Interview on decoupling + Pelosi visit is met with criticism
Florian Dorn on the costs of decoupling from China
Did Pelosi put her own interests above stability?
Military exercises continue on Monday
Hong Kong reduces mandatory quarantine
Baidu receives green light for autonomous cabs
Sanofi invests in cancer research
Five killed in coal mine accident
Profile: Sonja Peterson – ’emissions trading is a huge step’
Dear reader,
Germany’s heavy dependencies on China are once again shifting into focus following the Russian invasion of Ukraine. In extreme cases, economic dependencies can do a lot of damage to a society, as the example of Russian gas currently demonstrates. But how costly would it be for Germany to become less dependent on China? The ifo Institute has calculated this question in several scenarios. Felix Lee spoke with the study’s co-author, Florian Dorn, about the high costs and which sectors would be particularly affected. The Ifo researcher advises German companies to further diversify their supply chains.
Nancy Pelosi’s visit to Taiwan and China’s reactions have generated considerable turmoil. Major Western countries were unanimous in their reaction, condemning China’s military drills around Taiwan. Other countries in the region have been reluctant to take a clear stand or have even criticized Pelosi’s visit, Frank Sieren reports. Australia’s foreign minister calls for de-escalation. South Korea’s new president did not even meet Pelosi. This restraint is hardly surprising. Who would want to mess with the economically and militarily superior “bully”, who currently also flexes his military muscles?
Your Nico Beckert
Interview
‘Less China, more USA’
Florian Dorn, Economist at the Ifo Institute
Mr. Dorn, according to your study, a trade war with China would cost the Germans almost six times as much as Brexit. The German economy lost around 0.14 percent in economic output in the wake of Brexit. Why do you consider a GDP loss of just under 0.9 percent in the event of a trade war with China to be dramatic?
Florian Dorn: That may not sound like much. But the percentages refer to a long-term level effect of economic output. The real growth losses in the transition phase in the event of a trade war with China would be far higher. Germany as an export nation would be forced to readjust its business model. Entire sectors would experience slumps.
Which sectors would be particularly affected?
In particular, sectors in the manufacturing industry that are heavily intertwined in international trade. The biggest losers would be the automotive industry. Here, there would be a loss of value added of about $8.3 billion, a drop of about 8.5 percent. Mechanical engineers, with a minus of more than $5 billion, and companies that manufacture transportation equipment would also be severely affected. They would lose out on cheap intermediate products from China, which they would then have to buy at a higher price from other countries. At the same time, they would lose China’s large sales market.
VW, BASF, and Siemens largely produce locally for the Chinese market. Would a trade war really destroy so many jobs in Germany?
These companies indeed produce in China. But they still obtain many preliminary products from factories and suppliers here in Germany. If these orders were to disappear, it would also cost many jobs here.
How likely do you think the scenario of a trade war is?
I don’t like to speculate about that. What is important – and this has been shown not least by the war in Ukraine: We are prepared for different scenarios. The current tensions between China and Taiwan, or China and the United States, show how great the conflict potential is. And Germany and Europe could quickly become involved. Therefore, companies should begin to diversify now in order to reduce unilateral and critical dependencies on certain markets and authoritarian regimes.
Isn’t the study proof that Germany’s dependence on China has long been excessive and that we should definitely not become involved in a trade war?
Of course, it would be preferable to avoid trade wars. De-globalization or trade wars always end up making people poorer. But we shouldn’t look to the future naively and say: That won’t happen, because it will hurt both sides. However, the decision to wage a trade war is not made by Germany alone; a trade war can also be started by China. Certainly, companies should not turn away from important trading partners unnecessarily. Nevertheless, in parallel, I would already place greater emphasis on free trade agreements with like-minded nations such as the USA. That should be the goal of German and European economic policy.
Wouldn’t a relocation of many companies back from China, i.e. a nationalization of supply chains, be a solution?
No, on the contrary: Relocating production back to Germany, the EU or even neighboring regions would mean even significantly higher costs for value creation in Germany. This is because production would become significantly more expensive as a result. We would ramp up production and employment in economic sectors that are unproductive compared with other sectors in this country. We would also drive up the prices of our products in world trade and lose competitiveness. The result would be less domestic and foreign demand for many of these goods. Relocation would cause German real economic output to drop by around 9.9 percent. So we would lose significantly in terms of value-added and wealth.
Then what would be the alternatives to China?
In one scenario, we simulated the decoupling of Western countries from China, combined with a trade agreement between the EU and the United States. Such a US-European trade agreement could not fully offset the adverse effects of the decoupling of the West from China. However, the expected trade benefits from the large US market would put the net cost at a similar level to the expected cost of Brexit. In this scenario, we would at least know what was coming.
Florian Dorn, 36, is an economist at the Ifo Institute, Director of EconPol Europe, and teaches finance and economic policy at Ludwig Maximillians University in Munich.
There is no doubt about it: Democratic Speaker of the US House of Representatives Nancy Pelosi promoted important Western values in Taiwan: “self-determination and self-government, democracy and freedom, human dignity and human rights,” as she writes in a piece for the Washington Post. But stylizing her trip as a mere fight for Western freedom doesn’t quite cover it. It was not just about morality, but also economic and geopolitical interests.
It was about securing supply chains. After all, the USA is also dependent on microchips from Taiwan. The country has a global market share of over 60 percent. The supply must remain secure.
It might also be possible that Pelosi attempted to leave her mark. Since the 82-year-old will step down after the congressional elections in October, this was probably her last chance to have an impact on the global political stage. That may also be why she traveled to Taiwan, even though her fellow party member, US President Joe Biden, was skeptical.
According to Biden, his military advisers called the visit “not a good idea”. Moreover, Biden is feeling pressure to balance domestic political aspirations and foreign political realities. This is becoming harder as other countries have the power to assert their interests more clearly than in the past.
US government clarifies Pelosi is not acting on its behalf
Her trip was nothing new, Pelosi said: 25 years ago, her predecessor Newt Gingrich also traveled to Taiwan. But he was a Republican and then-President Bill Clinton was a Democrat. Now Pelosi, a Democrat, is putting her fellow party member Biden on the spot. She shows off at his expense. Meanwhile, the White House clarified: The One-China policy is written in stone. Pelosi is not the government and does not act on its behalf. Only a few nations worldwide recognize Taiwan as an independent state.
But on the other hand, Taiwan has a government independent of Beijing. The country enjoys great economic success and receives military backing from the United States. Therefore, Beijing feels the status quo shaken by Pelosi’s visit, which dictates the existence of only one China. That is why China’s leadership reacted fiercely and, from an international perspective, in part out of proportion. Beijing launched unprecedented military exercises, penetrated Taiwan’s 12-nautical-mile zone, and fired missiles over the island. Beijing argues that Taiwan is not an independent country. Therefore, the zones established under international law would not apply.
Meanwhile, the G7 countries described Pelosi’s visit as “normal” and Beijing’s reaction as “aggressive”. They accuse Beijing of attempting to unilaterally change the status quo. Germany’s Foreign Minister Annalena Baerbock said, “We do not accept when international law is broken and a larger neighbor attacks its smaller neighbor in violation of international law – and that of course also applies to China.” At the end of her statement, a spokesman for the German government added: “Germany continues to recognize the one-China principle.”
Escalation can spark unintended momentum
Because nationalism is on the rise in the People’s Republic, the escalation may gain unintended momentum. “Don’t put on a show of power if you don’t have the power,” reads one of many comments on Weibo, China’s Twitter, “What a loss of face!” China’s leadership may be forced to redeem itself.
Accordingly, critical voices – mostly from Asia – accuse Pelosi of putting her personal interests before party interests and thus risking the stability of the global order. But criticism has also come from the West: Pulitzer Prize winner Jane Perlez, former Beijing bureau chief of the New York Times, calls it an “unnecessary provocation“.
The Economist’s verdict was: “A trip designed to convey strength risks instead showing up the Biden administration’s confusion and lack of purpose.” Former Australian Prime Minister and sinologist Kevin Rudd considered the trip “unwise” because it only increased tensions. Penny Wong, Australia’s Foreign Minister, one of America’s closest allies in the region, expressed concern, saying, “All parties should de-escalate tensions, and we should continue with others in the region to urge the maintenance of peace and stability in the region, and in particular, across the Taiwan Strait.”
South Korea’s head of government canceled meeting with Pelosi
“This is a very poor signaling diplomacy coming from Washington to its allies and partners in the region,” thinks South Korean scholar Seong-Hyon Lee of the Fairbank Center for Chinese Studies at Harvard. The foreign ministers of ASEAN countries, who held a summit in Cambodia at the same time, expressed concerns that her visit “could destabilize the region and eventually could lead to miscalculation, serious confrontation, open conflicts and unpredictable consequences among major powers.”
Meanwhile, the new South Korean President, Yoon Suk-Yeol, unlike Japanese Prime Minister Fumio Kishida, decided not to meet with Pelosi and instead spoke with her on the phone. Analysts believe Yoon had decided not to get further involved in the conflict between the US and China.
In the meantime, Japan’s Premier Kishida reportedly asked Pelosi to clarify: “We have said from the start that our representation here is not about changing the status quo in Taiwan or the region.” Earlier, China’s Foreign Minister Wang Yi declined the very first meeting with his new Japanese counterpart, Yoshimasa Hayashi.
ASEAN
Geopolitics
Nancy Pelosi
Taiwan
USA
News
Further exercises off Taiwan’s coast
The Chinese military continued its drills around Taiwan on Monday. The eastern People’s Liberation Army forces announced they would conduct further anti-submarine and maritime defense drills off the island. Originally, the military had announced a four-day drill up to and including Sunday in the waters around Taiwan.
The continuation is seen as a renewed threatening gesture by the People’s Republic toward its neighboring country, following last week’s visit to Taiwan by high-ranking US politician Nancy Pelosi. Taiwan’s Ministry of Defense confirmed on Monday the renewed presence of Chinese warships and fighter jets around the island. Up to and including Sunday afternoon, the ministry had registered 66 fighter jets and 14 warships of the People’s Liberation Army participating in last week’s exercises.
The Chinese military has announced further live-fire exercises off its own coast in Guangdong. From Tuesday to Thursday, part of the coastline will be closed. Fire drills have also been underway in the Bohai Sea in northeastern China for an entire month since Monday. A little further south in the Yellow Sea, similar maneuvers are planned until mid-August.
While Chinese analysts see the previous week’s maneuvers as laying the groundwork for regular similar exercises by the People’s Liberation Army, Taiwanese observers believe in a morale boost for the island nation’s population and growing resentment toward the People’s Republic. grz
Geopolitics
Military
People’s Liberation Army
Taiwan
Hong Kong eases entry requirements
Hong Kong will reduce the period of mandatory hotel quarantine after arrival from seven to three days. The new regulations, which are aimed at providing a middle ground between economic productivity and the fight against the spread of the Coronavirus, will take effect next Friday.
Under the new rules, all passengers will only have to spend three days in strict isolation in a hotel after arrival. In the event of a negative test, entrants will be allowed to return to their own homes or a hotel of their choice after 72 hours. For another four days thereafter, affected individuals will not be allowed to enter public facilities or offices, but will be allowed to move freely around the city. At the height of the pandemic, entrants had to spend up to 21 days in isolation.
The aim was to reduce the impact of the quarantine on economic activity in the city, said government Chief Executive John Lee, explaining the decision. Still, the British Chamber of Commerce criticized the remaining mandatory quarantine as a drag on the economy. “It is unlikely to benefit the broader business and tourist travel which will need a full lifting of quarantine controls,” Executive Director David Graham told Bloomberg. The government is being encouraged to drop the quarantine altogether for negative test results. “This will be critical for Hong Kong’s economic and business outlook,” he said. grz
Coronavirus
Health
Hongkong
Baidu receives first license for fully autonomous taxis
The Chinese technology group Baidu has become the first company in the People’s Republic to receive the green light to operate fully autonomous robot taxis on public roads. The licenses are effective immediately in the two Chinese metropolises of Chongqing and Wuhan, as the Google rival announced on Monday. There, robotaxis could now transport passengers without backup drivers.
The company called it a turning point in the use of self-driving cars. The operation of the robot taxis will initially be limited to certain hours during the day. Baidu will be launching five cars in each of the two cities and is already negotiating to expand the service to other cities, such as Beijing and Shanghai. In the meantime, the autonomous driving division of the Chinese group has completed more than one million rides in ten Chinese cities, according to the company’s information.
Baidu is competing with Pony.ai, a startup co-funded by Toyota. The latter is already authorized to offer a limited autonomous taxi service, but is still required to have a backup driver present in the car. Just a few days ago, Pony.ai launched the service in Beijing. Customers have been able to book robo-taxis in a 60-square-kilometer area in southern Beijing since early August. However, customers cannot yet get on or off at any location, only at 250 selected locations.
Car companies and technology firms around the world are investing billions in the development and operation of self-driving cars. Both China and the United States are further ahead than others when it comes to approvals. In San Francisco, robot cabs without drivers from the startup Cruis are already operating on selected roads. nib/rtr
Autoindustrie
Cancer drug: Sanofi acquires stake in biotech company
The French pharmaceutical company Sanofi has made a €300 million investment in the Chinese biotech company Innovent Biologics. The two companies plan to jointly develop two cancer drugs in China, as reported by the business portal Caixin. According to company sources, Innovent has signed a licensing agreement with Sanofi for the exclusive marketing of the drugs.
With the investment, Sanofi has acquired almost four percent of Innovent. In addition, an agreement was signed that gives Sanofi the option to invest an additional €300 million, thus doubling its stake. nib
Health
Pharma
Five dead after coal mine accident
Five miners were killed in an accident at a coal mine in Shanxi. On Friday, a roof collapsed and left the miners trapped. Rescue operations lasted until Monday. Then, during the day, the death of the five miners was reported. Shanxi is the largest coal province in China. It produces 1.2 billion tons of coal per year.
This year, mines throughout the province plan to expand production by 11 percent, Bloomberg reports. In the past, authorities had increased safety regulations at the mines. As a result, there have been fewer accidents. However, after the energy crisis in the second half of last year, Beijing instructed the mines to increase production again; it is unclear whether safety regulations are always followed.
In the first seven months of 2022, there were 86 accidents in coal mines with 129 casualties. According to authorities, the number of accidents decreased by 24 percent compared to the same period last year. nib
Coal
Energy
Raw materials
Heads
Sonja Peterson – climate economist at the Baltic Sea
Sonja Peterson is a Professor of Climate Economics at the IfW.
A business English course at university had a lasting impact on Sonja Peterson’s career. “In it, our professor taught environmental economics in English because he obviously discovered that topic for himself,” Peterson recalls. “I found that totally fascinating.” She was studying business mathematics in Hamburg at the time, and the connection between the environment and market economics – through the pricing of carbon, for example – had not been on her radar before taking the English course.
Peterson now works as a climate economist at the Kiel Institute for the World Economy, or IfW for short. The economic mathematician and economist has been working there since 2002 – and now even has a desk with a view of the Baltic Sea just a few meters away. “If I’m there,” she admits. Because right now, she is working from home.
She joined the IfW as a research associate and became head of “The Environment and Natural Resources” department. “I now wear two hats: I am both a researcher and a science manager.” And so, on the one hand, she takes care of research proposals and junior scientists. On the other hand, she has been dealing with issues around international and European climate policy for about 20 years. “There’s no avoiding China, of course,” she says. By now, the country can no longer fall back on the position of a developing country with low per capita emissions.
After all, emissions per capita are at a level comparable to that of Germany. But she also sees progress in Chinese climate policy: “Since the beginning of 2021, there has been a national emissions trading system, which I see as a huge step.” Admittedly, she says, this has so far not been ambitious enough when it comes to price, scope and reduction goals. “Nevertheless, it’s an important start to create the institutions to then build on.”
‘I try to keep my carbon footprint low’
She has not yet been to the Middle Kingdom herself, even though she has worked with Chinese colleagues time and again. Is she planning a trip when the Covid rules allow it again? “It would take a very good reason,” Peterson says. “I try to keep my personal carbon footprint low and avoid long-distance flights.” As a result, the Bielefeld native primarily looks at the global economy from Kiel, holds lectures and, as an honorary professor, also lectures at Kiel University.
And she is happy when she is allowed to let her inner mathematician shine: “Every once in a while, I can take the plunge with my model.” Her model is the institute’s DART model, which simulates the economic impact of introducing climate policy instruments. What would she like to see in climate policy right now? “That the upward trend of recent years continues and a price is put on more and more greenhouse gas emissions.” Paul Meerkamp
Climate
Emissions
Sustainability
Trade
Executive Moves
Chang Che has joined the New York Times, where he will be writing about technological change in China. Previously, the journalist worked for the independent media company SupChina.
Helen Yang will become Chairwoman of the China operations of French asset manager Natixis Investment Managers. Yang has 15 years of experience in the sector in China. Previously, she worked for insurer Ping An and Fosun International, among others.
Is something changing in your organization? Why not let us know at heads@table.media?
Fosun
Dessert
No end to the heat wave in sight: China’s national weather service predicts temperatures of more than 40 degrees for some parts of the country in the coming days. Despite the sweltering heat – as here in Fuyang in the central Chinese city of Anhui – it seems to be more important to some motorists to not expose their skin to direct sunlight.
Florian Dorn on the costs of decoupling from China
Did Pelosi put her own interests above stability?
Military exercises continue on Monday
Hong Kong reduces mandatory quarantine
Baidu receives green light for autonomous cabs
Sanofi invests in cancer research
Five killed in coal mine accident
Profile: Sonja Peterson – ’emissions trading is a huge step’
Dear reader,
Germany’s heavy dependencies on China are once again shifting into focus following the Russian invasion of Ukraine. In extreme cases, economic dependencies can do a lot of damage to a society, as the example of Russian gas currently demonstrates. But how costly would it be for Germany to become less dependent on China? The ifo Institute has calculated this question in several scenarios. Felix Lee spoke with the study’s co-author, Florian Dorn, about the high costs and which sectors would be particularly affected. The Ifo researcher advises German companies to further diversify their supply chains.
Nancy Pelosi’s visit to Taiwan and China’s reactions have generated considerable turmoil. Major Western countries were unanimous in their reaction, condemning China’s military drills around Taiwan. Other countries in the region have been reluctant to take a clear stand or have even criticized Pelosi’s visit, Frank Sieren reports. Australia’s foreign minister calls for de-escalation. South Korea’s new president did not even meet Pelosi. This restraint is hardly surprising. Who would want to mess with the economically and militarily superior “bully”, who currently also flexes his military muscles?
Your Nico Beckert
Interview
‘Less China, more USA’
Florian Dorn, Economist at the Ifo Institute
Mr. Dorn, according to your study, a trade war with China would cost the Germans almost six times as much as Brexit. The German economy lost around 0.14 percent in economic output in the wake of Brexit. Why do you consider a GDP loss of just under 0.9 percent in the event of a trade war with China to be dramatic?
Florian Dorn: That may not sound like much. But the percentages refer to a long-term level effect of economic output. The real growth losses in the transition phase in the event of a trade war with China would be far higher. Germany as an export nation would be forced to readjust its business model. Entire sectors would experience slumps.
Which sectors would be particularly affected?
In particular, sectors in the manufacturing industry that are heavily intertwined in international trade. The biggest losers would be the automotive industry. Here, there would be a loss of value added of about $8.3 billion, a drop of about 8.5 percent. Mechanical engineers, with a minus of more than $5 billion, and companies that manufacture transportation equipment would also be severely affected. They would lose out on cheap intermediate products from China, which they would then have to buy at a higher price from other countries. At the same time, they would lose China’s large sales market.
VW, BASF, and Siemens largely produce locally for the Chinese market. Would a trade war really destroy so many jobs in Germany?
These companies indeed produce in China. But they still obtain many preliminary products from factories and suppliers here in Germany. If these orders were to disappear, it would also cost many jobs here.
How likely do you think the scenario of a trade war is?
I don’t like to speculate about that. What is important – and this has been shown not least by the war in Ukraine: We are prepared for different scenarios. The current tensions between China and Taiwan, or China and the United States, show how great the conflict potential is. And Germany and Europe could quickly become involved. Therefore, companies should begin to diversify now in order to reduce unilateral and critical dependencies on certain markets and authoritarian regimes.
Isn’t the study proof that Germany’s dependence on China has long been excessive and that we should definitely not become involved in a trade war?
Of course, it would be preferable to avoid trade wars. De-globalization or trade wars always end up making people poorer. But we shouldn’t look to the future naively and say: That won’t happen, because it will hurt both sides. However, the decision to wage a trade war is not made by Germany alone; a trade war can also be started by China. Certainly, companies should not turn away from important trading partners unnecessarily. Nevertheless, in parallel, I would already place greater emphasis on free trade agreements with like-minded nations such as the USA. That should be the goal of German and European economic policy.
Wouldn’t a relocation of many companies back from China, i.e. a nationalization of supply chains, be a solution?
No, on the contrary: Relocating production back to Germany, the EU or even neighboring regions would mean even significantly higher costs for value creation in Germany. This is because production would become significantly more expensive as a result. We would ramp up production and employment in economic sectors that are unproductive compared with other sectors in this country. We would also drive up the prices of our products in world trade and lose competitiveness. The result would be less domestic and foreign demand for many of these goods. Relocation would cause German real economic output to drop by around 9.9 percent. So we would lose significantly in terms of value-added and wealth.
Then what would be the alternatives to China?
In one scenario, we simulated the decoupling of Western countries from China, combined with a trade agreement between the EU and the United States. Such a US-European trade agreement could not fully offset the adverse effects of the decoupling of the West from China. However, the expected trade benefits from the large US market would put the net cost at a similar level to the expected cost of Brexit. In this scenario, we would at least know what was coming.
Florian Dorn, 36, is an economist at the Ifo Institute, Director of EconPol Europe, and teaches finance and economic policy at Ludwig Maximillians University in Munich.
There is no doubt about it: Democratic Speaker of the US House of Representatives Nancy Pelosi promoted important Western values in Taiwan: “self-determination and self-government, democracy and freedom, human dignity and human rights,” as she writes in a piece for the Washington Post. But stylizing her trip as a mere fight for Western freedom doesn’t quite cover it. It was not just about morality, but also economic and geopolitical interests.
It was about securing supply chains. After all, the USA is also dependent on microchips from Taiwan. The country has a global market share of over 60 percent. The supply must remain secure.
It might also be possible that Pelosi attempted to leave her mark. Since the 82-year-old will step down after the congressional elections in October, this was probably her last chance to have an impact on the global political stage. That may also be why she traveled to Taiwan, even though her fellow party member, US President Joe Biden, was skeptical.
According to Biden, his military advisers called the visit “not a good idea”. Moreover, Biden is feeling pressure to balance domestic political aspirations and foreign political realities. This is becoming harder as other countries have the power to assert their interests more clearly than in the past.
US government clarifies Pelosi is not acting on its behalf
Her trip was nothing new, Pelosi said: 25 years ago, her predecessor Newt Gingrich also traveled to Taiwan. But he was a Republican and then-President Bill Clinton was a Democrat. Now Pelosi, a Democrat, is putting her fellow party member Biden on the spot. She shows off at his expense. Meanwhile, the White House clarified: The One-China policy is written in stone. Pelosi is not the government and does not act on its behalf. Only a few nations worldwide recognize Taiwan as an independent state.
But on the other hand, Taiwan has a government independent of Beijing. The country enjoys great economic success and receives military backing from the United States. Therefore, Beijing feels the status quo shaken by Pelosi’s visit, which dictates the existence of only one China. That is why China’s leadership reacted fiercely and, from an international perspective, in part out of proportion. Beijing launched unprecedented military exercises, penetrated Taiwan’s 12-nautical-mile zone, and fired missiles over the island. Beijing argues that Taiwan is not an independent country. Therefore, the zones established under international law would not apply.
Meanwhile, the G7 countries described Pelosi’s visit as “normal” and Beijing’s reaction as “aggressive”. They accuse Beijing of attempting to unilaterally change the status quo. Germany’s Foreign Minister Annalena Baerbock said, “We do not accept when international law is broken and a larger neighbor attacks its smaller neighbor in violation of international law – and that of course also applies to China.” At the end of her statement, a spokesman for the German government added: “Germany continues to recognize the one-China principle.”
Escalation can spark unintended momentum
Because nationalism is on the rise in the People’s Republic, the escalation may gain unintended momentum. “Don’t put on a show of power if you don’t have the power,” reads one of many comments on Weibo, China’s Twitter, “What a loss of face!” China’s leadership may be forced to redeem itself.
Accordingly, critical voices – mostly from Asia – accuse Pelosi of putting her personal interests before party interests and thus risking the stability of the global order. But criticism has also come from the West: Pulitzer Prize winner Jane Perlez, former Beijing bureau chief of the New York Times, calls it an “unnecessary provocation“.
The Economist’s verdict was: “A trip designed to convey strength risks instead showing up the Biden administration’s confusion and lack of purpose.” Former Australian Prime Minister and sinologist Kevin Rudd considered the trip “unwise” because it only increased tensions. Penny Wong, Australia’s Foreign Minister, one of America’s closest allies in the region, expressed concern, saying, “All parties should de-escalate tensions, and we should continue with others in the region to urge the maintenance of peace and stability in the region, and in particular, across the Taiwan Strait.”
South Korea’s head of government canceled meeting with Pelosi
“This is a very poor signaling diplomacy coming from Washington to its allies and partners in the region,” thinks South Korean scholar Seong-Hyon Lee of the Fairbank Center for Chinese Studies at Harvard. The foreign ministers of ASEAN countries, who held a summit in Cambodia at the same time, expressed concerns that her visit “could destabilize the region and eventually could lead to miscalculation, serious confrontation, open conflicts and unpredictable consequences among major powers.”
Meanwhile, the new South Korean President, Yoon Suk-Yeol, unlike Japanese Prime Minister Fumio Kishida, decided not to meet with Pelosi and instead spoke with her on the phone. Analysts believe Yoon had decided not to get further involved in the conflict between the US and China.
In the meantime, Japan’s Premier Kishida reportedly asked Pelosi to clarify: “We have said from the start that our representation here is not about changing the status quo in Taiwan or the region.” Earlier, China’s Foreign Minister Wang Yi declined the very first meeting with his new Japanese counterpart, Yoshimasa Hayashi.
ASEAN
Geopolitics
Nancy Pelosi
Taiwan
USA
News
Further exercises off Taiwan’s coast
The Chinese military continued its drills around Taiwan on Monday. The eastern People’s Liberation Army forces announced they would conduct further anti-submarine and maritime defense drills off the island. Originally, the military had announced a four-day drill up to and including Sunday in the waters around Taiwan.
The continuation is seen as a renewed threatening gesture by the People’s Republic toward its neighboring country, following last week’s visit to Taiwan by high-ranking US politician Nancy Pelosi. Taiwan’s Ministry of Defense confirmed on Monday the renewed presence of Chinese warships and fighter jets around the island. Up to and including Sunday afternoon, the ministry had registered 66 fighter jets and 14 warships of the People’s Liberation Army participating in last week’s exercises.
The Chinese military has announced further live-fire exercises off its own coast in Guangdong. From Tuesday to Thursday, part of the coastline will be closed. Fire drills have also been underway in the Bohai Sea in northeastern China for an entire month since Monday. A little further south in the Yellow Sea, similar maneuvers are planned until mid-August.
While Chinese analysts see the previous week’s maneuvers as laying the groundwork for regular similar exercises by the People’s Liberation Army, Taiwanese observers believe in a morale boost for the island nation’s population and growing resentment toward the People’s Republic. grz
Geopolitics
Military
People’s Liberation Army
Taiwan
Hong Kong eases entry requirements
Hong Kong will reduce the period of mandatory hotel quarantine after arrival from seven to three days. The new regulations, which are aimed at providing a middle ground between economic productivity and the fight against the spread of the Coronavirus, will take effect next Friday.
Under the new rules, all passengers will only have to spend three days in strict isolation in a hotel after arrival. In the event of a negative test, entrants will be allowed to return to their own homes or a hotel of their choice after 72 hours. For another four days thereafter, affected individuals will not be allowed to enter public facilities or offices, but will be allowed to move freely around the city. At the height of the pandemic, entrants had to spend up to 21 days in isolation.
The aim was to reduce the impact of the quarantine on economic activity in the city, said government Chief Executive John Lee, explaining the decision. Still, the British Chamber of Commerce criticized the remaining mandatory quarantine as a drag on the economy. “It is unlikely to benefit the broader business and tourist travel which will need a full lifting of quarantine controls,” Executive Director David Graham told Bloomberg. The government is being encouraged to drop the quarantine altogether for negative test results. “This will be critical for Hong Kong’s economic and business outlook,” he said. grz
Coronavirus
Health
Hongkong
Baidu receives first license for fully autonomous taxis
The Chinese technology group Baidu has become the first company in the People’s Republic to receive the green light to operate fully autonomous robot taxis on public roads. The licenses are effective immediately in the two Chinese metropolises of Chongqing and Wuhan, as the Google rival announced on Monday. There, robotaxis could now transport passengers without backup drivers.
The company called it a turning point in the use of self-driving cars. The operation of the robot taxis will initially be limited to certain hours during the day. Baidu will be launching five cars in each of the two cities and is already negotiating to expand the service to other cities, such as Beijing and Shanghai. In the meantime, the autonomous driving division of the Chinese group has completed more than one million rides in ten Chinese cities, according to the company’s information.
Baidu is competing with Pony.ai, a startup co-funded by Toyota. The latter is already authorized to offer a limited autonomous taxi service, but is still required to have a backup driver present in the car. Just a few days ago, Pony.ai launched the service in Beijing. Customers have been able to book robo-taxis in a 60-square-kilometer area in southern Beijing since early August. However, customers cannot yet get on or off at any location, only at 250 selected locations.
Car companies and technology firms around the world are investing billions in the development and operation of self-driving cars. Both China and the United States are further ahead than others when it comes to approvals. In San Francisco, robot cabs without drivers from the startup Cruis are already operating on selected roads. nib/rtr
Autoindustrie
Cancer drug: Sanofi acquires stake in biotech company
The French pharmaceutical company Sanofi has made a €300 million investment in the Chinese biotech company Innovent Biologics. The two companies plan to jointly develop two cancer drugs in China, as reported by the business portal Caixin. According to company sources, Innovent has signed a licensing agreement with Sanofi for the exclusive marketing of the drugs.
With the investment, Sanofi has acquired almost four percent of Innovent. In addition, an agreement was signed that gives Sanofi the option to invest an additional €300 million, thus doubling its stake. nib
Health
Pharma
Five dead after coal mine accident
Five miners were killed in an accident at a coal mine in Shanxi. On Friday, a roof collapsed and left the miners trapped. Rescue operations lasted until Monday. Then, during the day, the death of the five miners was reported. Shanxi is the largest coal province in China. It produces 1.2 billion tons of coal per year.
This year, mines throughout the province plan to expand production by 11 percent, Bloomberg reports. In the past, authorities had increased safety regulations at the mines. As a result, there have been fewer accidents. However, after the energy crisis in the second half of last year, Beijing instructed the mines to increase production again; it is unclear whether safety regulations are always followed.
In the first seven months of 2022, there were 86 accidents in coal mines with 129 casualties. According to authorities, the number of accidents decreased by 24 percent compared to the same period last year. nib
Coal
Energy
Raw materials
Heads
Sonja Peterson – climate economist at the Baltic Sea
Sonja Peterson is a Professor of Climate Economics at the IfW.
A business English course at university had a lasting impact on Sonja Peterson’s career. “In it, our professor taught environmental economics in English because he obviously discovered that topic for himself,” Peterson recalls. “I found that totally fascinating.” She was studying business mathematics in Hamburg at the time, and the connection between the environment and market economics – through the pricing of carbon, for example – had not been on her radar before taking the English course.
Peterson now works as a climate economist at the Kiel Institute for the World Economy, or IfW for short. The economic mathematician and economist has been working there since 2002 – and now even has a desk with a view of the Baltic Sea just a few meters away. “If I’m there,” she admits. Because right now, she is working from home.
She joined the IfW as a research associate and became head of “The Environment and Natural Resources” department. “I now wear two hats: I am both a researcher and a science manager.” And so, on the one hand, she takes care of research proposals and junior scientists. On the other hand, she has been dealing with issues around international and European climate policy for about 20 years. “There’s no avoiding China, of course,” she says. By now, the country can no longer fall back on the position of a developing country with low per capita emissions.
After all, emissions per capita are at a level comparable to that of Germany. But she also sees progress in Chinese climate policy: “Since the beginning of 2021, there has been a national emissions trading system, which I see as a huge step.” Admittedly, she says, this has so far not been ambitious enough when it comes to price, scope and reduction goals. “Nevertheless, it’s an important start to create the institutions to then build on.”
‘I try to keep my carbon footprint low’
She has not yet been to the Middle Kingdom herself, even though she has worked with Chinese colleagues time and again. Is she planning a trip when the Covid rules allow it again? “It would take a very good reason,” Peterson says. “I try to keep my personal carbon footprint low and avoid long-distance flights.” As a result, the Bielefeld native primarily looks at the global economy from Kiel, holds lectures and, as an honorary professor, also lectures at Kiel University.
And she is happy when she is allowed to let her inner mathematician shine: “Every once in a while, I can take the plunge with my model.” Her model is the institute’s DART model, which simulates the economic impact of introducing climate policy instruments. What would she like to see in climate policy right now? “That the upward trend of recent years continues and a price is put on more and more greenhouse gas emissions.” Paul Meerkamp
Climate
Emissions
Sustainability
Trade
Executive Moves
Chang Che has joined the New York Times, where he will be writing about technological change in China. Previously, the journalist worked for the independent media company SupChina.
Helen Yang will become Chairwoman of the China operations of French asset manager Natixis Investment Managers. Yang has 15 years of experience in the sector in China. Previously, she worked for insurer Ping An and Fosun International, among others.
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Fosun
Dessert
No end to the heat wave in sight: China’s national weather service predicts temperatures of more than 40 degrees for some parts of the country in the coming days. Despite the sweltering heat – as here in Fuyang in the central Chinese city of Anhui – it seems to be more important to some motorists to not expose their skin to direct sunlight.
