Mr. Lange, is the geopolitical situation giving trade policy new momentum?
Absolutely. In the European Parliament, too, I have noticed that colleagues who have recently been part of the trade-critical mainstream have given greater importance to the issue of stable, resilient relations with countries.
In light of the developments in recent weeks, a bilateral investment and perhaps trade agreement with Taiwan is becoming increasingly attractive. The EU Parliament has been calling for this for some time now, but nothing happens. Where are the problems?
The political assessment of the EU Commission is that, firstly, this is not economically necessary and, secondly, it would cause additional problems about the “one China policy”. I don’t see it that way at all. We have always approached things that we have discussed and done with the People’s Republic of China in parallel with Taiwan. It’s more a question of the overall policy assessment of the EU Commission as a whole and not necessarily just the will of the EU Directorate General for Trade. When we discuss these things with the Trade Directorate, the reservations of the European External Action Service (EEAS) are always in the room as well.
There is an internal conflict between the EU Trade Directorate and EEAS about Taiwan. Is that the reason?
I wouldn’t necessarily say it’s a conflict. But there are different assessments.
Do you see any risk that Beijing might respond to an agreement with Taiwan in a similarly confrontational fashion as it did to Pelosi’s visit?
This must be seen in the context of the CAI investment agreement. If we were to conclude an agreement with Taiwan similar to the one we negotiated with the People’s Republic, then there is no rational reason for such a reaction. If an agreement with Taiwan were to go beyond the CAI, then that would certainly lead to escalation.
The European Parliament’s Trade Committee, which I chair, plans a delegation visit to Taiwan in December. It is not yet clear who will take part and what exactly the agenda will be. But it will deal with the issue of an investment agreement and the stabilization of supply chains.
Since Ms. Pelosi’s visit, Beijing has been more aggressive about visits to Taiwan and has also sanctioned, for example, Lithuania’s Vice Minister of Transport over it. Are there no concerns about that within the committee?
No. Sometimes you hear that different assessments of such visits are made within the Chinese government. We will have to wait and see. EU parliamentarians have already been to Taiwan without being sanctioned. It will depend very much on how the visit is positioned.
Does it make sense to have an investment agreement with Taiwan in mind when the executive EU Commission has not really jumped on the idea yet?
We will have to see how this develops. I believe that Parliament also has a bit of influence vis-à-vis the Commission.
Since you mentioned the CAI, have there been any new developments? Is something moving?
No, we have two agreements deep in the freezer of the refrigerator. These are CAI and Mercosur. As long as the political conditions remain as they are, both agreements will stay there. With Mercosur, we have to wait for the election in Brazil. As far as CAI is concerned, there was no significant progress at the July trade dialogue regarding the political issues on sanctions against EU MPs. That is why nothing is moving there.
You visited Washington a few weeks ago. Were there also talks there about possible cooperation between the EU, the USA and Taiwan in the semiconductor sector?
No, we have not talked about that. But the anti-China policy was very much in the foreground. The big competitor, the threat to Washington, is China. That is a line that has run through the talks. And you see it in US national policy as well. The climate and social package that has now been passed also includes subsidies for electric cars. It clearly states that products that are currently mainly manufactured in China will not be included in the subsidy program. Only batteries and raw materials produced in the USA will be included. That is anti-China policy. But it also means that European cars will not be subsidized either. The interests of the United States are very much focused on its own country.
How do you respond to your US interlocutors in such cases? So far, the EU has always emphasized its middle ground in the trade dispute between the U.S. and China. Can this position be maintained, even in light of the Ukraine war?
We are not in between, we are clearly aligned with the USA in terms of values. But we have different interests. That has to be said again and again. The position of holding China down by all economic means and thus economically securing the supremacy of the United States is certainly not in our interest. Isolating China politically or economically cannot succeed. Wherever we can cooperate and have influence, we should use it. The era of a bipolar world is over, and a return to such a world order is not realistic. That is why we are also having these discussions with our American friends.
Could this stance toward China still be maintained if aggression against Taiwan actually happens?
No, absolutely not. This was also clearly stated at the economic dialogue in July. If there are aggressive actions against Taiwan, then the reaction will be sanctions and tough policies. A study by the Ifo Institute recently suggested that such a scenario would mean considerable losses of prosperity in Europe. But there’s no getting around it at all, then there are no more possibilities for cooperation.
With this in mind, should there be an even stronger focus on trade with like-minded countries and thus more ambitious trade cooperation with the US?
It is currently impossible to obtain a congressional mandate for a trade agreement with the EU in the United States. So at the moment, there is this rather low-threshold cooperation and exchange, which I think basically makes sense. As far as China is concerned and the uncertainty that comes with that, of course, that gives an opportunity for other countries in the Asian region. We have a trade agreement with Vietnam, which is a very dynamic country. I’m very pleased to observe that companies are making investments in Vietnam. Or also in Indonesia.
Shouldn’t we try to sign an agreement with the entire ASEAN region?
Yes, of course. But Cambodia and Myanmar are also part of ASEAN. And whether the son of the dictator in the Philippines is better than his father, I am not sure. There are problems in the region as well. We are negotiating very constructively with Indonesia and Malaysia at the moment. Theoretically, an agreement with ASEAN as a whole would be the best situation. But that is not politically realistic.
The EU Commission’s proposal for an import ban on products made using forced labor is set for September. What do you expect?
There will be a ban on the marketing of products from forced labor. Thus, it is also possible that forced labor will be discriminated against within the European Union and these products will not be allowed to enter the market. On evidence issues, there should be close cooperation with the International Labor Organization (ILO). Then, of course, this still has to be enforced in ILO member states.
Solar panels from China are currently piling up at US customs because of the Uyghur Forced Labor Prevention Act (UFLPA). Can this be better avoided with the planned marketing ban?
With UFLPA, the authorities have reversed the burden of proof. It is generally assumed that everything was made with forced labor and companies have to prove the contrary. That is not realistic here. Under the UFLPA, however, there is also a dialogue phase, which I find interesting. After all, the point is to improve the situation locally, and that is more likely to happen this way.
So how exactly will the marketing ban work?
Where there is a suspicion of forced labor, a close look must be taken. The ILO certainly also plays a decisive role here, by examining this accordingly. Then, of course, with a certain run-up, it can be said: “The tomatoes from country X of the EU can no longer be marketed” or “The Christmas tree baubles from Xinjiang can no longer be marketed” and then importers must react accordingly. Waiting until the goods arrive at the port and then denying them entry is of little help. The consequence is that these products are sold elsewhere.
But that could happen with a marketing ban. The goods are marketed and sold in other markets. Just not here.
The question is how strong the market volume will still be then and how important it will be for importers to become active. That has to be seen.
What else is on your agenda after the summer break?
The crackdown on forced labor is certainly important legislation. Then there is the supply chain act on the table. Active consultations are now beginning on this. However, responsibility within the EU Commission has not yet been fully clarified. There is a proposal that the justice committee has the lead, but that has not yet been confirmed. In addition, there is the “Anti-Coercion Instrument”. Here, the scope and definition need to be clearer. We would like to pass this in the EU Parliament in October and then hopefully still have the trialogue under the Czech Council Presidency. Lithuania in particular is exerting internal pressure here.
Bernd Lange has been a member of the EU Parliament since 1994, with one interruption (2005-2009). The Oldenburg native has chaired the trade committee since July 2014. Lange is also a member of the delegation for relations with the countries of Southeast Asia and ASEAN.
Lange also spoke with our colleagues at Europe.Table about the EU’s trade policy towards the US, potential trade agreements with India and Australia, and the visit of German Chancellor Olaf Scholz and Economics Minister Robert Habeck to Canada. You can find the interview here.
It is an important step for autonomous driving. The southern Chinese metropolis of Shenzhen is the first city ever to legalize autonomous driving in its metropolitan area and has developed innovative regulations to this end. Since August 1, they have regulated the commercial use of so-called intelligent cars. Since then, approved autonomous cars have been allowed to operate in large parts of the city without a driver at the wheel – in a metropolis of 20 million people that is one of the most densely populated regions in the world.
Chinese autonomous driving pioneers such as AutoX (China.Table reported) have been able to offer their robot cab services in Shenzhen since 2020. Until now, however, they have been limited to the Pingshan district, where they were allowed to operate within an area of 168 square kilometers. Now, the entire metropolitan area, which is two and a half times larger than Berlin, has been approved.
These cars can be hailed via an app. They drive in Pingshan without a backup driver. AutoX has manufactured the cars in its own production facility since as early as July 2021. AutoX’s system is at Level 4 of automated driving. Since May, the company has operated its Unmanned Operation Center in Pingshan, which coordinates the fleet without human assistance. AutoX is also operating such pilot projects in other Chinese cities, with a total of more than 1,000 vehicles on the road. This makes it the largest robotaxi company in the world. It was only founded in 2016.
For the time being, the citywide regulation in Shenzhen is even more cautious than the liberal practice in the Pingshan district. A so-called safety operator, i.e. a person present in the car, is still required citywide. At the same time, regulations in Shenzhen create the framework for liability in case of an accident for the first time. If a driver sits in the autonomous vehicle, he or she will be held liable for damages in the event of an accident, according to the new regulations. For a fully autonomous vehicle, the owner or operator of the vehicle is liable for damages.
This is an important decision and a relief for the car manufacturers. For a long time, there were discussions as to whether the manufacturers and the software developers should be held liable. This means that their expansion drive will not be hindered by liability risks.
The technology metropolis in southern China is pursuing the development of autonomous driving as a systematic strategy (China.Table reported). Part of its business model is to rapidly bring future technology into practical use. By 2025, Shenzhen’s city government plans for its smart vehicle industry to reach revenues of ¥200 billion – around €29 billion.
Market leader AutoX is not the only company active in Shenzhen. Startup Deeproute.ai, which is also co-funded by Alibaba as well as Chinese car manufacturer and Volvo owner Geely, began public test operations of a fleet of 70 autonomous taxis in the city’s Futian district last July.
Baidu, which launched its Apollo Go robot cab ride service (China.Table reported) in Shenzhen’s Nanshan district in February, plans to expand its service to 65 cities by 2025 and 100 cities by 2030. Before the end of the year, Baidu plans to double its current autonomous fleet to 600 vehicles – second only to AutoX.
This makes Shenzhen the global stronghold of autonomous driving, and the regulations developed in Shenzhen are crucial for nationwide legislation. This is because Beijing is currently drafting new guidelines in parallel. A draft guideline and a series of new regulations will create the legal infrastructure to make autonomous vehicles suitable for everyday use.
China’s Ministry of Transport now states the regulations will allow the country “to adapt to the development of autonomous driving technologies and encourage the regulated application of self-driving vehicles for transport services, while ensuring safety.” Authorities are still accepting comments and suggestions for improvements to the drafts until September 7.
As it also looks like operators nationwide will be held liable in the event of accidents, the shares of automotive suppliers, especially manufacturers of driver assistance systems, rose sharply in response to the news. Even lesser-known companies such as Shenzhen-listed Zhengzhou Tiamaes saw their share price rise by 20 percent.
Among the beneficiaries is smartphone and home appliance manufacturer Xiaomi, which has recently unveiled new software for autonomous driving. At a presentation in Beijing, the company demonstrated a test car that can perform various driving maneuvers fully automatically, including turns on the road, swerving, turning left at intersections, turning at roundabouts, and driving steadily downhill.
In March 2021, Xiaomi CEO Lei Jun announced plans to pour around $10 billion into the company’s new car division over the next ten years. The Xiaomi team for autopilot development has already grown to more than 500 employees.
The draft national guidelines include the operation of autonomous buses on designated, closed-off routes, while autonomous taxis are allowed to drive on roads with light and controlled traffic. The draft national guidelines include allowing autonomous buses to operate on selected, closed routes, while self-driving cabs will be allowed to operate on roads with light and controlled traffic. Driverless transport of goods will be permitted in certain areas. Vehicles classified as partially or highly autonomous will still be required to have a human driver on board, while fully autonomous vehicles will require a control center or safety officer. Autonomous cars are still prohibited from carrying hazardous materials such as explosives.
Operators of autonomous public transportation services must also obtain third-party liability insurance with coverage of more than ¥5 million ($740,000), as well as insurance for work safety and motor vehicle insurance. In the event of accidents or system failures, the autonomous vehicle must be able to record and store data. Operators must share this data with local authorities. In particular, the data recorded 90 seconds before and 30 seconds after an accident is subject to the recording and handover obligation.
The USA is not yet as advanced as Shenzhen and China. In Arizona, seven trucks are currently driving without human drivers on the Tucson-Phoenix Arizona route. In California, General Motor’s (GM.N) robot cab unit Cruise LLC was granted permission in June to offer driverless cab rides in designated areas.
GM is currently requesting authorities to approve vehicles without a steering wheel and pedals for everyday use. However, the authorities remain skeptical. Overall, level 4 autonomous driving is still limited to low-population test areas in some states. A nationwide regulation is not yet in the works.
By contrast, the development of autonomous driving is a top priority for China’s powerful National Development and Reform Commission (NDRC). In its latest Five-Year Plan, Beijing has made autonomous driving a key area of focus. According to a report by London-based data service IHS Markit, China’s ride-hailing market could grow by 20 to 28 percent annually to ¥2.25 trillion (about €330 billion) by 2030, of which 60 percent will come from robotaxis.
Recent developments in the Taiwan Strait have once again demonstrated that the world no longer functions the same way it did before the Covid pandemic, before Russia’s war of aggression in Ukraine, or before this Taiwan crisis. The People’s Republic of China has responded to the visit of US House of Representatives Speaker Nancy Pelosi, the trip of another US congressional delegation, and the announcement of the opening of formal negotiations on a US-Taiwan trade and investment agreement not only with sharp verbal criticism, but also with massive military drills and the publication of a white paper on Taiwan.
Three aspects are important here. First, unlike the increasingly authoritarian regime on the Mainland, Taiwan has developed a flourishing democracy that thrives on the political participation of its young population. At the same time, despite the government’s efforts toward diversification, no other place in the world is as economically linked to the People’s Republic of China as today’s Taiwan. However, the economic interdependence between the two sides of the Taiwan Strait does not provide more stability; on the contrary, it enhances insecurity and promotes a scenario in which the PRC does not necessarily have to conquer Taiwan at all: A blockade or permanent disruption of the sea lanes through military maneuvers is enough to put Taiwan’s de facto sovereignty at serious risk.
Second, the Chinese leadership’s reaction to Pelosi’s visit has left no doubt about its claim to supremacy in the region and vis-à-vis the United States. The Chinese leadership under Xi Jinping is primarily concerned with using all means at its disposal to achieve greater compatibility between the regional and global order, which Beijing is actively helping to transform, and the goals of the Chinese Communist Party. Incidents like the current one in Taiwan are consequently used to establish and consolidate Chinese positions, for example, the “one China principle” (i.e. the principle that there is only one China, solely represented by the People’s Republic of China, and that Taiwan is an inseparable part of this one China) as an international norm.
Third, the Taiwan crisis unfolds against a backdrop of almost entirely shattered Sino-American relations and further exacerbates differences. There are hardly any open bilateral channels of communication left – the few that existed in the first place have been terminated or suspended indefinitely by the Chinese leadership in response to Pelosi’s visit. Given the breakdown of established dialogue formats, it has become increasingly difficult to imagine how the growing divide between the two sides can ever be bridged.
Thus, the Taiwan crisis is another example of how today’s world seems to be somehow out of joint. What used to be true no longer applies. Backward-looking comparisons such as discussions about a new Cold War or the idea that we are in a competition between autocracies vs. democracies appear partially apt, at best. They fall short because we are experiencing a historical turning point; a turning point in time that cannot be pinned down to just one political event, but is based on an interplay of interlocking crises, changes and shocks.
This marks the beginning of a new, different era, in which the political, economic and planetary contours are still uncertain and which, for this very reason, harbors enormous risks. As a result, governments must work together, even if they have fundamentally different views, for example, on values. This is demanding, full of uncertainties, and sometimes a high price has to be paid. And yet, it can only be done together, lest the increasing diplomatic radio silence between the US and China prove to be the calm before the storm. A bilateral face-to-face meeting between the two heads of state on the fringes of the G20 or the APEC summit in November of this year would certainly be a welcome first step, even if it is unlikely to lead to a breakthrough.
Dr. Nadine Godehardt is a researcher in the Asia Research Group at the German Institute for International and Security Affairs (SWP) in Berlin. She focuses on China’s political system, but also cooperation and alliances in the region.
Dr. Gudrun Wacker is a senior fellow at the Asia Research Group of the German Institute for International and Security Affairs (SWP). Her research focuses on China and the Indo-Pacific region. She is an expert on Taiwan-China relations.
Mr. Lange, is the geopolitical situation giving trade policy new momentum?
Absolutely. In the European Parliament, too, I have noticed that colleagues who have recently been part of the trade-critical mainstream have given greater importance to the issue of stable, resilient relations with countries.
In light of the developments in recent weeks, a bilateral investment and perhaps trade agreement with Taiwan is becoming increasingly attractive. The EU Parliament has been calling for this for some time now, but nothing happens. Where are the problems?
The political assessment of the EU Commission is that, firstly, this is not economically necessary and, secondly, it would cause additional problems about the “one China policy”. I don’t see it that way at all. We have always approached things that we have discussed and done with the People’s Republic of China in parallel with Taiwan. It’s more a question of the overall policy assessment of the EU Commission as a whole and not necessarily just the will of the EU Directorate General for Trade. When we discuss these things with the Trade Directorate, the reservations of the European External Action Service (EEAS) are always in the room as well.
There is an internal conflict between the EU Trade Directorate and EEAS about Taiwan. Is that the reason?
I wouldn’t necessarily say it’s a conflict. But there are different assessments.
Do you see any risk that Beijing might respond to an agreement with Taiwan in a similarly confrontational fashion as it did to Pelosi’s visit?
This must be seen in the context of the CAI investment agreement. If we were to conclude an agreement with Taiwan similar to the one we negotiated with the People’s Republic, then there is no rational reason for such a reaction. If an agreement with Taiwan were to go beyond the CAI, then that would certainly lead to escalation.
The European Parliament’s Trade Committee, which I chair, plans a delegation visit to Taiwan in December. It is not yet clear who will take part and what exactly the agenda will be. But it will deal with the issue of an investment agreement and the stabilization of supply chains.
Since Ms. Pelosi’s visit, Beijing has been more aggressive about visits to Taiwan and has also sanctioned, for example, Lithuania’s Vice Minister of Transport over it. Are there no concerns about that within the committee?
No. Sometimes you hear that different assessments of such visits are made within the Chinese government. We will have to wait and see. EU parliamentarians have already been to Taiwan without being sanctioned. It will depend very much on how the visit is positioned.
Does it make sense to have an investment agreement with Taiwan in mind when the executive EU Commission has not really jumped on the idea yet?
We will have to see how this develops. I believe that Parliament also has a bit of influence vis-à-vis the Commission.
Since you mentioned the CAI, have there been any new developments? Is something moving?
No, we have two agreements deep in the freezer of the refrigerator. These are CAI and Mercosur. As long as the political conditions remain as they are, both agreements will stay there. With Mercosur, we have to wait for the election in Brazil. As far as CAI is concerned, there was no significant progress at the July trade dialogue regarding the political issues on sanctions against EU MPs. That is why nothing is moving there.
You visited Washington a few weeks ago. Were there also talks there about possible cooperation between the EU, the USA and Taiwan in the semiconductor sector?
No, we have not talked about that. But the anti-China policy was very much in the foreground. The big competitor, the threat to Washington, is China. That is a line that has run through the talks. And you see it in US national policy as well. The climate and social package that has now been passed also includes subsidies for electric cars. It clearly states that products that are currently mainly manufactured in China will not be included in the subsidy program. Only batteries and raw materials produced in the USA will be included. That is anti-China policy. But it also means that European cars will not be subsidized either. The interests of the United States are very much focused on its own country.
How do you respond to your US interlocutors in such cases? So far, the EU has always emphasized its middle ground in the trade dispute between the U.S. and China. Can this position be maintained, even in light of the Ukraine war?
We are not in between, we are clearly aligned with the USA in terms of values. But we have different interests. That has to be said again and again. The position of holding China down by all economic means and thus economically securing the supremacy of the United States is certainly not in our interest. Isolating China politically or economically cannot succeed. Wherever we can cooperate and have influence, we should use it. The era of a bipolar world is over, and a return to such a world order is not realistic. That is why we are also having these discussions with our American friends.
Could this stance toward China still be maintained if aggression against Taiwan actually happens?
No, absolutely not. This was also clearly stated at the economic dialogue in July. If there are aggressive actions against Taiwan, then the reaction will be sanctions and tough policies. A study by the Ifo Institute recently suggested that such a scenario would mean considerable losses of prosperity in Europe. But there’s no getting around it at all, then there are no more possibilities for cooperation.
With this in mind, should there be an even stronger focus on trade with like-minded countries and thus more ambitious trade cooperation with the US?
It is currently impossible to obtain a congressional mandate for a trade agreement with the EU in the United States. So at the moment, there is this rather low-threshold cooperation and exchange, which I think basically makes sense. As far as China is concerned and the uncertainty that comes with that, of course, that gives an opportunity for other countries in the Asian region. We have a trade agreement with Vietnam, which is a very dynamic country. I’m very pleased to observe that companies are making investments in Vietnam. Or also in Indonesia.
Shouldn’t we try to sign an agreement with the entire ASEAN region?
Yes, of course. But Cambodia and Myanmar are also part of ASEAN. And whether the son of the dictator in the Philippines is better than his father, I am not sure. There are problems in the region as well. We are negotiating very constructively with Indonesia and Malaysia at the moment. Theoretically, an agreement with ASEAN as a whole would be the best situation. But that is not politically realistic.
The EU Commission’s proposal for an import ban on products made using forced labor is set for September. What do you expect?
There will be a ban on the marketing of products from forced labor. Thus, it is also possible that forced labor will be discriminated against within the European Union and these products will not be allowed to enter the market. On evidence issues, there should be close cooperation with the International Labor Organization (ILO). Then, of course, this still has to be enforced in ILO member states.
Solar panels from China are currently piling up at US customs because of the Uyghur Forced Labor Prevention Act (UFLPA). Can this be better avoided with the planned marketing ban?
With UFLPA, the authorities have reversed the burden of proof. It is generally assumed that everything was made with forced labor and companies have to prove the contrary. That is not realistic here. Under the UFLPA, however, there is also a dialogue phase, which I find interesting. After all, the point is to improve the situation locally, and that is more likely to happen this way.
So how exactly will the marketing ban work?
Where there is a suspicion of forced labor, a close look must be taken. The ILO certainly also plays a decisive role here, by examining this accordingly. Then, of course, with a certain run-up, it can be said: “The tomatoes from country X of the EU can no longer be marketed” or “The Christmas tree baubles from Xinjiang can no longer be marketed” and then importers must react accordingly. Waiting until the goods arrive at the port and then denying them entry is of little help. The consequence is that these products are sold elsewhere.
But that could happen with a marketing ban. The goods are marketed and sold in other markets. Just not here.
The question is how strong the market volume will still be then and how important it will be for importers to become active. That has to be seen.
What else is on your agenda after the summer break?
The crackdown on forced labor is certainly important legislation. Then there is the supply chain act on the table. Active consultations are now beginning on this. However, responsibility within the EU Commission has not yet been fully clarified. There is a proposal that the justice committee has the lead, but that has not yet been confirmed. In addition, there is the “Anti-Coercion Instrument”. Here, the scope and definition need to be clearer. We would like to pass this in the EU Parliament in October and then hopefully still have the trialogue under the Czech Council Presidency. Lithuania in particular is exerting internal pressure here.
Bernd Lange has been a member of the EU Parliament since 1994, with one interruption (2005-2009). The Oldenburg native has chaired the trade committee since July 2014. Lange is also a member of the delegation for relations with the countries of Southeast Asia and ASEAN.
Lange also spoke with our colleagues at Europe.Table about the EU’s trade policy towards the US, potential trade agreements with India and Australia, and the visit of German Chancellor Olaf Scholz and Economics Minister Robert Habeck to Canada. You can find the interview here.
It is an important step for autonomous driving. The southern Chinese metropolis of Shenzhen is the first city ever to legalize autonomous driving in its metropolitan area and has developed innovative regulations to this end. Since August 1, they have regulated the commercial use of so-called intelligent cars. Since then, approved autonomous cars have been allowed to operate in large parts of the city without a driver at the wheel – in a metropolis of 20 million people that is one of the most densely populated regions in the world.
Chinese autonomous driving pioneers such as AutoX (China.Table reported) have been able to offer their robot cab services in Shenzhen since 2020. Until now, however, they have been limited to the Pingshan district, where they were allowed to operate within an area of 168 square kilometers. Now, the entire metropolitan area, which is two and a half times larger than Berlin, has been approved.
These cars can be hailed via an app. They drive in Pingshan without a backup driver. AutoX has manufactured the cars in its own production facility since as early as July 2021. AutoX’s system is at Level 4 of automated driving. Since May, the company has operated its Unmanned Operation Center in Pingshan, which coordinates the fleet without human assistance. AutoX is also operating such pilot projects in other Chinese cities, with a total of more than 1,000 vehicles on the road. This makes it the largest robotaxi company in the world. It was only founded in 2016.
For the time being, the citywide regulation in Shenzhen is even more cautious than the liberal practice in the Pingshan district. A so-called safety operator, i.e. a person present in the car, is still required citywide. At the same time, regulations in Shenzhen create the framework for liability in case of an accident for the first time. If a driver sits in the autonomous vehicle, he or she will be held liable for damages in the event of an accident, according to the new regulations. For a fully autonomous vehicle, the owner or operator of the vehicle is liable for damages.
This is an important decision and a relief for the car manufacturers. For a long time, there were discussions as to whether the manufacturers and the software developers should be held liable. This means that their expansion drive will not be hindered by liability risks.
The technology metropolis in southern China is pursuing the development of autonomous driving as a systematic strategy (China.Table reported). Part of its business model is to rapidly bring future technology into practical use. By 2025, Shenzhen’s city government plans for its smart vehicle industry to reach revenues of ¥200 billion – around €29 billion.
Market leader AutoX is not the only company active in Shenzhen. Startup Deeproute.ai, which is also co-funded by Alibaba as well as Chinese car manufacturer and Volvo owner Geely, began public test operations of a fleet of 70 autonomous taxis in the city’s Futian district last July.
Baidu, which launched its Apollo Go robot cab ride service (China.Table reported) in Shenzhen’s Nanshan district in February, plans to expand its service to 65 cities by 2025 and 100 cities by 2030. Before the end of the year, Baidu plans to double its current autonomous fleet to 600 vehicles – second only to AutoX.
This makes Shenzhen the global stronghold of autonomous driving, and the regulations developed in Shenzhen are crucial for nationwide legislation. This is because Beijing is currently drafting new guidelines in parallel. A draft guideline and a series of new regulations will create the legal infrastructure to make autonomous vehicles suitable for everyday use.
China’s Ministry of Transport now states the regulations will allow the country “to adapt to the development of autonomous driving technologies and encourage the regulated application of self-driving vehicles for transport services, while ensuring safety.” Authorities are still accepting comments and suggestions for improvements to the drafts until September 7.
As it also looks like operators nationwide will be held liable in the event of accidents, the shares of automotive suppliers, especially manufacturers of driver assistance systems, rose sharply in response to the news. Even lesser-known companies such as Shenzhen-listed Zhengzhou Tiamaes saw their share price rise by 20 percent.
Among the beneficiaries is smartphone and home appliance manufacturer Xiaomi, which has recently unveiled new software for autonomous driving. At a presentation in Beijing, the company demonstrated a test car that can perform various driving maneuvers fully automatically, including turns on the road, swerving, turning left at intersections, turning at roundabouts, and driving steadily downhill.
In March 2021, Xiaomi CEO Lei Jun announced plans to pour around $10 billion into the company’s new car division over the next ten years. The Xiaomi team for autopilot development has already grown to more than 500 employees.
The draft national guidelines include the operation of autonomous buses on designated, closed-off routes, while autonomous taxis are allowed to drive on roads with light and controlled traffic. The draft national guidelines include allowing autonomous buses to operate on selected, closed routes, while self-driving cabs will be allowed to operate on roads with light and controlled traffic. Driverless transport of goods will be permitted in certain areas. Vehicles classified as partially or highly autonomous will still be required to have a human driver on board, while fully autonomous vehicles will require a control center or safety officer. Autonomous cars are still prohibited from carrying hazardous materials such as explosives.
Operators of autonomous public transportation services must also obtain third-party liability insurance with coverage of more than ¥5 million ($740,000), as well as insurance for work safety and motor vehicle insurance. In the event of accidents or system failures, the autonomous vehicle must be able to record and store data. Operators must share this data with local authorities. In particular, the data recorded 90 seconds before and 30 seconds after an accident is subject to the recording and handover obligation.
The USA is not yet as advanced as Shenzhen and China. In Arizona, seven trucks are currently driving without human drivers on the Tucson-Phoenix Arizona route. In California, General Motor’s (GM.N) robot cab unit Cruise LLC was granted permission in June to offer driverless cab rides in designated areas.
GM is currently requesting authorities to approve vehicles without a steering wheel and pedals for everyday use. However, the authorities remain skeptical. Overall, level 4 autonomous driving is still limited to low-population test areas in some states. A nationwide regulation is not yet in the works.
By contrast, the development of autonomous driving is a top priority for China’s powerful National Development and Reform Commission (NDRC). In its latest Five-Year Plan, Beijing has made autonomous driving a key area of focus. According to a report by London-based data service IHS Markit, China’s ride-hailing market could grow by 20 to 28 percent annually to ¥2.25 trillion (about €330 billion) by 2030, of which 60 percent will come from robotaxis.
Recent developments in the Taiwan Strait have once again demonstrated that the world no longer functions the same way it did before the Covid pandemic, before Russia’s war of aggression in Ukraine, or before this Taiwan crisis. The People’s Republic of China has responded to the visit of US House of Representatives Speaker Nancy Pelosi, the trip of another US congressional delegation, and the announcement of the opening of formal negotiations on a US-Taiwan trade and investment agreement not only with sharp verbal criticism, but also with massive military drills and the publication of a white paper on Taiwan.
Three aspects are important here. First, unlike the increasingly authoritarian regime on the Mainland, Taiwan has developed a flourishing democracy that thrives on the political participation of its young population. At the same time, despite the government’s efforts toward diversification, no other place in the world is as economically linked to the People’s Republic of China as today’s Taiwan. However, the economic interdependence between the two sides of the Taiwan Strait does not provide more stability; on the contrary, it enhances insecurity and promotes a scenario in which the PRC does not necessarily have to conquer Taiwan at all: A blockade or permanent disruption of the sea lanes through military maneuvers is enough to put Taiwan’s de facto sovereignty at serious risk.
Second, the Chinese leadership’s reaction to Pelosi’s visit has left no doubt about its claim to supremacy in the region and vis-à-vis the United States. The Chinese leadership under Xi Jinping is primarily concerned with using all means at its disposal to achieve greater compatibility between the regional and global order, which Beijing is actively helping to transform, and the goals of the Chinese Communist Party. Incidents like the current one in Taiwan are consequently used to establish and consolidate Chinese positions, for example, the “one China principle” (i.e. the principle that there is only one China, solely represented by the People’s Republic of China, and that Taiwan is an inseparable part of this one China) as an international norm.
Third, the Taiwan crisis unfolds against a backdrop of almost entirely shattered Sino-American relations and further exacerbates differences. There are hardly any open bilateral channels of communication left – the few that existed in the first place have been terminated or suspended indefinitely by the Chinese leadership in response to Pelosi’s visit. Given the breakdown of established dialogue formats, it has become increasingly difficult to imagine how the growing divide between the two sides can ever be bridged.
Thus, the Taiwan crisis is another example of how today’s world seems to be somehow out of joint. What used to be true no longer applies. Backward-looking comparisons such as discussions about a new Cold War or the idea that we are in a competition between autocracies vs. democracies appear partially apt, at best. They fall short because we are experiencing a historical turning point; a turning point in time that cannot be pinned down to just one political event, but is based on an interplay of interlocking crises, changes and shocks.
This marks the beginning of a new, different era, in which the political, economic and planetary contours are still uncertain and which, for this very reason, harbors enormous risks. As a result, governments must work together, even if they have fundamentally different views, for example, on values. This is demanding, full of uncertainties, and sometimes a high price has to be paid. And yet, it can only be done together, lest the increasing diplomatic radio silence between the US and China prove to be the calm before the storm. A bilateral face-to-face meeting between the two heads of state on the fringes of the G20 or the APEC summit in November of this year would certainly be a welcome first step, even if it is unlikely to lead to a breakthrough.
Dr. Nadine Godehardt is a researcher in the Asia Research Group at the German Institute for International and Security Affairs (SWP) in Berlin. She focuses on China’s political system, but also cooperation and alliances in the region.
Dr. Gudrun Wacker is a senior fellow at the Asia Research Group of the German Institute for International and Security Affairs (SWP). Her research focuses on China and the Indo-Pacific region. She is an expert on Taiwan-China relations.
