In a way, the new year starts like the old one ended: With the trade war between the US and China. Under pressure from Washington, the Netherlands withdrew an existing export license for domestic high-tech chip machine manufacturer ASML. The intention is to prevent China from catching up with companies such as the global market leader TSMC from Taiwan.
Several Western governments are currently trying to attract the largest and most advanced manufacturer of semiconductors. However, TSMC’s investments are based on business considerations, not persuasion, as Taiwanese economist Kristy Hsu explains in an interview with Felix Lee. In Germany, for instance, TSMC plans to supply the automotive industry. In the medium term, Hsu believes that additional TSMC plants and the production of ultra-modern chips in Germany are possible. This is because de-risking and diversification also play an increasingly important role for Taiwanese companies.
Meanwhile, German companies repeatedly emphasize that de-risking does not mean turning away from China. One future market offering opportunities in the People’s Republic is decarbonization. The energy transition in China is also accompanied by numerous requirements and a considerable need for modernization. German companies have much to offer here, as Christian Domke Seidel analyzes – for example, regarding energy efficiency and the circular economy.
Taiwan is the world’s leading production hub for semiconductors. Is the decision by local chip manufacturer TSMC to build a plant in Germany good for the island republic?
First, many people felt the concerns of industry hollowing out, because two years ago, TSMC first announced that they would invest in Arizona, then Japan, and now Dresden. But people here began to realize that this is a very important decision, not only for TSMC but also for other important players in the semiconductor sector, and perhaps other sectors, too, because they have to be globalized. Whatever happens – be it a geopolitical risk or a health crisis – it will be very dangerous for TSMC and the entire ecosystem if all supply chains are concentrated in Taiwan or countries like China. Right now people are getting more supportive of TSMC going overseas.
Why did TSMC decide to produce overseas?
TSMC primarily follows its customers. Investment incentives certainly also play a role, i.e., state aid from governments in the host countries to reduce production costs, for example, or other promises. However, TSMC’s decisions are primarily based on market criteria. The new business partners abroad can also help TSMC to better understand the local mentality and legislation – which in turn should attract new customers.
TSMC definitely wants to follow its clients. Investment incentives, such as state aid provided by governments of host countries to bring down production costs overseas and commitments of their support, are also taken into account. Business partners will also help TSMC understand the local culture and local legislation policy, which may significantly reduce the barriers for new clients. It is guaranteeing the market there.
How much did politics influence the decision?
We all know that TSMC has been under a lot of pressure. Since the global chip shortage, many governments have been trying to establish a chip industry in their own country. For example, considering TSMC can get generous subsidies from the US government, and that the US is its largest buyer, they have to follow their clients. Especially after the US-China trade war and the export control measures adopted by the US against China, the export market has changed for TSMC and other chip manufacturers in Taiwan. Orders from China are decreasing, and orders from the US are increasing. According to TSMC’s latest sales figures, around 50 percent of exports in the first three quarters went to the US, while less than 20 percent went to China.
Chip exports to Europe are very low. So why did TSMC still decide to build a plant in Dresden? Was it because of German subsidies?
German subsidies and government support are, of course, key to TSMC’s decisions, but another factor is their major clients from the automotive sector. TSMC aims to supply more chips to the German and European automotive industries.
The biggest clients are located in the United States. But to what extent are geopolitical considerations involved? After all, the US government fears that China could invade Taiwan.
I wouldn’t say the political pressure is directly on TSMC. But I think that all Taiwanese companies are aware of the determination of the US government. So, most of these Taiwanese companies feel that they have to act. Our latest statistics show that the number of Taiwanese companies investing in China has fallen by around one-third. The number of Taiwanese companies investing in China has shrunk to around a third. Ten years ago, about 85 percent of investments still went to the People’s Republic. So that kind of de-risking or diversification strategy is now adopted in all sectors. The Taiwanese are trying to make up for what is lost by withdrawing from the Chinese market on the Western markets.
Taiwan’s semiconductor industry is crucial to the global economy. Do you think the industry protects the island from a Chinese attack?
Our government denies the silicon shield. China relies very much on semiconductors from Taiwan. But China wouldn’t invade Taiwan only because they can control TSMC. TSMC needs to have close relations with equipment providers in the Netherlands and Japan and materials or IC designs from the US and EU. If TSMC were to become a Chinese company after an invasion, all these foreign companies would stop cooperating with TSMC. We believe there are other reasons why China would invade Taiwan, such as Taiwan declaring its independence. Semiconductors are never the primary focus of this decision.
Could TSMC’s factories in Germany or the USA continue production if the People’s Liberation Army were to invade Taiwan?
The plants could at least survive for a certain period of time if they were already in operation. But in most cases, foreign factories have to follow the instructions of the headquarters in Taiwan. Therefore, in the event of blockades or an invasion from China, there may be disruptions of all kinds or even a total production stoppage.
In June 2022, Nancy Pelosi, Speaker of the US House of Representatives at the time, visited Taiwan. What has changed since then?
Some multinational companies asked Taiwanese key suppliers not only to produce in Taiwan, but to diversify more.
What does the Taiwanese government think of such requests?
People here gradually realized that risk mitigation is key. Just as we have come to realize that it is dangerous for all Taiwanese companies to locate their plants in China, it is dangerous for multinational companies to rely solely on imports from Taiwan. At present, 93 percent of the world’s most technologically advanced chips and 60 percent of all chips are manufactured in Taiwan. It is also only good for Taiwan’s security if semiconductor supply chains are extended to other like-minded countries.
Do you think Taiwan can maintain its lead in semiconductor technology?
Taiwan will be able to maintain its leading position in technologically advanced chips for at least the next ten years. But as far as mature chips are concerned, China is actually catching up quickly. There are other newcomers as well, such as Singapore, Malaysia, not to mention South Korea and the USA. In this regard, Taiwan will probably soon no longer be the largest producer – which is okay.
If TSMC is now beginning to manufacture mature chips in Germany, could this mean that the Dresden plant may soon also manufacture technologically advanced chips?
Yes. When TSMC first announced the fab in Arizona, it was only to produce 5nm chips. Last year, the company management decided to build a second fab for even smaller chips. The same thing happened in Japan. So if everything goes smoothly, which is very likely, TSMC will build a second or even third fab in Germany. Or other Taiwanese companies, such as the second-largest semiconductor manufacturer, UMC, will go there.
TSMC is known for its efficient and cost-effective production conditions. Why?
TSMC has thousands of suppliers in Taiwan, many of which are a two-hour drive away. So, if TSMC needs support from a particular company that provides a specific component, it can simply call them. Of course, equipment, electricity, water and all these utilities, including TSMC engineers, are also expensive in Taiwan. But wages for many jobs are still lower than in the US, for example. And the working culture is another reason TSCM produces more efficiently in Taiwan.
Could you elaborate?
People in the Taiwanese semiconductor industry generally have longer working hours than, for example, in Germany. Normally, people work in two shifts here: Day shift and night shift. This means that the machines keep running. Employees in certain positions, such as maintenance engineers, are also constantly on call, be it early in the morning or even at Christmas or during the Chinese New Year holidays. The biggest challenge for TSMC in Germany will probably be strict labor laws and trade unions.
What are the conditions like for TSMC in the United States?
Production in Arizona is twice as expensive for TSMC as in Taiwan. We can also see the problem of recruiting workforce there. Last year, TSMC offered young engineers an entry-level salary of around 100,000 US dollars. That was not enough for many of them. They want to work for companies that offer at least 160,000 dollars.
Will this also be a problem in Germany?
I don’t know yet. TSMC is currently trying to recruit 200 engineers to work in Germany. The problem is that there are hardly any engineers in Taiwan speaking German. What worried TSMC most when they first announced going to the US was whether they could bring their suppliers.
And can they?
More than 30 companies have already announced that they will follow TSMC to the US. But most of these companies are large companies. It is more difficult for smaller companies. This is because investing in Europe and the USA is very expensive. So they must decide: If they don’t go, they lose clients. If they go, they have to ensure that the investments can be covered not just for the first or second year, but for at least five years.
Will they bring their suppliers to Germany?
This is not yet clear. There is talk of a connection with the existing IT cluster in the Czech Republic. The main question is whether the so-called packaging companies, which are considered to be particularly labor-intensive in the manufacturing of high-performance chips, will follow TSMC. They could set up shop in Eastern Europe.
One of the biggest challenges in the USA and Germany seems to be the lack of skilled workers. Does Taiwan have enough engineers?
No, many young people in Taiwan feel that working in the semiconductor industry is too demanding. My nephew, for example, was offered a job at TSMC. But he turned it down. The lack of highly qualified workers is also a problem in Taiwan.
TSMC wants to train German students. Is Taiwan not afraid of brain drain?
No. It doesn’t work like that. The knowledge required to produce high-performance semiconductors is very complex and hierarchical. This knowledge cannot be stolen so easily.
Ms. Kristy Hsu is the Director of the Taiwan ASEAN Studies Center at Chung-Hua Institution of Economic Research. Her research focuses on the semiconductor industry and international trade policy. During a research visit organized by the Journalists Network e.V., Felix Lee participated for Table.Media in the interview she held with several German journalists.
China is working towards the energy transition and is in the process of drawing up corresponding roadmaps for the overall economy and industrial sectors. All companies will have to follow these plans in future – without jeopardizing their economic success. “In China, politics and business are often difficult to separate. The industry has to implement the policy guidelines, and it is doing so,” says Jens Hildebrandt, Delegate of German Industry and Commerce in Beijing and Executive Director of the German Chamber of Commerce (AHK). German companies are to sell the relevant technologies and services to China. They could play a profitable role.
Decarbonization is a high priority for China’s government, including the corresponding sustainability requirements for companies. At the same time, local companies are faced with increasingly strict regulations such as those in Europe. One example of this is the EU Battery Regulation. “Like Germany, China is an export country. The industry must therefore fulfill legal requirements if it wants to continue supplying these markets,” explains Hildebrandt. “The more important sustainability becomes, the greater the motivation of Chinese suppliers to decarbonize.”
For example, if China wants to continue to offer EV batteries in Europe, they need to be produced more sustainably. Mainly due to the energy mix in China, production generates around 105 grams of CO2 per kilowatt-hour. In Europe, it is 20 to 30 percent less. A competitive disadvantage that companies in the People’s Republic must manage. Including with the help of German suppliers.
According to Hildebrandt, German companies have a lot to offer that could support the Chinese energy transition: “When it comes to energy efficiency, German companies offer good solutions, products and services. But also in the circular economy.” The companies have suitable products for many relevant sectors. German mechanical engineering companies in particular could help to massively reduce the energy requirements of China’s industry. For example, they could supply air compressors that consume 20 to 30 percent less energy than comparable competitor products.
Heat pumps, heat recovery and energy-efficient industrial boilers are also products in which German companies have a technological advantage over their Chinese competitors that should not be underestimated. “We are focussing on German interests. And there are several examples of how German companies are contributing to decarbonization,” says Hildebrandt.
China’s own 30/60 climate targets cannot be achieved without effort: Beijing plans to peak its greenhouse gas emissions by 2030 at the latest and achieve net zero emissions by 2060. But there is a long way to go. In 2022, the People’s Republic emitted a total of 11.4 billion tons of CO2 equivalent (USA: 5.0 billion, Germany 0.7 billion). That is 27 percent of global carbon emissions. According to the National Bureau of Statistics (NBS) and the China Electricity Council (CEC), 56.2 percent of primary energy consumption in 2022 came from coal, 17.9 percent from oil and 8.4 percent from natural gas. Renewable energies, including nuclear power, only accounted for 17.5 percent.
By 2030, the share of renewables in primary energy consumption is expected to grow to 25 percent, and to 90 percent by 2060. However, given the growing demand for energy, the People’s Republic continues to invest heavily in coal-fired power plants. According to a joint study by the Centre for Research on Energy and Clean Air (CREA) and Global Energy Monitor (GEM), China approved new coal-fired power plants with a total capacity of 106 gigawatts in 2022.
The biggest factor in energy production, and consequently emissions, is electricity generation – and China has made significant progress in this area. According to the National Energy Administration (NEA), the total installed capacity of renewable energy exceeded 1.4 terawatts at the end of November. This corresponds to around 49.9 percent of total power generation capacity – practically half.
NEA data shows that this capacity comprises around 536 gigawatts of solar energy, 420 gigawatts of hydropower, 404 gigawatts of wind power and 44 gigawatts of biomass. The government’s action plan also calls for 50 percent of roofs on newly constructed public buildings and factories to be fitted with photovoltaic systems. However, this growth is unlikely to be sufficient to meet the climate targets of the People’s Republic.
Hildebrandt also sees other obstacles: “China is currently experiencing weak economic growth. These are poor conditions for climate action and decarbonization. We’ll have to wait and see whether this actually happens.” German companies also see it that way. In a survey conducted by the AHK, 49 percent of companies stated that they see growing business opportunities in increasing decarbonization.
At the same time, however, 57 percent also expect rising costs due to stricter environmental regulations. Depending on the sector, German companies’ investment plans for China’s decarbonization are quite ambitious. The chemical industry (70 percent plan to invest in carbon neutrality) and the automotive industry (53 percent) are leading the way.
Hildebrandt says that the German government is more cautious. “There is bilateral cooperation at government level. However, it mainly takes place at a structural level. The German government is relatively cautious when it comes to concrete corporate cooperation.”
Sinolytics is a European research-based consultancy entirely focused on China. It advises European companies on their strategic orientation and specific business activities in the People’s Republic.
Flowing hair, deep voice, guitar solos – these are the trademarks of Wu Bai (伍佰 – Wǔ bǎi), a key figure in Taiwanese rock music for over 30 years. With his band China Blue, he fills the biggest concert halls throughout East and Southeast Asia. Demand for concert tickets for his and other Taiwanese bands has exploded in China since the end of the COVID-19 pandemic. Wu Bai is part of a long tradition. Taiwanese artists such as Teresa Teng, Jay Chou and A-Mei have played a key role in shaping popular music in China since the 1980s. And yet, it is remarkable that Wu Bai, in particular, has such a loyal following in China, as his life and work are closely linked to his escape from political constraints and the search for his own Taiwanese identity.
Wu Bai, whose real name is Wu Junlin, was born in 1968 and grew up in a village in the rural Chiayi region in southwestern Taiwan. His father was a retired worker in a sugar factory; his mother sold betel nuts, a popular stimulant and treat in Taiwan, on the street. In the late 1980s, Wu Bai dropped out of school and moved to Taipei. There, he earned money by working odd jobs and teaching himself to play the guitar.
It was a time of social awakening after decades of dictatorship under the Kuomintang party. New spaces for subcultures also opened up in the course of political democratization. An alternative music scene emerged. And many songs were no longer written in the politically imposed standard Chinese spoken during the dictatorship, but in Taiwanese Minnan, spoken by the majority of the population at the time. Historically originating from a dialect of the Chinese coastal province of Fujian, Taiwanese Minnan (usually called Taiwanese) became a symbol of social self-determination. Wu Bai released his first two songs in Taiwanese in 1992. He soon founded the band Wu Bai & China Blue, with whom he still performs today.
Wu Bai’s music expresses a great love of life and passion just as much as melancholy. His song “Back to Hometown” (返去故鄉 – Fǎnqù gùxiāng), about someone returning home who is treated with suspicion and contempt by people in his hometown, is interpreted by many as an allusion to the stigmatization of politically persecuted individuals during the KMT dictatorship. Wu Bai dedicated the song “White Dove” (白鴿 – Bái gē) specifically to Taiwan. It says: “Even though I carry eternal sorrows, at least I still have my freedom.”
But many of Wu Bai’s songs are about love, including his perhaps most famous, “Norwegian Forest” (挪威森林 – Nuówēi sēnlín). Based on a novel by Haruki Murakami, the song is about secrets that people hide “in the deep forests of their hearts,” even from their loved ones.
Wu Bai always emphasizes that his music is, above all, an expression of a fundamental attitude towards life. This may also be why he appeals to a broad audience beyond Taiwan. Wu Bai is also adapting his repertoire in China, with fewer songs in Taiwanese and without any political messages. Due to ever-stricter censorship and nationalist propaganda, Taiwanese artists are walking a fine line in the People’s Republic. In August 2023, for example, an indie band was targeted at their first performance in the People’s Republic after announcing that they had never played in China before. This was taken as an indirect indication that the band did not consider Taiwan part of China – an insult in the eyes of the Chinese public.
In his early career days, Wu Bai was also denied entry to concerts in China for some time. His band had performed at election rallies of then-Taipei mayor and later president Chen Shui-bian of the DPP, who had very clearly criticized the People’s Republic. However, Wu Bai has been spared hostility in China in recent years. And in an environment where the limits of what can be said are becoming ever narrower, it is perhaps also his ability to sense existential longings without formulating them in an overly political way that continues to fascinate many of his fans to this day. Leonardo Pape
Ephemeral beauty: At temperatures between minus 12 and minus 22 degrees, ice sculptors compete against each other at the 35th Harbin International Ice Sculpture Competition in Harbin in the far north-east of China. Oddly enough, at the same time as the three-day artistic competition opens, the Chinese state media reports that 2023 was also the hottest year on record in China. Hard to imagine in frosty Harbin right now.
In a way, the new year starts like the old one ended: With the trade war between the US and China. Under pressure from Washington, the Netherlands withdrew an existing export license for domestic high-tech chip machine manufacturer ASML. The intention is to prevent China from catching up with companies such as the global market leader TSMC from Taiwan.
Several Western governments are currently trying to attract the largest and most advanced manufacturer of semiconductors. However, TSMC’s investments are based on business considerations, not persuasion, as Taiwanese economist Kristy Hsu explains in an interview with Felix Lee. In Germany, for instance, TSMC plans to supply the automotive industry. In the medium term, Hsu believes that additional TSMC plants and the production of ultra-modern chips in Germany are possible. This is because de-risking and diversification also play an increasingly important role for Taiwanese companies.
Meanwhile, German companies repeatedly emphasize that de-risking does not mean turning away from China. One future market offering opportunities in the People’s Republic is decarbonization. The energy transition in China is also accompanied by numerous requirements and a considerable need for modernization. German companies have much to offer here, as Christian Domke Seidel analyzes – for example, regarding energy efficiency and the circular economy.
Taiwan is the world’s leading production hub for semiconductors. Is the decision by local chip manufacturer TSMC to build a plant in Germany good for the island republic?
First, many people felt the concerns of industry hollowing out, because two years ago, TSMC first announced that they would invest in Arizona, then Japan, and now Dresden. But people here began to realize that this is a very important decision, not only for TSMC but also for other important players in the semiconductor sector, and perhaps other sectors, too, because they have to be globalized. Whatever happens – be it a geopolitical risk or a health crisis – it will be very dangerous for TSMC and the entire ecosystem if all supply chains are concentrated in Taiwan or countries like China. Right now people are getting more supportive of TSMC going overseas.
Why did TSMC decide to produce overseas?
TSMC primarily follows its customers. Investment incentives certainly also play a role, i.e., state aid from governments in the host countries to reduce production costs, for example, or other promises. However, TSMC’s decisions are primarily based on market criteria. The new business partners abroad can also help TSMC to better understand the local mentality and legislation – which in turn should attract new customers.
TSMC definitely wants to follow its clients. Investment incentives, such as state aid provided by governments of host countries to bring down production costs overseas and commitments of their support, are also taken into account. Business partners will also help TSMC understand the local culture and local legislation policy, which may significantly reduce the barriers for new clients. It is guaranteeing the market there.
How much did politics influence the decision?
We all know that TSMC has been under a lot of pressure. Since the global chip shortage, many governments have been trying to establish a chip industry in their own country. For example, considering TSMC can get generous subsidies from the US government, and that the US is its largest buyer, they have to follow their clients. Especially after the US-China trade war and the export control measures adopted by the US against China, the export market has changed for TSMC and other chip manufacturers in Taiwan. Orders from China are decreasing, and orders from the US are increasing. According to TSMC’s latest sales figures, around 50 percent of exports in the first three quarters went to the US, while less than 20 percent went to China.
Chip exports to Europe are very low. So why did TSMC still decide to build a plant in Dresden? Was it because of German subsidies?
German subsidies and government support are, of course, key to TSMC’s decisions, but another factor is their major clients from the automotive sector. TSMC aims to supply more chips to the German and European automotive industries.
The biggest clients are located in the United States. But to what extent are geopolitical considerations involved? After all, the US government fears that China could invade Taiwan.
I wouldn’t say the political pressure is directly on TSMC. But I think that all Taiwanese companies are aware of the determination of the US government. So, most of these Taiwanese companies feel that they have to act. Our latest statistics show that the number of Taiwanese companies investing in China has fallen by around one-third. The number of Taiwanese companies investing in China has shrunk to around a third. Ten years ago, about 85 percent of investments still went to the People’s Republic. So that kind of de-risking or diversification strategy is now adopted in all sectors. The Taiwanese are trying to make up for what is lost by withdrawing from the Chinese market on the Western markets.
Taiwan’s semiconductor industry is crucial to the global economy. Do you think the industry protects the island from a Chinese attack?
Our government denies the silicon shield. China relies very much on semiconductors from Taiwan. But China wouldn’t invade Taiwan only because they can control TSMC. TSMC needs to have close relations with equipment providers in the Netherlands and Japan and materials or IC designs from the US and EU. If TSMC were to become a Chinese company after an invasion, all these foreign companies would stop cooperating with TSMC. We believe there are other reasons why China would invade Taiwan, such as Taiwan declaring its independence. Semiconductors are never the primary focus of this decision.
Could TSMC’s factories in Germany or the USA continue production if the People’s Liberation Army were to invade Taiwan?
The plants could at least survive for a certain period of time if they were already in operation. But in most cases, foreign factories have to follow the instructions of the headquarters in Taiwan. Therefore, in the event of blockades or an invasion from China, there may be disruptions of all kinds or even a total production stoppage.
In June 2022, Nancy Pelosi, Speaker of the US House of Representatives at the time, visited Taiwan. What has changed since then?
Some multinational companies asked Taiwanese key suppliers not only to produce in Taiwan, but to diversify more.
What does the Taiwanese government think of such requests?
People here gradually realized that risk mitigation is key. Just as we have come to realize that it is dangerous for all Taiwanese companies to locate their plants in China, it is dangerous for multinational companies to rely solely on imports from Taiwan. At present, 93 percent of the world’s most technologically advanced chips and 60 percent of all chips are manufactured in Taiwan. It is also only good for Taiwan’s security if semiconductor supply chains are extended to other like-minded countries.
Do you think Taiwan can maintain its lead in semiconductor technology?
Taiwan will be able to maintain its leading position in technologically advanced chips for at least the next ten years. But as far as mature chips are concerned, China is actually catching up quickly. There are other newcomers as well, such as Singapore, Malaysia, not to mention South Korea and the USA. In this regard, Taiwan will probably soon no longer be the largest producer – which is okay.
If TSMC is now beginning to manufacture mature chips in Germany, could this mean that the Dresden plant may soon also manufacture technologically advanced chips?
Yes. When TSMC first announced the fab in Arizona, it was only to produce 5nm chips. Last year, the company management decided to build a second fab for even smaller chips. The same thing happened in Japan. So if everything goes smoothly, which is very likely, TSMC will build a second or even third fab in Germany. Or other Taiwanese companies, such as the second-largest semiconductor manufacturer, UMC, will go there.
TSMC is known for its efficient and cost-effective production conditions. Why?
TSMC has thousands of suppliers in Taiwan, many of which are a two-hour drive away. So, if TSMC needs support from a particular company that provides a specific component, it can simply call them. Of course, equipment, electricity, water and all these utilities, including TSMC engineers, are also expensive in Taiwan. But wages for many jobs are still lower than in the US, for example. And the working culture is another reason TSCM produces more efficiently in Taiwan.
Could you elaborate?
People in the Taiwanese semiconductor industry generally have longer working hours than, for example, in Germany. Normally, people work in two shifts here: Day shift and night shift. This means that the machines keep running. Employees in certain positions, such as maintenance engineers, are also constantly on call, be it early in the morning or even at Christmas or during the Chinese New Year holidays. The biggest challenge for TSMC in Germany will probably be strict labor laws and trade unions.
What are the conditions like for TSMC in the United States?
Production in Arizona is twice as expensive for TSMC as in Taiwan. We can also see the problem of recruiting workforce there. Last year, TSMC offered young engineers an entry-level salary of around 100,000 US dollars. That was not enough for many of them. They want to work for companies that offer at least 160,000 dollars.
Will this also be a problem in Germany?
I don’t know yet. TSMC is currently trying to recruit 200 engineers to work in Germany. The problem is that there are hardly any engineers in Taiwan speaking German. What worried TSMC most when they first announced going to the US was whether they could bring their suppliers.
And can they?
More than 30 companies have already announced that they will follow TSMC to the US. But most of these companies are large companies. It is more difficult for smaller companies. This is because investing in Europe and the USA is very expensive. So they must decide: If they don’t go, they lose clients. If they go, they have to ensure that the investments can be covered not just for the first or second year, but for at least five years.
Will they bring their suppliers to Germany?
This is not yet clear. There is talk of a connection with the existing IT cluster in the Czech Republic. The main question is whether the so-called packaging companies, which are considered to be particularly labor-intensive in the manufacturing of high-performance chips, will follow TSMC. They could set up shop in Eastern Europe.
One of the biggest challenges in the USA and Germany seems to be the lack of skilled workers. Does Taiwan have enough engineers?
No, many young people in Taiwan feel that working in the semiconductor industry is too demanding. My nephew, for example, was offered a job at TSMC. But he turned it down. The lack of highly qualified workers is also a problem in Taiwan.
TSMC wants to train German students. Is Taiwan not afraid of brain drain?
No. It doesn’t work like that. The knowledge required to produce high-performance semiconductors is very complex and hierarchical. This knowledge cannot be stolen so easily.
Ms. Kristy Hsu is the Director of the Taiwan ASEAN Studies Center at Chung-Hua Institution of Economic Research. Her research focuses on the semiconductor industry and international trade policy. During a research visit organized by the Journalists Network e.V., Felix Lee participated for Table.Media in the interview she held with several German journalists.
China is working towards the energy transition and is in the process of drawing up corresponding roadmaps for the overall economy and industrial sectors. All companies will have to follow these plans in future – without jeopardizing their economic success. “In China, politics and business are often difficult to separate. The industry has to implement the policy guidelines, and it is doing so,” says Jens Hildebrandt, Delegate of German Industry and Commerce in Beijing and Executive Director of the German Chamber of Commerce (AHK). German companies are to sell the relevant technologies and services to China. They could play a profitable role.
Decarbonization is a high priority for China’s government, including the corresponding sustainability requirements for companies. At the same time, local companies are faced with increasingly strict regulations such as those in Europe. One example of this is the EU Battery Regulation. “Like Germany, China is an export country. The industry must therefore fulfill legal requirements if it wants to continue supplying these markets,” explains Hildebrandt. “The more important sustainability becomes, the greater the motivation of Chinese suppliers to decarbonize.”
For example, if China wants to continue to offer EV batteries in Europe, they need to be produced more sustainably. Mainly due to the energy mix in China, production generates around 105 grams of CO2 per kilowatt-hour. In Europe, it is 20 to 30 percent less. A competitive disadvantage that companies in the People’s Republic must manage. Including with the help of German suppliers.
According to Hildebrandt, German companies have a lot to offer that could support the Chinese energy transition: “When it comes to energy efficiency, German companies offer good solutions, products and services. But also in the circular economy.” The companies have suitable products for many relevant sectors. German mechanical engineering companies in particular could help to massively reduce the energy requirements of China’s industry. For example, they could supply air compressors that consume 20 to 30 percent less energy than comparable competitor products.
Heat pumps, heat recovery and energy-efficient industrial boilers are also products in which German companies have a technological advantage over their Chinese competitors that should not be underestimated. “We are focussing on German interests. And there are several examples of how German companies are contributing to decarbonization,” says Hildebrandt.
China’s own 30/60 climate targets cannot be achieved without effort: Beijing plans to peak its greenhouse gas emissions by 2030 at the latest and achieve net zero emissions by 2060. But there is a long way to go. In 2022, the People’s Republic emitted a total of 11.4 billion tons of CO2 equivalent (USA: 5.0 billion, Germany 0.7 billion). That is 27 percent of global carbon emissions. According to the National Bureau of Statistics (NBS) and the China Electricity Council (CEC), 56.2 percent of primary energy consumption in 2022 came from coal, 17.9 percent from oil and 8.4 percent from natural gas. Renewable energies, including nuclear power, only accounted for 17.5 percent.
By 2030, the share of renewables in primary energy consumption is expected to grow to 25 percent, and to 90 percent by 2060. However, given the growing demand for energy, the People’s Republic continues to invest heavily in coal-fired power plants. According to a joint study by the Centre for Research on Energy and Clean Air (CREA) and Global Energy Monitor (GEM), China approved new coal-fired power plants with a total capacity of 106 gigawatts in 2022.
The biggest factor in energy production, and consequently emissions, is electricity generation – and China has made significant progress in this area. According to the National Energy Administration (NEA), the total installed capacity of renewable energy exceeded 1.4 terawatts at the end of November. This corresponds to around 49.9 percent of total power generation capacity – practically half.
NEA data shows that this capacity comprises around 536 gigawatts of solar energy, 420 gigawatts of hydropower, 404 gigawatts of wind power and 44 gigawatts of biomass. The government’s action plan also calls for 50 percent of roofs on newly constructed public buildings and factories to be fitted with photovoltaic systems. However, this growth is unlikely to be sufficient to meet the climate targets of the People’s Republic.
Hildebrandt also sees other obstacles: “China is currently experiencing weak economic growth. These are poor conditions for climate action and decarbonization. We’ll have to wait and see whether this actually happens.” German companies also see it that way. In a survey conducted by the AHK, 49 percent of companies stated that they see growing business opportunities in increasing decarbonization.
At the same time, however, 57 percent also expect rising costs due to stricter environmental regulations. Depending on the sector, German companies’ investment plans for China’s decarbonization are quite ambitious. The chemical industry (70 percent plan to invest in carbon neutrality) and the automotive industry (53 percent) are leading the way.
Hildebrandt says that the German government is more cautious. “There is bilateral cooperation at government level. However, it mainly takes place at a structural level. The German government is relatively cautious when it comes to concrete corporate cooperation.”
Sinolytics is a European research-based consultancy entirely focused on China. It advises European companies on their strategic orientation and specific business activities in the People’s Republic.
Flowing hair, deep voice, guitar solos – these are the trademarks of Wu Bai (伍佰 – Wǔ bǎi), a key figure in Taiwanese rock music for over 30 years. With his band China Blue, he fills the biggest concert halls throughout East and Southeast Asia. Demand for concert tickets for his and other Taiwanese bands has exploded in China since the end of the COVID-19 pandemic. Wu Bai is part of a long tradition. Taiwanese artists such as Teresa Teng, Jay Chou and A-Mei have played a key role in shaping popular music in China since the 1980s. And yet, it is remarkable that Wu Bai, in particular, has such a loyal following in China, as his life and work are closely linked to his escape from political constraints and the search for his own Taiwanese identity.
Wu Bai, whose real name is Wu Junlin, was born in 1968 and grew up in a village in the rural Chiayi region in southwestern Taiwan. His father was a retired worker in a sugar factory; his mother sold betel nuts, a popular stimulant and treat in Taiwan, on the street. In the late 1980s, Wu Bai dropped out of school and moved to Taipei. There, he earned money by working odd jobs and teaching himself to play the guitar.
It was a time of social awakening after decades of dictatorship under the Kuomintang party. New spaces for subcultures also opened up in the course of political democratization. An alternative music scene emerged. And many songs were no longer written in the politically imposed standard Chinese spoken during the dictatorship, but in Taiwanese Minnan, spoken by the majority of the population at the time. Historically originating from a dialect of the Chinese coastal province of Fujian, Taiwanese Minnan (usually called Taiwanese) became a symbol of social self-determination. Wu Bai released his first two songs in Taiwanese in 1992. He soon founded the band Wu Bai & China Blue, with whom he still performs today.
Wu Bai’s music expresses a great love of life and passion just as much as melancholy. His song “Back to Hometown” (返去故鄉 – Fǎnqù gùxiāng), about someone returning home who is treated with suspicion and contempt by people in his hometown, is interpreted by many as an allusion to the stigmatization of politically persecuted individuals during the KMT dictatorship. Wu Bai dedicated the song “White Dove” (白鴿 – Bái gē) specifically to Taiwan. It says: “Even though I carry eternal sorrows, at least I still have my freedom.”
But many of Wu Bai’s songs are about love, including his perhaps most famous, “Norwegian Forest” (挪威森林 – Nuówēi sēnlín). Based on a novel by Haruki Murakami, the song is about secrets that people hide “in the deep forests of their hearts,” even from their loved ones.
Wu Bai always emphasizes that his music is, above all, an expression of a fundamental attitude towards life. This may also be why he appeals to a broad audience beyond Taiwan. Wu Bai is also adapting his repertoire in China, with fewer songs in Taiwanese and without any political messages. Due to ever-stricter censorship and nationalist propaganda, Taiwanese artists are walking a fine line in the People’s Republic. In August 2023, for example, an indie band was targeted at their first performance in the People’s Republic after announcing that they had never played in China before. This was taken as an indirect indication that the band did not consider Taiwan part of China – an insult in the eyes of the Chinese public.
In his early career days, Wu Bai was also denied entry to concerts in China for some time. His band had performed at election rallies of then-Taipei mayor and later president Chen Shui-bian of the DPP, who had very clearly criticized the People’s Republic. However, Wu Bai has been spared hostility in China in recent years. And in an environment where the limits of what can be said are becoming ever narrower, it is perhaps also his ability to sense existential longings without formulating them in an overly political way that continues to fascinate many of his fans to this day. Leonardo Pape
Ephemeral beauty: At temperatures between minus 12 and minus 22 degrees, ice sculptors compete against each other at the 35th Harbin International Ice Sculpture Competition in Harbin in the far north-east of China. Oddly enough, at the same time as the three-day artistic competition opens, the Chinese state media reports that 2023 was also the hottest year on record in China. Hard to imagine in frosty Harbin right now.
