As head of the Asia-Pacific Committee, one of Joe Kaeser’s tasks is to pick up on the mood and interests of the business community and translate them into concrete positions. At the same time, he is increasingly taking on a role as a thought leader on trade policy issues: In his time as an active Siemens manager, he gained plenty of experience in business practice, and as a group CEO, he moved in the corridors of power in recent years. In an interview with China.Table, he advises the government and companies: We shouldn’t get on China’s bad side, but simultaneously look for alternatives intensively. An exporting nation cannot afford trade disputes, but it must also not be dependent on an unpredictable foreign market.
Did the production of cheap fur bring us the pandemic? Tanuki have beautiful, soft fur. That’s why fur farms in China breed them en masse. The virologist Christian Drosten suspects the origin of the worldwide rampant epidemic here. Due to negligence in keeping and barbaric methods of slaughtering, the virus could have jumped over to humans. Perhaps, the Chinese leadership is not at all unjustified in the great discussion about the laboratory origin regarding this. After all, a false lead could distract from the true origin of the pandemic.
In the 1950s and 1960s, uranium was the energy raw material of the future; at the time, its reserves were still considered practically inexhaustible. For China, nuclear power is still an important building block for a climate-neutral power supply today. However, China’s own uranium reserves will only last a few more years, as Frank Sieren reports. The country’s technicians thus now want to extract the radioactive metal from the sea. At least, this is an effort Germany can spare itself because of its nuclear-free strategy.
Mr. Kaeser, is the German economy currently focussing too much on China?
Thanks to opening policies, China has become one of Germany’s main markets in the last 40 years, ahead of the USA. Exchange and trade have greatly benefited all parties involved. China has been able to lift many millions of people out of poverty and become the technological leader in some areas. It has helped German companies of all sizes to tap into new growth opportunities. Individual industries have now set clear priorities in China, including carmakers and machinery manufacturers. In this respect, it is a partnership from which both sides have benefited.
But?
No real “but.” It’s just that the situation has become more complex. The circumstances have changed primarily because China is very determinedly claiming a leading role in the global economy and is already doing so in some cases. Moreover, its technical capabilities are already very highly developed. Through all of this, the issue of systems competition has arisen. The United States is about to lose its number one position as an economic power in the medium term. But they don’t want to be number two in the world order. Who on place number one wants that?
What conclusions do you draw from this?
German business would be well advised to use its opportunities to influence the EU even more: It should be at the table and be heard internationally. The EU must help shape the world trade of tomorrow in the intergovernmental space. In addition, the German economy would be well advised to look at what other markets and partner countries there are in the region besides China. Asia clearly remains the engine of growth.
Is your message directed at the members of the APA or rather at politicians? Companies are free to invest where they see the greatest opportunities.
Our current position paper has emerged from the associations. It is admittedly a huge compromise between the interests of different industries and companies. Nevertheless, we have developed a good synthesis of what is best for our country. It’s a message in several directions. But it is also a warning: What we see today in terms of Chinese leadership is just the beginning! We want to send a message to the political level: Germany alone will be too small to have a say in setting global standards. If we do not make a concerted effort, this will essentially take place between the USA and China. It remains to be seen whether this call from Brussels will be heard and whether it will bring results. But we cannot be accused of not having pointed this out in time. There is a lot at stake because these developments will affect our prosperity in the future.
Are you particularly concerned about setting standards without German participation?
Yes, because this could hit our medium-sized businesses in particular, which are the broad backbone of our domestic economy. The large global companies will not wait for the environment to form, they will go their own way into localization. They have the resources to go along with decoupling. In concrete terms, this means they can develop their own products for each market according to the standards there and produce them locally. Medium-sized companies do not have these opportunities so easily. They benefit most from open markets with common standards. However, small and medium-sized enterprises are the economic and social element of stability. Anything that is to their disadvantage has consequences for prosperity in the country.
The CAI was an attempt to secure more reliable access to the Chinese market for companies of all sizes. Now it is not moving forward for the foreseeable future. What do you think about it?
It seemed like a good start to build such a framework. However, the CAI was nothing more in terms of expression and timing. Now we see that it is on hold anyway. All this also shows the problem of how divided we actually are as an economic power vis-à-vis China. They may look to us, but they will not wait for us.
Where do we go from here?
In the overall picture, our best hope lies in greater European integration. Only that can secure prosperity in the long term. It is high time that changes were made here. The new German government must tackle the issue head-on starting in the fall. The timing of our position paper was an attempt to offer encouragement and help in prioritizing economic policy in this regard. Germany, as the largest economy in Europe, and as a technology and market leader in many sectors, has the most to lose if this process goes wrong.
The new position paper encourages diversification away from China after the BDI had already sounded a critical note against China last year. Is a certain skepticism about China setting in at the association level?
As I said, we want to provide effective support for the political decision-making processes. This includes pointing out alternatives. In the end, companies must decide for themselves how to deal with the market and competition. They have more to lose than a choice.
Do you also advocate a return to the old partner countries Japan, Australia, South Korea and India?
These are indeed not deregistered. And they have to deal with similar conditions as we do. Most of them are also exporting countries. Some of them have aging populations, such as Japan, and thus have a lot in common with Germany. We would do well not to leave these economies to America. President Joe Biden has agreed very, very quickly with his economic team to forge close ties with these countries. Presumably, he wants to build up a local counterweight to China’s expansive policy.
Have we not taken China’s activities like the Belt and Road Initiative seriously enough?
We have long underestimated how much economic but also geostrategic influence China is building up with the Belt and Road Initiative. Now we must pay attention to what the Americans are up to in this situation. They will act and strategically realign. Presumably, they will bring Taiwan, Korea, Japan and other countries with common strategic interests to the table. These countries are more likely to cooperate with the United States than with Europe, which is difficult to classify in geopolitical terms and which, in case of doubt, will be left out as a protective power. We in Europe must be careful not to be left behind here.
The question is whether the EU can manage to take a clear position on this.
The fact is that it does not have a common foreign trade position. Interests diverge widely within the EU. Some have wine growers, others fishermen, and we have car and machine manufacturers, for example. If it requires the unanimity of 27 countries, it will be difficult. We can see this now in the difficulty the EU has in adopting positions on current economic and political issues. No wonder disillusionment is setting in among the citizens. But if Europe has a common foreign economic position, neither China nor the US can ignore that so easily. The EU is still the second-largest single market in the world after the US.
If the EU does succeed in coordinating its China policy – what would be the right way to deal with a great power that is increasingly unfriendly with its counter-sanctions?
It was not only China that contributed to the chain of events. What goes around comes around. And what right do rich industrialized nations have to deny developing countries their claim to prosperity? A lot of tact is needed here. People must continue to talk to each other, and in doing so, they also have to show consideration for the conditions in the other country. There are cultural things that should be made clear before taking action. But it is also clear that China is now implementing its claim to leadership with increasing clarity and efficiency. No question about it. That’s why we can’t avoid dealing with China and its system. State capitalism as a form of government allows for high efficiency. The system is not compatible with our democratic standards. But it does exist. That is why the democratic world has to deal with it.
Technologically, China is already ahead in some areas. Where do we go from here?
The development in the consumer Internet sector has passed Germany. We did not participate at all. In contrast, the automation and digitization of industry are well underway. With the development of artificial intelligence, applications and new business models in which we can continue to lead in the future are emerging.
You mean Industry 4.0?
There are many names for it. Its core is: The Internet reaches the industrial world. Either you are in or you are out. If you innovate, you’re going to be lighter and faster. That’s going to be a huge advantage. The speed of innovation is increasing rapidly, the time to market new products is decreasing. Productivity in manufacturing and logistics increases. Machines are connected and self-learning. Here we are back to the topic of common standards.
However, a large international market for standardized products only exists in partnership with China. This would deepen the integration of our economic areas instead of reducing it.
That is why data security is playing an increasingly important role. The Internet of Things needs a free flow of data everywhere at all times. Boundless mobility and connectivity with secure data protection. This is an extraterritorial order that we need to organize. This is a major challenge for the community of states, which is organized in a territorial order.
So the political trends of decoupling, trade war and spiraling sanctions run directly counter to what the unfolding of the technical trends requires?
Exactly. The Trump era hasn’t exactly helped to bring global politics together with global economic needs. We shouldn’t kid ourselves, though. Even the Biden administration will not be dissuaded from defending the US position as the world’s systemic power. This includes asserting US interests as an economic power. The issue will thus not go away. The rhetoric will certainly change again under Biden compared to Trump but the underlying theme will remain: the competition for global economic and geostrategic supremacy, which also directly affects us as Germany and the EU.
Joe Kaeser, 63, is Chairman of the Asia-Pacific Committee of German Business (APA). He was CEO of Siemens from 2013 to February 2021 and is now Chairman of the Supervisory Board of Siemens Energy. Kaeser’s first experience of Asia dates back to 1987 when he headed the group’s semiconductor business in Malaysia. The Far East markets have remained his focus ever since.
Since the fall of 2019, Moritz Koerner has been a member of the European Parliament and a member of the Delegation for relations with the People’s Republic of China. Delegation trips to Beijing are out of the question in pandemic times. Instead, Koerner has only had a few talks with the Chinese representation for the EU in Brussels so far. “That’s a pity,” he says in the video interview. “As a new, young member of Parliament, I would have been very interested to talk, especially with young people from China.”
Moritz Koerner, who grew up in Langenfeld in the Rhineland, is, as a 30-year-old, far below the average age of MEPs, which is almost 50 in this legislative period. Even before that, in FDP state politics, he was always among the younger ones: At 16, he joined the Young Liberals in North Rhine-Westphalia and was their chairman from 2013 to 2018. At the age of 26, he was elected as the youngest member of the state parliament in Dusseldorf at the time.
Moritz Koerner did not choose the China delegation merely because of his travel preferences. “We have to take China more seriously, there’s no way around it now. Especially as a young member of parliament, I have the feeling that China will keep us busy for a very long time.” The People’s Republic is on its way to a world power or at least on par with the United States. This is changing the world order considerably, he said. If China is increasingly exporting its own ideas of human rights to the rest of the world – what does that mean for a free society, as Koerner envisions it? These are the kinds of questions that preoccupy the 30-year-old.
However, the EU must be more consistent in representing its values, and not only with regard to human rights. Politics and business should not be viewed in isolation from each other, Moritz Koerner believes – for example, about the Belt and Road Initiative: “We see that many countries are becoming dependent on China,” he explains. “The question is: Will the EU just let that happen? Or do we need to position ourselves more in rivalry?“
In the European Parliament, Moritz Koerner also sits on the Committee on Budgets and the Committee on Civil Liberties, Justice, and Home Affairs. Many topics overlap with China issues – for example, criticism of TikTok, the Chinese video app currently popular especially among younger people (China.Table reported on founder Zhang Yiming). The platform allegedly illegally collected personal data from children, according to the US Antitrust Division. To that end, Koerner sent a request to the European Commission in the fall of 2019. He wanted to find out what was true about the allegations and whether there was already an investigation. The Commission’s answer: The national data protection authorities were responsible. The European Parliament’s Data Protection Committee did launch an investigation – “unfortunately, nothing more has happened so far,” says Koerner.
He himself does not have a TikTok account for this reason. “I have nothing against the app, but I would like it to adhere to European rules. I view with skepticism if the Chinese state could have influence here,” says Koerner. Nevertheless, he uses almost every other social media platform – and has his own podcast: In “Europa, wir muessen reden” (“Europe, we need to talk”), he talks for half an hour in each episode with colleagues from other parties and member states. “Politics seems awfully far away,” he says. “We need to communicate much more what we do – especially as MEPs.” Leonie Duengefeld
As head of the Asia-Pacific Committee, one of Joe Kaeser’s tasks is to pick up on the mood and interests of the business community and translate them into concrete positions. At the same time, he is increasingly taking on a role as a thought leader on trade policy issues: In his time as an active Siemens manager, he gained plenty of experience in business practice, and as a group CEO, he moved in the corridors of power in recent years. In an interview with China.Table, he advises the government and companies: We shouldn’t get on China’s bad side, but simultaneously look for alternatives intensively. An exporting nation cannot afford trade disputes, but it must also not be dependent on an unpredictable foreign market.
Did the production of cheap fur bring us the pandemic? Tanuki have beautiful, soft fur. That’s why fur farms in China breed them en masse. The virologist Christian Drosten suspects the origin of the worldwide rampant epidemic here. Due to negligence in keeping and barbaric methods of slaughtering, the virus could have jumped over to humans. Perhaps, the Chinese leadership is not at all unjustified in the great discussion about the laboratory origin regarding this. After all, a false lead could distract from the true origin of the pandemic.
In the 1950s and 1960s, uranium was the energy raw material of the future; at the time, its reserves were still considered practically inexhaustible. For China, nuclear power is still an important building block for a climate-neutral power supply today. However, China’s own uranium reserves will only last a few more years, as Frank Sieren reports. The country’s technicians thus now want to extract the radioactive metal from the sea. At least, this is an effort Germany can spare itself because of its nuclear-free strategy.
Mr. Kaeser, is the German economy currently focussing too much on China?
Thanks to opening policies, China has become one of Germany’s main markets in the last 40 years, ahead of the USA. Exchange and trade have greatly benefited all parties involved. China has been able to lift many millions of people out of poverty and become the technological leader in some areas. It has helped German companies of all sizes to tap into new growth opportunities. Individual industries have now set clear priorities in China, including carmakers and machinery manufacturers. In this respect, it is a partnership from which both sides have benefited.
But?
No real “but.” It’s just that the situation has become more complex. The circumstances have changed primarily because China is very determinedly claiming a leading role in the global economy and is already doing so in some cases. Moreover, its technical capabilities are already very highly developed. Through all of this, the issue of systems competition has arisen. The United States is about to lose its number one position as an economic power in the medium term. But they don’t want to be number two in the world order. Who on place number one wants that?
What conclusions do you draw from this?
German business would be well advised to use its opportunities to influence the EU even more: It should be at the table and be heard internationally. The EU must help shape the world trade of tomorrow in the intergovernmental space. In addition, the German economy would be well advised to look at what other markets and partner countries there are in the region besides China. Asia clearly remains the engine of growth.
Is your message directed at the members of the APA or rather at politicians? Companies are free to invest where they see the greatest opportunities.
Our current position paper has emerged from the associations. It is admittedly a huge compromise between the interests of different industries and companies. Nevertheless, we have developed a good synthesis of what is best for our country. It’s a message in several directions. But it is also a warning: What we see today in terms of Chinese leadership is just the beginning! We want to send a message to the political level: Germany alone will be too small to have a say in setting global standards. If we do not make a concerted effort, this will essentially take place between the USA and China. It remains to be seen whether this call from Brussels will be heard and whether it will bring results. But we cannot be accused of not having pointed this out in time. There is a lot at stake because these developments will affect our prosperity in the future.
Are you particularly concerned about setting standards without German participation?
Yes, because this could hit our medium-sized businesses in particular, which are the broad backbone of our domestic economy. The large global companies will not wait for the environment to form, they will go their own way into localization. They have the resources to go along with decoupling. In concrete terms, this means they can develop their own products for each market according to the standards there and produce them locally. Medium-sized companies do not have these opportunities so easily. They benefit most from open markets with common standards. However, small and medium-sized enterprises are the economic and social element of stability. Anything that is to their disadvantage has consequences for prosperity in the country.
The CAI was an attempt to secure more reliable access to the Chinese market for companies of all sizes. Now it is not moving forward for the foreseeable future. What do you think about it?
It seemed like a good start to build such a framework. However, the CAI was nothing more in terms of expression and timing. Now we see that it is on hold anyway. All this also shows the problem of how divided we actually are as an economic power vis-à-vis China. They may look to us, but they will not wait for us.
Where do we go from here?
In the overall picture, our best hope lies in greater European integration. Only that can secure prosperity in the long term. It is high time that changes were made here. The new German government must tackle the issue head-on starting in the fall. The timing of our position paper was an attempt to offer encouragement and help in prioritizing economic policy in this regard. Germany, as the largest economy in Europe, and as a technology and market leader in many sectors, has the most to lose if this process goes wrong.
The new position paper encourages diversification away from China after the BDI had already sounded a critical note against China last year. Is a certain skepticism about China setting in at the association level?
As I said, we want to provide effective support for the political decision-making processes. This includes pointing out alternatives. In the end, companies must decide for themselves how to deal with the market and competition. They have more to lose than a choice.
Do you also advocate a return to the old partner countries Japan, Australia, South Korea and India?
These are indeed not deregistered. And they have to deal with similar conditions as we do. Most of them are also exporting countries. Some of them have aging populations, such as Japan, and thus have a lot in common with Germany. We would do well not to leave these economies to America. President Joe Biden has agreed very, very quickly with his economic team to forge close ties with these countries. Presumably, he wants to build up a local counterweight to China’s expansive policy.
Have we not taken China’s activities like the Belt and Road Initiative seriously enough?
We have long underestimated how much economic but also geostrategic influence China is building up with the Belt and Road Initiative. Now we must pay attention to what the Americans are up to in this situation. They will act and strategically realign. Presumably, they will bring Taiwan, Korea, Japan and other countries with common strategic interests to the table. These countries are more likely to cooperate with the United States than with Europe, which is difficult to classify in geopolitical terms and which, in case of doubt, will be left out as a protective power. We in Europe must be careful not to be left behind here.
The question is whether the EU can manage to take a clear position on this.
The fact is that it does not have a common foreign trade position. Interests diverge widely within the EU. Some have wine growers, others fishermen, and we have car and machine manufacturers, for example. If it requires the unanimity of 27 countries, it will be difficult. We can see this now in the difficulty the EU has in adopting positions on current economic and political issues. No wonder disillusionment is setting in among the citizens. But if Europe has a common foreign economic position, neither China nor the US can ignore that so easily. The EU is still the second-largest single market in the world after the US.
If the EU does succeed in coordinating its China policy – what would be the right way to deal with a great power that is increasingly unfriendly with its counter-sanctions?
It was not only China that contributed to the chain of events. What goes around comes around. And what right do rich industrialized nations have to deny developing countries their claim to prosperity? A lot of tact is needed here. People must continue to talk to each other, and in doing so, they also have to show consideration for the conditions in the other country. There are cultural things that should be made clear before taking action. But it is also clear that China is now implementing its claim to leadership with increasing clarity and efficiency. No question about it. That’s why we can’t avoid dealing with China and its system. State capitalism as a form of government allows for high efficiency. The system is not compatible with our democratic standards. But it does exist. That is why the democratic world has to deal with it.
Technologically, China is already ahead in some areas. Where do we go from here?
The development in the consumer Internet sector has passed Germany. We did not participate at all. In contrast, the automation and digitization of industry are well underway. With the development of artificial intelligence, applications and new business models in which we can continue to lead in the future are emerging.
You mean Industry 4.0?
There are many names for it. Its core is: The Internet reaches the industrial world. Either you are in or you are out. If you innovate, you’re going to be lighter and faster. That’s going to be a huge advantage. The speed of innovation is increasing rapidly, the time to market new products is decreasing. Productivity in manufacturing and logistics increases. Machines are connected and self-learning. Here we are back to the topic of common standards.
However, a large international market for standardized products only exists in partnership with China. This would deepen the integration of our economic areas instead of reducing it.
That is why data security is playing an increasingly important role. The Internet of Things needs a free flow of data everywhere at all times. Boundless mobility and connectivity with secure data protection. This is an extraterritorial order that we need to organize. This is a major challenge for the community of states, which is organized in a territorial order.
So the political trends of decoupling, trade war and spiraling sanctions run directly counter to what the unfolding of the technical trends requires?
Exactly. The Trump era hasn’t exactly helped to bring global politics together with global economic needs. We shouldn’t kid ourselves, though. Even the Biden administration will not be dissuaded from defending the US position as the world’s systemic power. This includes asserting US interests as an economic power. The issue will thus not go away. The rhetoric will certainly change again under Biden compared to Trump but the underlying theme will remain: the competition for global economic and geostrategic supremacy, which also directly affects us as Germany and the EU.
Joe Kaeser, 63, is Chairman of the Asia-Pacific Committee of German Business (APA). He was CEO of Siemens from 2013 to February 2021 and is now Chairman of the Supervisory Board of Siemens Energy. Kaeser’s first experience of Asia dates back to 1987 when he headed the group’s semiconductor business in Malaysia. The Far East markets have remained his focus ever since.
Since the fall of 2019, Moritz Koerner has been a member of the European Parliament and a member of the Delegation for relations with the People’s Republic of China. Delegation trips to Beijing are out of the question in pandemic times. Instead, Koerner has only had a few talks with the Chinese representation for the EU in Brussels so far. “That’s a pity,” he says in the video interview. “As a new, young member of Parliament, I would have been very interested to talk, especially with young people from China.”
Moritz Koerner, who grew up in Langenfeld in the Rhineland, is, as a 30-year-old, far below the average age of MEPs, which is almost 50 in this legislative period. Even before that, in FDP state politics, he was always among the younger ones: At 16, he joined the Young Liberals in North Rhine-Westphalia and was their chairman from 2013 to 2018. At the age of 26, he was elected as the youngest member of the state parliament in Dusseldorf at the time.
Moritz Koerner did not choose the China delegation merely because of his travel preferences. “We have to take China more seriously, there’s no way around it now. Especially as a young member of parliament, I have the feeling that China will keep us busy for a very long time.” The People’s Republic is on its way to a world power or at least on par with the United States. This is changing the world order considerably, he said. If China is increasingly exporting its own ideas of human rights to the rest of the world – what does that mean for a free society, as Koerner envisions it? These are the kinds of questions that preoccupy the 30-year-old.
However, the EU must be more consistent in representing its values, and not only with regard to human rights. Politics and business should not be viewed in isolation from each other, Moritz Koerner believes – for example, about the Belt and Road Initiative: “We see that many countries are becoming dependent on China,” he explains. “The question is: Will the EU just let that happen? Or do we need to position ourselves more in rivalry?“
In the European Parliament, Moritz Koerner also sits on the Committee on Budgets and the Committee on Civil Liberties, Justice, and Home Affairs. Many topics overlap with China issues – for example, criticism of TikTok, the Chinese video app currently popular especially among younger people (China.Table reported on founder Zhang Yiming). The platform allegedly illegally collected personal data from children, according to the US Antitrust Division. To that end, Koerner sent a request to the European Commission in the fall of 2019. He wanted to find out what was true about the allegations and whether there was already an investigation. The Commission’s answer: The national data protection authorities were responsible. The European Parliament’s Data Protection Committee did launch an investigation – “unfortunately, nothing more has happened so far,” says Koerner.
He himself does not have a TikTok account for this reason. “I have nothing against the app, but I would like it to adhere to European rules. I view with skepticism if the Chinese state could have influence here,” says Koerner. Nevertheless, he uses almost every other social media platform – and has his own podcast: In “Europa, wir muessen reden” (“Europe, we need to talk”), he talks for half an hour in each episode with colleagues from other parties and member states. “Politics seems awfully far away,” he says. “We need to communicate much more what we do – especially as MEPs.” Leonie Duengefeld
