Table.Briefing: China (English)

Gunnar Wiegand: EU must defend itself against overcapacity + Xiaopeng launches model offensive

Dear reader,

US Secretary of State Antony Blinken will visit China next week for the second time in less than a year. At the top of the list of discussion topics: Russia and Beijing’s support for Moscow.

One of the main topics of our conversation with Gunnar Wiegand is how the US, China, and EU triangle is actually faring. He was an EU diplomat for over thirty years and is now a Visiting Distinguished Fellow at the German Marshall Fund of the United States (GMF).

According to Wiegand, Beijing’s position in the war against Ukraine is becoming increasingly important for the relationship between China and Europe. “Because Russia’s war against Ukraine is continuing and intensifying. Whether intentionally or not, China is now the most important economic, financial and technological pillar of Russia’s war economy.” Wiegand urges a joint European approach.

On Thursday, the Beijing Motor Show kicks off. It is now the most important industry event of its kind. Our particular focus is on the new, strong competition that Germany is facing in the Far East. Today, we start off with an analysis of Xpeng. The up-and-coming manufacturer wants to take off with a model offensive.

We will continue to provide you with car analyses and interviews over the coming days. Two of our colleagues will be at the trade fair.

Your
Amelie Richter
Image of Amelie  Richter

Interview

‘We need to realign our trade’

Gunnar Wiegand spent over three decades working for the European Union, most recently as Head of the Asia Department of the European External Action Service (EEAS). He is now a Fellow at the German Marshall Fund.

Let’s take a look into the future: In January 2025, just under nine months from now, who do you think will be in the White House? And who will lead the EU Commission?

No think tank has the capacity to tell fortunes. We look at the democratic processes. We all know that the situation in the USA is open and that one or another candidate selection can be made by the American people. As far as the final selection is concerned, we have already seen several times that presidents other than those who received the majority of votes cast were able to prevail in the electoral system. I think we have to be realistic. Not only here in Brussels, but in all parts of the world, we have to be prepared for the possibility , that the challenger and former president could become US president again. That would of course have certain effects on policy in Washington, both towards Europe and towards China and Russia.

And who do you think will become President of the EU Commission?

This is even more difficult. In contrast to the US elections, there is even less predictability here because the top candidates are not all candidates for the EU Parliament and the proposal is first made by the European Council, which then has to be confirmed by a majority in the European Parliament. But I think there is a high probability that the candidate of the strongest parliamentary group will be appointed the President of the European Commission. We can assume that there are relatively good chances for the current incumbent to continue to lead the Commission.

In the triangle of the United States, China and the EU – what will be the main issues in the next few years?

The most important question that all three will face is: How do we trade? This was the main sticking point between the Trump administration and China. The measures that were taken at that time, namely the unilateral imposition of significant tariffs not only against China but also against other trading partners such as Europe, which are currently suspended. The topic gains additional importance because we have an ever-growing capacity for overproduction in China, not only for steel and aluminum, but especially for solar systems, electric cars and wind turbines. This is largely achieved through subsidies and this structural overproduction has to be sold somewhere. We certainly have to come up with new policy approaches here, both in the producing country and in the sales markets, in order to deal with this in such a way that deindustrialization does not occur in our countries.

And apart from trade?

The question of Taiwan. How important is the goal of reunification in policy-making in Beijing? And how is the reaction to this in Europe and the USA? If the red lines are adhered to, i.e. no means of violence are used or threatened, then this will also be respected in Washington and Brussels. There must be a consensual process between the leadership in Taiwan and the leadership in China, the results of which must be democratically legitimized. The issues of economic security in cutting-edge technologies and possible licensing of exports and foreign investments also remain important.

But the ever closer connection between China and Russia is becoming increasingly important for Europe’s relationship with China. Because Russia’s war against Ukraine continues and is becoming more intense. Whether intentionally or not, China is now the most important economic, financial and technological pillar of Russia’s war economy. This is increasingly becoming a problem for European security.

What would a President Trump mean for Taiwan?

I think President Trump would not question the strategic ambiguity of the US position in supporting Taiwan. He hasn’t done that during his first presidency or during the election campaign. Therefore, one should not jump to conclusions about Taiwan, even if Trump had, let’s say, taken a much more robust stance on trade policy towards Taiwan.

You have not been part of the European External Action Service (EEAS) for almost six months. How do you now see the work from the outside regarding China?

Overall, the EU is pursuing a holistic course that is sometimes complex and slower than intended, but that overall has developed significantly on a basis of realism. Let’s take China, with the ambitions it has and the capabilities it is building. Since 2019, all EU member states have been able to rally behind the approach, to see China simultaneously as a partner, as a competitor and as a systemic rival. We see that a number of regulations and directives have since been adopted to better leverage Europe’s normative and economic power in the absence of bilateral agreements with China. I would like to point out that all of these legislative proposals always required cooperation between the Council and Parliament. That’s why it took time.

What progress has been made, specifically?

There has also been a lot more realism in the Member States themselves. Look at how many Confucius Institutes there are in our universities today and how many there were a few years ago. Or how many member states are still taking part in the Belt and Road Initiative. The 17+1 process has also come to a standstill. There has also been a rethink at the national level, and joint EU action has become much more important. The most important task, where much more common ground must now be found and decisions must be made clearly, is in the area of structural overproduction in China and how to deal with it. There is still a lot to do.

Gunnar Wiegand is a Visiting Distinguished Fellow at the Indo-Pacific Program of the German Marshall Fund of the United States (GMF). Wiegand was Head of the Asia Division of the European External Action Service (EEAS) from January 2016 to August 2023. Previously, he was Deputy Head of the Europe and Central Asia Division and Director of the Russia, Eastern Partnership, Central Asia and OSCE Division.

  • EU
  • Geopolitics
  • Trade
  • Trump 2024

Feature

Grow or perish: Xpeng’s battle for unit sales

A touch of Lamborghini: the Xpeng P7 launches with scissor doors.

Over the next three years, Xpeng plans to launch 30 new models – an unusually high number by automotive industry standards. This is according to an internal letter to employees, as reported by the online medium CN-EV-Post. This includes, among other things, lower-priced models under the equivalent of 20,000 euros for the global market. Given the competitive domestic market, Xpeng needs to grow quickly to become profitable through economies of scale. But it is no longer that simple. The Chinese car market has enormous overcapacity.

Xpeng has had a very mixed year. In 2023, the company sold 142,000 cars. While this represents an increase of 17 percent compared to 2022, the company clearly missed its sales target (200,000 cars).

The brand thus made a loss of a hefty 1.4 billion euros (ten billion yuan). However, this even positively surprised analysts. They had expected a loss of 1.5 billion euros. 2024 has not really got off to a promising start either – Xpeng only shipped around 22,500 cars in the first quarter.

Xpeng wants to start the catch-up race

Xpeng is well aware of the situation. The internal letter to its employees is correspondingly brutal. The South China Morning Post quotes the letter as saying that a “new phase of bloodbath” is about to begin. However, the consequences are different than expected. Instead of cutting jobs, He Xiaopeng, founder and CEO of the eponymous EV manufacturer, promises to create 4,000 new jobs by the end of the year.

Furthermore, the brand plans to invest 450 million euros (3.5 billion yuan) in developing intelligent cars – more than ever in the company’s history. This increase in investment is urgently needed. NIO (13 billion yuan) and Li Auto (10.6 billion yuan) spent significantly more in the last financial year.

A year of changes

Xpeng wants to use this offensive to reap the rewards it sowed in the past financial year, which has been characterized by several changes. These included restructuring its sales and distribution, as Caixin Global reports. Xpeng had two different sales channels. Xpeng’s own car dealerships and on the other – which only came later – sales via external dealers. As both divisions competed within Xpeng, they snatched each other’s customers. Since 2023, both channels have been united under Vice President Wang Tong and unprofitable dealerships have had to close. Xpeng currently has 254 own and 166 external dealers.

Thanks to a new vehicle architecture, 80 percent of key parts can be used across almost all models. This also shortens the development time of new models enormously. An advantage that will become important in the near future. That is how the company has come up with the number of 30 new models planned.

These include two models Xpeng plans to launch under a new brand name. The project name is “Mona”. The brand’s cars will cost between 13,000 and 20,000 euros, around half the price of Xpeng’s existing vehicles. Xpeng thus directly challenges BYD, which specializes in this vehicle class. In 2023, the group sold just over three million electric and plug-in cars, many of which are being sold for less than 20,000 euros.

Strong basis with Xpeng

Xpeng also plans the joint development of two additional models with Volkswagen by 2026. Volkswagen banks on Xpeng and has signed a cooperation agreement. The German manufacturer has acquired a 4.99 percent stake in the Chinese company for 700 million euros. A “master agreement” states that the two companies intend to develop a joint platform and software for electric cars. The joint procurement of parts is also intended to reduce costs.

Xpeng’s core competence across all price classes will be intelligent driver assistance systems and the artificial intelligence behind them. However, this technology is not a unique selling point in the Chinese market. BYD and the other car companies, as well as tech giants such as Huawei and Xiaomi, have also entered the car market.

However, Xpeng is well prepared for the catch-up race despite the losses. According to Brian Gu, the company’s Honorary Vice Chairman and Co-President, the changes and cost savings are beginning to bear fruit. Margins have increased by ten percent, and liquid funds now stand at almost six billion euros.

  • Car Industry
  • Technology
  • Xpeng

News

Chinese hackers spied on VW

Between 2010 and 2014, Chinese attackers repeatedly gained access to Volkswagen’s computers and siphoned off company knowledge. German broadcasters ZDF and Der Spiegel reported this, citing documents relating to the defense against the cyberattack. Government agencies are believed to have been behind the attack. According to one of the insiders, a “trail” led in the direction of the People’s Liberation Army. Moreover, they were working fixed hours, which indicates the actions of civil servants. At the time, it was one of the most significant cyberattacks in the world.

The information the hackers accessed included, for example, program code for transmission control, as well as technical data on electric mobility and fuel cells. In which Chinese products this knowledge may have been used later is unknown.

It took considerable effort and a large-scale operation in 2015 to lock the attackers out of the systems. Volkswagen has revised its IT security since. This revelation comes shortly before the Beijing Auto Show in a climate of increasing skepticism about China in certain parts of government, society and business. However, VW plans to invest more than ever in China. According to reports, the Chinese embassy in Berlin reacted indignantly to the suspected links to China and emphasized that the country condemns all forms of cyber espionage. fin

  • De-risking

Tesla continues the discount battle

In the fight against weak demand, US EV manufacturer Tesla has once again lowered its prices, further speeding up the downward discount spiral. Prices for Tesla cars in China have again fallen by around 2,000 dollars, according to information on the car manufacturer’s official website on Sunday. The company announced similar price reductions in the US on Friday.

The global market for electric cars is currently weakening. Tesla started the year with a significant sales decline. It was the first time in almost four years that the company sold fewer vehicles than the previous year. Chinese manufacturer BYD is hot on Tesla’s heels. This is compounded by tougher competition from industry newcomers and the growing range of electric cars from established manufacturers such as VW. Another driving factor behind the falling prices is China’s overcapacity. China’s car manufacturers only work at 70 percent capacity. rtr

  • Car Industry

Authorities ban WhatsApp from the Apple App Store

China’s leadership has ordered Apple to remove WhatsApp from the App Store in the People’s Republic. The US company has already complied. Explaining the move, Apple said it is obliged to comply with the laws of the countries in which it operates. The Wall Street Journal quotes Apple as saying that the Chinese internet regulatory authority justified this order with “national security concerns.” Likewise, Meta’s Threads app, a competitor to X (formerly Twitter) is no longer available in the Chinese Apple App Store.

Whatsapp has only been usable in China for years anyway via VPN services that redirect data traffic so that it appears to come from another country. Virtually all Western short message services and social media are blocked in China itself. Nevertheless, WhatsApp could still be downloaded to devices from the App Store. flee

Bill to split US TikTok clears parliamentary hurdle

On Saturday, the US House of Representatives gave the video app TikTok an ultimatum to split from its Chinese parent company ByteDance. A majority of MPs from both parties voted in favor of the motion. If the US subsidiary does not break away from its Chinese parent company, TikTok will be banned from the Apple and Google app stores in the US. The Senate still has to approve the bill before it can come into force.

Critics of TikTok accuse the platform of close ties to the Chinese government and possible data espionage. TikTok rejects all accusations. It is unclear whether the government in Beijing would agree to the sale of the US part of the company. With 170 million American users, the app is particularly popular with young people. The dispute has become an important issue in the US election campaign. rtr

  • Cybersecurity
  • Geopolitics
  • Tiktok
  • USA

Ground beneath Chinese cities is sinking

The ground beneath many Chinese cities is constantly sinking. 45 percent of the country’s urban areas are sinking at a rate of more than three millimeters per year, according to a report by the German Press Agency citing a Chinese study published in Science. In 16 percent of cases, it is even more than ten millimeters per year. The study found that the main cause of the sinking is the extraction of groundwater from rock layers below the cities and the weight of buildings due to the country’s enormous construction boom.

Among the cities severely affected by subsidence are the capital, Beijing, and the port metropolis of Shanghai, each with a population of well over 20 million. Some areas of Shanghai have subsided by up to three meters in the past century, which has been known for some time.

However, a team led by researcher Zurui Ao from South China Normal University in Foshan has now analyzed satellite measurements from 2015 to 2022 from 82 major Chinese cities where almost three-quarters of urban Chinese live. Ground deformations can be tracked from the satellites using radar. Nearly one-third (“29 percent”) of the population of these cities is affected by subsidence of more than three millimeters. According to the researchers, a total of 920 million Chinese were living in urban regions as of 2020 – an estimated 270 million of them on sinking ground.

One in ten coastal residents will be affected

The consequences are already being felt. The study shows that subsidence-related disasters in China have already caused hundreds of deaths and injuries every year in recent decades, as well as immense economic damage. Moreover, the risk of flooding is rising in densely populated coastal regions. The combination of land subsidence and climate crisis-induced sea level rise means that 22 to 26 percent of the Chinese coastline could be below sea level by 2120. This would affect around one in ten coastal residents. There is also a risk of damage to buildings and foundations, infrastructure and sewage systems.

“Our results underscore the necessity of enhancing protective measures to mitigate potential damages from subsidence,” the study states. It calls for more sustainable water management, which is already being successfully practiced in the Japanese cities of Tokyo and Osaka. This could also stabilize the subsidence rate in China. Land subsidence due to human activity is already occurring in many parts of the world. ck

  • Climate & Environment

Severe flooding in southern China

Severe flooding in Hong Kong’s Chaiwan district

At least six people have been injured and others buried in landslides following heavy rainfall in the southern Chinese province of Guangdong. Citing local authorities, China’s state broadcaster CCTV reported that three locations in the Bei River basin had experienced “once-in-a-century flooding” due to heavy rainfall, AFP news agency reported.

Torrential rainfall has caused rivers in the Pearl River Delta to rise in large parts of Guangdong since Thursday, leading to flooding in the mountainous regions. Footage released by CCTV showed houses being destroyed by a wall of brown mud. Initially, there were no reports of fatalities or how many people were buried by the landslides. The storms and flooding have also affected the megacities of Hong Kong, Shenzhen and Guangzhou.

The Pearl River Delta is one of the most densely populated regions in the world. China’s national weather service had issued severe weather warnings for parts of Guangdong and warned of violent storms in the coastal regions. According to CCTV, floods up to 5.8 meters above the warning level could hit the region on Monday morning. flee

  • Climate & Environment
  • Flooding
  • Guangdong
  • Hongkong

Heads

Alice Gruenfelder – a literary look at Tibet, Taiwan and Xinjiang

Alice Gruenfelder has written about her travels to Xinjiang and Tibet.

Alice Gruenfelder’s day begins every morning at seven. She is woken somewhat rudely from her sleep at this hour by the bells of the neighboring church, which ring every quarter of an hour from seven in the morning. “My day is structured by them, and once I’m somewhere else, I listen in vain for this timepiece that annoys me so much in everyday life.” It is fitting for her adopted home of Zurich that her day is precisely timed. At least that’s the cliché.

But there was something about the clichés. You could say that Gruenfelder is not on good terms with them – in fact, she spends a considerable part of her life debunking them, especially those that Europeans use to classify China and Asia.

Alice Gruenfelder lived in Asia for several years. After studying sinology in Berlin, she traveled extensively in China as a study tour guide, particularly in Tibet and Xinjiang. She has now traveled to China so often that she can only shrug her shoulders when asked how many times she has been there. “I haven’t kept count.”

A novel about 140,000 Chinese war workers

Gruenfelder’s fascination with China was combined with her literary inclination at an early age. She studied Sinology and Modern German Literature and even learned the craft of bookselling before completing her studies. Today, she is an editor, literary mediator, author and translator. She writes about China and other Asian countries whose people have profoundly touched her on her many travels. With her publications, she tries to convey the mood of the respective country to readers. “I want to express what people really care about, what they think and feel.”

She has just finished her latest novel and is now looking for a publisher. It is about the 140,000 Chinese war workers the French and British recruited during the First World War. Alice Gruenfelder prefers to deal with topics that are rarely discussed elsewhere. Her first novel “Wuestengangerin” (“Desert Walker”), published by Edition 8 in 2018, was set against the backdrop of the unrest in Xinjiang and the oppression of the Uyghurs – at a time when hardly anyone in the West was talking about it.

Numerous new projects in mind

She currently has two volumes by Taiwanese poet Tsai Wan-Shuen on her desk, which still need proofreading. Making her work known in German-speaking countries is close to her heart. Gruenfeld still has a few projects of this kind in mind.

Her biggest wish is to stay longer in Keelong on Taiwan’s north coast. “I would like to explore the various cultural and historical layers that fascinated me so much during my last stay.” She will surely bring back many insights from this trip, which will find their way into the German literary landscape in one way or another. Svenja Napp

  • China
  • Literatur

Executive Moves

Howard Tan has been Business Development Manager at Wuerth in Shanghai since February. He was previously Market Developer, also for Wuerth.

Benjamin Sim will become Head of the Greater China & Singapore region at Julius Baer as of June 1. Sim joined the Swiss wealth manager in 2016 and has held positions including Deputy Branch Head and Chief Operating Officer (COO) in Singapore and COO in Hong Kong. Prior to Julius Baer, Sim worked at Credit Suisse and HSBC.

Is something changing in your organization? Let us know at heads@table.media!

So to Speak

Harvesting chives

割韭菜 – gē jiǔcài – harvesting chives

What do the coaching scene, multi-level marketing and the exploitation of interns have in common? In all these fields, Chinese chives are harvested by the bunch! You heard right, at least your Chinese ear did.

Harvesting chives, or more precisely “cutting garlic chives,” in Chinese 割韭菜 gē jiǔcài (from 割 gē “to cut, sever” and 韭菜 jiǔcài “(Chinese) garlic chives, cut garlic”), is how the Chinese describe someone who has a bad judgment or makes bad decisions about their purchases.

It used to be a metaphor in stock market jargon. It described how experienced players fleeced naïve newcomers on the slippery financial floor by selling dodgy funds and financial products. Sometimes they simply waited until the nervous newbies panicked and dumped their shares at the wrong moment to then buy them up for chump change – jiucai harvest time for the stock market wolves. Raking in such profits probably seemed as easy to them as harvesting tufts of chives. Chives shoots are also known to sprout quickly – just as new investors are always growing on the stock market bed, whose hay can then be harvested again.

Coaching and ruthless entrepreneurs

In the meantime, Chinese word acrobats have transferred the snappy linguistic blossom to every conceivable fleecing scenario involving ordinary people as cash cows. For example, China’s flourishing coaching industry, where self-proclaimed gurus are constantly trying to squeeze the digital renminbi out of the thirsty middle class by offering new courses and promises of success. Instead of the hoped-for career and bank booster for participants, the miracle coaches end up swinging themselves up the income ladder. Another infamous type of chive cutter in China is ruthless companies that fob off young career starters with lousy starting salaries and lots of overtime, only to fire them after a few years and replace them with a new generation of graduates.

If you are a gwailo visiting China for the first time, you could fall into a real “Jiucai” trap. In the West, garlic chives (allium tuberosum), also known as Asian chives, are still a niche plant and not very common. This type of leek, with its flat, thick-tubed stems, is mainly used in East Asian cuisine. The spicy plant is said to have originated in China, where it is believed to have been cultivated around 3,000 years ago.

Tastes more like garlic than chives

However, this millennia-old ingredient is uncharted territory for many newcomers to China. It is not uncommon for them to confuse the strong green stalks with our standard chives (which are called xiāngcōng in Chinese) at first close contact and euphorically pile up scrambled garlic eggs, garlic jiaozi and fried garlic tofu on their plates in the canteen. The rude awakening comes in the afternoon meeting, when instead of optimism and the latest figures, the only thing you are spreading in the room is garlic breath. Because Chinese chives actually taste more like garlic than chives.

Garlic or not, TCM celebrates the plant for its healing effects, including cancer prevention, regardless of its taste. Similar to garlic or wild garlic, the plant contains the active ingredient allicin, which strengthens the human immune system against viruses and bacteria and is also said to lower cholesterol, balance blood lipids and reduce inflammation. “Jiucai” also has a digestive and appetite-stimulating effect and is even praised on the Chinese internet as a secret weapon against aging and a superfood for a brighter complexion.

China knows no vampires

By the way, even in China, opinions differ on “Jiucai.” Some avoid jiucai dishes like the devil avoids holy water. Hardcore foodies, on the other hand, swear by the spicy stalks and eat them as a pie filling (韭菜馅饼 jiǔcài-xiànbǐng), spice up glass noodle dishes (韭菜炒粉丝 jiǔcài chǎofěnsī) and omelets (韭菜鸡蛋饼 jiǔcài-jīdànbǐng). Real jiucai junkies even order the cabbage in its pure form, for example, roasted (烤韭菜 kǎo jiǔcài) or fried (炒韭菜 chǎo jiǔcài).

If you like a strong taste (重口味 zhòngkǒuwèi “strong taste,” in a figurative sense also “unusual” or “tougher taste”), you will get your money’s worth with Chinese cuisine anyway. This is especially true for garlic fans. The fact that vampires are unknown to the Chinese culture might also have something to do with the fact that the Middle Kingdom makes the most of the garlic plant (大蒜 dàsuàn) in culinary terms. In some parts of China, whole cloves of pickled garlic are eaten as an appetizer or snack, for example, in 糖醋蒜 tángcùsuàn (“sweet and sour pickled garlic”). In addition to the bulb as a seasoning all-rounder, garlic shoots in various stages of growth are also a popular dish, such as young shoots, called 蒜苗 suànmiáo (the green part of garlic), or the fully grown garlic stalks, called 蒜苔 suàntái.

If you’ve had a somewhat unpleasant experience with garlic or chopped garlic, your alarm bells should be ringing when you visit a restaurant and the waiter politely asks you: 有没有忌口? Yǒu méiyǒu jìkǒu? – “Are you allergic to something?” This is the right time to make any special requests, such as “no garlic” or “not spicy, please.” The last exit, so to speak, before embarking on a rollercoaster ride of flavors. Come to think of it, culinary experimentation often pays off in China and activates completely new areas in the mouth and stomach.

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

China.Table editorial team

CHINA.TABLE EDITORIAL OFFICE

Licenses:
    Dear reader,

    US Secretary of State Antony Blinken will visit China next week for the second time in less than a year. At the top of the list of discussion topics: Russia and Beijing’s support for Moscow.

    One of the main topics of our conversation with Gunnar Wiegand is how the US, China, and EU triangle is actually faring. He was an EU diplomat for over thirty years and is now a Visiting Distinguished Fellow at the German Marshall Fund of the United States (GMF).

    According to Wiegand, Beijing’s position in the war against Ukraine is becoming increasingly important for the relationship between China and Europe. “Because Russia’s war against Ukraine is continuing and intensifying. Whether intentionally or not, China is now the most important economic, financial and technological pillar of Russia’s war economy.” Wiegand urges a joint European approach.

    On Thursday, the Beijing Motor Show kicks off. It is now the most important industry event of its kind. Our particular focus is on the new, strong competition that Germany is facing in the Far East. Today, we start off with an analysis of Xpeng. The up-and-coming manufacturer wants to take off with a model offensive.

    We will continue to provide you with car analyses and interviews over the coming days. Two of our colleagues will be at the trade fair.

    Your
    Amelie Richter
    Image of Amelie  Richter

    Interview

    ‘We need to realign our trade’

    Gunnar Wiegand spent over three decades working for the European Union, most recently as Head of the Asia Department of the European External Action Service (EEAS). He is now a Fellow at the German Marshall Fund.

    Let’s take a look into the future: In January 2025, just under nine months from now, who do you think will be in the White House? And who will lead the EU Commission?

    No think tank has the capacity to tell fortunes. We look at the democratic processes. We all know that the situation in the USA is open and that one or another candidate selection can be made by the American people. As far as the final selection is concerned, we have already seen several times that presidents other than those who received the majority of votes cast were able to prevail in the electoral system. I think we have to be realistic. Not only here in Brussels, but in all parts of the world, we have to be prepared for the possibility , that the challenger and former president could become US president again. That would of course have certain effects on policy in Washington, both towards Europe and towards China and Russia.

    And who do you think will become President of the EU Commission?

    This is even more difficult. In contrast to the US elections, there is even less predictability here because the top candidates are not all candidates for the EU Parliament and the proposal is first made by the European Council, which then has to be confirmed by a majority in the European Parliament. But I think there is a high probability that the candidate of the strongest parliamentary group will be appointed the President of the European Commission. We can assume that there are relatively good chances for the current incumbent to continue to lead the Commission.

    In the triangle of the United States, China and the EU – what will be the main issues in the next few years?

    The most important question that all three will face is: How do we trade? This was the main sticking point between the Trump administration and China. The measures that were taken at that time, namely the unilateral imposition of significant tariffs not only against China but also against other trading partners such as Europe, which are currently suspended. The topic gains additional importance because we have an ever-growing capacity for overproduction in China, not only for steel and aluminum, but especially for solar systems, electric cars and wind turbines. This is largely achieved through subsidies and this structural overproduction has to be sold somewhere. We certainly have to come up with new policy approaches here, both in the producing country and in the sales markets, in order to deal with this in such a way that deindustrialization does not occur in our countries.

    And apart from trade?

    The question of Taiwan. How important is the goal of reunification in policy-making in Beijing? And how is the reaction to this in Europe and the USA? If the red lines are adhered to, i.e. no means of violence are used or threatened, then this will also be respected in Washington and Brussels. There must be a consensual process between the leadership in Taiwan and the leadership in China, the results of which must be democratically legitimized. The issues of economic security in cutting-edge technologies and possible licensing of exports and foreign investments also remain important.

    But the ever closer connection between China and Russia is becoming increasingly important for Europe’s relationship with China. Because Russia’s war against Ukraine continues and is becoming more intense. Whether intentionally or not, China is now the most important economic, financial and technological pillar of Russia’s war economy. This is increasingly becoming a problem for European security.

    What would a President Trump mean for Taiwan?

    I think President Trump would not question the strategic ambiguity of the US position in supporting Taiwan. He hasn’t done that during his first presidency or during the election campaign. Therefore, one should not jump to conclusions about Taiwan, even if Trump had, let’s say, taken a much more robust stance on trade policy towards Taiwan.

    You have not been part of the European External Action Service (EEAS) for almost six months. How do you now see the work from the outside regarding China?

    Overall, the EU is pursuing a holistic course that is sometimes complex and slower than intended, but that overall has developed significantly on a basis of realism. Let’s take China, with the ambitions it has and the capabilities it is building. Since 2019, all EU member states have been able to rally behind the approach, to see China simultaneously as a partner, as a competitor and as a systemic rival. We see that a number of regulations and directives have since been adopted to better leverage Europe’s normative and economic power in the absence of bilateral agreements with China. I would like to point out that all of these legislative proposals always required cooperation between the Council and Parliament. That’s why it took time.

    What progress has been made, specifically?

    There has also been a lot more realism in the Member States themselves. Look at how many Confucius Institutes there are in our universities today and how many there were a few years ago. Or how many member states are still taking part in the Belt and Road Initiative. The 17+1 process has also come to a standstill. There has also been a rethink at the national level, and joint EU action has become much more important. The most important task, where much more common ground must now be found and decisions must be made clearly, is in the area of structural overproduction in China and how to deal with it. There is still a lot to do.

    Gunnar Wiegand is a Visiting Distinguished Fellow at the Indo-Pacific Program of the German Marshall Fund of the United States (GMF). Wiegand was Head of the Asia Division of the European External Action Service (EEAS) from January 2016 to August 2023. Previously, he was Deputy Head of the Europe and Central Asia Division and Director of the Russia, Eastern Partnership, Central Asia and OSCE Division.

    • EU
    • Geopolitics
    • Trade
    • Trump 2024

    Feature

    Grow or perish: Xpeng’s battle for unit sales

    A touch of Lamborghini: the Xpeng P7 launches with scissor doors.

    Over the next three years, Xpeng plans to launch 30 new models – an unusually high number by automotive industry standards. This is according to an internal letter to employees, as reported by the online medium CN-EV-Post. This includes, among other things, lower-priced models under the equivalent of 20,000 euros for the global market. Given the competitive domestic market, Xpeng needs to grow quickly to become profitable through economies of scale. But it is no longer that simple. The Chinese car market has enormous overcapacity.

    Xpeng has had a very mixed year. In 2023, the company sold 142,000 cars. While this represents an increase of 17 percent compared to 2022, the company clearly missed its sales target (200,000 cars).

    The brand thus made a loss of a hefty 1.4 billion euros (ten billion yuan). However, this even positively surprised analysts. They had expected a loss of 1.5 billion euros. 2024 has not really got off to a promising start either – Xpeng only shipped around 22,500 cars in the first quarter.

    Xpeng wants to start the catch-up race

    Xpeng is well aware of the situation. The internal letter to its employees is correspondingly brutal. The South China Morning Post quotes the letter as saying that a “new phase of bloodbath” is about to begin. However, the consequences are different than expected. Instead of cutting jobs, He Xiaopeng, founder and CEO of the eponymous EV manufacturer, promises to create 4,000 new jobs by the end of the year.

    Furthermore, the brand plans to invest 450 million euros (3.5 billion yuan) in developing intelligent cars – more than ever in the company’s history. This increase in investment is urgently needed. NIO (13 billion yuan) and Li Auto (10.6 billion yuan) spent significantly more in the last financial year.

    A year of changes

    Xpeng wants to use this offensive to reap the rewards it sowed in the past financial year, which has been characterized by several changes. These included restructuring its sales and distribution, as Caixin Global reports. Xpeng had two different sales channels. Xpeng’s own car dealerships and on the other – which only came later – sales via external dealers. As both divisions competed within Xpeng, they snatched each other’s customers. Since 2023, both channels have been united under Vice President Wang Tong and unprofitable dealerships have had to close. Xpeng currently has 254 own and 166 external dealers.

    Thanks to a new vehicle architecture, 80 percent of key parts can be used across almost all models. This also shortens the development time of new models enormously. An advantage that will become important in the near future. That is how the company has come up with the number of 30 new models planned.

    These include two models Xpeng plans to launch under a new brand name. The project name is “Mona”. The brand’s cars will cost between 13,000 and 20,000 euros, around half the price of Xpeng’s existing vehicles. Xpeng thus directly challenges BYD, which specializes in this vehicle class. In 2023, the group sold just over three million electric and plug-in cars, many of which are being sold for less than 20,000 euros.

    Strong basis with Xpeng

    Xpeng also plans the joint development of two additional models with Volkswagen by 2026. Volkswagen banks on Xpeng and has signed a cooperation agreement. The German manufacturer has acquired a 4.99 percent stake in the Chinese company for 700 million euros. A “master agreement” states that the two companies intend to develop a joint platform and software for electric cars. The joint procurement of parts is also intended to reduce costs.

    Xpeng’s core competence across all price classes will be intelligent driver assistance systems and the artificial intelligence behind them. However, this technology is not a unique selling point in the Chinese market. BYD and the other car companies, as well as tech giants such as Huawei and Xiaomi, have also entered the car market.

    However, Xpeng is well prepared for the catch-up race despite the losses. According to Brian Gu, the company’s Honorary Vice Chairman and Co-President, the changes and cost savings are beginning to bear fruit. Margins have increased by ten percent, and liquid funds now stand at almost six billion euros.

    • Car Industry
    • Technology
    • Xpeng

    News

    Chinese hackers spied on VW

    Between 2010 and 2014, Chinese attackers repeatedly gained access to Volkswagen’s computers and siphoned off company knowledge. German broadcasters ZDF and Der Spiegel reported this, citing documents relating to the defense against the cyberattack. Government agencies are believed to have been behind the attack. According to one of the insiders, a “trail” led in the direction of the People’s Liberation Army. Moreover, they were working fixed hours, which indicates the actions of civil servants. At the time, it was one of the most significant cyberattacks in the world.

    The information the hackers accessed included, for example, program code for transmission control, as well as technical data on electric mobility and fuel cells. In which Chinese products this knowledge may have been used later is unknown.

    It took considerable effort and a large-scale operation in 2015 to lock the attackers out of the systems. Volkswagen has revised its IT security since. This revelation comes shortly before the Beijing Auto Show in a climate of increasing skepticism about China in certain parts of government, society and business. However, VW plans to invest more than ever in China. According to reports, the Chinese embassy in Berlin reacted indignantly to the suspected links to China and emphasized that the country condemns all forms of cyber espionage. fin

    • De-risking

    Tesla continues the discount battle

    In the fight against weak demand, US EV manufacturer Tesla has once again lowered its prices, further speeding up the downward discount spiral. Prices for Tesla cars in China have again fallen by around 2,000 dollars, according to information on the car manufacturer’s official website on Sunday. The company announced similar price reductions in the US on Friday.

    The global market for electric cars is currently weakening. Tesla started the year with a significant sales decline. It was the first time in almost four years that the company sold fewer vehicles than the previous year. Chinese manufacturer BYD is hot on Tesla’s heels. This is compounded by tougher competition from industry newcomers and the growing range of electric cars from established manufacturers such as VW. Another driving factor behind the falling prices is China’s overcapacity. China’s car manufacturers only work at 70 percent capacity. rtr

    • Car Industry

    Authorities ban WhatsApp from the Apple App Store

    China’s leadership has ordered Apple to remove WhatsApp from the App Store in the People’s Republic. The US company has already complied. Explaining the move, Apple said it is obliged to comply with the laws of the countries in which it operates. The Wall Street Journal quotes Apple as saying that the Chinese internet regulatory authority justified this order with “national security concerns.” Likewise, Meta’s Threads app, a competitor to X (formerly Twitter) is no longer available in the Chinese Apple App Store.

    Whatsapp has only been usable in China for years anyway via VPN services that redirect data traffic so that it appears to come from another country. Virtually all Western short message services and social media are blocked in China itself. Nevertheless, WhatsApp could still be downloaded to devices from the App Store. flee

    Bill to split US TikTok clears parliamentary hurdle

    On Saturday, the US House of Representatives gave the video app TikTok an ultimatum to split from its Chinese parent company ByteDance. A majority of MPs from both parties voted in favor of the motion. If the US subsidiary does not break away from its Chinese parent company, TikTok will be banned from the Apple and Google app stores in the US. The Senate still has to approve the bill before it can come into force.

    Critics of TikTok accuse the platform of close ties to the Chinese government and possible data espionage. TikTok rejects all accusations. It is unclear whether the government in Beijing would agree to the sale of the US part of the company. With 170 million American users, the app is particularly popular with young people. The dispute has become an important issue in the US election campaign. rtr

    • Cybersecurity
    • Geopolitics
    • Tiktok
    • USA

    Ground beneath Chinese cities is sinking

    The ground beneath many Chinese cities is constantly sinking. 45 percent of the country’s urban areas are sinking at a rate of more than three millimeters per year, according to a report by the German Press Agency citing a Chinese study published in Science. In 16 percent of cases, it is even more than ten millimeters per year. The study found that the main cause of the sinking is the extraction of groundwater from rock layers below the cities and the weight of buildings due to the country’s enormous construction boom.

    Among the cities severely affected by subsidence are the capital, Beijing, and the port metropolis of Shanghai, each with a population of well over 20 million. Some areas of Shanghai have subsided by up to three meters in the past century, which has been known for some time.

    However, a team led by researcher Zurui Ao from South China Normal University in Foshan has now analyzed satellite measurements from 2015 to 2022 from 82 major Chinese cities where almost three-quarters of urban Chinese live. Ground deformations can be tracked from the satellites using radar. Nearly one-third (“29 percent”) of the population of these cities is affected by subsidence of more than three millimeters. According to the researchers, a total of 920 million Chinese were living in urban regions as of 2020 – an estimated 270 million of them on sinking ground.

    One in ten coastal residents will be affected

    The consequences are already being felt. The study shows that subsidence-related disasters in China have already caused hundreds of deaths and injuries every year in recent decades, as well as immense economic damage. Moreover, the risk of flooding is rising in densely populated coastal regions. The combination of land subsidence and climate crisis-induced sea level rise means that 22 to 26 percent of the Chinese coastline could be below sea level by 2120. This would affect around one in ten coastal residents. There is also a risk of damage to buildings and foundations, infrastructure and sewage systems.

    “Our results underscore the necessity of enhancing protective measures to mitigate potential damages from subsidence,” the study states. It calls for more sustainable water management, which is already being successfully practiced in the Japanese cities of Tokyo and Osaka. This could also stabilize the subsidence rate in China. Land subsidence due to human activity is already occurring in many parts of the world. ck

    • Climate & Environment

    Severe flooding in southern China

    Severe flooding in Hong Kong’s Chaiwan district

    At least six people have been injured and others buried in landslides following heavy rainfall in the southern Chinese province of Guangdong. Citing local authorities, China’s state broadcaster CCTV reported that three locations in the Bei River basin had experienced “once-in-a-century flooding” due to heavy rainfall, AFP news agency reported.

    Torrential rainfall has caused rivers in the Pearl River Delta to rise in large parts of Guangdong since Thursday, leading to flooding in the mountainous regions. Footage released by CCTV showed houses being destroyed by a wall of brown mud. Initially, there were no reports of fatalities or how many people were buried by the landslides. The storms and flooding have also affected the megacities of Hong Kong, Shenzhen and Guangzhou.

    The Pearl River Delta is one of the most densely populated regions in the world. China’s national weather service had issued severe weather warnings for parts of Guangdong and warned of violent storms in the coastal regions. According to CCTV, floods up to 5.8 meters above the warning level could hit the region on Monday morning. flee

    • Climate & Environment
    • Flooding
    • Guangdong
    • Hongkong

    Heads

    Alice Gruenfelder – a literary look at Tibet, Taiwan and Xinjiang

    Alice Gruenfelder has written about her travels to Xinjiang and Tibet.

    Alice Gruenfelder’s day begins every morning at seven. She is woken somewhat rudely from her sleep at this hour by the bells of the neighboring church, which ring every quarter of an hour from seven in the morning. “My day is structured by them, and once I’m somewhere else, I listen in vain for this timepiece that annoys me so much in everyday life.” It is fitting for her adopted home of Zurich that her day is precisely timed. At least that’s the cliché.

    But there was something about the clichés. You could say that Gruenfelder is not on good terms with them – in fact, she spends a considerable part of her life debunking them, especially those that Europeans use to classify China and Asia.

    Alice Gruenfelder lived in Asia for several years. After studying sinology in Berlin, she traveled extensively in China as a study tour guide, particularly in Tibet and Xinjiang. She has now traveled to China so often that she can only shrug her shoulders when asked how many times she has been there. “I haven’t kept count.”

    A novel about 140,000 Chinese war workers

    Gruenfelder’s fascination with China was combined with her literary inclination at an early age. She studied Sinology and Modern German Literature and even learned the craft of bookselling before completing her studies. Today, she is an editor, literary mediator, author and translator. She writes about China and other Asian countries whose people have profoundly touched her on her many travels. With her publications, she tries to convey the mood of the respective country to readers. “I want to express what people really care about, what they think and feel.”

    She has just finished her latest novel and is now looking for a publisher. It is about the 140,000 Chinese war workers the French and British recruited during the First World War. Alice Gruenfelder prefers to deal with topics that are rarely discussed elsewhere. Her first novel “Wuestengangerin” (“Desert Walker”), published by Edition 8 in 2018, was set against the backdrop of the unrest in Xinjiang and the oppression of the Uyghurs – at a time when hardly anyone in the West was talking about it.

    Numerous new projects in mind

    She currently has two volumes by Taiwanese poet Tsai Wan-Shuen on her desk, which still need proofreading. Making her work known in German-speaking countries is close to her heart. Gruenfeld still has a few projects of this kind in mind.

    Her biggest wish is to stay longer in Keelong on Taiwan’s north coast. “I would like to explore the various cultural and historical layers that fascinated me so much during my last stay.” She will surely bring back many insights from this trip, which will find their way into the German literary landscape in one way or another. Svenja Napp

    • China
    • Literatur

    Executive Moves

    Howard Tan has been Business Development Manager at Wuerth in Shanghai since February. He was previously Market Developer, also for Wuerth.

    Benjamin Sim will become Head of the Greater China & Singapore region at Julius Baer as of June 1. Sim joined the Swiss wealth manager in 2016 and has held positions including Deputy Branch Head and Chief Operating Officer (COO) in Singapore and COO in Hong Kong. Prior to Julius Baer, Sim worked at Credit Suisse and HSBC.

    Is something changing in your organization? Let us know at heads@table.media!

    So to Speak

    Harvesting chives

    割韭菜 – gē jiǔcài – harvesting chives

    What do the coaching scene, multi-level marketing and the exploitation of interns have in common? In all these fields, Chinese chives are harvested by the bunch! You heard right, at least your Chinese ear did.

    Harvesting chives, or more precisely “cutting garlic chives,” in Chinese 割韭菜 gē jiǔcài (from 割 gē “to cut, sever” and 韭菜 jiǔcài “(Chinese) garlic chives, cut garlic”), is how the Chinese describe someone who has a bad judgment or makes bad decisions about their purchases.

    It used to be a metaphor in stock market jargon. It described how experienced players fleeced naïve newcomers on the slippery financial floor by selling dodgy funds and financial products. Sometimes they simply waited until the nervous newbies panicked and dumped their shares at the wrong moment to then buy them up for chump change – jiucai harvest time for the stock market wolves. Raking in such profits probably seemed as easy to them as harvesting tufts of chives. Chives shoots are also known to sprout quickly – just as new investors are always growing on the stock market bed, whose hay can then be harvested again.

    Coaching and ruthless entrepreneurs

    In the meantime, Chinese word acrobats have transferred the snappy linguistic blossom to every conceivable fleecing scenario involving ordinary people as cash cows. For example, China’s flourishing coaching industry, where self-proclaimed gurus are constantly trying to squeeze the digital renminbi out of the thirsty middle class by offering new courses and promises of success. Instead of the hoped-for career and bank booster for participants, the miracle coaches end up swinging themselves up the income ladder. Another infamous type of chive cutter in China is ruthless companies that fob off young career starters with lousy starting salaries and lots of overtime, only to fire them after a few years and replace them with a new generation of graduates.

    If you are a gwailo visiting China for the first time, you could fall into a real “Jiucai” trap. In the West, garlic chives (allium tuberosum), also known as Asian chives, are still a niche plant and not very common. This type of leek, with its flat, thick-tubed stems, is mainly used in East Asian cuisine. The spicy plant is said to have originated in China, where it is believed to have been cultivated around 3,000 years ago.

    Tastes more like garlic than chives

    However, this millennia-old ingredient is uncharted territory for many newcomers to China. It is not uncommon for them to confuse the strong green stalks with our standard chives (which are called xiāngcōng in Chinese) at first close contact and euphorically pile up scrambled garlic eggs, garlic jiaozi and fried garlic tofu on their plates in the canteen. The rude awakening comes in the afternoon meeting, when instead of optimism and the latest figures, the only thing you are spreading in the room is garlic breath. Because Chinese chives actually taste more like garlic than chives.

    Garlic or not, TCM celebrates the plant for its healing effects, including cancer prevention, regardless of its taste. Similar to garlic or wild garlic, the plant contains the active ingredient allicin, which strengthens the human immune system against viruses and bacteria and is also said to lower cholesterol, balance blood lipids and reduce inflammation. “Jiucai” also has a digestive and appetite-stimulating effect and is even praised on the Chinese internet as a secret weapon against aging and a superfood for a brighter complexion.

    China knows no vampires

    By the way, even in China, opinions differ on “Jiucai.” Some avoid jiucai dishes like the devil avoids holy water. Hardcore foodies, on the other hand, swear by the spicy stalks and eat them as a pie filling (韭菜馅饼 jiǔcài-xiànbǐng), spice up glass noodle dishes (韭菜炒粉丝 jiǔcài chǎofěnsī) and omelets (韭菜鸡蛋饼 jiǔcài-jīdànbǐng). Real jiucai junkies even order the cabbage in its pure form, for example, roasted (烤韭菜 kǎo jiǔcài) or fried (炒韭菜 chǎo jiǔcài).

    If you like a strong taste (重口味 zhòngkǒuwèi “strong taste,” in a figurative sense also “unusual” or “tougher taste”), you will get your money’s worth with Chinese cuisine anyway. This is especially true for garlic fans. The fact that vampires are unknown to the Chinese culture might also have something to do with the fact that the Middle Kingdom makes the most of the garlic plant (大蒜 dàsuàn) in culinary terms. In some parts of China, whole cloves of pickled garlic are eaten as an appetizer or snack, for example, in 糖醋蒜 tángcùsuàn (“sweet and sour pickled garlic”). In addition to the bulb as a seasoning all-rounder, garlic shoots in various stages of growth are also a popular dish, such as young shoots, called 蒜苗 suànmiáo (the green part of garlic), or the fully grown garlic stalks, called 蒜苔 suàntái.

    If you’ve had a somewhat unpleasant experience with garlic or chopped garlic, your alarm bells should be ringing when you visit a restaurant and the waiter politely asks you: 有没有忌口? Yǒu méiyǒu jìkǒu? – “Are you allergic to something?” This is the right time to make any special requests, such as “no garlic” or “not spicy, please.” The last exit, so to speak, before embarking on a rollercoaster ride of flavors. Come to think of it, culinary experimentation often pays off in China and activates completely new areas in the mouth and stomach.

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

    China.Table editorial team

    CHINA.TABLE EDITORIAL OFFICE

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