Government consultations + Subsidies + VW + Continental + Chips

Dear reader,

German-Chinese government consultations start today. Critics complain that they have often been a PR success for Beijing in the past. Foreign policy experts from the coalition and the opposition are calling on the German government to address critical questions about human rights, sanctions, and the CAI investment agreement, as Finn Mayer-Kuckuk analyses. It would be a step forward. After all, just two weeks ago Angela Merkel spoke to Xi Jinping on the phone and hardly addressed any critical issues.

Frank Sieren took a closer look at one branch of the Chinese education system: international schools. For wealthy Chinese, they are seen as a cornerstone for their children’s successful careers. This is because the labor market often competes based on certificates rather than skills.

Delivery men are often at the other end of the “social ladder”. In China, the market for food delivery is booming. Jörn Petring and Gregor Koppenburg looked at the plans of market leader Meituan to replace employees with autonomous delivery robots. If the new technology catches on, it could put hundreds of thousands of people out of work who have fewer and fewer opportunities in China’s increasingly competitive labor market.

There were also some new developments in the automotive sector. Volkswagen has started construction of a new EV factory in Hefei. The supplier Continental is setting up a joint venture in the field of autonomous driving. And chip giant TSMC is looking to expand the production of semiconductors for the auto industry. Read more in the News.

Your
Nico Beckert

Talks in times of sanctions

By

Finn Mayer-Kuckuk

Today, Premier Li Keqiang, Chancellor Angela Merkel, and most of the ministers of their respective governments will be connected for video talks. This summit is called the “Sino-German Government Consultations” and is taking place for the sixth time. Merkel, as an experienced head of government, has been able to watch China grow in self-confidence in real-time over the course of the format since 2011. Back then, her counterparts still explicitly rejected great power ambitions; today, their successors are stepping up with the claim to determine world affairs.

Today’s China, however, is not only broadcast-conscious and at times really biting – it is also more hypocritical, according to the opposition. “China has many faces – a diplomatic one for us Europeans and an inward one,” Bijan Djir-Sarai, a member of the Bundestag’s foreign affairs committee for the FDP, said Tuesday at an event hosted by the Merics research institute. While China promises transparent rules for investments on the one hand, in practice it makes market access more difficult.

However, the German government is generally optimistic that the consultations will deliver something to the bottom line. “We appreciate the opportunity such a format gives to make progress on issues that are important to both sides,” said government spokesman Steffen Seibert. Specifically, he mentioned climate protection, economic issues, and COVID-19 as possible topics of discussion. Germany’s stance on civil and human rights was “well known,” he said. There were “completely different social systems sitting together at the table here.”

The government consultations normally take place alternately in Beijing and Berlin, but this time, of course, they are virtual. In addition to a large round with all the ministers, in which Li and Merkel set the tone, there are also individual discussions between the respective expert colleagues. Of particular interest here are the talks between the Ministers of Economics, Finance, Environment, and Justice. In addition, there is a round of talks with business people.

The format is rather the exception in international relations. Germany only holds such consultations with its European neighbors such as France, Italy, and Poland. The exceptions are Russia, Israel, India, and China. The consultations are therefore always seen as proof of the special relationship between the economic partners China and Germany. Critics, however, have long complained that the consultations are a PR success for China in particular – and that the communist leadership simply turns a deaf ear when it comes to difficult issues such as human rights.

Standing up for values – in the interests of the economy

The representatives of all Bundestag factions at the Merics event on German China policy agreed that the recently imposed sanctions should be a topic of the consultations – and that the government must speak plainly here. SPD foreign policy expert Nils Schmid spoke of an “attack on academic freedom” in view of the fact that Merics itself is also affected. The German side should also address the impact of the move on the pending confirmation of the CAI. “It should make it clear bilaterally that something like this does not fit in,” Schmid said. “If European parliamentarians are sanctioned, China can’t expect anything to come of it with the agreement.”

The Greens agree: “It is not acceptable that institutions such as Merics and the EU Parliament are sanctioned and then this is not addressed at the upper level such as the government consultations,” said Omid Nouripour, the group’s foreign policy spokesman. The FDP also favors a clear course here. “Silence on something like the sanctions would be interpreted as weakness,” Djir-Sarai said.

The FDP applies a similar logic to the issue of human rights. “The fact that the federal government is taking the initiative here is likely to be in the interests of many participants from the business community,” Gyde Jensen, FDP member of parliament and chairwoman of the human rights committee, told the AFP news agency. “After all, they can suffer lasting reputational damage from the suspicion of at least tolerating serious human rights violations in their own supply chain.” On the other hand, there is no point in simply wiping away all problems by referring to different social systems.

Meanwhile, the mechanical engineering association VDMA demanded that the government be unyielding in the talks where market access is concerned. The government should demand that China abide by the rules of the World Trade Organization, allow German experts into the country more easily and give European companies more consideration in tenders. But these are the usual demands of the associations ahead of the summit meetings with China.

Springboard international schools

By

Frank Sieren

China traditionally considers itself a meritocracy. Educational opportunities are supposed to be decided solely by performance. In practice, this is not always the case. For many Chinese, education abroad is still seen as a guarantee of prosperity. The widespread assumption is that anyone who has enjoyed a few semesters at a renowned foreign educational institution will end up with the best job prospects. And this is often still true. On the Chinese job market, many graduates today still compete more with diplomas and certificates than with their skills.

British excellence for the Chinese middle class

Well-known foreign franchises are benefiting from this, especially those from the UK, which is also linked to the fact that British universities continue to enjoy an excellent reputation in China. For example, the supply of educational institutions such as Harrow, Dulwich, and Wellington in China has tripled in the last five years, according to data from the UK’s Department for International Trade (DIT). Demand has been growing particularly rapidly in the so-called Greater Bay Area (GBA), an economic cluster around the affluent cities of Guangzhou, Hong Kong, and Macau. According to NewSchool Insight Media, an education services platform, of the 53 new international schools opened, 12 opened in Guangdong province. This year alone, 11 new international schools are expected to open in the tech metropolis of Shenzhen.

While in recent years, such elite schools were part of the educational infrastructure mainly in cities such as Beijing and Shanghai, smaller cities and less affluent regions are now also being swept up in the boom. New open spots here are often snapped up in no time. The Chinese middle class is growing and, more than ever, wants to invest in a good education. As a result of the decades-long one-child policy, many parents do not want to miss any opportunity when it comes to their children’s educational chances. The quality differences between schools in the countryside and those in the boom metropolises are still enormous. Young people from the provinces often lack the economic, social, and cultural capital to later assert themselves at the class-conscious elite universities.

This is the gap that school providers, led by the British, are looking to fill. Ten independent British schools have set up sites in the provinces of Guangdong, Fujian, Hunan, Guangxi, Jiangxi, and Hainan since the beginning of 2020. Dulwich and Harrow, for example, have moved to Zhuhai, a city of two million people in the immediate vicinity of Macau. Lady Eleanor Holles School, a girls’ school with a 300-year history, has set up a campus in Foshan, an industrial city of seven million people. By 2025, some 20 British school brands could be operating at around 31 sites in the region, writes the Chinese business magazine Caixin. Most of them operate under the “management contract” system, in which a Chinese partner invests in the construction and operation of the facility, while the British side takes responsibility for academic quality.

Long-term investments

Conversely, Chinese investors are also increasingly penetrating the British education market by buying up schools in the country. At least 17 British private schools, including the long-established Bournemouth Collegiate School and Riddlesworth Hall, have become wholly or partially Chinese-owned in recent years. With many schools in financial distress due to the COVID-19 pandemic, this trend is likely to continue. Investors generate a steady cash flow from the operation of the schools and also get the opportunity to adopt the proven educational concepts into their own school projects in China. Profit margins are high thanks to the ever-increasing tuition fees. According to an analysis by Essence Securities, Maple Leaf Educational Systems, which operates 120 schools in 30 Chinese cities, generated a net profit margin of 33.3 percent last year.

The education market is also attractive to real estate companies. Li Peng, an international education investor, tells Caixin that international schools generate stable cash flows while improving the branding of real estate companies. Perhaps the best-known company bridging the gap between the real estate and education sectors is Bright Scholar Education Holdings Ltd, which operates seven international schools, 15 bilingual schools, 58 kindergartens, and 19 English education centers in 10 Chinese provinces under the name Country Garden.

Strengthening the domestic education market

That fits with Beijing’s plans to educate its students and top students more and more at home in the future. According to a study by the National Science Foundation, 90 percent of Chinese students studying STEM subjects abroad are still working in the US ten years after graduation. Beijing has launched attractive return programs with lavish research budgets to lure them back home. For some years now, Beijing has also been investing more in its own elite universities. The number of those returning to China after graduation has already risen from 40 percent to around 80 percent between 2009 and 2018, and the West’s less-than-sovereign handling of the COVID-19 pandemic in China’s eyes will accelerate the Chinese students’ departure. “I think it is quite possible that more and more young people from China will stay in their own country in the future instead of studying abroad for some time,” says Guan Yan, a student adviser who works in Shanghai for the University of Edinburgh.

Meituan plans to replace employees with delivery robots

Meituan is preparing to change the streetscape in Beijing. In parts of the capital, the company, which uses a yellow kangaroo as its mascot, has been given permission to test a fleet of autonomous delivery robots. The food delivery service began the pilot project back in February 2020, sending food orders to its customers this way during the COVID-19 pandemic. Since then, the company has sent around 35,000 orders to 20 Beijing apartment blocks using autonomous delivery vehicles.

The box van routinely maneuvers through Beijing’s dense traffic. It is about one meter long and reaches up to the shoulders, keeps enough distance on its four rubber wheels from cars that overtake it on the left and right. The yellow-painted vehicle also skilfully avoids pedestrians who want to put the autonomous delivery van to the test and step into the road directly in front of it.

Autonomous robo-messengers change the cityscape

After the first test phase, it is now going into the second round. Meituan recently announced that it had raised a record $10 billion from investors, partly to advance its autonomous delivery capabilities with more robots and drones. In line with this, the company last week unveiled the second generation of its self-driving delivery vehicles, which are designed to detect obstacles in their vicinity up to a radius of 150 meters and cover a distance of 80 kilometers with a load capacity of 150 kilograms.

Hand in hand with Meituan’s announcement, the Beijing municipal government released a document designating additional areas for qualified businesses to use unmanned delivery vehicles. Domestic e-commerce giants Alibaba and JD.com also have ambitions for autonomous logistics services. In September 2020, Alibaba unveiled an autonomous logistics robot called Xiaomanlv that can plan delivery routes, identify obstacles and predict pedestrian movements. JD.com has already been testing delivery robots and drones since 2018.

What will happen to the workers?

Less enthusiastic about the corporations’ efforts to advance autonomous deliveries are likely to be their roadside workers, with Meituan alone estimated to employ four million delivery messengers for whom the tough job is often the only way to earn a living.

Ten years ago, it was impossible to imagine how Beijing’s streetscape would be transformed by the now ubiquitous messengers on their electric scooters. Thinking ten years into the future, the picture is likely to have changed again as small autonomous delivery vehicles whizz around everywhere.

The tech giants themselves make no secret of the fact that they would prefer not to employ any human delivery men in the future: “I hope that one day there will be no more humans in my company. Everything should be 100 percent run by robots and artificial intelligence,” JD CEO Richard Liu said at a technology conference three years ago. However, the government will also want to have a say in these plans.

Antitrust investigation against Meituan

The long arm of the authorities became visible on Monday. The Chinese antitrust authority announced that it had opened an investigation against the Beijing tech giant. After Alibaba, the next tech giant has been hit. This step hardly surprised anyone in the industry because they know that the record fine imposed on Alibaba by the regulators a few weeks ago was not intended to affect Alibaba founder Jack Ma exclusively, as is sometimes reported.

The antitrust authority’s action was not, or at least not primarily, designed as a personal vendetta against Ma, who had previously criticized China’s state banks in a speech. Rather, a broad-based clean-up campaign is underway in China’s technology sector, whose companies have long benefited from being much less regulated than competitors in the West. Often to the detriment of customers.

Like Alibaba, Meituan is accused of the practice “er xuan yi”, which translates as “choose one of two”. What is meant is that traders or restaurants are sometimes forced to be active on only one ordering platform and are thus not allowed to offer their goods to the competition.

Alibaba had to pay the equivalent of a fine of €2.3 billion for this. Meituan will probably also have to transfer money to the government. However, just like Alibaba, the amount will most likely not threaten the company’s existence.

While the government wants more oversight of tech giants, it also wants them to continue to thrive. The share price of Meituan, which dominates about two-thirds of China’s food delivery market, rose more than two percent on the Hong Kong stock exchange on Tuesday. So investors took the cartel investigations in stride. Gregor Koppenburg/Jörn Petring

EU cracks down on Chinese subsidies

The EU Commission wants to prevent European companies from being taken over by highly subsidized foreign companies – the corresponding legislative proposal is now to be presented next Wednesday, a spokeswoman for the Directorate-General for Competition confirmed to China.Table. Brussels also wants to stop state-backed companies from abroad from taking public contracts away from European competitors. EU Competition Commissioner Margrethe Vestager had already made proposals in a White Paper last year.

According to media reports, the expected bill will now largely follow the ideas of the White Paper. According to it, the European Commission would be empowered to intervene in takeovers of EU companies or bids for public contracts if they are driven by state subsidies from outside the EU. In addition, it is planned that particularly large takeovers of companies or tenders must in the future be notified to the Commission in advance. The Financial Times quotes two unnamed EU sources as saying that the benchmarks are planned takeovers of companies worth at least €500 million or tender contracts worth at least €250 million. According to the sources, the new rules would also apply to European companies if they were found to be receiving subsidies from outside the EU.

Companies could also face fines or a veto from Brussels if they fail to notify the EU Commission. It is also envisaged that companies already present in the EU and receiving subsidies of more than €200,000 over a three-year period will have to notify the Commission of the amount.

Once the Brussels authority’s draft law is published, it will be submitted to the member states and the European Parliament for consideration. However, it could take several years before the regulation enters into force. Details of the proposal are also subject to change. Observers expect the EU move to be seen as protectionism in Beijing. ari

Census shows population decline

China could record the first population decline since data collection began in 1949. The total population of the People’s Republic is again below 1.4 billion people. This is the result of the new census, reports the Financial Times with reference to informed circles. So far the data is not yet public. The census was already completed in December 2020 and, according to the FT, should have been published in early April.

According to FT sources, the figures would be considered very sensitive and would have to be reviewed by several government agencies before being released. Huang Wenzheng, an associate at the Center for China and Globalization, a Beijing-based think tank, told the FT, “the census results will have a big impact on how Chinese people view their country and how various government departments operate. They need to be treated very carefully.”

Demographic change is considered one of China’s greatest challenges. The one-child policy has slowed down population growth too much. The abolition of the one-child policy only contributed to an increase in the birth rate in the first year. High costs for health care, education, and housing, as well as a lack of daycare places, are playing a role in more and more Chinese deciding against having a second child. And one’s own career is also a factor (China.Table reported).

As recently as mid-April, researchers at China’s central bank had called on policymakers to completely liberalize birth policies and also allow more than two children, the South China Morning Post reported. A study by the central bank said it was also necessary to ensure more equality: “We need to create a birth-friendly environment and solve the problems women face during pregnancy, childbirth, kindergarten, and school enrollment.” Finally, China’s rapid economic growth over the past four decades is mainly due to the demographic dividend, a situation in which the working-age population between 15 and 64 is larger than the proportion of non-working citizens, the central bank researchers said. nib

Start of construction for new VW plant in Anhui

Volkswagen has begun construction of a new electric car factory in Hefei. The 500,000-square-meter factory is scheduled for completion in mid-2022, Volkswagen Group China announced on Tuesday. The first electric cars are expected to roll off the production line there in the second half of 2023. The plant, which will have a future maximum capacity of 350,000 cars a year, will be part of the Volkswagen Anhui electric joint venture, which VW plans to develop into an e-mobility hub. Hefei is the provincial capital of Anhui.

The new factory will be the third in China where Volkswagen will produce EVs on its MEB modular electric drive platform. The other two are located at the joint venture with Shanghai Automotive (SAIC VW) in the Shanghai suburb of Anting and at the second joint venture FAW VW in Foshan in southern China. Volkswagen plans to deliver up to 1.5 million new EVs per year from the various Group brands in China by 2025. On the MEB platform, the body and chassis are separated so that, according to VW, each brand can place its own models in different sizes and designs on it.

Renewable energies as part of Volkswagen’s environmental strategy

The new plant will be powered by renewable energies from the outset, VW China boss Stephan Wöllenstein announced. He called the site a “cornerstone of the group’s decarbonization strategy”. The new plant will incorporate a number of energy-saving strategies to reduce CO2 emissions, VW announced. These would include production facilities with low energy consumption. A number of companies, including BASF, are currently planning production facilities that run on green power. In the automotive sector, for example, Volvo says it already runs its plant in Daqing, northern China, on 100 percent renewable electricity.

Since September 2019, VW has been selling the SOL E20X compact EVs with joint venture partner Jianghuai Automobile (JAC), which is a further development of a JAC electric model. In December 2020, Volkswagen had taken over management control and 75 percent of the shares of the joint venture, formerly called JAC Volkswagen. Volkswagen Anhui’s new product portfolio, built on the MEB platform, will target younger customers in the future, according to VW. VW also established an electric mobility research and development center at the site, which was inaugurated in December 2020. A supplier park for battery and component manufacturers will also be built in the area around the factory, according to VW. ck

Autonomous driving: continental cooperates with Horizon Robotics

The Chinese chip developer Horizon Robotics has founded a joint venture for autonomous driving with the German automotive supplier Continental AG. Both partners want to strengthen their position in the smart vehicle market as a result, according to a joint statement of intent.

The announcement comes after the two began collaborating last September and Horizon Robotics began integrating its “Journey AI chips” into Continental’s driver assistance systems.

According to business magazine Caixin, Horizon Robotics has announced plans to launch a new “Journey 5 chip” with a computing power of 96 trillion operations per second. The new chip is said to enable Level 4 autonomy, the second-highest autonomous driving capability according to the standards of the US Society of Automotive Engineers.

For the domestic market, the Beijing-based company signed a deal with carmaker SAIC Motor in February for Horizon Robotics to install its full range of AI chips, driver assistance systems, and visual perception technology in SAIC’s smart vehicles. niw

Automotive chips: TSMC plans billion-dollar investment in China

Taiwanese chipmaker Taiwan Semiconductor Manufacturing plans to invest the equivalent of €2.3 billion in Nanjing to expand chip production for the automotive sector. New production lines are to be built by 2023 to meet the high demand for 28-nanometer chips, the portal NikkeiAsia reports.

Accordingly, this is TSMC’s first investment in China since 2015, when they built the Nanjing fab. Up to 40,000 wafers are to be produced monthly. The 28-nanometer technology is a few generations old, but is still in high demand in the auto industry (China.Table reported). nib

Christian Ude

Former Senior Mayor of Munich and member of the advisory board of Chinaforum Bayern e.V.

Christian Ude cannot say exactly how his interest in China began. “For a long time, my wife and I had a vague interest in this ancient Chinese high culture that we knew so little about,” says the former mayor of Munich. As vague as this interest may have been at first, it was reason enough for the SPD politician and his wife to give up smoking.

The money saved was then to finance a trip to China. However, by the time the first trip to the Middle Kingdom actually took place, Ude was already the mayor of Munich. And after a good 20 years at the helm of the Bavarian capital, the 73-year-old’s connections to China are now so good that only COVID-19 is keeping him from a planned trip.

While still active as mayor, Christian Ude took a seat on the advisory board of the Chinaforum Bayern. The association offers a platform for the exchange of business and politics from Bavaria and China, arranges contacts, and organizes lectures. Ude mainly brings in contacts from the scientific field. Various Chinese universities invited the then-mayor as a guest professor – including the renowned Tongji University in Shanghai. His experiences as a lecturer in China are mixed. There is a great deal of academic freedom at Chinese universities, he says. However, anyone coming from abroad should be careful not to make recommendations to the Chinese: “I was immediately lectured that it was not part of my subject,” Ude admits.

Shanghai was also Christian Ude’s first point of contact with China when, as Chairman of the Supervisory Board of Messe München, he accompanied the development of the Shanghai New International Expo Center at the end of the 1990s. The Chinese image of Germany is shaped by Bavaria, says Ude: “The students know the match line-ups of FC Bayern from the last matchday and the next. The companies they know are the big Bavarian companies Siemens and BMW.” When asked why Bavaria is ahead among the federal states, Christian Ude sings an unexpected song of praise: “It also has to do with the international aspirations of the CSU, which does not see itself as a regional party. Franz Josef Strauß was the first West German politician to meet with Mao.”

Bavaria still benefits from the economic pragmatism of the Christian Democrats when it comes to China, and Christian Ude sees it similarly today when it comes to the tension between business and politics: “I find the debate hypocritical. On the one hand, to import Saudi oil, to accept torture there, and at the same time to demand to stop trade with China because human rights there don’t correspond to our values.” Nevertheless, Ude experienced the tension himself when he was sharply criticized by the Chinese consulate for inviting the Dalai Lama to Munich as mayor. However, he said the COVID-19 pandemic in particular also showed that the Chinese market has saved many companies in Germany. David Renke

“These aerial views of rental bicycle and scooter cemeteries in China are mind-boggling.”

Collector’s picture with bell – tens of thousands of rental bikes have now been discarded in China and stored at collection points outside cities. There are more pictures on the pages of the StraitsTimes.

CHINA.TABLE EDITORIAL OFFICE

Amelie
Richter

Marcel
Grzanna

Fabian
Peltsch

Julia
Fiedler

Angela
Köckritz

Jörn
Petring

Dear reader,

German-Chinese government consultations start today. Critics complain that they have often been a PR success for Beijing in the past. Foreign policy experts from the coalition and the opposition are calling on the German government to address critical questions about human rights, sanctions, and the CAI investment agreement, as Finn Mayer-Kuckuk analyses. It would be a step forward. After all, just two weeks ago Angela Merkel spoke to Xi Jinping on the phone and hardly addressed any critical issues.

Frank Sieren took a closer look at one branch of the Chinese education system: international schools. For wealthy Chinese, they are seen as a cornerstone for their children’s successful careers. This is because the labor market often competes based on certificates rather than skills.

Delivery men are often at the other end of the “social ladder”. In China, the market for food delivery is booming. Jörn Petring and Gregor Koppenburg looked at the plans of market leader Meituan to replace employees with autonomous delivery robots. If the new technology catches on, it could put hundreds of thousands of people out of work who have fewer and fewer opportunities in China’s increasingly competitive labor market.

There were also some new developments in the automotive sector. Volkswagen has started construction of a new EV factory in Hefei. The supplier Continental is setting up a joint venture in the field of autonomous driving. And chip giant TSMC is looking to expand the production of semiconductors for the auto industry. Read more in the News.

Your
Nico Beckert

Talks in times of sanctions

By

Finn Mayer-Kuckuk

Today, Premier Li Keqiang, Chancellor Angela Merkel, and most of the ministers of their respective governments will be connected for video talks. This summit is called the “Sino-German Government Consultations” and is taking place for the sixth time. Merkel, as an experienced head of government, has been able to watch China grow in self-confidence in real-time over the course of the format since 2011. Back then, her counterparts still explicitly rejected great power ambitions; today, their successors are stepping up with the claim to determine world affairs.

Today’s China, however, is not only broadcast-conscious and at times really biting – it is also more hypocritical, according to the opposition. “China has many faces – a diplomatic one for us Europeans and an inward one,” Bijan Djir-Sarai, a member of the Bundestag’s foreign affairs committee for the FDP, said Tuesday at an event hosted by the Merics research institute. While China promises transparent rules for investments on the one hand, in practice it makes market access more difficult.

However, the German government is generally optimistic that the consultations will deliver something to the bottom line. “We appreciate the opportunity such a format gives to make progress on issues that are important to both sides,” said government spokesman Steffen Seibert. Specifically, he mentioned climate protection, economic issues, and COVID-19 as possible topics of discussion. Germany’s stance on civil and human rights was “well known,” he said. There were “completely different social systems sitting together at the table here.”

The government consultations normally take place alternately in Beijing and Berlin, but this time, of course, they are virtual. In addition to a large round with all the ministers, in which Li and Merkel set the tone, there are also individual discussions between the respective expert colleagues. Of particular interest here are the talks between the Ministers of Economics, Finance, Environment, and Justice. In addition, there is a round of talks with business people.

The format is rather the exception in international relations. Germany only holds such consultations with its European neighbors such as France, Italy, and Poland. The exceptions are Russia, Israel, India, and China. The consultations are therefore always seen as proof of the special relationship between the economic partners China and Germany. Critics, however, have long complained that the consultations are a PR success for China in particular – and that the communist leadership simply turns a deaf ear when it comes to difficult issues such as human rights.

Standing up for values – in the interests of the economy

The representatives of all Bundestag factions at the Merics event on German China policy agreed that the recently imposed sanctions should be a topic of the consultations – and that the government must speak plainly here. SPD foreign policy expert Nils Schmid spoke of an “attack on academic freedom” in view of the fact that Merics itself is also affected. The German side should also address the impact of the move on the pending confirmation of the CAI. “It should make it clear bilaterally that something like this does not fit in,” Schmid said. “If European parliamentarians are sanctioned, China can’t expect anything to come of it with the agreement.”

The Greens agree: “It is not acceptable that institutions such as Merics and the EU Parliament are sanctioned and then this is not addressed at the upper level such as the government consultations,” said Omid Nouripour, the group’s foreign policy spokesman. The FDP also favors a clear course here. “Silence on something like the sanctions would be interpreted as weakness,” Djir-Sarai said.

The FDP applies a similar logic to the issue of human rights. “The fact that the federal government is taking the initiative here is likely to be in the interests of many participants from the business community,” Gyde Jensen, FDP member of parliament and chairwoman of the human rights committee, told the AFP news agency. “After all, they can suffer lasting reputational damage from the suspicion of at least tolerating serious human rights violations in their own supply chain.” On the other hand, there is no point in simply wiping away all problems by referring to different social systems.

Meanwhile, the mechanical engineering association VDMA demanded that the government be unyielding in the talks where market access is concerned. The government should demand that China abide by the rules of the World Trade Organization, allow German experts into the country more easily and give European companies more consideration in tenders. But these are the usual demands of the associations ahead of the summit meetings with China.

Springboard international schools

By

Frank Sieren

China traditionally considers itself a meritocracy. Educational opportunities are supposed to be decided solely by performance. In practice, this is not always the case. For many Chinese, education abroad is still seen as a guarantee of prosperity. The widespread assumption is that anyone who has enjoyed a few semesters at a renowned foreign educational institution will end up with the best job prospects. And this is often still true. On the Chinese job market, many graduates today still compete more with diplomas and certificates than with their skills.

British excellence for the Chinese middle class

Well-known foreign franchises are benefiting from this, especially those from the UK, which is also linked to the fact that British universities continue to enjoy an excellent reputation in China. For example, the supply of educational institutions such as Harrow, Dulwich, and Wellington in China has tripled in the last five years, according to data from the UK’s Department for International Trade (DIT). Demand has been growing particularly rapidly in the so-called Greater Bay Area (GBA), an economic cluster around the affluent cities of Guangzhou, Hong Kong, and Macau. According to NewSchool Insight Media, an education services platform, of the 53 new international schools opened, 12 opened in Guangdong province. This year alone, 11 new international schools are expected to open in the tech metropolis of Shenzhen.

While in recent years, such elite schools were part of the educational infrastructure mainly in cities such as Beijing and Shanghai, smaller cities and less affluent regions are now also being swept up in the boom. New open spots here are often snapped up in no time. The Chinese middle class is growing and, more than ever, wants to invest in a good education. As a result of the decades-long one-child policy, many parents do not want to miss any opportunity when it comes to their children’s educational chances. The quality differences between schools in the countryside and those in the boom metropolises are still enormous. Young people from the provinces often lack the economic, social, and cultural capital to later assert themselves at the class-conscious elite universities.

This is the gap that school providers, led by the British, are looking to fill. Ten independent British schools have set up sites in the provinces of Guangdong, Fujian, Hunan, Guangxi, Jiangxi, and Hainan since the beginning of 2020. Dulwich and Harrow, for example, have moved to Zhuhai, a city of two million people in the immediate vicinity of Macau. Lady Eleanor Holles School, a girls’ school with a 300-year history, has set up a campus in Foshan, an industrial city of seven million people. By 2025, some 20 British school brands could be operating at around 31 sites in the region, writes the Chinese business magazine Caixin. Most of them operate under the “management contract” system, in which a Chinese partner invests in the construction and operation of the facility, while the British side takes responsibility for academic quality.

Long-term investments

Conversely, Chinese investors are also increasingly penetrating the British education market by buying up schools in the country. At least 17 British private schools, including the long-established Bournemouth Collegiate School and Riddlesworth Hall, have become wholly or partially Chinese-owned in recent years. With many schools in financial distress due to the COVID-19 pandemic, this trend is likely to continue. Investors generate a steady cash flow from the operation of the schools and also get the opportunity to adopt the proven educational concepts into their own school projects in China. Profit margins are high thanks to the ever-increasing tuition fees. According to an analysis by Essence Securities, Maple Leaf Educational Systems, which operates 120 schools in 30 Chinese cities, generated a net profit margin of 33.3 percent last year.

The education market is also attractive to real estate companies. Li Peng, an international education investor, tells Caixin that international schools generate stable cash flows while improving the branding of real estate companies. Perhaps the best-known company bridging the gap between the real estate and education sectors is Bright Scholar Education Holdings Ltd, which operates seven international schools, 15 bilingual schools, 58 kindergartens, and 19 English education centers in 10 Chinese provinces under the name Country Garden.

Strengthening the domestic education market

That fits with Beijing’s plans to educate its students and top students more and more at home in the future. According to a study by the National Science Foundation, 90 percent of Chinese students studying STEM subjects abroad are still working in the US ten years after graduation. Beijing has launched attractive return programs with lavish research budgets to lure them back home. For some years now, Beijing has also been investing more in its own elite universities. The number of those returning to China after graduation has already risen from 40 percent to around 80 percent between 2009 and 2018, and the West’s less-than-sovereign handling of the COVID-19 pandemic in China’s eyes will accelerate the Chinese students’ departure. “I think it is quite possible that more and more young people from China will stay in their own country in the future instead of studying abroad for some time,” says Guan Yan, a student adviser who works in Shanghai for the University of Edinburgh.

Meituan plans to replace employees with delivery robots

Meituan is preparing to change the streetscape in Beijing. In parts of the capital, the company, which uses a yellow kangaroo as its mascot, has been given permission to test a fleet of autonomous delivery robots. The food delivery service began the pilot project back in February 2020, sending food orders to its customers this way during the COVID-19 pandemic. Since then, the company has sent around 35,000 orders to 20 Beijing apartment blocks using autonomous delivery vehicles.

The box van routinely maneuvers through Beijing’s dense traffic. It is about one meter long and reaches up to the shoulders, keeps enough distance on its four rubber wheels from cars that overtake it on the left and right. The yellow-painted vehicle also skilfully avoids pedestrians who want to put the autonomous delivery van to the test and step into the road directly in front of it.

Autonomous robo-messengers change the cityscape

After the first test phase, it is now going into the second round. Meituan recently announced that it had raised a record $10 billion from investors, partly to advance its autonomous delivery capabilities with more robots and drones. In line with this, the company last week unveiled the second generation of its self-driving delivery vehicles, which are designed to detect obstacles in their vicinity up to a radius of 150 meters and cover a distance of 80 kilometers with a load capacity of 150 kilograms.

Hand in hand with Meituan’s announcement, the Beijing municipal government released a document designating additional areas for qualified businesses to use unmanned delivery vehicles. Domestic e-commerce giants Alibaba and JD.com also have ambitions for autonomous logistics services. In September 2020, Alibaba unveiled an autonomous logistics robot called Xiaomanlv that can plan delivery routes, identify obstacles and predict pedestrian movements. JD.com has already been testing delivery robots and drones since 2018.

What will happen to the workers?

Less enthusiastic about the corporations’ efforts to advance autonomous deliveries are likely to be their roadside workers, with Meituan alone estimated to employ four million delivery messengers for whom the tough job is often the only way to earn a living.

Ten years ago, it was impossible to imagine how Beijing’s streetscape would be transformed by the now ubiquitous messengers on their electric scooters. Thinking ten years into the future, the picture is likely to have changed again as small autonomous delivery vehicles whizz around everywhere.

The tech giants themselves make no secret of the fact that they would prefer not to employ any human delivery men in the future: “I hope that one day there will be no more humans in my company. Everything should be 100 percent run by robots and artificial intelligence,” JD CEO Richard Liu said at a technology conference three years ago. However, the government will also want to have a say in these plans.

Antitrust investigation against Meituan

The long arm of the authorities became visible on Monday. The Chinese antitrust authority announced that it had opened an investigation against the Beijing tech giant. After Alibaba, the next tech giant has been hit. This step hardly surprised anyone in the industry because they know that the record fine imposed on Alibaba by the regulators a few weeks ago was not intended to affect Alibaba founder Jack Ma exclusively, as is sometimes reported.

The antitrust authority’s action was not, or at least not primarily, designed as a personal vendetta against Ma, who had previously criticized China’s state banks in a speech. Rather, a broad-based clean-up campaign is underway in China’s technology sector, whose companies have long benefited from being much less regulated than competitors in the West. Often to the detriment of customers.

Like Alibaba, Meituan is accused of the practice “er xuan yi”, which translates as “choose one of two”. What is meant is that traders or restaurants are sometimes forced to be active on only one ordering platform and are thus not allowed to offer their goods to the competition.

Alibaba had to pay the equivalent of a fine of €2.3 billion for this. Meituan will probably also have to transfer money to the government. However, just like Alibaba, the amount will most likely not threaten the company’s existence.

While the government wants more oversight of tech giants, it also wants them to continue to thrive. The share price of Meituan, which dominates about two-thirds of China’s food delivery market, rose more than two percent on the Hong Kong stock exchange on Tuesday. So investors took the cartel investigations in stride. Gregor Koppenburg/Jörn Petring

EU cracks down on Chinese subsidies

The EU Commission wants to prevent European companies from being taken over by highly subsidized foreign companies – the corresponding legislative proposal is now to be presented next Wednesday, a spokeswoman for the Directorate-General for Competition confirmed to China.Table. Brussels also wants to stop state-backed companies from abroad from taking public contracts away from European competitors. EU Competition Commissioner Margrethe Vestager had already made proposals in a White Paper last year.

According to media reports, the expected bill will now largely follow the ideas of the White Paper. According to it, the European Commission would be empowered to intervene in takeovers of EU companies or bids for public contracts if they are driven by state subsidies from outside the EU. In addition, it is planned that particularly large takeovers of companies or tenders must in the future be notified to the Commission in advance. The Financial Times quotes two unnamed EU sources as saying that the benchmarks are planned takeovers of companies worth at least €500 million or tender contracts worth at least €250 million. According to the sources, the new rules would also apply to European companies if they were found to be receiving subsidies from outside the EU.

Companies could also face fines or a veto from Brussels if they fail to notify the EU Commission. It is also envisaged that companies already present in the EU and receiving subsidies of more than €200,000 over a three-year period will have to notify the Commission of the amount.

Once the Brussels authority’s draft law is published, it will be submitted to the member states and the European Parliament for consideration. However, it could take several years before the regulation enters into force. Details of the proposal are also subject to change. Observers expect the EU move to be seen as protectionism in Beijing. ari

Census shows population decline

China could record the first population decline since data collection began in 1949. The total population of the People’s Republic is again below 1.4 billion people. This is the result of the new census, reports the Financial Times with reference to informed circles. So far the data is not yet public. The census was already completed in December 2020 and, according to the FT, should have been published in early April.

According to FT sources, the figures would be considered very sensitive and would have to be reviewed by several government agencies before being released. Huang Wenzheng, an associate at the Center for China and Globalization, a Beijing-based think tank, told the FT, “the census results will have a big impact on how Chinese people view their country and how various government departments operate. They need to be treated very carefully.”

Demographic change is considered one of China’s greatest challenges. The one-child policy has slowed down population growth too much. The abolition of the one-child policy only contributed to an increase in the birth rate in the first year. High costs for health care, education, and housing, as well as a lack of daycare places, are playing a role in more and more Chinese deciding against having a second child. And one’s own career is also a factor (China.Table reported).

As recently as mid-April, researchers at China’s central bank had called on policymakers to completely liberalize birth policies and also allow more than two children, the South China Morning Post reported. A study by the central bank said it was also necessary to ensure more equality: “We need to create a birth-friendly environment and solve the problems women face during pregnancy, childbirth, kindergarten, and school enrollment.” Finally, China’s rapid economic growth over the past four decades is mainly due to the demographic dividend, a situation in which the working-age population between 15 and 64 is larger than the proportion of non-working citizens, the central bank researchers said. nib

Start of construction for new VW plant in Anhui

Volkswagen has begun construction of a new electric car factory in Hefei. The 500,000-square-meter factory is scheduled for completion in mid-2022, Volkswagen Group China announced on Tuesday. The first electric cars are expected to roll off the production line there in the second half of 2023. The plant, which will have a future maximum capacity of 350,000 cars a year, will be part of the Volkswagen Anhui electric joint venture, which VW plans to develop into an e-mobility hub. Hefei is the provincial capital of Anhui.

The new factory will be the third in China where Volkswagen will produce EVs on its MEB modular electric drive platform. The other two are located at the joint venture with Shanghai Automotive (SAIC VW) in the Shanghai suburb of Anting and at the second joint venture FAW VW in Foshan in southern China. Volkswagen plans to deliver up to 1.5 million new EVs per year from the various Group brands in China by 2025. On the MEB platform, the body and chassis are separated so that, according to VW, each brand can place its own models in different sizes and designs on it.

Renewable energies as part of Volkswagen’s environmental strategy

The new plant will be powered by renewable energies from the outset, VW China boss Stephan Wöllenstein announced. He called the site a “cornerstone of the group’s decarbonization strategy”. The new plant will incorporate a number of energy-saving strategies to reduce CO2 emissions, VW announced. These would include production facilities with low energy consumption. A number of companies, including BASF, are currently planning production facilities that run on green power. In the automotive sector, for example, Volvo says it already runs its plant in Daqing, northern China, on 100 percent renewable electricity.

Since September 2019, VW has been selling the SOL E20X compact EVs with joint venture partner Jianghuai Automobile (JAC), which is a further development of a JAC electric model. In December 2020, Volkswagen had taken over management control and 75 percent of the shares of the joint venture, formerly called JAC Volkswagen. Volkswagen Anhui’s new product portfolio, built on the MEB platform, will target younger customers in the future, according to VW. VW also established an electric mobility research and development center at the site, which was inaugurated in December 2020. A supplier park for battery and component manufacturers will also be built in the area around the factory, according to VW. ck

Autonomous driving: continental cooperates with Horizon Robotics

The Chinese chip developer Horizon Robotics has founded a joint venture for autonomous driving with the German automotive supplier Continental AG. Both partners want to strengthen their position in the smart vehicle market as a result, according to a joint statement of intent.

The announcement comes after the two began collaborating last September and Horizon Robotics began integrating its “Journey AI chips” into Continental’s driver assistance systems.

According to business magazine Caixin, Horizon Robotics has announced plans to launch a new “Journey 5 chip” with a computing power of 96 trillion operations per second. The new chip is said to enable Level 4 autonomy, the second-highest autonomous driving capability according to the standards of the US Society of Automotive Engineers.

For the domestic market, the Beijing-based company signed a deal with carmaker SAIC Motor in February for Horizon Robotics to install its full range of AI chips, driver assistance systems, and visual perception technology in SAIC’s smart vehicles. niw

Automotive chips: TSMC plans billion-dollar investment in China

Taiwanese chipmaker Taiwan Semiconductor Manufacturing plans to invest the equivalent of €2.3 billion in Nanjing to expand chip production for the automotive sector. New production lines are to be built by 2023 to meet the high demand for 28-nanometer chips, the portal NikkeiAsia reports.

Accordingly, this is TSMC’s first investment in China since 2015, when they built the Nanjing fab. Up to 40,000 wafers are to be produced monthly. The 28-nanometer technology is a few generations old, but is still in high demand in the auto industry (China.Table reported). nib

Christian Ude

Christian Ude cannot say exactly how his interest in China began. “For a long time, my wife and I had a vague interest in this ancient Chinese high culture that we knew so little about,” says the former mayor of Munich. As vague as this interest may have been at first, it was reason enough for the SPD politician and his wife to give up smoking.

The money saved was then to finance a trip to China. However, by the time the first trip to the Middle Kingdom actually took place, Ude was already the mayor of Munich. And after a good 20 years at the helm of the Bavarian capital, the 73-year-old’s connections to China are now so good that only COVID-19 is keeping him from a planned trip.

While still active as mayor, Christian Ude took a seat on the advisory board of the Chinaforum Bayern. The association offers a platform for the exchange of business and politics from Bavaria and China, arranges contacts, and organizes lectures. Ude mainly brings in contacts from the scientific field. Various Chinese universities invited the then-mayor as a guest professor – including the renowned Tongji University in Shanghai. His experiences as a lecturer in China are mixed. There is a great deal of academic freedom at Chinese universities, he says. However, anyone coming from abroad should be careful not to make recommendations to the Chinese: “I was immediately lectured that it was not part of my subject,” Ude admits.

Shanghai was also Christian Ude’s first point of contact with China when, as Chairman of the Supervisory Board of Messe München, he accompanied the development of the Shanghai New International Expo Center at the end of the 1990s. The Chinese image of Germany is shaped by Bavaria, says Ude: “The students know the match line-ups of FC Bayern from the last matchday and the next. The companies they know are the big Bavarian companies Siemens and BMW.” When asked why Bavaria is ahead among the federal states, Christian Ude sings an unexpected song of praise: “It also has to do with the international aspirations of the CSU, which does not see itself as a regional party. Franz Josef Strauß was the first West German politician to meet with Mao.”

Bavaria still benefits from the economic pragmatism of the Christian Democrats when it comes to China, and Christian Ude sees it similarly today when it comes to the tension between business and politics: “I find the debate hypocritical. On the one hand, to import Saudi oil, to accept torture there, and at the same time to demand to stop trade with China because human rights there don’t correspond to our values.” Nevertheless, Ude experienced the tension himself when he was sharply criticized by the Chinese consulate for inviting the Dalai Lama to Munich as mayor. However, he said the COVID-19 pandemic in particular also showed that the Chinese market has saved many companies in Germany. David Renke

Collector’s picture with bell – tens of thousands of rental bikes have now been discarded in China and stored at collection points outside cities. There are more pictures on the pages of the StraitsTimes.

CHINA.TABLE EDITORIAL OFFICE

Amelie
Richter

Marcel
Grzanna

Fabian
Peltsch

Julia
Fiedler

Angela
Köckritz

Jörn
Petring

Feature

Talks in times of sanctions

Standing up for values – in the interests of the economy

Springboard international schools

British excellence for the Chinese middle class

Long-term investments

Strengthening the domestic education market

Meituan plans to replace employees with delivery robots

Autonomous robo-messengers change the cityscape

What will happen to the workers?

Antitrust investigation against Meituan

News

EU cracks down on Chinese subsidies

Census shows population decline

Start of construction for new VW plant in Anhui

Renewable energies as part of Volkswagen’s environmental strategy

Autonomous driving: continental cooperates with Horizon Robotics

Automotive chips: TSMC plans billion-dollar investment in China

Profile

Christian Ude

Dessert

China.Table Editors

CHINA.TABLE EDITORIAL OFFICE

Feature

Talks in times of sanctions

Standing up for values – in the interests of the economy

Springboard international schools

British excellence for the Chinese middle class

Long-term investments

Strengthening the domestic education market

Meituan plans to replace employees with delivery robots

Autonomous robo-messengers change the cityscape

What will happen to the workers?

Antitrust investigation against Meituan

News

EU cracks down on Chinese subsidies

Census shows population decline

Start of construction for new VW plant in Anhui

Renewable energies as part of Volkswagen’s environmental strategy

Autonomous driving: continental cooperates with Horizon Robotics

Automotive chips: TSMC plans billion-dollar investment in China

Profile

Christian Ude

Dessert

China.Table Editors

CHINA.TABLE EDITORIAL OFFICE

Sign up now and continue reading immediately