Table.Briefing: China

Interview with Michael Schaefer + Industrialists in a donation frenzy

  • Ambassador Schaefer talks about the “Zukunftsbrücke”
  • Internet companies outdo one another in charity
  • BDI demands distinct boundaries
  • Car sales continue to plummet
  • SMIC builds new factory
  • Tensions at talks on climate protection
  • EU seeks common approach
  • Profile: Rasmus C. Beck
Dear reader,

In China, big companies are outdoing each other with big donations right now. Alibaba set the bar with the equivalent of 13 billion euros – two-thirds of its last annual profit. Our team in Beijing has been investigating whether the money is really benefiting “general prosperity,” as state and party head Xi Jinping has recently pressed for. Perhaps the philanthropic generosity also serves as an effective strategy to dampen the party leadership’s ire toward billionaires and large corporations?

Michael Schaefer, former ambassador to China, regards civil society relations with China with concern and hope. Concern, because the channels of communication have narrowed considerably, even though dialogue is crucial right now. Hope, because there are still access points. In Monday’s interview with China.Table, he explains how these may be accessed. Schaefer, meanwhile, warns against the idea that China will yet become a democracy along Western lines. He nevertheless calls for respectful dialogue at eye level. There is simply no alternative.

The IAA Mobility trade show starts today in Munich. So this week, we take another look at various car trends.

I hope your week starts well,

Your
Ning Wang
Image of Ning  Wang

Interview

“No dialogue is achieved with moralizing lectures”.

Disclaimer: This interview has been translated into English and is not considered an official translation by any party involved in the interview.

Mr. Ambassador, over the past ten years, the “Zukunftsbrücke” program has brought more than 240 young people with professional experience from China and Germany together. However, the channels of communication with China have also become very narrow during this time. Can you tell us again what was possible back then?

I had the idea for this project back in 2008, one year after my arrival as ambassador to China. Even then, there was a lack of informal channels for discussing contentious issues between Germany and China in a spirit of trust. We, therefore, wanted to establish a process that would open up new avenues of sustainable understanding. The Atlantic Bridge served as a model. It was to be a program over a longer period of time, bringing together future leaders from both countries. Each year, 15 young leaders from each country, not just “one-track specialists” but exciting people from all parts of society. In this way, we wanted to bring as many different perspectives as possible to the exchange on topics of common interest.

That sounds ambitious.

Quite, but it came to fruition surprisingly quickly. During his visit to China at the end of 2008, then-Foreign Minister Frank-Walter Steinmeier was very fond of the idea. Together, we were able to use this opportunity to win over Bernhard Lorentz, then head of the Mercator Foundation, to realize the project. In the declaration issued by the two heads of government during Chancellor Merkel’s visit to China in 2010, the “Zukunftsbrücke” was then welcomed by both governments for the first time – alongside the bold exhibition on the “Art of Enlightenment” by the three state museums in Berlin, Dresden, and Munich. The German-Chinese “Zukunftsbrücke” was officially launched at the first German-Chinese government consultations in Berlin in 2011.

The support from the very top worked out then?

Yes, that was very important. Both governments have thus assumed patronage. The first “Zukunftsbrücke” camp took place in Hangzhou in 2012, then annually, rotating once in China and once in Germany. In addition to Beijing and Berlin, the camp always went to a second location in the province of the respective country. From the very beginning, the focus was on sustainability issues – with different facets. In addition to energy and climate, for example, the social dimension or the reorganization of international partnerships were up for discussion. Even controversial topics such as the respective understanding of human rights were discussed intensively and excitingly.

To what extent?

Both sides repeatedly discovered misconceptions about their own society in the other. Therefore, it was all the more important to listen actively and engage with the other perspective. The focus was always on personal understanding, what was called bonding. Regular alumni meetings, such as the one now taking place this weekend, serve to deepen these bonds. It’s not meant to be a one-off thematic exchange, but the creation of a sustainable network.

That’s a beautiful goal – but exchange with China has proven to be increasingly difficult. How is the program doing today?

We held a camp every year until 2019, but due to COVID-19, we couldn’t do it in 2020 and 2021. This year, the ten-year period originally envisioned by both governments has come to an end. Whether the process will go into a second phase is currently still open, but given the current tensions between the two sides rather unlikely…

…because of the hostility and sanction rounds.

We will have to wait and see when the situation will ease up again. I am convinced that both sides understand the value of such an exchange process. We in Europe need to understand better what drives China – conversely, we need to explain what makes our societies tick and what our visions are.

There are also prejudices in China?

Of course. For example, it is not understood at all where our interest in individual human rights comes from. In China, the discussion is often seen as an excuse to pillory the Chinese social model. This changes when it is explained to the Chinese that it was precisely the massive human rights violations in and by Germany in the 20th century that created a special awareness among us of the importance of individual rights. If I personally tell them how my German origins have shaped me, they are more willing to listen to me.

Nevertheless, many Germans mainly want to lecture their Chinese interlocutors. That is probably not very helpful?

This also applies to other countries in the West. We paint our picture of the other side prematurely. The representatives of the West often lack the will to see common opportunities and interests. But the cautionary language is also increasingly found on the Chinese side.

Currently, relations are pretty sour, the EU and China are imposing sanctions on each other, and exchanges are at an all-time low. How do we break this up again now?

We have to utilize existing channels. One example is a cooperation between environmental ministries. Climate and the biosphere are a global common good, a global common property. There are concrete common interests here between the Europeans and the Chinese, but also with the Americans.

However, institutions with a connection to China are currently complaining that there are no longer any events where they can signal their willingness to talk.

That’s true; the scope for civil society, in particular, is becoming ever narrower in China. We should always offer a dialogue from the German side. In the preparatory phase, we can tell our Chinese interlocutors without any form of paternalism: we are interested in real exchange. A patronizing attitude only causes harm here. Instead, we should try to understand where China’s interests lie and explain our own interests. We must approach China with a critical and constructive eye, by no means naively blue-eyed, but knowing that we must continue to have an exchange with such an important society in the future, and ask ourselves how to achieve this?

So, how do you do it?

We must always be aware of the importance of honest dialogue and mutual trust – especially in the face of such great differences. China is a partner, competitor, and strategic rival all in one, as the EU has learned. We must abandon wishful thinking that China shares our interests and values. Let’s be frank: China has never been a democracy, has never been a constitutional state, and the likelihood of it becoming one is low. We have always been systemic rivals; what has changed is that China has become a great power.

So we’re supposed to rubber-stamp everything China does?

Of course, we don’t. But we need China, and China needs us to tackle key challenges. Cooperation remains essential. But China must not, of course, place itself outside international law. The ban on torture or the protection of human rights lawyers applies to China just as they do in European countries. China must also abide by international law in Hong Kong, in other words, the handover treaty with Great Britain. At such points, Europe must not only be prepared to draw a clear red line, but also communicate clearly what happens if China crosses that red line.

Where is the next red line?

A violent unification of Taiwan with China marks a red line. In this case, Europe should be ready to support Taiwan. And it should make clear what measures it is ready to take to back up its promise. Europe must also be credible here. We should approach the rivalry with China with a sense of proportion, but also with self-confidence.

This makes civil society exchange all the more important before such crisis scenarios even arise. On which side do you see more goodwill for dialogue?

At the government level, goodwill is currently very limited on both sides. At the civil society level, it is much greater. The German foundations, for example, are prepared to make their contribution and support an exchange in whatever form it takes. In China, this is more difficult because civil society is increasingly restricted in its free development. That is very regrettable, and I believe that the Chinese Government is not doing itself any favors here.

Are there any suitable contacts left in China at all?

In China, there are still numerous organizations and institutions willing to talk. For example, think tanks such as the Center for China and Globalization or universities. We should always try to open up dialogue formats that are supported by both sides.

Do you mean big professional conferences?

No, I am much more in favor of small dialogue formats. Large conferences are too public to be able to talk freely. These events should be topic-related but should allow for a confidential exchange. Over the past few years, we have developed the “Global Table” format with the BMW Foundation, in which we bring around 30 bright minds from different regions of the world to one table. Of course, you can also do something like this within a region or bilaterally.

The process of setting topics probably plays a role as well?

It is about focusing on common interests. The environment and climate are such issues. Each individual should be willing to work on the necessary processes of change. In any case, it is essential that a respectful dialogue takes place on a level playing field.

As a former diplomat and head of a foundation, Michael Schaefer (72) is a consummate professional in the sphere of German-Chinese exchange. From 2007 to 2013, he was ambassador to Beijing, then chairman of the BMW Foundation board for eight years. He is also a member of the Trilateral Commission, a think tank for exchange between America, Europe, and Asia.

  • Climate
  • Diplomacy
  • EU
  • Geopolitics
  • Hongkong
  • Human Rights
  • Taiwan

Feature

China’s tech giants invest in ‘common prosperity’

China’s tech giants are currently in a hurry to get donations out to the people. Last week, Alibaba raised the bar to a whole new level: the online retailer announced donations of 100 billion yuan, the equivalent of about 13 billion euros, to charity over the next five years. The sum is equivalent to around two-thirds of Alibaba’s latest annual profit.

In the days before, Alibaba’s competitors Tencent and Pinduoduo had already shown generosity, declaring that they would provide 50 billion and ten billion yuan, respectively. 

China’s tech giants and other private corporations seem to have concluded that philanthropic grandstanding is an effective strategy for confronting the new reality of Beijing’s economic policies.

What that looks like has become clear in recent months with the crackdown by regulators. Suddenly, the authorities were meddling everywhere. They focused on the business practices of tech giants in particular. But the real estate market, the education sector, and the entertainment industry have also been hit with stricter rules and bans.

China’s leadership turns back to socialism

Around three trillion US dollars have been wiped off the markets by Beijing’s interventions, according to an estimate by US bank Goldman Sachs. Some observers are already talking about a paradigm shift. “After 40 years of allowing the market to play a growing role in fostering prosperity, China’s leaders have remembered something important – they are communists,” the financial agency Bloomberg pointed out in a recent commentary.

Of course, China does not want to abolish capitalism. However, the leadership sees the need to take action against increasing imbalances in the distribution of wealth. It also wants to limit the power of large corporations and promote small and medium-sized enterprises instead. When reformer Deng Xiaoping pushed for China’s economic opening in the 1980s, the motto was still “Let some get rich first.” That worked; after all, there are more billionaires in China today than in any other country. 

The “common prosperity” mantra

State and party leader Xi Jinping has now adopted a new mantra. State media have been repeating his slogan of “common prosperity” like a prayer wheel, a slogan that existed at the time of the Communist Party’s founding but has not been propagated as fervently for a long time as it has been these days. The Beijing leadership has had enough of “irrational capital expansion” and “barbaric growth”. Xi clarified this in a speech at the end of August (China.Table reported).

It is unclear how far Beijing actually intends to go with this major redistribution. Observers point to the upcoming party congress next year, at which Xi will secure his third term in office. Before such important events, Beijing has repeatedly tightened the screws in the past.

Many of the recently imposed measures against corporations are supported by the people. Alibaba, for example, is no longer allowed to force retailers to offer its products exclusively on its own platforms. This is intended to enable more competition. Minimum wage and health insurance for food delivery workers should also be a given. In social media, many users also applauded the decision to take action against rampant tutoring, thanks to which a few providers were earning a fortune (China.Table reported).

Loyalty should pay off

Big tech corporations may resent the tightened reins, but they also know their profits will continue to bubble up despite tougher regulation. Their generous donations show Beijing that they are backing the leadership. According to an analysis by Bloomberg, at least 73 listed companies in China used the term “common prosperity” in their latest quarterly reports.

Remaining true to party principles may pay off for companies in the short term. But there are also cautionary voices about Beijing’s new direction. Targeting rich people and entrepreneurs will hurt job creation, writes Beijing economics professor Zhang Weiying. It dampens consumption and ultimately leads the nation back into poverty, he says. Market-oriented reforms since the late 1970s have made China a fairer and more equal society, Zhang said. A free economy has given ordinary people the opportunity to rise out of poverty and become rich. If trust in the market is lost, China will not experience “shared prosperity” but “shared poverty“.

China’s state media, on the other hand, recently preferred to disseminate the radical commentary of an Internet blogger who goes in a completely different direction. “This is a transformation from capital-centered to people-centered,” the author wrote in praise of the current crackdown, adding: “The capital market will no longer be a paradise for capitalists to get rich overnight.” Gregor Koppenburg/Joern Petring

  • Alibaba
  • Chinese Communist Party
  • Pinduoduo
  • Technology
  • Tencent

News

BDI calls for “red line” in dealing with China

The German industry wants a red line for dealing with China and its economic policy. “Anyone who wants to continue to benefit from free access to our market must adhere to basic rules and also open up their own market,” Siegfried Russwurm, president of the industry association BDI, told German news agency Deutsche Presse-Agentur.

He sees a common agenda with other states as necessary: “I am optimistic that an international coalition can be forged for the right way to deal with Beijing,” Russwurm said. Within the EU, there is a relatively broad consensus, and there is also a great deal of agreement with the US and countries such as Australia, New Zealand, Japan, and Canada.

As China is one of the most important markets worldwide for many German companies, competition is also fierce. Recently, goods from China have increasingly been competing with German exports in the EU as well. The Chinese economy recovered more quickly from the COVID crisis than the European economy. While the EU largely grants Chinese companies free access to its market, China is sealing off its own market to a greater extent.

Because China repeatedly violates globally applicable rules – such as the observance of human rights – the head of the BDI sees risks for companies. “It is true for politicians as well as for companies that they must know where to draw their red line, the point of no return,” he underlined. “A company cannot accept the risk tof forced labor or child labor in its value chain. Each company must find its own red line,” said the head of the BDI. niw

  • BDI
  • EU
  • Human Rights
  • Trade

Sharp decline in car sales

Car sales in China fell significantly in August. According to data from the manufacturers’ association CAAM, the number of vehicles sold last month fell 22 percent from the previous month. The news comes just days after industry body China Passenger Car Association (CPCA) announced that the number of vehicles sold in August fell 13 percent year-on-year.

Both associations calculate their data using different criteria. While the manufacturers’ association CAAM also includes commercial vehicles and sales by producers to dealers, CPCA uses sales of passenger cars, SUVs and minivans to customers as the basis for its calculations. Extreme weather conditions with flooding and an increase in coronavirus infections had recently deterred customers from going to car dealers’ showrooms.

However, at an industry meeting, Vice Minister of Industry Xin Guobin warned that the chip shortage triggered by the Corona pandemic would continue to affect auto production in China, with the auto industry last expecting the chip shortage to ease as early as the end of July, supporting sales in August. However, due to the Delta variant in Southeast Asia, several chip factories had to halt production, resulting in a significant shortage of auto chips. niw

  • CAAM
  • Car Industry
  • Chips

SMIC builds large chip factory near Shanghai

The Chinese semiconductor manufacturer Semiconductor Manufacturing International Corp. (SMIC) is investing around seven and a half billion euros in a new site near Shanghai. This is the company’s response to global supply bottlenecks, which are also causing assembly lines in German industry to come to a standstill. The project partner is the Lingang Free Trade Zone (FTZ) in Pudong. SMIC, in turn, is financing the expansion in part from a state subsidy fund for the semiconductor industry.

However, SMIC does not intend to launch a new technology in Shanghai, but to produce chips with a structure width of 28 nanometers or more. For high-tech applications such as high-speed processors, elements with a structure width of seven nanometers are currently used. The world market leader TSMC from Taiwan is even currently working on three-nanometer chips. The 28-nanometer class, which is now to be created in Shanghai, is more suitable for coarser applications such as Wifi components. But chips such as those used in cars also fall into this category. fin

  • Car Industry
  • SMIC
  • Technologie

Tensions block climate talks

US special climate envoy John Kerry’s talks in China ended on Friday without a result. Chinese officials had wanted to make it clear to the US government that “it is impossible to win China’s cooperation on climate change while taking an anti-Chinese stance on key issues,” Shi Yinhong, a professor of international relations at Beijing Renmin University, told the South China Morning Post.

Even before the two-day talks, China had set conditions for a cooperation with the US on climate protection. Washington cannot try to curb his country’s development on the one hand – and push for cooperation on the other, Foreign Minister Wang Yi said during Kerry’s visit to Tianjin on Thursday. Wang accused President Joe Biden’s administration of a “major strategic miscalculation toward China” (China.Table reported).

Wang had thus rejected Kerry’s call for climate action to be treated as an isolated subject. “The U.S. wants climate change cooperation to be an “oasis” of China-U.S. relations. However, if the oasis is all surrounded by deserts, then sooner or later, the “oasis” will be desertified,” Wang said, according to a Foreign Ministry statement.

That Kerry, nevertheless, met with Chinese Vice Premier Han Zheng and senior politician and U.S. expert Yang Jiechi alongside Wang and special climate envoy Xie Zhenhua is seen as a signal that Beijing is trying to address issues beyond the climate talks that lead to ongoing tensions between the two countries.

The meeting comes just a few weeks before the climate summit in Glasgow in November. Experts worldwide agree that without China and the US working together, no progress can be made on curbing climate change. niw

  • Climate
  • Geopolitics
  • John Kerry
  • USA
  • Wang Yi

Borrell: EU needs common approach to China policy

The EU needs a shared sense of responsibility to confront China, according to its foreign affairs envoy Josep Borrell. The bloc also needs to have unity and “a pragmatic, realistic and coherent approach with China,” Borrell said after a meeting of EU foreign ministers on Friday. “We also need to engage with China about Afghanistan. Competition, but also cooperation in trade and economic issues, are an important part of our relationship with China,” Borrell said.

The EUSR and ministers also discussed the Indo-Pacific region with Indian Foreign Minister Subrahmanyam Jaishankar during their meeting in Slovenia. Brussels plans to present its strategy for the region later this month. In addition, EU Commission President Ursula von der Leyen is expected to raise the issue in her State of the European Union (SOTEU) address in the middle of the month.

However, India would not replace China as a general interlocutor in Asia, Slovenian Foreign Minister Anže Logar stressed after the informal meeting. His home country currently holds the EU presidency. “India will not replace China because China and India are different countries with different economic structures and different trade relations with Europe, but we want to strengthen our relations with India,” Logar said. For example, work must continue on concluding a trade and investment agreement with India and cooperation must be strengthened with regard to local security, Logar said. ari

  • EU
  • Geopolitics
  • India
  • Josep Borrell

Profile

Rasmus C. Beck – In search of investments for Duisburg

Rasmus C. Beck, CEO of Duisburg Business Innovation

For anyone who wants to trace the decline of the German Rhine metropolis Duisburg as a former mining town, the site of former Krupp steelworks in Rheinhausen is the wrong place. Since the late 1990s, the site has been telling the story of the difficult structural transformation from coal and steel metropolis to a global logistics center. The problems, however, such as high unemployment and debt, are far from over. Despite this, or perhaps precisely because of it, Rasmus C. Beck took over as managing director of Duisburg Business Innovation, this spring.

Beck is well aware of the challenge: “Everyone knows Marxloh because the chancellor was here.” In 2015, Angela Merkel was booed during her visit to the area. At the same time, Beck thinks that the city’s potential is completely undervalued: “There is still the last industrial core in the Ruhr region here, and this is where the transformation of steel production towards climate neutrality will take place.” There is also another important partner to help with the city’s resurgence: China.

The Silk Road project forms an important building block in the concept with which Beck wants to move the city forward: “I don’t know of any success story in economic development that is not embedded internationally.” The two other cornerstones are a good university that develops know-how and city-owned land that can be made available to business. Beck sees the fact that the endpoint of the new Silk Road is at the port of Duisburg as a gift. However, it is not a coincidence, says Beck: “It fits in well with the competencies we have as a trade city. Trade has defined the city ever since it was founded.”

Good academic infrastructure in Duisburg

The 41-year-old is not afraid of being taken over by Chinese investors; Duisburg is too broadly positioned for that. At the same time, cooperation with China and participation in the new Silk Road is also a cultural project, Beck believes: “Ideas and know-how don’t come in containers. But these containers are a good basis for us to start a cultural exchange as well.” Beck welcomes the work of the Confucius Institute at the University of Duisburg-Essen, as well as the Institute of East Asian Studies; he also points out that Duisburg was the first German city to establish a city partnership with a major Chinese city.

During his last visit to China, Beck stayed in Shenzhen in 2019. During his visits to China, he is particularly impressed by the speed of the country’s development. “By that, I mean in particular also the rate at which the standard of living has improved for the poorer population,” says Beck. He also says that the Chinese are already further ahead in terms of openness to digital solutions in everyday life – whether it’s autonomous driving or 5G technology.

In the end, Beck is convinced that the differences between Germany and China are actually not as great as often assumed. “Of course, China has a different political system and is a huge country with different development needs,” says Beck. The authoritarian structures in China do help to speed up processes, but the quality of development in the country is now on a par with the West. This is the case in the construction industry, for example. Now, Germany can learn from China when it comes to future topics such as smart cities. “I think we should use mutual admiration to engage in exchange. Also about the critical issues, but above all about the common opportunities.” David Renke

  • Germany
  • Konfuzius-Institute
  • New Silk Road
  • Technology
  • Trade

Executive Moves

Stephan Kneipp is Elaris‘ new COO. Elaris, based in Rhineland-Palatinate, is a distributor of models made by Chinese manufacturer Dorcen. Previously, Kneipp was Head of Digital Ventures and Data-Driven Business at the Powertrain Solutions division of Bosch.

Dominik Lembke has been appointed Director of Product Development at Svolt in August. Lembke is to bring the customers in Europe and the development departments of the battery manufacturer in Europe and China together. The 37-year-old previously worked at Porsche in Weissach, where he most recently headed the BEV battery systems division and was technical project manager for the HV batteries division.

China.Table Editors

CHINA.TABLE EDITORIAL OFFICE

Licenses:
    • Ambassador Schaefer talks about the “Zukunftsbrücke”
    • Internet companies outdo one another in charity
    • BDI demands distinct boundaries
    • Car sales continue to plummet
    • SMIC builds new factory
    • Tensions at talks on climate protection
    • EU seeks common approach
    • Profile: Rasmus C. Beck
    Dear reader,

    In China, big companies are outdoing each other with big donations right now. Alibaba set the bar with the equivalent of 13 billion euros – two-thirds of its last annual profit. Our team in Beijing has been investigating whether the money is really benefiting “general prosperity,” as state and party head Xi Jinping has recently pressed for. Perhaps the philanthropic generosity also serves as an effective strategy to dampen the party leadership’s ire toward billionaires and large corporations?

    Michael Schaefer, former ambassador to China, regards civil society relations with China with concern and hope. Concern, because the channels of communication have narrowed considerably, even though dialogue is crucial right now. Hope, because there are still access points. In Monday’s interview with China.Table, he explains how these may be accessed. Schaefer, meanwhile, warns against the idea that China will yet become a democracy along Western lines. He nevertheless calls for respectful dialogue at eye level. There is simply no alternative.

    The IAA Mobility trade show starts today in Munich. So this week, we take another look at various car trends.

    I hope your week starts well,

    Your
    Ning Wang
    Image of Ning  Wang

    Interview

    “No dialogue is achieved with moralizing lectures”.

    Disclaimer: This interview has been translated into English and is not considered an official translation by any party involved in the interview.

    Mr. Ambassador, over the past ten years, the “Zukunftsbrücke” program has brought more than 240 young people with professional experience from China and Germany together. However, the channels of communication with China have also become very narrow during this time. Can you tell us again what was possible back then?

    I had the idea for this project back in 2008, one year after my arrival as ambassador to China. Even then, there was a lack of informal channels for discussing contentious issues between Germany and China in a spirit of trust. We, therefore, wanted to establish a process that would open up new avenues of sustainable understanding. The Atlantic Bridge served as a model. It was to be a program over a longer period of time, bringing together future leaders from both countries. Each year, 15 young leaders from each country, not just “one-track specialists” but exciting people from all parts of society. In this way, we wanted to bring as many different perspectives as possible to the exchange on topics of common interest.

    That sounds ambitious.

    Quite, but it came to fruition surprisingly quickly. During his visit to China at the end of 2008, then-Foreign Minister Frank-Walter Steinmeier was very fond of the idea. Together, we were able to use this opportunity to win over Bernhard Lorentz, then head of the Mercator Foundation, to realize the project. In the declaration issued by the two heads of government during Chancellor Merkel’s visit to China in 2010, the “Zukunftsbrücke” was then welcomed by both governments for the first time – alongside the bold exhibition on the “Art of Enlightenment” by the three state museums in Berlin, Dresden, and Munich. The German-Chinese “Zukunftsbrücke” was officially launched at the first German-Chinese government consultations in Berlin in 2011.

    The support from the very top worked out then?

    Yes, that was very important. Both governments have thus assumed patronage. The first “Zukunftsbrücke” camp took place in Hangzhou in 2012, then annually, rotating once in China and once in Germany. In addition to Beijing and Berlin, the camp always went to a second location in the province of the respective country. From the very beginning, the focus was on sustainability issues – with different facets. In addition to energy and climate, for example, the social dimension or the reorganization of international partnerships were up for discussion. Even controversial topics such as the respective understanding of human rights were discussed intensively and excitingly.

    To what extent?

    Both sides repeatedly discovered misconceptions about their own society in the other. Therefore, it was all the more important to listen actively and engage with the other perspective. The focus was always on personal understanding, what was called bonding. Regular alumni meetings, such as the one now taking place this weekend, serve to deepen these bonds. It’s not meant to be a one-off thematic exchange, but the creation of a sustainable network.

    That’s a beautiful goal – but exchange with China has proven to be increasingly difficult. How is the program doing today?

    We held a camp every year until 2019, but due to COVID-19, we couldn’t do it in 2020 and 2021. This year, the ten-year period originally envisioned by both governments has come to an end. Whether the process will go into a second phase is currently still open, but given the current tensions between the two sides rather unlikely…

    …because of the hostility and sanction rounds.

    We will have to wait and see when the situation will ease up again. I am convinced that both sides understand the value of such an exchange process. We in Europe need to understand better what drives China – conversely, we need to explain what makes our societies tick and what our visions are.

    There are also prejudices in China?

    Of course. For example, it is not understood at all where our interest in individual human rights comes from. In China, the discussion is often seen as an excuse to pillory the Chinese social model. This changes when it is explained to the Chinese that it was precisely the massive human rights violations in and by Germany in the 20th century that created a special awareness among us of the importance of individual rights. If I personally tell them how my German origins have shaped me, they are more willing to listen to me.

    Nevertheless, many Germans mainly want to lecture their Chinese interlocutors. That is probably not very helpful?

    This also applies to other countries in the West. We paint our picture of the other side prematurely. The representatives of the West often lack the will to see common opportunities and interests. But the cautionary language is also increasingly found on the Chinese side.

    Currently, relations are pretty sour, the EU and China are imposing sanctions on each other, and exchanges are at an all-time low. How do we break this up again now?

    We have to utilize existing channels. One example is a cooperation between environmental ministries. Climate and the biosphere are a global common good, a global common property. There are concrete common interests here between the Europeans and the Chinese, but also with the Americans.

    However, institutions with a connection to China are currently complaining that there are no longer any events where they can signal their willingness to talk.

    That’s true; the scope for civil society, in particular, is becoming ever narrower in China. We should always offer a dialogue from the German side. In the preparatory phase, we can tell our Chinese interlocutors without any form of paternalism: we are interested in real exchange. A patronizing attitude only causes harm here. Instead, we should try to understand where China’s interests lie and explain our own interests. We must approach China with a critical and constructive eye, by no means naively blue-eyed, but knowing that we must continue to have an exchange with such an important society in the future, and ask ourselves how to achieve this?

    So, how do you do it?

    We must always be aware of the importance of honest dialogue and mutual trust – especially in the face of such great differences. China is a partner, competitor, and strategic rival all in one, as the EU has learned. We must abandon wishful thinking that China shares our interests and values. Let’s be frank: China has never been a democracy, has never been a constitutional state, and the likelihood of it becoming one is low. We have always been systemic rivals; what has changed is that China has become a great power.

    So we’re supposed to rubber-stamp everything China does?

    Of course, we don’t. But we need China, and China needs us to tackle key challenges. Cooperation remains essential. But China must not, of course, place itself outside international law. The ban on torture or the protection of human rights lawyers applies to China just as they do in European countries. China must also abide by international law in Hong Kong, in other words, the handover treaty with Great Britain. At such points, Europe must not only be prepared to draw a clear red line, but also communicate clearly what happens if China crosses that red line.

    Where is the next red line?

    A violent unification of Taiwan with China marks a red line. In this case, Europe should be ready to support Taiwan. And it should make clear what measures it is ready to take to back up its promise. Europe must also be credible here. We should approach the rivalry with China with a sense of proportion, but also with self-confidence.

    This makes civil society exchange all the more important before such crisis scenarios even arise. On which side do you see more goodwill for dialogue?

    At the government level, goodwill is currently very limited on both sides. At the civil society level, it is much greater. The German foundations, for example, are prepared to make their contribution and support an exchange in whatever form it takes. In China, this is more difficult because civil society is increasingly restricted in its free development. That is very regrettable, and I believe that the Chinese Government is not doing itself any favors here.

    Are there any suitable contacts left in China at all?

    In China, there are still numerous organizations and institutions willing to talk. For example, think tanks such as the Center for China and Globalization or universities. We should always try to open up dialogue formats that are supported by both sides.

    Do you mean big professional conferences?

    No, I am much more in favor of small dialogue formats. Large conferences are too public to be able to talk freely. These events should be topic-related but should allow for a confidential exchange. Over the past few years, we have developed the “Global Table” format with the BMW Foundation, in which we bring around 30 bright minds from different regions of the world to one table. Of course, you can also do something like this within a region or bilaterally.

    The process of setting topics probably plays a role as well?

    It is about focusing on common interests. The environment and climate are such issues. Each individual should be willing to work on the necessary processes of change. In any case, it is essential that a respectful dialogue takes place on a level playing field.

    As a former diplomat and head of a foundation, Michael Schaefer (72) is a consummate professional in the sphere of German-Chinese exchange. From 2007 to 2013, he was ambassador to Beijing, then chairman of the BMW Foundation board for eight years. He is also a member of the Trilateral Commission, a think tank for exchange between America, Europe, and Asia.

    • Climate
    • Diplomacy
    • EU
    • Geopolitics
    • Hongkong
    • Human Rights
    • Taiwan

    Feature

    China’s tech giants invest in ‘common prosperity’

    China’s tech giants are currently in a hurry to get donations out to the people. Last week, Alibaba raised the bar to a whole new level: the online retailer announced donations of 100 billion yuan, the equivalent of about 13 billion euros, to charity over the next five years. The sum is equivalent to around two-thirds of Alibaba’s latest annual profit.

    In the days before, Alibaba’s competitors Tencent and Pinduoduo had already shown generosity, declaring that they would provide 50 billion and ten billion yuan, respectively. 

    China’s tech giants and other private corporations seem to have concluded that philanthropic grandstanding is an effective strategy for confronting the new reality of Beijing’s economic policies.

    What that looks like has become clear in recent months with the crackdown by regulators. Suddenly, the authorities were meddling everywhere. They focused on the business practices of tech giants in particular. But the real estate market, the education sector, and the entertainment industry have also been hit with stricter rules and bans.

    China’s leadership turns back to socialism

    Around three trillion US dollars have been wiped off the markets by Beijing’s interventions, according to an estimate by US bank Goldman Sachs. Some observers are already talking about a paradigm shift. “After 40 years of allowing the market to play a growing role in fostering prosperity, China’s leaders have remembered something important – they are communists,” the financial agency Bloomberg pointed out in a recent commentary.

    Of course, China does not want to abolish capitalism. However, the leadership sees the need to take action against increasing imbalances in the distribution of wealth. It also wants to limit the power of large corporations and promote small and medium-sized enterprises instead. When reformer Deng Xiaoping pushed for China’s economic opening in the 1980s, the motto was still “Let some get rich first.” That worked; after all, there are more billionaires in China today than in any other country. 

    The “common prosperity” mantra

    State and party leader Xi Jinping has now adopted a new mantra. State media have been repeating his slogan of “common prosperity” like a prayer wheel, a slogan that existed at the time of the Communist Party’s founding but has not been propagated as fervently for a long time as it has been these days. The Beijing leadership has had enough of “irrational capital expansion” and “barbaric growth”. Xi clarified this in a speech at the end of August (China.Table reported).

    It is unclear how far Beijing actually intends to go with this major redistribution. Observers point to the upcoming party congress next year, at which Xi will secure his third term in office. Before such important events, Beijing has repeatedly tightened the screws in the past.

    Many of the recently imposed measures against corporations are supported by the people. Alibaba, for example, is no longer allowed to force retailers to offer its products exclusively on its own platforms. This is intended to enable more competition. Minimum wage and health insurance for food delivery workers should also be a given. In social media, many users also applauded the decision to take action against rampant tutoring, thanks to which a few providers were earning a fortune (China.Table reported).

    Loyalty should pay off

    Big tech corporations may resent the tightened reins, but they also know their profits will continue to bubble up despite tougher regulation. Their generous donations show Beijing that they are backing the leadership. According to an analysis by Bloomberg, at least 73 listed companies in China used the term “common prosperity” in their latest quarterly reports.

    Remaining true to party principles may pay off for companies in the short term. But there are also cautionary voices about Beijing’s new direction. Targeting rich people and entrepreneurs will hurt job creation, writes Beijing economics professor Zhang Weiying. It dampens consumption and ultimately leads the nation back into poverty, he says. Market-oriented reforms since the late 1970s have made China a fairer and more equal society, Zhang said. A free economy has given ordinary people the opportunity to rise out of poverty and become rich. If trust in the market is lost, China will not experience “shared prosperity” but “shared poverty“.

    China’s state media, on the other hand, recently preferred to disseminate the radical commentary of an Internet blogger who goes in a completely different direction. “This is a transformation from capital-centered to people-centered,” the author wrote in praise of the current crackdown, adding: “The capital market will no longer be a paradise for capitalists to get rich overnight.” Gregor Koppenburg/Joern Petring

    • Alibaba
    • Chinese Communist Party
    • Pinduoduo
    • Technology
    • Tencent

    News

    BDI calls for “red line” in dealing with China

    The German industry wants a red line for dealing with China and its economic policy. “Anyone who wants to continue to benefit from free access to our market must adhere to basic rules and also open up their own market,” Siegfried Russwurm, president of the industry association BDI, told German news agency Deutsche Presse-Agentur.

    He sees a common agenda with other states as necessary: “I am optimistic that an international coalition can be forged for the right way to deal with Beijing,” Russwurm said. Within the EU, there is a relatively broad consensus, and there is also a great deal of agreement with the US and countries such as Australia, New Zealand, Japan, and Canada.

    As China is one of the most important markets worldwide for many German companies, competition is also fierce. Recently, goods from China have increasingly been competing with German exports in the EU as well. The Chinese economy recovered more quickly from the COVID crisis than the European economy. While the EU largely grants Chinese companies free access to its market, China is sealing off its own market to a greater extent.

    Because China repeatedly violates globally applicable rules – such as the observance of human rights – the head of the BDI sees risks for companies. “It is true for politicians as well as for companies that they must know where to draw their red line, the point of no return,” he underlined. “A company cannot accept the risk tof forced labor or child labor in its value chain. Each company must find its own red line,” said the head of the BDI. niw

    • BDI
    • EU
    • Human Rights
    • Trade

    Sharp decline in car sales

    Car sales in China fell significantly in August. According to data from the manufacturers’ association CAAM, the number of vehicles sold last month fell 22 percent from the previous month. The news comes just days after industry body China Passenger Car Association (CPCA) announced that the number of vehicles sold in August fell 13 percent year-on-year.

    Both associations calculate their data using different criteria. While the manufacturers’ association CAAM also includes commercial vehicles and sales by producers to dealers, CPCA uses sales of passenger cars, SUVs and minivans to customers as the basis for its calculations. Extreme weather conditions with flooding and an increase in coronavirus infections had recently deterred customers from going to car dealers’ showrooms.

    However, at an industry meeting, Vice Minister of Industry Xin Guobin warned that the chip shortage triggered by the Corona pandemic would continue to affect auto production in China, with the auto industry last expecting the chip shortage to ease as early as the end of July, supporting sales in August. However, due to the Delta variant in Southeast Asia, several chip factories had to halt production, resulting in a significant shortage of auto chips. niw

    • CAAM
    • Car Industry
    • Chips

    SMIC builds large chip factory near Shanghai

    The Chinese semiconductor manufacturer Semiconductor Manufacturing International Corp. (SMIC) is investing around seven and a half billion euros in a new site near Shanghai. This is the company’s response to global supply bottlenecks, which are also causing assembly lines in German industry to come to a standstill. The project partner is the Lingang Free Trade Zone (FTZ) in Pudong. SMIC, in turn, is financing the expansion in part from a state subsidy fund for the semiconductor industry.

    However, SMIC does not intend to launch a new technology in Shanghai, but to produce chips with a structure width of 28 nanometers or more. For high-tech applications such as high-speed processors, elements with a structure width of seven nanometers are currently used. The world market leader TSMC from Taiwan is even currently working on three-nanometer chips. The 28-nanometer class, which is now to be created in Shanghai, is more suitable for coarser applications such as Wifi components. But chips such as those used in cars also fall into this category. fin

    • Car Industry
    • SMIC
    • Technologie

    Tensions block climate talks

    US special climate envoy John Kerry’s talks in China ended on Friday without a result. Chinese officials had wanted to make it clear to the US government that “it is impossible to win China’s cooperation on climate change while taking an anti-Chinese stance on key issues,” Shi Yinhong, a professor of international relations at Beijing Renmin University, told the South China Morning Post.

    Even before the two-day talks, China had set conditions for a cooperation with the US on climate protection. Washington cannot try to curb his country’s development on the one hand – and push for cooperation on the other, Foreign Minister Wang Yi said during Kerry’s visit to Tianjin on Thursday. Wang accused President Joe Biden’s administration of a “major strategic miscalculation toward China” (China.Table reported).

    Wang had thus rejected Kerry’s call for climate action to be treated as an isolated subject. “The U.S. wants climate change cooperation to be an “oasis” of China-U.S. relations. However, if the oasis is all surrounded by deserts, then sooner or later, the “oasis” will be desertified,” Wang said, according to a Foreign Ministry statement.

    That Kerry, nevertheless, met with Chinese Vice Premier Han Zheng and senior politician and U.S. expert Yang Jiechi alongside Wang and special climate envoy Xie Zhenhua is seen as a signal that Beijing is trying to address issues beyond the climate talks that lead to ongoing tensions between the two countries.

    The meeting comes just a few weeks before the climate summit in Glasgow in November. Experts worldwide agree that without China and the US working together, no progress can be made on curbing climate change. niw

    • Climate
    • Geopolitics
    • John Kerry
    • USA
    • Wang Yi

    Borrell: EU needs common approach to China policy

    The EU needs a shared sense of responsibility to confront China, according to its foreign affairs envoy Josep Borrell. The bloc also needs to have unity and “a pragmatic, realistic and coherent approach with China,” Borrell said after a meeting of EU foreign ministers on Friday. “We also need to engage with China about Afghanistan. Competition, but also cooperation in trade and economic issues, are an important part of our relationship with China,” Borrell said.

    The EUSR and ministers also discussed the Indo-Pacific region with Indian Foreign Minister Subrahmanyam Jaishankar during their meeting in Slovenia. Brussels plans to present its strategy for the region later this month. In addition, EU Commission President Ursula von der Leyen is expected to raise the issue in her State of the European Union (SOTEU) address in the middle of the month.

    However, India would not replace China as a general interlocutor in Asia, Slovenian Foreign Minister Anže Logar stressed after the informal meeting. His home country currently holds the EU presidency. “India will not replace China because China and India are different countries with different economic structures and different trade relations with Europe, but we want to strengthen our relations with India,” Logar said. For example, work must continue on concluding a trade and investment agreement with India and cooperation must be strengthened with regard to local security, Logar said. ari

    • EU
    • Geopolitics
    • India
    • Josep Borrell

    Profile

    Rasmus C. Beck – In search of investments for Duisburg

    Rasmus C. Beck, CEO of Duisburg Business Innovation

    For anyone who wants to trace the decline of the German Rhine metropolis Duisburg as a former mining town, the site of former Krupp steelworks in Rheinhausen is the wrong place. Since the late 1990s, the site has been telling the story of the difficult structural transformation from coal and steel metropolis to a global logistics center. The problems, however, such as high unemployment and debt, are far from over. Despite this, or perhaps precisely because of it, Rasmus C. Beck took over as managing director of Duisburg Business Innovation, this spring.

    Beck is well aware of the challenge: “Everyone knows Marxloh because the chancellor was here.” In 2015, Angela Merkel was booed during her visit to the area. At the same time, Beck thinks that the city’s potential is completely undervalued: “There is still the last industrial core in the Ruhr region here, and this is where the transformation of steel production towards climate neutrality will take place.” There is also another important partner to help with the city’s resurgence: China.

    The Silk Road project forms an important building block in the concept with which Beck wants to move the city forward: “I don’t know of any success story in economic development that is not embedded internationally.” The two other cornerstones are a good university that develops know-how and city-owned land that can be made available to business. Beck sees the fact that the endpoint of the new Silk Road is at the port of Duisburg as a gift. However, it is not a coincidence, says Beck: “It fits in well with the competencies we have as a trade city. Trade has defined the city ever since it was founded.”

    Good academic infrastructure in Duisburg

    The 41-year-old is not afraid of being taken over by Chinese investors; Duisburg is too broadly positioned for that. At the same time, cooperation with China and participation in the new Silk Road is also a cultural project, Beck believes: “Ideas and know-how don’t come in containers. But these containers are a good basis for us to start a cultural exchange as well.” Beck welcomes the work of the Confucius Institute at the University of Duisburg-Essen, as well as the Institute of East Asian Studies; he also points out that Duisburg was the first German city to establish a city partnership with a major Chinese city.

    During his last visit to China, Beck stayed in Shenzhen in 2019. During his visits to China, he is particularly impressed by the speed of the country’s development. “By that, I mean in particular also the rate at which the standard of living has improved for the poorer population,” says Beck. He also says that the Chinese are already further ahead in terms of openness to digital solutions in everyday life – whether it’s autonomous driving or 5G technology.

    In the end, Beck is convinced that the differences between Germany and China are actually not as great as often assumed. “Of course, China has a different political system and is a huge country with different development needs,” says Beck. The authoritarian structures in China do help to speed up processes, but the quality of development in the country is now on a par with the West. This is the case in the construction industry, for example. Now, Germany can learn from China when it comes to future topics such as smart cities. “I think we should use mutual admiration to engage in exchange. Also about the critical issues, but above all about the common opportunities.” David Renke

    • Germany
    • Konfuzius-Institute
    • New Silk Road
    • Technology
    • Trade

    Executive Moves

    Stephan Kneipp is Elaris‘ new COO. Elaris, based in Rhineland-Palatinate, is a distributor of models made by Chinese manufacturer Dorcen. Previously, Kneipp was Head of Digital Ventures and Data-Driven Business at the Powertrain Solutions division of Bosch.

    Dominik Lembke has been appointed Director of Product Development at Svolt in August. Lembke is to bring the customers in Europe and the development departments of the battery manufacturer in Europe and China together. The 37-year-old previously worked at Porsche in Weissach, where he most recently headed the BEV battery systems division and was technical project manager for the HV batteries division.

    China.Table Editors

    CHINA.TABLE EDITORIAL OFFICE

    Licenses:

      Sign up now and continue reading immediately

      No credit card details required. No automatic renewal.

      Sie haben bereits das Table.Briefing Abonnement?

      Anmelden und weiterlesen