “Of course, the ideal would be cooperation with China on the major infrastructure projects of the future.”
To counter China’s technological strategy, the US already took action. On Tuesday, the US Senate approved on a bipartisan basis a vast $170 billion research and technology investment program to strengthen the US economy to compete with China. Among other things, it aims to boost the production of semiconductors in the US and research into artificial intelligence. It is the “largest investment in research and technological innovation in generations,” insisted Senate Democratic Majority Leader Chuck Schumer. “We are in a competition with China and other countries to win the 21st century, and the starting shot has been fired,” Biden had said earlier in promoting the program. The US must assert its position as the “most innovative and productive nation in the world.”
The Europeans seem hesitant so far, especially the German government. “We have no interest in dividing the world into two spheres,” Angela Merkel had said at a transatlantic congress of the CDU/CSU parliamentary group at the end of April. It is true that Western democracies must address sensitive issues such as human rights together and everywhere, the Chancellor stressed. However, she said, the interest was clear: a country as large as China should be part of a multilateral world order. Major challenges such as climate change cannot be mastered otherwise. Merkel explicitly defended the EU-China Comprehensive Agreement on Investment (CAI), which has been concluded but not yet ratified by the EU Parliament. This was a “very important undertaking because it gives us more reciprocity in market access.”
So far, however, the Europeans do not have a counter-program to China’s Belt and Road Initiative. “Perhaps it was strategically intended to wait for Biden to show that they are also prepared to work together,” economist Sandkamp suspects. Because, of course, the European Union and the United States together have much more room for maneuver and negotiating power than they do alone. This weekend’s G7 could be a good starting point.
Germany often discusses the chicken and egg situation when it comes to electromobility. What is needed first: charging points or EVs? Without a charging infrastructure, EVs make little sense. But for charging stations to operate profitably, there needs to be a sufficiently high demand – in other words, a corresponding number of EVs. China is brushing aside such concerns with a dual strategy: The People’s Republic is investing in the expansion of e-mobility and new charging stations simultaneously.
As is typical for China, it relies on mass. The positive effect is a fundamentally high availability of charging stations. The downside, however, is negligent maintenance and a lack of quality in practice. China’s expansion plans are thus ambitious and are progressing in record time – but the reality for EV drivers is still lacking.
The People’s Republic has two-thirds of the world’s public charging points. In comparison, Germany has only 41,000, which is how many China built in just four months. The expansion in China is even picking up speed.
Private suppliers, the two state-owned power grid operators, and Chinese car companies are vying for the best market position. They are creating supply before demand explodes. In China, there are five EVs for every public charging point. In the European Union, an average of nine cars compete for one charging point. In Germany, in particular, the expansion of charging infrastructure has not kept pace with the recent sales boom. In this country, 17 EVs share one public charging point. The EU recommends a maximum of ten. Germany is therefore performing poorly.
China has also seen rapid development in private charging points. In private households, mostly in apartment blocks, there are now a good 800,000 charging points, which still supplement the network of public ones. Comparative figures for Germany are unavailable, as private charging points are not centrally recorded.
The reason for the success of the expansion is that it is wanted from the very top. For Beijing, the expansion of the charging infrastructure has been a political priority since 2014 and is being pursued with increasing seriousness. The central government sets expansion targets, provides numerous subsidies, and sets uniform charging standards.
The implementation of the national targets takes place at the provincial and municipal levels. Numerous provinces and cities subsidize the high initial investment in charging stations and assume up to 30 percent of the installation costs. Operation is also subsidized. Since 2014, operators of public charging stations have fallen under the cheapest of China’s three electricity tariffs. They are allowed to purchase electricity at the industrial tariff.
To ensure that the subsidies reach the customers, some provinces and many cities have introduced a price cap. The maximum charging fee was between €0.06 and €0.30 per kilowatt hour, depending on the region. This was another incentive to buy EVs. However, the municipal government of Beijing lifted this price cap at the beginning of 2018 because many charging stations were not profitable.
In general, charging station operators are notoriously writing red numbers. It takes six to ten years for a charging station to make a profit. At least government subsidies shorten this period somewhat. Many operators invest anyway because the provinces want to meet government targets, and operators “want to capture market share to take advantage of future market developments,” as a study by the Columbia Center on Global Energy Policy notes.
In March 2020, the central government also included the expansion of charging infrastructure in its Covid stimulus package. It is providing the equivalent of $1.4 billion to promote the construction of 600,000 new charging points – two-thirds of which will be private.
In addition to financial support, Beijing also imposes regulations on the expansion of the charging infrastructure. Since 2015, all new residential buildings and ten percent of the parking spaces in large public buildings must have charging points for EVs. Many provinces and municipalities also stipulate that commercial parking lots have certain percentages of charging points. In May 2021, additional requirements were enacted: When new residential complexes are built, charging points and the necessary power supply infrastructure must be installed at all parking spaces.
There has been a uniform charging standard (GB/T) mandatory for all newly sold EVs since 2015. International car companies had to adopt this standard for their Chinese models. In Europe, there has been a uniformly prescribed standard (CCS) since 2014, which is mandatory for all charging points. According to the German Association of the Automotive Industry, the Chinese standard has been revised several times and is soon to be replaced by the new ChaoJi system, as it is not sufficiently powerful. This could mean a massive effort on the part of Chinese providers to upgrade the existing infrastructure.
Despite all the financial support and strict regulations, China has fallen short of its 2015 target of installing 4.8 million charging points by 2020. The expansion is stalling in a number of places: A recent government document, for example, calls for the reduction of bureaucratic hurdles in the construction of charging stations in residential areas.
And at least initially, some companies seemed to abuse the high subsidies. They installed charging stations in regions of China that have hardly any traffic. In recent years, however, the subsidies have been made more performance-based. Some incentives have been redesigned so that energy consumption at charging points determines the number of subsidies. Thus, the construction of heavily used charging stations in places with high demand should be particularly encouraged.
The Columbia Center on Global Energy Policy’s research also shows that too “slow grid upgrades to support the charging network are a problem.” In other words, utilities often can’t provide enough power for all those charging stations. Grid expansion is the responsibility of two state-owned power grid operators, State Grid and China Southern Grid. State Grid has an annual infrastructure expansion plan. “Requests for grid upgrades must be submitted early or they will not be included in the following year’s plan,” the Columbia researchers write. Delays occur, they say.
Field reports from China also show frequent problems with the charging points. As a result, on a 1,400-kilometer test tour between Beijing and Inner Mongolia, many charging points were defective or difficult to use. At one State Grid station, there was a power failure and the car had to be towed away, reports an employee of a German institution to China.Table.
The charging apps are often confusing and do not provide sufficient information on initiating charging processes or where charging stations are located at all, according to the practical tester. In many cases, it was also necessary to make phone calls to the respective providers to activate the charging process. The conclusion of the test drive: The charging infrastructure in China is inadequate in practice. The interoperability and maintenance of the facilities are obstacles to a good process.
Despite the practical weaknesses, China is at least making rapid progress with the expansion. In Germany, on the other hand, the charging infrastructure is lagging behind car sales. The German Association of the Automotive Industry complains that the addition of just under 1,000 charging points per month is not enough. The demand is 2,000 per month. But even that could be too slow: According to a study commissioned by the Ministry of Transport, between 440,000 and 843,000 public charging points are needed by 2030.
Stefan Bratzel, Director of the Center of Automotive Management (CAM), also says that the “speed of expansion would have to be increased significantly” to keep up with the rising demand. He sees a lot of catching up to do, especially in terms of fast-charging infrastructure. According to Bratzel, the problem of the reliability of the charging infrastructure is even greater. It is not uncommon for public charging stations not to work or to be located behind closed factory yards on Saturdays. Unfortunately, there are no representative studies on the subject yet. An ADAC spokeswoman also explains: “To take away consumers’ range anxiety, more transparency must be created about the existing public charging points and their actual availability.” When it comes to the economic viability of the charging infrastructure, Bratzel sees similar problems as in China. Politicians have neglected this topic for too long.
In an effort to address rapid population aging, China has just announced that it will allow all families to have up to three children. The decision comes on the heels of widely publicized new data showing that the Chinese fertility rate in 2020 was only 1.3 per woman, which is similar to that of Japan (1.36 in 2019) and notably lower than that of the United States (1.7).
But a below-replacement fertility rate is only one part of China’s demographic problem. (China.Table reported). A second issue is the sheer size of its older population (China.Table reported). Before 1971, Chinese family-planning policies were pro-natal, restricting access to contraceptives and family-planning education. As a result, the country’s current or soon-to-be elderly population has grown particularly large: the size of the population aged 15-24 is only around 72 percent that of those aged 45-54, compared to 79 percent in Japan and 100 percent in the United States. This top-heavy demographic structure makes the problem of declining fertility even more acute, because new, younger workers are needed to replace those who will retire and require support.
A third problem is urban-rural inequality. China’s rural population is generally prohibited from moving to urban areas by the country’s hukou system of residency permits. Rural residents thus have had fewer opportunities to access education and health care. In 2010 to 2012, the urban enrollment rate was 100 percent for middle school, 63 percent for high school, and 54 percent for university; in rural areas, it was 70 percent, three percent, and two percent, respectively.
Likewise, urban areas had 2.68 doctors per 1,000 people in 2008, compared to just 1.26 per 1,000 people in rural areas. Not surprisingly, rural areas suffer worse health outcomes, with lower life expectancy and higher morbidity rates than urban areas.
Chinese policymakers tend to discuss each of these issues separately. But that is a mistake. Low fertility, the legacy of pro-natal policies, and rural-urban divides all affect a population-age structure that has a direct bearing on China’s long-run economic development.
Economic growth depends heavily on the quality of the labor force. If workers cannot access health care or acquire skills in school or on the job, the economy will suffer. Worldwide, differences in worker quality can explain about half of all cross-country differences in income and growth.
Telling Chinese couples that they may have three children will not automatically increase the fertility rate, nor will it necessarily help with the larger economic challenge. Fertility is determined by socioeconomic factors, such as the cost of raising children and the economic opportunities that parents foresee for their offspring. These costs are exceptionally high in urban China, where residential real estate is more expensive than in any other country at a similar income level.
Moreover, academic competition is intense. Children and their parents begin feeling the pressure of the nationwide gaokao exam for university admission in primary school. A 1999 reform that expanded the number of university slots could have partly relieved this pressure, except that job growth has not kept up; unemployment rates for college graduates have duly increased.
Urban parents also face the burden of caring for their own aging parents. This is no small task in a country where pensions are limited, and where few people move to retirement communities later in life. Most aging Chinese expect their adult children to care for them. And because the one-child policy in place from 1979 to 2016 was enforced more strictly in urban areas, most young urban parents grew up as only children. With no siblings to share the load, couples can expect to spend the next one or two decades caring for four aging parents in addition to rearing their own child. Adding two more children would increase the average couple’s dependents from five to seven.
By contrast, fertility is higher in rural areas, and the cost of rearing children is lower. Housing is cheaper, and the fact that there are fewer schooling opportunities are limited means that parents can worry less about the costs of education. Rural Chinese of childbearing age are much more likely to have siblings with whom they can work together in caring for elderly parents.
Under these circumstances, allowing families to have three children without also making other changes would likely not achieve the intended economic result, and could even make things worse. With the urban population unlikely to have many more children unless the financial burdens of child-rearing and elder care are reduced, it is only rural fertility that will increase. And without improvements in rural health and education, the size and share of the unskilled working population will grow.
A labor force with a growing share of unskilled workers is the last thing China needs as it strives to push the frontiers of technological innovation and advance beyond middle-income status. While improving schools and public health in rural areas is straightforward (albeit expensive), generating employment for graduates will be much more difficult. And without employment, young people will not be able to help support the aging population.
Chinese policymakers have shown awareness of some of these issues. In addition to increasing the fertility limit, they have acknowledged the need to reduce housing costs and to provide education subsidies. But these proposals remain vague, because there really are no simple solutions. Chinese policymakers will need to be mindful of the economic ramifications of the country’s demographic trends in tandem with its urban-rural divide – and take care to avoid making a difficult problem worse.
Nancy Qian is Professor of Managerial Economics and Decision Sciences at Northwestern University’s Kellogg School of Management and Co-Director of Northwestern University’s Global Poverty Research Lab and the Founding Director of China Econ Lab.
Copyright: Project Syndicate, 2021.
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The rice dumplings come in sweet and savory forms, with dates, red bean paste, or meat and egg yolk. And they are always wrapped in bamboo or reed leaves – zongzi (粽子) are a must for the Dragon Boat Festival. According to legend, the festival itself dates back to the attempted rescue of the poet Qu Yuan, who lived in the Warring States period (475-221 BC) and drowned himself in the river because of the injustices he had suffered. The rice dumplings were thrown into the river to prevent the fish from nibbling on Qu Yuan’s corpse. The Dragon Boat Festival is always celebrated on the fifth day of the fifth month according to the lunar calendar, and this year it falls on the coming Monday. Until then, however, everyone is already pitching in to prepare the traditional holiday dish. flee
