China’s political decision-makers are keenly aware of the tense economic situation. In September, Xi Jinping personally spoke of a “sense of urgency” regarding the government’s economic management. And still, big changes have yet to happen. A commentary in the People’s Daily, published shortly before the Central Economic Conference in early December, gives an indication of what might be the reason, writes today’s author of “China Perspective.”
Lisa-Martina Klein’s analysis focuses on Georgia and its continued expansion of economic relations with China. Although Georgia’s pro-Russian government seems to have abandoned its original EU course for good, it does not want to rely on Russia as a long-term partner: In July 2023, Tbilisi and Beijing signed a strategic partnership agreement, which is intended to facilitate mutual investment, trade and cooperation in almost all critical areas. Georgia can look forward to Chinese bank loans. Critics complain about the country’s resulting dependency.
Last but not least, we would like to draw your attention to the first edition of our new CEO.Table, which will celebrate its premiere on Saturday. You can register by clicking on the picture below.
Your Julia Fiedler
Feature
Geopolitics: How Georgia is making itself dependent on China
A Chinese construction company in Georgia, photographed in October 2024.
Georgia has taken a closer political course towards Russia in recent months. In late November, Prime Minister Irakli Kobakhidze announced that he would suspend EU accession negotiations until the next parliamentary elections in 2028 and would no longer accept budget support from the EU. Thousands of Georgians, including many entrepreneurs, have been protesting every day since then, fearing that their government will completely turn its back on the EU, its largest trading partner. Between 2021 and 2024, the EU supported Georgia with 340 million euros.
Strategically, however, Tbilisi intends to free itself from its northern neighbor, which has occupied around 20 percent of Georgian territory since the attack on South Ossetia in 2008. Instead, Georgia continues to expand its economic relations with China – to the detriment of Georgian and foreign investors and companies.
Hardly any investments from China
For example, a strategic partnership agreement signed between Tbilisi and Beijing in July 2023 states that Georgia welcomes China’s Belt and Road Initiative. Mutual investment, trade and cooperation are to be facilitated in almost all critical areas: Transportation, communication, development and strengthening of the Middle Corridor, digital technologies, expansion of the railroad network, water resources, environmental protection as well as the use of Georgia’s transit infrastructure for the smooth export of Chinese products to Western markets. In return, Georgia receives preferential loans from Chinese banks. A policy that China is also pursuing in Africa and Central Asia.
However, China’s investments in Georgia remain low and have even decreased since the agreement was signed. According to the National Statistics Office of Georgia, China’s direct investments in Georgia totaled just under 100 million US dollars in 2023. By comparison, the UK invested just under 400 million US dollars and the Netherlands 386 million US dollars in the same period. The figures for 2024 are not yet fully available – China invested just 14 million US dollars in the first quarter of 2024, compared to more than 32 million US dollars in the same period in 2023.
Critical infrastructure in Chinese hands
Nevertheless, almost every major contract put out to public tender and paid for by the government has been awarded to Chinese companies and consortia under questionable circumstances since 2016. These include key projects such as the construction of important main roads, tunnels and bridges, sensitive surveillance technology such as scanners at airports or in official buildings, and power distribution grid technology.
In the summer, a controversial Chinese-Singaporean consortium, China Communication Construction Company Limited (CCCC) and China Harbor Investment, was awarded the contract to build the deep-sea port in Anaklia on the Black Sea. The port will be 51 percent state-owned and 49 percent foreign-owned. It will primarily allow China to transport its goods to Europe, bypassing Russia.
What is more critical from a security policy perspective is that this will increase China’s presence in the Black Sea region alongside Russia. Just a few kilometers to the north, Russia plans a new naval port in Ochamchire. Since the Russian invasion of Ukraine, NATO has identified this region as a strategically important area for itself. A port of this importance in Chinese hands weakens NATO’s position.
No benefit for Georgia’s companies
Some say that Georgia positions itself diversely between Russia, the EU and China, while critics say that Georgia is making itself dependent. One of the loudest is Tinatin Chidascheli, former minister of defense and chairwoman of the government- and China-critical think tank Civic Idea. According to Chidascheli, Russia is currently the main security problem. However, Georgia is a complete “slave to Beijing.”
The question is where the country should be in 50 or 100 years, says Chidascheli. “I see Georgia in the European Union. But the problem we have with China, and as long as this government remains in office, this will continue, is the dominance of Chinese companies in the Georgian state procurement market.”
Chinese companies disregard conditions
In Georgia itself, hardly anyone benefits from these projects, says Chidascheli. The Chinese companies bring their own workers, equipment and building materials from Central Asia. The result: Western companies have increasingly pulled out of Georgia. For example, Heidelberg Materials, the largest German investor in Georgia, sold its shares in a Georgian joint venture in 2023. There are also hardly any European or US bidders left in public tenders, says Chiadascheli.
Investigations by local media and the think tank Civic Idea also reveal that Chinese companies have little regard for work safety or the environment. Despite legal regulations, environmental impact studies are not carried out sufficiently. Accidents occur regularly and landslides caused by construction work in mountainous terrain bury people and newly built roads.
China
Economy
EU-Beitritt
Nato
News
Destroyed Baltic Sea cables: Observers allowed on board the Yi Peng 3
China has permitted representatives from Germany, Sweden, Finland and Denmark to board the Yi Peng 3 – the cargo ship under investigation for the destruction of undersea cables. However, the Swedish police stated they had only been on board the ship as observers while the Chinese authorities conducted investigations.
“In parallel, the preliminary investigation into sabotage in connection with two cable breaks in the Baltic Sea is continuing,” the police said. The actions on board the ship on Thursday are not part of the preliminary investigation being conducted by Sweden, the police added.
Danish Foreign Minister Lars Lokke Rasmussen said that his country had facilitated a meeting between representatives of Germany, Sweden, Finland and China earlier this week, helping to end months of stalemate. “It is our expectation that once the inspection has been completed by this group of people from the four countries, the ship will be able to sail towards its destination,” Lokke Rasmussen said.
Western intelligence officials from several countries are convinced that the Yi Peng 3 had severed the two cables. However, they have expressed different views on whether it was accidental or deliberate. Swedish Prime Minister Ulf Kristersson had urged the ship to return to Sweden to assist the investigation.
The Baltic Sea cables, one of which connects Finland and Germany and the other Sweden with Lithuania, were damaged on November 17 and 18. Satellite data had put the investigators on the trail of the Yi Peng 3 as it had taken a conspicuous zigzag course. Since then, the Yi Peng 3 has been anchored in the Kattegat between Sweden and Denmark. rtr
Geopolitik
Annual press conference: Putin praises relations with China
According to Vladimir Putin, relations between Russia and China have reached an unprecedented level. At his annual press conference, the Russian President praised the positive nature of the relations. Russia and China have always coordinated their actions on the international stage and will continue to do so, he added.
At the several-hour event, which also included a “talk with citizens,” Putin also spoke about the war in Ukraine and the country’s economic situation, which he described as satisfactory. Russia should have prepared for a war with Ukraine much earlier, said the Kremlin leader. However, he also reiterated his willingness to negotiate. “Politics is the art of compromise,” he replied to a question from US broadcaster NBC.
Ukrainian President Volodymyr Zelenskiy attended a summit of European Union leaders in Brussels on Thursday. The final declaration of the summit did not mention China or Beijing’s “red line” of indirectly arming Russia. rtr
EU-Gipfel
Russland
Valine from China: EU initiates anti-dumping proceedings
The European Union has initiated anti-dumping proceedings against valine imports from China. The amino acid is used in animal feed, for example. The request was filed by the French chemical company Eurolysine SAS, which accuses Chinese importers of price distortions, among other things.
The company refers to a working document from the EU Directorate-General for Trade on market distortions from China, which also lists chemicals. “Several articles were provided to support the Chinese government interference in Chinese valine producing companies,” the notice states. The EU investigation may now take up to 14 months. ari
Chemistry
Trade
China Perspective
China Perspective: Why does the CCP shun meaningful steps to boost growth?
One of the biggest ticket box hits in Chinese movie theaters in 2024 is Her Story (好东西), a film carrying quite strong feminist messages. It is surprising that the film could make it into the cinema at all because feminism is something the Chinese authorities frown about and films are subject to the most strict censorship among all art and entertainment forms in China.
One of the key reasons that explains its luck, industry insiders say, is that censorship for films has this year been quietly relaxed to save an industry troubled by dwindling revenues caused by a shortage of good films. In addition to films, promoters of big concerts also said approval processes had been smoother this year. Encouraged by this, the city of Hangzhou has even reportedly reached out to US singer Taylor Swift for a potential concert in 2025 despite the strained Sino-US relations. Local governments’ enthusiasm for the concerts is also mainly financial: big concerts bring handsome profits.
Course changed to prop up growth
China changed course in many areas in 2024 to aid sagging growth. The tightened control of the real estate sector was loosened; Private educational institutions, which had been subject to severe crackdown since 2021, were allowed to provide courses again.
Suspending lofty attitude towards foreign capital, the country has again sent delegations overseas to lure investment. Citizens of dozens of wealthy countries can now visit China without visa. After being indifferent for a few years to foreigners’ difficulty coping with China’s omnipresent ID-linked digital payment system, solutions were provided to enable people without a Chinese ID pay with Alipay and WeChat.
Real growth-friendly reforms missing
However, these moves dealt only with peripheral problems. The government has remained reluctant to take steps widely believed to be necessary to put the economy on a track for sustained growth, namely, strengthening social welfare to boost private consumption and taking convincing measures to protect interests of private and foreign investors.
It is not that the policymakers haven’t been aware of the tough situation the economy has been in. In September, Xi Jinping called for a “sense of urgency” in improving the government’s economic management. Chinese leaders have also been in 2024 voicing sweet words to the private sector and international investors in an attempt to boost their morale.
But real actions were missing. Following Xi’s “sense of urgency” comment, the Ministry of Finance unveiled a debt swap scheme to bail out cash-strapped local governments. But the size of the program, which could reduce local government’s interest payment by 600 billion yuan (79 billion euro) in the next five years, is tiny. Accompanying the scheme was the finance minister’s statement that the central government would tolerate no “hidden debt” in the future, making the whole package more about reinforced control of local governments than a step to stimulate growth.
People’s Daily article tells the rationale
A recent commentary by the People’s Daily, the leading CCP mouthpiece, could well explain the government’s reluctance to take real meaningful actions. The December 5 article, quoting Xi, was titled “To resolutely reform things that should be reformed; Not to reform things that shouldn’t be.”
Similar statements were spoken by all Chinese leaders since Deng Xiaoping. But the timing of the appearance of its latest version was interesting: it was published shortly before a tone-setting CCP Politburo meeting and the ensuing Central Economic Work Conference. The article warned against “mechanically applying Western theory to win applause of certain people,” saying such reforms threaten to “change the banner and color” of the regime. Very harsh words indeed.
As for social welfare, Xi has long maintained that China should not pursue “welfarism,” which he said was unsustainable and would “encourage laziness.” So far, there is still no indication that Xi has changed his mind about it.
KP Chinas
Executive Moves
Xiuru Liu has been Overseas Sales Director at BYD in Shenzhen since November. In his new position, he is responsible for the sale of powertrain batteries on the overseas market and managing the sales team in Europe and China.
Ramon Lv has been Head of China Reefer at DHL Global Forwarding since November. As Sales Manager, Lv was previously jointly responsible for refrigerated transport logistics at A. P. Møller-Mærsk. He is based in Qingdao.
Is something changing in your organization? Let us know at heads@table.media!
Advent calendar
While we have a name for each finger, the Chinese neglect one of them – at least as far as naming is concerned. The ring finger is often referred to as the “finger without a name” (无 wú “without,” 名 míng “name,” 指 zhǐ “finger; pointing”). Fortunately, not everywhere – in some places, it is called 环指 (huánzhǐ), “ring finger,” like in the West.
China’s political decision-makers are keenly aware of the tense economic situation. In September, Xi Jinping personally spoke of a “sense of urgency” regarding the government’s economic management. And still, big changes have yet to happen. A commentary in the People’s Daily, published shortly before the Central Economic Conference in early December, gives an indication of what might be the reason, writes today’s author of “China Perspective.”
Lisa-Martina Klein’s analysis focuses on Georgia and its continued expansion of economic relations with China. Although Georgia’s pro-Russian government seems to have abandoned its original EU course for good, it does not want to rely on Russia as a long-term partner: In July 2023, Tbilisi and Beijing signed a strategic partnership agreement, which is intended to facilitate mutual investment, trade and cooperation in almost all critical areas. Georgia can look forward to Chinese bank loans. Critics complain about the country’s resulting dependency.
Last but not least, we would like to draw your attention to the first edition of our new CEO.Table, which will celebrate its premiere on Saturday. You can register by clicking on the picture below.
Your Julia Fiedler
Feature
Geopolitics: How Georgia is making itself dependent on China
A Chinese construction company in Georgia, photographed in October 2024.
Georgia has taken a closer political course towards Russia in recent months. In late November, Prime Minister Irakli Kobakhidze announced that he would suspend EU accession negotiations until the next parliamentary elections in 2028 and would no longer accept budget support from the EU. Thousands of Georgians, including many entrepreneurs, have been protesting every day since then, fearing that their government will completely turn its back on the EU, its largest trading partner. Between 2021 and 2024, the EU supported Georgia with 340 million euros.
Strategically, however, Tbilisi intends to free itself from its northern neighbor, which has occupied around 20 percent of Georgian territory since the attack on South Ossetia in 2008. Instead, Georgia continues to expand its economic relations with China – to the detriment of Georgian and foreign investors and companies.
Hardly any investments from China
For example, a strategic partnership agreement signed between Tbilisi and Beijing in July 2023 states that Georgia welcomes China’s Belt and Road Initiative. Mutual investment, trade and cooperation are to be facilitated in almost all critical areas: Transportation, communication, development and strengthening of the Middle Corridor, digital technologies, expansion of the railroad network, water resources, environmental protection as well as the use of Georgia’s transit infrastructure for the smooth export of Chinese products to Western markets. In return, Georgia receives preferential loans from Chinese banks. A policy that China is also pursuing in Africa and Central Asia.
However, China’s investments in Georgia remain low and have even decreased since the agreement was signed. According to the National Statistics Office of Georgia, China’s direct investments in Georgia totaled just under 100 million US dollars in 2023. By comparison, the UK invested just under 400 million US dollars and the Netherlands 386 million US dollars in the same period. The figures for 2024 are not yet fully available – China invested just 14 million US dollars in the first quarter of 2024, compared to more than 32 million US dollars in the same period in 2023.
Critical infrastructure in Chinese hands
Nevertheless, almost every major contract put out to public tender and paid for by the government has been awarded to Chinese companies and consortia under questionable circumstances since 2016. These include key projects such as the construction of important main roads, tunnels and bridges, sensitive surveillance technology such as scanners at airports or in official buildings, and power distribution grid technology.
In the summer, a controversial Chinese-Singaporean consortium, China Communication Construction Company Limited (CCCC) and China Harbor Investment, was awarded the contract to build the deep-sea port in Anaklia on the Black Sea. The port will be 51 percent state-owned and 49 percent foreign-owned. It will primarily allow China to transport its goods to Europe, bypassing Russia.
What is more critical from a security policy perspective is that this will increase China’s presence in the Black Sea region alongside Russia. Just a few kilometers to the north, Russia plans a new naval port in Ochamchire. Since the Russian invasion of Ukraine, NATO has identified this region as a strategically important area for itself. A port of this importance in Chinese hands weakens NATO’s position.
No benefit for Georgia’s companies
Some say that Georgia positions itself diversely between Russia, the EU and China, while critics say that Georgia is making itself dependent. One of the loudest is Tinatin Chidascheli, former minister of defense and chairwoman of the government- and China-critical think tank Civic Idea. According to Chidascheli, Russia is currently the main security problem. However, Georgia is a complete “slave to Beijing.”
The question is where the country should be in 50 or 100 years, says Chidascheli. “I see Georgia in the European Union. But the problem we have with China, and as long as this government remains in office, this will continue, is the dominance of Chinese companies in the Georgian state procurement market.”
Chinese companies disregard conditions
In Georgia itself, hardly anyone benefits from these projects, says Chidascheli. The Chinese companies bring their own workers, equipment and building materials from Central Asia. The result: Western companies have increasingly pulled out of Georgia. For example, Heidelberg Materials, the largest German investor in Georgia, sold its shares in a Georgian joint venture in 2023. There are also hardly any European or US bidders left in public tenders, says Chiadascheli.
Investigations by local media and the think tank Civic Idea also reveal that Chinese companies have little regard for work safety or the environment. Despite legal regulations, environmental impact studies are not carried out sufficiently. Accidents occur regularly and landslides caused by construction work in mountainous terrain bury people and newly built roads.
China
Economy
EU-Beitritt
Nato
News
Destroyed Baltic Sea cables: Observers allowed on board the Yi Peng 3
China has permitted representatives from Germany, Sweden, Finland and Denmark to board the Yi Peng 3 – the cargo ship under investigation for the destruction of undersea cables. However, the Swedish police stated they had only been on board the ship as observers while the Chinese authorities conducted investigations.
“In parallel, the preliminary investigation into sabotage in connection with two cable breaks in the Baltic Sea is continuing,” the police said. The actions on board the ship on Thursday are not part of the preliminary investigation being conducted by Sweden, the police added.
Danish Foreign Minister Lars Lokke Rasmussen said that his country had facilitated a meeting between representatives of Germany, Sweden, Finland and China earlier this week, helping to end months of stalemate. “It is our expectation that once the inspection has been completed by this group of people from the four countries, the ship will be able to sail towards its destination,” Lokke Rasmussen said.
Western intelligence officials from several countries are convinced that the Yi Peng 3 had severed the two cables. However, they have expressed different views on whether it was accidental or deliberate. Swedish Prime Minister Ulf Kristersson had urged the ship to return to Sweden to assist the investigation.
The Baltic Sea cables, one of which connects Finland and Germany and the other Sweden with Lithuania, were damaged on November 17 and 18. Satellite data had put the investigators on the trail of the Yi Peng 3 as it had taken a conspicuous zigzag course. Since then, the Yi Peng 3 has been anchored in the Kattegat between Sweden and Denmark. rtr
Geopolitik
Annual press conference: Putin praises relations with China
According to Vladimir Putin, relations between Russia and China have reached an unprecedented level. At his annual press conference, the Russian President praised the positive nature of the relations. Russia and China have always coordinated their actions on the international stage and will continue to do so, he added.
At the several-hour event, which also included a “talk with citizens,” Putin also spoke about the war in Ukraine and the country’s economic situation, which he described as satisfactory. Russia should have prepared for a war with Ukraine much earlier, said the Kremlin leader. However, he also reiterated his willingness to negotiate. “Politics is the art of compromise,” he replied to a question from US broadcaster NBC.
Ukrainian President Volodymyr Zelenskiy attended a summit of European Union leaders in Brussels on Thursday. The final declaration of the summit did not mention China or Beijing’s “red line” of indirectly arming Russia. rtr
EU-Gipfel
Russland
Valine from China: EU initiates anti-dumping proceedings
The European Union has initiated anti-dumping proceedings against valine imports from China. The amino acid is used in animal feed, for example. The request was filed by the French chemical company Eurolysine SAS, which accuses Chinese importers of price distortions, among other things.
The company refers to a working document from the EU Directorate-General for Trade on market distortions from China, which also lists chemicals. “Several articles were provided to support the Chinese government interference in Chinese valine producing companies,” the notice states. The EU investigation may now take up to 14 months. ari
Chemistry
Trade
China Perspective
China Perspective: Why does the CCP shun meaningful steps to boost growth?
One of the biggest ticket box hits in Chinese movie theaters in 2024 is Her Story (好东西), a film carrying quite strong feminist messages. It is surprising that the film could make it into the cinema at all because feminism is something the Chinese authorities frown about and films are subject to the most strict censorship among all art and entertainment forms in China.
One of the key reasons that explains its luck, industry insiders say, is that censorship for films has this year been quietly relaxed to save an industry troubled by dwindling revenues caused by a shortage of good films. In addition to films, promoters of big concerts also said approval processes had been smoother this year. Encouraged by this, the city of Hangzhou has even reportedly reached out to US singer Taylor Swift for a potential concert in 2025 despite the strained Sino-US relations. Local governments’ enthusiasm for the concerts is also mainly financial: big concerts bring handsome profits.
Course changed to prop up growth
China changed course in many areas in 2024 to aid sagging growth. The tightened control of the real estate sector was loosened; Private educational institutions, which had been subject to severe crackdown since 2021, were allowed to provide courses again.
Suspending lofty attitude towards foreign capital, the country has again sent delegations overseas to lure investment. Citizens of dozens of wealthy countries can now visit China without visa. After being indifferent for a few years to foreigners’ difficulty coping with China’s omnipresent ID-linked digital payment system, solutions were provided to enable people without a Chinese ID pay with Alipay and WeChat.
Real growth-friendly reforms missing
However, these moves dealt only with peripheral problems. The government has remained reluctant to take steps widely believed to be necessary to put the economy on a track for sustained growth, namely, strengthening social welfare to boost private consumption and taking convincing measures to protect interests of private and foreign investors.
It is not that the policymakers haven’t been aware of the tough situation the economy has been in. In September, Xi Jinping called for a “sense of urgency” in improving the government’s economic management. Chinese leaders have also been in 2024 voicing sweet words to the private sector and international investors in an attempt to boost their morale.
But real actions were missing. Following Xi’s “sense of urgency” comment, the Ministry of Finance unveiled a debt swap scheme to bail out cash-strapped local governments. But the size of the program, which could reduce local government’s interest payment by 600 billion yuan (79 billion euro) in the next five years, is tiny. Accompanying the scheme was the finance minister’s statement that the central government would tolerate no “hidden debt” in the future, making the whole package more about reinforced control of local governments than a step to stimulate growth.
People’s Daily article tells the rationale
A recent commentary by the People’s Daily, the leading CCP mouthpiece, could well explain the government’s reluctance to take real meaningful actions. The December 5 article, quoting Xi, was titled “To resolutely reform things that should be reformed; Not to reform things that shouldn’t be.”
Similar statements were spoken by all Chinese leaders since Deng Xiaoping. But the timing of the appearance of its latest version was interesting: it was published shortly before a tone-setting CCP Politburo meeting and the ensuing Central Economic Work Conference. The article warned against “mechanically applying Western theory to win applause of certain people,” saying such reforms threaten to “change the banner and color” of the regime. Very harsh words indeed.
As for social welfare, Xi has long maintained that China should not pursue “welfarism,” which he said was unsustainable and would “encourage laziness.” So far, there is still no indication that Xi has changed his mind about it.
KP Chinas
Executive Moves
Xiuru Liu has been Overseas Sales Director at BYD in Shenzhen since November. In his new position, he is responsible for the sale of powertrain batteries on the overseas market and managing the sales team in Europe and China.
Ramon Lv has been Head of China Reefer at DHL Global Forwarding since November. As Sales Manager, Lv was previously jointly responsible for refrigerated transport logistics at A. P. Møller-Mærsk. He is based in Qingdao.
Is something changing in your organization? Let us know at heads@table.media!
Advent calendar
While we have a name for each finger, the Chinese neglect one of them – at least as far as naming is concerned. The ring finger is often referred to as the “finger without a name” (无 wú “without,” 名 míng “name,” 指 zhǐ “finger; pointing”). Fortunately, not everywhere – in some places, it is called 环指 (huánzhǐ), “ring finger,” like in the West.
