Interview with Joerg Wuttke + CAI vs. sanctions

Dear reader,

How can the EU deal with a China that can barely walk because it is bursting with strength? Our correspondent Frank Sieren spoke with Jörg Wuttke, one of the most experienced China managers in German business and long-time President of the local EU Chamber of Commerce. Wuttke advocates saving the CAI investment agreement by both sides simply applying it. As spoken by a pragmatist who has himself put a lot of work into preparing the treaty, in the hope of stopping the “downwards spiral, sanctions against sanctions” after all.

Wuttke explains China’s currently so “robust” appearance with historical comparison. After its long period of weakness, the country is in a similar position to Germany under Kaiser Wilhelm II. There, too, “the tone became more determined and idiosyncratic.” Now, conversely, the West must find the right tone toward China under Xi Jinping – after all, our prosperity depends on functioning relations, he said. The written version of the interview can be found here at China.Table.

In addition, Amelie Richter found out the current state of the decision-making process in the EU Parliament. Behind the scenes, MEPs are asking themselves the same question as Sieren and Wuttke: How can the EU deal with the emotional roller coaster of tough sanctions and a fully negotiated partnership agreement? The approach in Brussels, however, is different: Ratification of the CAI is only possible if Beijing reduces sanctions; that is the mood among MEPs. The conflict is developing into a nerve-racking situation.

Your
Finn Mayer-Kuckuk

Exit out of the sanctions trap: ‘We’re simply filling the CAI with life!’

https://www.youtube.com/watch?v=OgGp4SMQ_vs

Mr. Wuttke, are the EU’s sanctions against China reasonable?

I don’t think sanctions are reasonable in principle. My wife is Russian. I have seen the sanctions on Russia since 2014. Seven years have gone by without the sanctions being withdrawn. Russia is suffering, the EU is suffering. And Russia hasn’t weakened internationally until today. At the same time, the Chinese response to our sanctions has shown that they, too, won’t simply be backed into a corner. Their sanctions are disproportionately tougher than ours. That surprised us. The question is now how we can get out of this trap.

Beijing trusts Chancellor Merkel more than almost any other Western politician. What should she do now? She doesn’t have much time left. The elections are as soon as September.

Yes, she has the confidence of the Chinese government. And that is why she can succeed in reopening the door a little wider, which was demonstrated recently during the German-Chinese government consultations. Merkel is trying to maintain contact so that this downward spiral, sanctions against sanctions, can be stopped.

What role does the investment agreement play between the EU and China? If the EU has its way, it should remain on ice as long as Beijing does not withdraw its sanctions.

First of all, it is very important that, after seven years of negotiations, Europe managed to reach an agreement with China on such a treaty. Europe has thus found its own voice – against American pressure. We should continue working on major difficulties and stick to the investment agreement.

How do you do that?

We are not waiting for the agreement to be ratified by the EU Parliament but are simply implementing it. That, at any rate, is what I am currently trying to convince our partners in Beijing to do. We are now simply filling with life, what China has conceded to us and what we are allowing China to do. For the EU, too, this is about concessions that de facto go further than what has been achieved in all other bilateral agreements. That’s progress.

But with that, we turn a blind eye to human rights abuses.

It is extremely saddening what is happening in Hong Kong and frightening how minorities are treated in Xinjiang. But I believe there is little we can do about it. We must exercise humility in these matters. We do not have the power to force China’s policy in a different direction. Even in a coalition with the Americans, I am very skeptical that we will succeed in forcing China in a new direction. The Chinese are proud and will only push back all the harder. We must remain realistic. Brussels has not even managed to make EU member Hungary see reason concerning China. Our pressure will not make China move towards a free market economy or give in on human rights issues. We can, at best, move things in small steps, but only where we have been able to convince the Chinese that corresponding reforms are of benefit to themselves.

If we can’t change China, do we need to improve protecting ourselves against China?

Yes and no. We would have to protect ourselves against unfair competition from heavily subsidized state-owned enterprises. Competition from private companies, on the other hand, is good for us. So the fact that Geely bought Volvo, a company that no one in the West wanted to pay a cent for, and that Volvo is now enjoying success again is a very positive example. In general, you can even say that without pressure from China, the German automotive industry would not be as far along as it is today. That’s why we need more Chinese competition. Not less. This is the only way to identify our weaknesses, which we need to work on. We can only stand up to China from a position of economic strength. And we only have that if we are competitive. We need to get out of our lethargy.

What could this mean in concrete terms?

We need to reform the EU instead of believing we are safe if we limit ourselves to protecting our markets against China. China’s share of global economic growth, even without Covid, is as large as that of all OECD countries combined. China must become our Sputnik moment. We have already fallen behind China in many key technological areas. How we change that has to be the most important question. And not how we close ourselves off.

But China is putting us at a greater and greater disadvantage. We are increasingly on the defensive.

You have to take a more differentiated view. Thanks to China, we can buy more and more good quality products at low prices. That strengthens our purchasing power. Today, most Chinese products are just as good as Western ones but cheaper. At the same time, there are still important areas in which we in Germany would not be in such a good position today if it were not for the Chinese market. The automotive industry is certainly the first to be mentioned.

But haven’t we also lost many industries and, thus, jobs to China?

Yes, indeed. But on balance, we have gained far more and still have more to gain than to lose in the future.

Why are the Chinese so successful economically?

Many factors come together. Important is the extreme eagerness to work and a great appreciation of education, especially in the natural sciences. That is almost no longer the case in Germany. And the willingness to tackle new challenges is also more pronounced in China. The Chinese are willing to take risks. That is something we lack, which is also because the Chinese are not as perfectionistic. They stop developing products when they are 80 percent ready, go to market with their product and then develop it step by step for the customer. On the other hand, we like to develop until the product is 110 percent ready for the market. By then, however, the Chinese have already been on the market for a year and found their customers. In short, we have to learn much more from China than we have in the past. China is a big gym for us that frees us from our lethargy.

At the same time, however, China is trying to make itself independent of us by increasing domestic consumption and pushing ahead with RCEP, the Asian Free Trade Area.

We should look at the issue with a little more self-confidence. If China and its Asian neighbors are doing better, that is also good for us. New middle classes are emerging that can and want to afford not only Chinese products but also ours. All those companies that produce in Asia, including the European ones, will benefit from the fact that customs duties will be abolished. In a sense, they are no longer European but also Asian. We are already part of the furniture. Furthermore, the EU concluded far-reaching bilateral agreements with Asian countries, including South Korea, Japan, Vietnam and Singapore. And they are negotiating with New Zealand, Australia, and Indonesia. This is not just about access to our products but also about important issues such as environmental protection and labor law. Europe is much further ahead than other countries in the West on this issue. Instead of despairing or being angry with the Asians, we should be proud of the fact that they are forging closer connections, which makes perfect sense from their point of view.

China is becoming more and more assertive vis-à-vis Europe, but also in Asia. Some even say, more impudent and nationalistic.

Yes, indeed. I don’t understand why such a large and stable country, a member of the UN Security Council, a nuclear weapon nation, and the second largest economy in the world with high growth, has to act so robustly, even on a small scale. After all, it is already obvious to everyone that they dominate. Nevertheless, China can’t deny itself the opportunity to show who’s boss, even in small matters.

Why is that?

This can perhaps be explained by looking at the history of Germany in the 19th century. Bismarck was aware that a successful Germany, growing stronger in the wake of industrialization and urbanization, would have to integrate itself cautiously into the international community. For it posed a challenge to the then-leading British. Then under Wilhelm II, similar to Xi Jinping, the tone became more determined and idiosyncratic, which then generated the corresponding counter-pressure from the neighbors.

To follow this analogy, it did not end well for Germany in the first half of the 20th century. Does that also apply to China?

At any rate, we should mention that here in Beijing from time to time. Germany had the opportunity to take the lead and squandered its chances in overconfidence. The 21st century can be the Chinese century if Beijing doesn’t overdo it. If they don’t sleepwalk and believe whatever they do will always continue. China is getting stronger; the West is getting weaker. For China, too, pride may come before a fall.

Would it not be beneficial for Europe if China were to stumble over its own feet once again? That would give us scope to do our homework.

That is a dangerous strategy because our economic prosperity depends on China. If China does not succeed, then God help us. Our interest must be that China reforms itself, but at the same time, remains successful and becomes a reliable partner in the new world order.

Joerg Wuttke has been President of the EU Chamber of Commerce in China since 2019 – a post with which he is already very familiar from two previous terms in office. Previously, he was also Chairman of the Supervisory Board of the German Chamber of Foreign Trade in Beijing, which he co-founded in 1999. Wuttke studied Chinese and economics in 1982 in Shanghai and Taipei, among other places. In 1986, he began working for ABB China in various functions. In 1997, he became Vice President and Chief Representative of BASF China – and remains so today. This makes Wuttke one of the most experienced German China managers. He lives with his family in Beijing.

Draft resolution: CAI only after end of sanctions

This week, the European Parliament will adopt a resolution on the sanctions imposed by Beijing. The resolution will probably link the future of the investment agreement between the European Union and China (CAI) to the lifting of the sanctions against European politicians, scientists, and organizations. Several MEPs already expressed this demand. With the resolution, the European Parliament would officially take a stand and thus increase the pressure on the EU Commission (China.Table reported).

In the draft resolutions of the four largest political groups in the EU Parliament received by China.Table, the Chinese sanctions are unanimously condemned – however, the respective demands for a work stoppage at the CAI are formulated differently.

The European Greens‘ proposal goes furthest. They demand “that any consideration of the EU-China Comprehensive Agreement on Investment (CAI) and any discussion of ratification by the Parliament remain frozen while Chinese sanctions are in place.” It also said the EU Commission was expected “to consult Parliament before taking any steps to conclude and sign the CAI.”
In terms of severity, the Socialists‘ draft resolution is located in the middle field. It says the lifting of sanctions against MEPs and EU institutions is “an unavoidable condition” for the EU Parliament and its committees to “proceed with discussions on the ratification of the CAI.”
In its draft resolution, the liberal Renew group also calls for the sanctions to be withdrawn and urges the EU Commission to use the CAI “as a lever to improve human rights protection and support for civil society in China.” Renew also welcomes in the draft that the EU Commission does not want to push ahead with ratification for the time being.
The conservative EPP group also calls in its draft for a withdrawal of sanctions against Europeans, but it has a milder approach. It does not talk about not proceeding with the CAI until then. However, the EU Commission is “reminded” to take into account the human rights situation in China and Hong Kong when it comes to “approving investment agreements or future trade agreements with the country.”

Evelyne Gebhardt (SPD) firmly believes that the demand for the withdrawal of sanctions will be included in the resolution as a precondition for further work on the CAI. She is an MEP and Vice-Chair of the European Parliament’s China delegation.“Maybe a little reworded, but I believe this precondition for talks can prevail,” Gebhardt told China.Table. She stressed that the European Parliament was not about stopping all talks with China. “But it is very clear that we expect sanctions to be dismantled.” If the CAI is to be ratified in the future, China is also expected to implement the ILO conventions.

The political groups in the European Parliament are still negotiating a joint draft resolution until around Tuesday evening, which will then be put to the vote on Thursday. The work in the Parliament on the CAI is currently on hold anyway. However, the legal scrubbing and the translation into the EU languages are still ongoing. ari

FDP takes pro-Taiwan stance

In its federal elections program, the FDP advocates strengthening Taiwan’s position. The Liberals removed the reference to the “One-China policy” at their party conference on Sunday evening. Instead, they are seeking greater Taiwanese involvement in international organizations. It is “a clear message to Beijing that the breach of international law in the Hong Kong case will not remain without consequences,” the party’s foreign policy spokesman Bijan Djir-Sarai told Reuters news agency. The FDP welcomes the CAI but criticizes human rights violations in China. A separate section is devoted to both the EU’s relations with the People’s Republic and the Taiwan issue.

The draft program before the party congress at the weekend said: “While maintaining the One-China policy, we support Taiwan’s efforts to integrate into international organizations – to the extent that this can be done below the threshold of state recognition.” The reference to the One-China policy was deleted from the final version. Since the diplomatic recognition of the People’s Republic by Western countries, this is the formula according to which there is only one Chinese state, which includes both the mainland and Taiwan.“We Free Democrats support the democratic and constitutional development in Taiwan as a successful counter-draft to the authoritarian system of rule in the People’s Republic of China,” it now says in the election program. However, formal recognition as a separate state is still not supported, Djir-Sarai said. fin

Zhurong reaches Mars’ surface

The Mars rover Zhurong has landed successfully. On Saturday, the capsule with the research robot reached the surface of the planet, the China National Space Administration (CNSA) announced. The Chinese Mars mission was underway for seven months (China.Table reported). Zhurong could transmit the first images and measurement results from the surface as soon as in the coming days.

This makes China the third nation to place an object on Mars. The other two are Russia and the US. Scientists expect the measurements to yield few entirely new insights from the Martian surface beyond experiments conducted by existing US missions. But for the challenging landing on another planet, Chinese engineers have developed techniques they can build on for the next stages of the space program. fin

Innovation: Sinopec converts crude oil directly into chemical products

The Chinese petrochemical company Sinopec has developed a new process for the direct conversion of crude oil into chemicals. As the trade magazine Process reports, this new “crude oil to chemicals” process, or COTC, is a significant technological breakthrough. Since it can omit various intermediate steps of traditional methods, it significantly simplifies crude oil refining for the chemical industry. According to Process, the new COTC process can produce significantly more ethylene, propylene and light hydrocarbons per barrel of oil than the petrochemical industry’s most advanced interconnected refinery sites. At the same time, energy consumption and emissions can be reduced considerably. According to the magazine, China is thus becoming the global technology leader in the catalytic cracking of crude oil.

Chemical precursors are obtained from crude oil for plastics production, among other things. While the demand for fuels is gradually decreasing worldwide due to the expansion of renewable energies and electromobility, the demand for chemicals is expected to continue growing for the time being. As a result, petrochemical companies around the world are looking for alternative business models for their refineries – so that they can continue to process crude oil in them. The secret of Sinopec’s process lies, among other things, in the “optimal matching of reaction temperature and catalytic activity,” Process quotes the chemical newspaper Zhongguo Huagong Bao. Sinopec had been researching the process for some time, it said. According to Process, Sinopec subsidiary Yangzhou Petrochemical has now tested it on an industrial scale for the first time. ck

Stockpiling in Taiwan after Covid infections

In Taiwan, the number of new Covid infections has risen rapidly from a low level. The government is now trying to salvage its previously very good pandemic record. The island nation served as an international role model regarding Covid containment. On Saturday, 180 new Covid infections were reported in Taiwan, compared with just 29 new cases as recently as Friday. President Tsai Ing-wen raised the alert level for the capital Taipei as well as surrounding regions. Since the weekend, no more than five people have been allowed to gather indoors. A new limit of ten people applies outdoors. While schools, government offices, offices, as well as most shops remain open, strict masking and distance rules apply again. Leisure and entertainment facilities such as bars and sports centers have been forced to close across the country as part of the restrictions, which are due to last until May 28. The government urged the public to refrain from hoarding purchases.

Health Minister Chen Shih-chung announced further measures for the future, including distance learning for some school grades and guidelines for hospitals to prioritize symptomatic Covid cases. He urged people to strengthen hygiene measures and avoid unnecessary travel and meetings. “Personal responsibility is very important,” Chen said. As of Sunday, a total of only 1682 infections have been counted in Taiwan since the outbreak of the virus crisis, and 12 people died in connection with a Covid infection. That Taiwan’s residents have hardly gotten vaccinated is a point of criticism. As of Saturday, only 186,149 of Taiwan’s 23 million residents had been vaccinated for the first time. niw

Robin Zeng Yuqun

In Thuringia, more precisely in Arnstadt near Erfurt, one or the other will have heard the name Robin Zeng before. In 2011, the entrepreneur founded Contemporary Amperex Technology, or CATL. The company manufactures batteries for EVs. So many, that CATL is the largest producer in the People’s Republic of China. In perspective: world market leader.

The company decided to invest a lot of money in a new production site in Arnstadt a few years ago. Without Covid the factory would have already been spitting out batteries on the assembly line. Due to pandemic-related delays, the site won’t start working until next year. Then the batteries will go to Tesla, Daimler, BMW, and other companies that produce masses of EVs. In the end, 2000 jobs will be created at the Arnstadt site. That’s why Robin Zeng has so many new friends in Thuringia.

A few days ago, the 53-year-old made headlines in a different location. Last week, he briefly became the richest person in Hong Kong with a fortune of $34.5 billion. Zeng lives in Hong Kong and is a citizen there. That was notable because the city’s previous leader, Li Ka-shing, topped the list unchallenged for years. However, it was only a marginal lead of $200 million that separated the two and was forfeited the following day as the total wealth of the two billionaires was calculated based on fluctuating stock prices. On a boring day on the stock market, the two can go up or down by a few hundred million. Not worth mentioning.

So what, you might think. One filthy-rich entrepreneur replaces another. But the changing of the guard’s timing is also a symbol of the transformation Hong Kong has undergone in the past two decades, especially in the past two years: the takeover of a former independent city by authoritarian rulers from the People’s Republic.

Li is something of a prototypical Hong Kong tycoon, raking in his first millions with plastic flowers in the 1950s, he since subjugated the city with his business acumen. Over decades, he kept reinventing himself, getting into real estate, building a food chain, and investing in telecommunications. Li turns 93 in June, a relic of the city’s golden age when Bruce Lee’s martial arts won fans all around the world.

Robin Zeng is on the starting block to permanently succeed Li as Hong Kong’s number one, at least in the Forbes real-time list of the super-rich. Robin’s real first name is Yuqun, and unlike Li Ka-shing, he wasn’t socialized in Hong Kong but on the mainland. He was born in the middle of the Cultural Revolution era in the southeastern coastal province of Fujian, whose residents are considered cosmopolitan and people with a sense of business because of their geographical location. Seven years ago, he applied for citizenship of the former British colony as part of a recruitment program run by the city of Hong Kong. It wanted to lure bright minds and successful entrepreneurs from the People’s Republic. As one of more than 7000 Chinese, he received Hong Kong papers.

Zeng has a Ph.D. in physics and studied at the Chinese Academy of Sciences. What made him rich, however, was cell chemistry, the inner workings of batteries. When he raised more capital in Shenzhen a year later after his stock market debut in 2017, on the first day of trading a mechanism stopped the new shares from plummeting. More than 44 percent price gain was not allowed. It was still enough for a market capitalization of about $12.5 billion. That made Zeng, who owns 26 percent of CATL shares, a multi-billionaire by then. But that was only the beginning of a success story significantly supported by Chinese subsidies for electric mobility.

For Robin Zeng, the past year in particular has meant financial advancement into an illustrious circle of people whose personal wealth is greater than the gross domestic product of almost 100 nation-states. The EV boom, especially in China, increased the demand for batteries so immensely that CATL’s share price tripled within 16 months since January 2020.

For Robin Zeng, incredible prosperity also means an obligation – to the Chinese Communist Party, which demands loyalty from successful company founders. Those who make it big in the Chinese market must not forget where they come from. Alibaba founder Jack Ma was reminded of this by the party a few months ago. In any case, Li Ka-shing is very cautious and reserved when it comes to his political expression – even though the Hong Kong citizen did not wear a Chinese muzzle originally. Here, too, Zeng’s rise symbolizes a turning point: towards a Hong Kong that is closely integrated into the People’s Republic. Marcel Grzanna

17.05.2021_On language

What are the top 3 stopgap gestures for selfies, group photos, and other spontaneous snaps? Clearly: victory sign, thumbs up, and flick a heart. Wait a minute, flick a heart? Every kid in China has long known this finger gymnastics. 比心 bǐxīn – literally “gesturing/imitating a heart” – is the name given to this pose, which has recently taken the photo-soaked smartphone age in the Middle Kingdom by storm. Here’s how it works: Place the tips of your thumb and index finger on top of each other, then slide your thumb out at an angle (like flicking) to create a little heart shape. Hold the position, take the photo, done!

By the way, 比心 bǐxīn is by no means the only “heart” that the Chinese language has in its repertoire. Depending on the heart’s condition, many new meanings arise in Putonghua. An “open” heart (开心 kāixīn), for example, means “glad, rejoice,” a “small” heart (小心 xiǎoxīn) means “be careful, be cautious.” One who “puts down” the heart (放心 fàngxīn) is “calmed, relieved,” one who “uses” it (用心 yòngxīn) is “careful, mindful, and focused,” and one who has a “rough” heart (粗心 cūxīn) is considered “careless, negligent.” If the heart is “wounded” (伤心 shāngxīn), one is “deeply sad,” if it is “good” (良心 liángxīn), one has “conscience” and “scruples,” and one who has “many” hearts beating in his chest (多心 duōxīn) is “worrying too much.” But how is one supposed to memorize all these characters and their meanings? Well, with a “hot” and “wild” heart, of course (热心 rèxīn and 野心 yěxīn), with enough “enthusiasm” and “ambition”, so to speak.

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

CHINA.TABLE EDITORIAL OFFICE

Amelie
Richter

Marcel
Grzanna

Fabian
Peltsch

Julia
Fiedler

Angela
Köckritz

Jörn
Petring

Dear reader,

How can the EU deal with a China that can barely walk because it is bursting with strength? Our correspondent Frank Sieren spoke with Jörg Wuttke, one of the most experienced China managers in German business and long-time President of the local EU Chamber of Commerce. Wuttke advocates saving the CAI investment agreement by both sides simply applying it. As spoken by a pragmatist who has himself put a lot of work into preparing the treaty, in the hope of stopping the “downwards spiral, sanctions against sanctions” after all.

Wuttke explains China’s currently so “robust” appearance with historical comparison. After its long period of weakness, the country is in a similar position to Germany under Kaiser Wilhelm II. There, too, “the tone became more determined and idiosyncratic.” Now, conversely, the West must find the right tone toward China under Xi Jinping – after all, our prosperity depends on functioning relations, he said. The written version of the interview can be found here at China.Table.

In addition, Amelie Richter found out the current state of the decision-making process in the EU Parliament. Behind the scenes, MEPs are asking themselves the same question as Sieren and Wuttke: How can the EU deal with the emotional roller coaster of tough sanctions and a fully negotiated partnership agreement? The approach in Brussels, however, is different: Ratification of the CAI is only possible if Beijing reduces sanctions; that is the mood among MEPs. The conflict is developing into a nerve-racking situation.

Your
Finn Mayer-Kuckuk

Exit out of the sanctions trap: ‘We’re simply filling the CAI with life!’

https://www.youtube.com/watch?v=OgGp4SMQ_vs

Mr. Wuttke, are the EU’s sanctions against China reasonable?

I don’t think sanctions are reasonable in principle. My wife is Russian. I have seen the sanctions on Russia since 2014. Seven years have gone by without the sanctions being withdrawn. Russia is suffering, the EU is suffering. And Russia hasn’t weakened internationally until today. At the same time, the Chinese response to our sanctions has shown that they, too, won’t simply be backed into a corner. Their sanctions are disproportionately tougher than ours. That surprised us. The question is now how we can get out of this trap.

Beijing trusts Chancellor Merkel more than almost any other Western politician. What should she do now? She doesn’t have much time left. The elections are as soon as September.

Yes, she has the confidence of the Chinese government. And that is why she can succeed in reopening the door a little wider, which was demonstrated recently during the German-Chinese government consultations. Merkel is trying to maintain contact so that this downward spiral, sanctions against sanctions, can be stopped.

What role does the investment agreement play between the EU and China? If the EU has its way, it should remain on ice as long as Beijing does not withdraw its sanctions.

First of all, it is very important that, after seven years of negotiations, Europe managed to reach an agreement with China on such a treaty. Europe has thus found its own voice – against American pressure. We should continue working on major difficulties and stick to the investment agreement.

How do you do that?

We are not waiting for the agreement to be ratified by the EU Parliament but are simply implementing it. That, at any rate, is what I am currently trying to convince our partners in Beijing to do. We are now simply filling with life, what China has conceded to us and what we are allowing China to do. For the EU, too, this is about concessions that de facto go further than what has been achieved in all other bilateral agreements. That’s progress.

But with that, we turn a blind eye to human rights abuses.

It is extremely saddening what is happening in Hong Kong and frightening how minorities are treated in Xinjiang. But I believe there is little we can do about it. We must exercise humility in these matters. We do not have the power to force China’s policy in a different direction. Even in a coalition with the Americans, I am very skeptical that we will succeed in forcing China in a new direction. The Chinese are proud and will only push back all the harder. We must remain realistic. Brussels has not even managed to make EU member Hungary see reason concerning China. Our pressure will not make China move towards a free market economy or give in on human rights issues. We can, at best, move things in small steps, but only where we have been able to convince the Chinese that corresponding reforms are of benefit to themselves.

If we can’t change China, do we need to improve protecting ourselves against China?

Yes and no. We would have to protect ourselves against unfair competition from heavily subsidized state-owned enterprises. Competition from private companies, on the other hand, is good for us. So the fact that Geely bought Volvo, a company that no one in the West wanted to pay a cent for, and that Volvo is now enjoying success again is a very positive example. In general, you can even say that without pressure from China, the German automotive industry would not be as far along as it is today. That’s why we need more Chinese competition. Not less. This is the only way to identify our weaknesses, which we need to work on. We can only stand up to China from a position of economic strength. And we only have that if we are competitive. We need to get out of our lethargy.

What could this mean in concrete terms?

We need to reform the EU instead of believing we are safe if we limit ourselves to protecting our markets against China. China’s share of global economic growth, even without Covid, is as large as that of all OECD countries combined. China must become our Sputnik moment. We have already fallen behind China in many key technological areas. How we change that has to be the most important question. And not how we close ourselves off.

But China is putting us at a greater and greater disadvantage. We are increasingly on the defensive.

You have to take a more differentiated view. Thanks to China, we can buy more and more good quality products at low prices. That strengthens our purchasing power. Today, most Chinese products are just as good as Western ones but cheaper. At the same time, there are still important areas in which we in Germany would not be in such a good position today if it were not for the Chinese market. The automotive industry is certainly the first to be mentioned.

But haven’t we also lost many industries and, thus, jobs to China?

Yes, indeed. But on balance, we have gained far more and still have more to gain than to lose in the future.

Why are the Chinese so successful economically?

Many factors come together. Important is the extreme eagerness to work and a great appreciation of education, especially in the natural sciences. That is almost no longer the case in Germany. And the willingness to tackle new challenges is also more pronounced in China. The Chinese are willing to take risks. That is something we lack, which is also because the Chinese are not as perfectionistic. They stop developing products when they are 80 percent ready, go to market with their product and then develop it step by step for the customer. On the other hand, we like to develop until the product is 110 percent ready for the market. By then, however, the Chinese have already been on the market for a year and found their customers. In short, we have to learn much more from China than we have in the past. China is a big gym for us that frees us from our lethargy.

At the same time, however, China is trying to make itself independent of us by increasing domestic consumption and pushing ahead with RCEP, the Asian Free Trade Area.

We should look at the issue with a little more self-confidence. If China and its Asian neighbors are doing better, that is also good for us. New middle classes are emerging that can and want to afford not only Chinese products but also ours. All those companies that produce in Asia, including the European ones, will benefit from the fact that customs duties will be abolished. In a sense, they are no longer European but also Asian. We are already part of the furniture. Furthermore, the EU concluded far-reaching bilateral agreements with Asian countries, including South Korea, Japan, Vietnam and Singapore. And they are negotiating with New Zealand, Australia, and Indonesia. This is not just about access to our products but also about important issues such as environmental protection and labor law. Europe is much further ahead than other countries in the West on this issue. Instead of despairing or being angry with the Asians, we should be proud of the fact that they are forging closer connections, which makes perfect sense from their point of view.

China is becoming more and more assertive vis-à-vis Europe, but also in Asia. Some even say, more impudent and nationalistic.

Yes, indeed. I don’t understand why such a large and stable country, a member of the UN Security Council, a nuclear weapon nation, and the second largest economy in the world with high growth, has to act so robustly, even on a small scale. After all, it is already obvious to everyone that they dominate. Nevertheless, China can’t deny itself the opportunity to show who’s boss, even in small matters.

Why is that?

This can perhaps be explained by looking at the history of Germany in the 19th century. Bismarck was aware that a successful Germany, growing stronger in the wake of industrialization and urbanization, would have to integrate itself cautiously into the international community. For it posed a challenge to the then-leading British. Then under Wilhelm II, similar to Xi Jinping, the tone became more determined and idiosyncratic, which then generated the corresponding counter-pressure from the neighbors.

To follow this analogy, it did not end well for Germany in the first half of the 20th century. Does that also apply to China?

At any rate, we should mention that here in Beijing from time to time. Germany had the opportunity to take the lead and squandered its chances in overconfidence. The 21st century can be the Chinese century if Beijing doesn’t overdo it. If they don’t sleepwalk and believe whatever they do will always continue. China is getting stronger; the West is getting weaker. For China, too, pride may come before a fall.

Would it not be beneficial for Europe if China were to stumble over its own feet once again? That would give us scope to do our homework.

That is a dangerous strategy because our economic prosperity depends on China. If China does not succeed, then God help us. Our interest must be that China reforms itself, but at the same time, remains successful and becomes a reliable partner in the new world order.

Joerg Wuttke has been President of the EU Chamber of Commerce in China since 2019 – a post with which he is already very familiar from two previous terms in office. Previously, he was also Chairman of the Supervisory Board of the German Chamber of Foreign Trade in Beijing, which he co-founded in 1999. Wuttke studied Chinese and economics in 1982 in Shanghai and Taipei, among other places. In 1986, he began working for ABB China in various functions. In 1997, he became Vice President and Chief Representative of BASF China – and remains so today. This makes Wuttke one of the most experienced German China managers. He lives with his family in Beijing.

Draft resolution: CAI only after end of sanctions

This week, the European Parliament will adopt a resolution on the sanctions imposed by Beijing. The resolution will probably link the future of the investment agreement between the European Union and China (CAI) to the lifting of the sanctions against European politicians, scientists, and organizations. Several MEPs already expressed this demand. With the resolution, the European Parliament would officially take a stand and thus increase the pressure on the EU Commission (China.Table reported).

In the draft resolutions of the four largest political groups in the EU Parliament received by China.Table, the Chinese sanctions are unanimously condemned – however, the respective demands for a work stoppage at the CAI are formulated differently.

The European Greens‘ proposal goes furthest. They demand “that any consideration of the EU-China Comprehensive Agreement on Investment (CAI) and any discussion of ratification by the Parliament remain frozen while Chinese sanctions are in place.” It also said the EU Commission was expected “to consult Parliament before taking any steps to conclude and sign the CAI.”
In terms of severity, the Socialists‘ draft resolution is located in the middle field. It says the lifting of sanctions against MEPs and EU institutions is “an unavoidable condition” for the EU Parliament and its committees to “proceed with discussions on the ratification of the CAI.”
In its draft resolution, the liberal Renew group also calls for the sanctions to be withdrawn and urges the EU Commission to use the CAI “as a lever to improve human rights protection and support for civil society in China.” Renew also welcomes in the draft that the EU Commission does not want to push ahead with ratification for the time being.
The conservative EPP group also calls in its draft for a withdrawal of sanctions against Europeans, but it has a milder approach. It does not talk about not proceeding with the CAI until then. However, the EU Commission is “reminded” to take into account the human rights situation in China and Hong Kong when it comes to “approving investment agreements or future trade agreements with the country.”