Table.Briefing: China

Interview with VDA head Hildegard Mueller + Rotor recycling

  • VDA head Mueller: ‘We must not isolate China’.
  • Wind power: hurdles in rotor blade recycling
  • Campaign against ‘fake news’ ahead of CP congress
  • Credit Suisse wants to expand in China
  • Customer data must remain in the country
  • Cansino receives approval for Covid spray vaccine
  • Protest against arms deal with Taiwan
  • Profile: Nargiza Salidjanova – A view of China from Washington
  • So To Speak: rubbing through life
Dear reader,

The automotive industry is undergoing one of the greatest upheavals in its history. The end of the combustion engine in 2035 is virtually inevitable. However, around half of the jobs in the German automotive industry still depend on the combustion engine. The fear of having to do without the Chinese market at this critical time is growing – even more so given geopolitical tensions between the West and China. Hildegard Mueller, President of the German Association of the Automotive Industry (VDA), sees a need for action. “We need an integrated China strategy,” she says in an interview with Table.Media.

Europe must diversify and become more resilient, emphasizes the VDA boss emphatically. However, despite all the necessary caution, China should not be isolated. “Simply leaving China – that is not the solution.” Because one thing should not be forgotten either: China also still has a great interest in our involvement.

China is and remains a country of superlatives and opportunities – also global climate policy. No other nation has recently built as many wind turbines as China. However, one downside of this renewable source is the costly recycling of the turbines. More and more turbines become obsolete and have to be dismantled. The rotor blades in particular cause problems: They are made of composite materials that are very difficult to separate.

Especially in China, the associated costs could become a burden for companies and government climate targets, analyzes Nico Beckert. There are hardly any national standards for disposal or even concrete financial support, such as tax incentives and subsidies in China. In practice, huge devices usually end up in landfills. Yet the mixture could be turned into building materials to save carbon emissions.

Your
Fabian Peltsch
Image of Fabian  Peltsch

Interview

‘Simply leaving China is not the solution’

Hildegard Mueller is the president of the German Association of the Automotive Industry (VDA)

The end of the internal combustion engine in 2035 is practically certain. BMW, Mercedes, and VW are prepared to drive mainly EVs by the end of the decade. So are the industry’s groans more like phantom pain?

It is too early to make a final assessment. After all, the trilogue (negotiations within the EU institutions, editor’s note) is still pending. However, I urgently warn against pushing the ambition level even higher in the EU legislative process. Instead, we need to create the right conditions to ensure that the ambitious targets can be achieved and that people are involved in the transformation process.

At the same time, one thing is certain: The industry will succeed in bringing the EV to relevant markets. The automotive industry has accepted the challenge of transformation. It is investing around €220 billion in research and development until 2026, primarily in electric mobility. In addition, at least another €100 billion will be spent on converting plants by 2030. So no one can accuse the auto industry of failing because of us. We want the ramp-up and are driving the transformation.

Manufacturers are doubly dependent on China today. BMW, Mercedes and VW are also fundamentally dependent on China, both as a sales market and supplier. Has the industry made itself too dependent on China?

The question of the relationship with China goes far beyond the auto industry. Overall, we are observing fundamental changes around the world: Until now, economics has accompanied, supported and stabilized political change. Now we are seeing geo-economics being used as a political strategy by some. This is a change whose consequences we are only just becoming aware of in Europe.

What is the consequence of this?

The answer cannot and must not be a rejection of globalization. On the contrary, Putin’s war of aggression means that we must talk and cooperate with even more countries. In doing so, we must of course diversify more and reduce dependencies. I will never tire of repeating that we need more raw materials, energy, and trade agreements. We can’t spend 15 years negotiating CETA with Canada and then renegotiate it again when everything is ready. We need an offensive for more legally secure agreements. Other countries are very active when it comes to securing access to raw materials and energy. We are too often not involved, we are much too slow, and we are increasingly weakening the competitive conditions for Europe and thus also for our industry. Europe’s future prosperity is at stake.

And what about corporate engagement?

Companies are doing all they can to become more diversified and resilient, finding alternative suppliers for raw materials and inputs wherever possible and signing contracts. Trade agreements provide the framework within which these contracts can be concluded with legal certainty. The other issue is sales markets. Of course, China is very important for our industry in this respect. The revenue we make there, too, feeds into the profits that pay for the transition. Incidentally, China is also interested in our involvement.

What does that mean?

I would like to see more support from policymakers. We need an integrated China strategy. But I see a lot of stagnation here, both at the national and EU levels. Simply leaving China is not the solution. The country and its economic importance are too big for that. We cannot isolate China. That would be naïve – and fatal, both politically and economically.

Mercedes has just announced its tightened luxury strategy. This is yet another intensified focus on the Chinese market. Where do you see efforts to become more independent of the Chinese sales market?

I generally do not comment on the strategies of individual companies. Of course, it is necessary to develop India or the Asia-Pacific region better as a sales market, for example. But that can’t be done overnight.

The chip crisis has cost manufacturers a lot of business. Does it make more sense to produce the chips at a higher price here instead of importing them from Asia with a certain risk?

When it comes to chips, we do not have a system dominated solely by the laws of the market. On the contrary, some states have actively pursued industrial policies and provided a lot of subsidies to ensure that factories were established. Europe has long rejected this. Slowly, it is waking up. It is high time to adapt the EU competition rules to the changing geostrategic conditions. Here, what could strengthen Europe globally is quickly seen as illegal aid.

What does that mean?

The EU has made a course correction and launched numerous IPCEIs (Important Projects of Common European Interest, editor’s note) for chip production. This is the right way to go in this case: I think production in Europe is important to make the industry more resilient.

Do you anticipate a slump in sales figures for German manufacturers in China as a result of the zero-Covid strategy?

No. Our current forecast for the Chinese market assumes an increase of nine percent. This would mean around 23 million cars on the Chinese market. Obviously, demand for cars in China is also being stimulated by the fact that the country has partially reduced purchase taxes. We also have to wait and see whether the situation in the supply chains will ease. This will depend on whether the manufacturers at the European locations can ramp up production numbers once again.

Hildegard Mueller was a member of the German Bundestag for the CDU from 2002 to 2008. From 2005 to 2008, she was Minister of State in the Federal Chancellery and Commissioner for Coordination between the Federal Government and the Federal States in Angela Merkel’s government. Since February 2020, the 55-year-old has been President of the German Association of the Automotive Industry.

  • Autoindustrie
  • Hildegard Müller

Feature

The wind industry’s recycling problem

The assembly and dismantling of wind turbines are very expensive in China, which makes recycling more difficult.

China’s National Energy Administration (NEA) calls on wind turbine developers to replace old turbines with new ones after 15 years. For this purpose, a subsidy program has even been extended. By 2025, more than 30 gigawatts of old turbines must be dismantled. And by 2040, the figure will be as high as 263 gigawatts.

Most parts of wind turbines can be recycled very effectively. But rotor blades still pose problems for the industry. A good 80 to 90 percent of them consist of composite materials. The synthetic resins used, form a strong bond with the glass and carbon fibers that is almost impossible to separate. For this reason – and also because it costs less – many countries dispose of the rotor blades in landfills. In the EU, landfilling is banned only in Germany, Austria, the Netherlands, and Finland.

So far, no data on old wind turbine blades has been collected in China. However, the People’s Republic generates one million tons of composite waste per year, rotor blades included. According to estimates, only about ten percent of this waste is recycled. “The figure is likely to be lower still for turbine blades,” Cosimo Ries of the consulting firm Trivium China tells China.Table.

Rotor blades often burned

Presently, the disposal of the blades cannot be tracked. “Currently, there are no clear rules on how disused rotor blades should be disposed of,” says Frank Haugwitz, a renewable energy expert at consulting agency Apricum. A large proportion is burned, dumped in landfills, or stacked in large piles in scrapyards, Ries adds.

But China intends to improve recycling. Through a Five-Year Plan for the circular economy, which was published last summer, recycling centers are to be established in around 60 cities, as Haugwitz says. Rotor blades are also to be explicitly disposed of there.

But with the recycling of wind turbine blades, companies face several problems. The obsolete wind turbines are often located in remote regions that are poorly connected to infrastructure. Recycling would come with “extremely high logistical and labor cost,” Ries says. The Trivium expert cites the example of the power producer China Datang. The company had to pay ¥18.5 million (the equivalent of €2.7 million) to dismantle eleven wind turbines from a wind farm in Guizhou. “This is a very significant amount of money, especially when you consider the amount of that will be retired in the decades ahead,” Ries said. The cost could become a “heavy burden” for companies. Presently, there are also few national standards and certifications, which are essential for a recycling economy.

No profitable business model

At present, there is no profitable business model in China for recycling wind turbines and their blades. This is also because the turbines do not contain as many critical raw materials as, for example, the batteries in electric cars. Yet rotor blades could indirectly help to reduce carbon dioxide emissions. The first companies in the USA and Europe shred the blades to sell the material to cement manufacturers, which use it to produce a cement-like building material with material properties almost identical to the original.

By using recycled rotor blades, fewer raw materials need to be utilized for cement production. According to various calculations, adding the material produces 16 to 27 percent less carbon. An even simpler way would be to burn the blades directly and use the heat to produce cement. This is what geocycle and building materials company Lafarge did in a cement kiln in Germany. Burning old wind turbine blades produces less carbon than using fossil fuels.

Whether such procedures will catch on and become profitable soon due to the high costs is still unclear. The government in China has the topic on its agenda, as shown by the plans to build up a recycling industry. It states that industrial raw materials are to be better recycled and new industries in the field are to be promoted. Research and development are to be strengthened to put waste from wind and solar plants to a second industrial use.

Plans are implemented poorly

However, the concrete implementation of these plans is currently lagging. “We haven’t seen any policies containing concrete financial support measures, such as tax incentives and subsidies, that will help the industry develop,” says Ries. Accordingly, it remains unclear how high on the agenda the problem is among those with political responsibility, says the Trivium expert.

  • Climate
  • Energy
  • Recycling
  • Renewable energies
  • Sustainability
  • Wind power

News

Ahead of CP congress: cyber authority plans stricter monitoring

China’s cyberspace watchdog has launched a three-month campaign ahead of the CP congress in October to crack down on online “fake news”. The campaign launched by the Cyberspace Administration of China (CAC) is aimed at “online rumors and fake information about major meetings, important events, and policies,” according to a statement. Violators should be punished “strictly, quickly and severely”. The punishment for violations has not been disclosed.

The measure also aims to stop “rumors” about labor safety, transportation, natural disasters, as well as false information about the society, the economy, epidemics, and the slander of China’s “heroes and martyrs,” according to a Reuters report. Online platforms have been asked to blacklist accounts that publish such content.

Xi Jinping is widely expected to secure a third term in office on October 16 (China.Table reported). However, the country faces severe challenges, from high unemployment to weakening economic growth and resentment over the government’s strict zero-Covid policy. rtr/fpe

  • Chinese Communist Party
  • Monitoring
  • Society
  • Technology

Credit Suisse wants to enter the investment business

Major Swiss bank Credit Suisse plans to start its wealth management business in China next year. “In spite of all these rumors flying around that Credit Suisse is pulling back or pulling out of China, China is a long-term play for us,” Benjamin Cavalli, head of the wealth management business in the Asia Pacific region, told Reuters news agency. The go-ahead should happen after the full acquisition of the Chinese securities joint venture is completed, Cavalli said. This is likely to be the case by the first quarter of 2023.

Cavalli stresses that the potential for selling wealth management products in the world’s second-largest economy is enormous. According to official data, China’s asset management market totaled ¥29 trillion ($4 trillion) in June. “We will never go into a new market where we feel we have to have a payback of three or four years,” the manager says.

As part of Beijing’s opening up to foreign financial companies, the Swiss had received approval to take control of their previous Chinese joint venture only two years ago. At the same time, the crisis-ridden major bank plans to cut around 5,000 jobs, according to insiders. fpe

  • Banks
  • Finance

New data transfer law in force

Last Thursday, China’s new data transfer law came into force. This was announced by the responsible Cyberspace Administration of China (CAC) on its website. In all likelihood, the law on cross-border data transfer will lead to foreign companies increasingly storing their data in China. So far, the CAC authorities require all affected companies to fill out a series of documents and submit them to the country’s Internet regulator for review, as reported by the South China Morning Post.

Among the documents required by the CAC is a self-assessment report that includes detailed information about the company that wants to export data, the recipient abroad, and how the data will be handled. Once the documentation is completed, the Internet regulator conducts a security review, which can take up to 45 business days.

Some international apps and online services had withdrawn from the Chinese market. The main reason was concern about China’s new digital strategy and the associated financial and bureaucratic challenges (China.Table reported). For many small and medium-sized companies, the additional expense is thus no longer worthwhile. niw

  • Data
  • Data protection
  • Technology

Cansino vaccine receives emergency approval

A vaccine by the company Cansino Biologics has been approved for emergency use as a booster by China’s drug regulator. However, there is no mRNA agent under development, but a nasal spray. The agent uses a viral vector to stimulate the production of components of Sars-CoV-2 in cells. In this way, it is similar to Astrazeneca’s product.

Spraying vaccines into the nose is considered to be a useful method. Many patients are more likely to accept this than an injection. In addition, the vaccine acts where viruses hit first: on the mucous membranes of the respiratory tract. It is still uncertain when Cansino’s nasal spray vaccine will be made available, as further approvals are still required.

On Friday, authorities already granted emergency approval to a vaccine from China’s Livzon Pharmaceutical Group as a booster. This vaccine uses individual viral proteins to provoke an immune response. Thus, the effect is similar to the US product Novavax. Approval for an mRNA vaccine is still pending in China. Only this approval is considered a breakthrough for rapidly producing high immunity in the population under zero-Covid conditions.

China continues to maintain its strict zero-Covid measures. On Saturday, the tech metropolis of Shenzhen ordered the closure of entertainment and cultural venues in four districts – an unspecified mini-lockdown. In Chengdu, the capital of Sichuan province, about 21 million people were sent into lockdown on Thursday over 132 new infections. In total, authorities reported 1,848 new Covid cases on September 3, including both symptomatic and asymptomatic infections. fin/fpe

  • Corona Vaccines
  • Health

Arms deal with Taiwan: China threatens retaliatory measures

China is threatening the US with retaliatory measures over an announced arms deal with Taiwan. China will “resolutely take legitimate and necessary countermeasures,” Liu Pengyu, Chinese Embassy spokesman in Washington, said on Saturday.

The US government must immediately halt arms sales and military interactions with Taiwan “so that it does not cause more damage to China-US relations, as well as to peace and stability across the Taiwan Strait,” Liu added.

According to insiders, the US has approved arms exports to Taiwan worth $1.1 billion. The package includes 60 anti-ship missiles and 100 air-to-air missiles (China.Table reported). US President Joe Biden justifies the military support by citing increasing pressure from China on democratically-ruled Taiwan. However, according to Washington, the arms package is only intended to maintain Taiwan’s defense capability, not to expand the island’s military capabilities. fpe

  • Military

Heads

Nargiza Salidjanova – China perspective from Washington

Nargiza Salidjanova, Director of the China Department of Rhodium Group.

Sometimes the right timing is crucial for success. This is what Nargiza Salidjanova experienced herself. “My career in China studies has been characterized by really good timing so far,” says the current Director of the China department at Rhodium Group, an independent research institute headquartered in New York. When Salidjanova first began to focus more closely on China during her undergraduate studies, the People’s Republic had just been admitted to the World Trade Organization. “What an excellent opportunity for a business student to follow the integration of a communist country into the global economic system in real time.” In 2007, she traveled to China for the first time. The country was preparing for the Summer Olympics, and the global financial crisis was looming on the horizon – another pivotal year.

She earned her master’s degree in international economic policy at the American University. Prior to joining Rhodium Group she served as Director of Economic and Trade Affairs at the US-China Economic and Security Review Commission, an advisory body to the US Congress. At Rhodium Group, Salidjanova is primarily involved in economic data analysis and the holistic assessment of current developments in the People’s Republic.

Information is harder to come by

She has noticed over the years that the work of China analysts can be very complicated due to the lack of information, unreliable sources, and insufficient access. “The pandemic and the shock of Russia’s war in Ukraine have made the situation even more difficult,” Salidjanova says. “Analysts need to be creative, but also remain cautious as China’s government focuses on establishing tighter and tighter controls regarding the flow of information.”

Salidjanova’s analyses are naturally influenced by her political views, as the Washington-based analyst reveals. She thinks the slowdown in China’s economy is self-inflicted because Beijing insists on government regulations instead of pushing ahead with reforms. “Stakeholders on both sides of the Atlantic and elsewhere are currently intensifying the discussion about dependence on Chinese products and imports.” There is a strong inclination toward self-sufficiency in the CP’s worldview, she said. At the same time, China is unwilling to become independent of foreign countries and to do it alone, she states further.

Nuanced analysis more important than ever

Once again, she sees China at a turning point. “China’s macroeconomic slowdown and growing geopolitical tensions increase the need for complex yet nuanced analysis,” she explains, referring to the China Pathfinder project that Rhodium launched with the Atlantic Council last year. This project aims to assess whether China is opening up again or closing itself off even further to the free market economy.

“Given China’s importance in the global system, the country is too important not to interact with, but the tenor of cooperation depends primarily on the decisions made in Beijing,” Salidjanova argues, from her perspective of the US capital. In any case, even currently, the timing couldn’t be more suited for an analyst to engage with the multi-faceted People’s Republic. Constantin Eckner

  • Chinese Communist Party
  • Nargiza Salidjanova
  • Rhodium Group
  • Technology
  • Trade

Executive Moves

Haixin Ying joined the consulting firm PKF Fasselt as a tax consultant on September 1. He is to strengthen PKF’s Duisburg Inner Harbor China Desk team, which serves 70 Chinese companies in Germany. Ying was previously Head of Tax at Huawei Germany. He has more than ten years of professional experience and his areas of expertise include transfer pricing and VAT.

Uwe Pichler-Necek has held the position of Managing Director of Porsche Engineering in China since July. Porsche Engineering had only expanded its presence in Beijing at the end of August with a new R&D center in the Chaoyang district. Pichler-Necek already joined Porsche Engineering in Shanghai in April to replace the previous Managing Director Kurt Schwaiger. Schwaiger is retiring after a six-year Chinastay.

Is something changing in your organization? Why not let us know at heads@table.media!

So To Speak

Rubbing through

蹭 – cèng – “rubbing through”

Let’s face it: haven’t we all rubbed up against someone else’s cooked food? Or maybe chafed against someone else’s car? No? But you’ve certainly rubbed up against free Internet, I bet!

If you’re rubbing your eyes in confusion, you have heard correctly. In Chinese, 蹭 cèng “rub, scrub” is an all-round expression for everything that has to do with a freeloader mentality. Depending on the context, the meaning ranges from snatching something discreetly to brazen sponging. As a mnemonic, pictures a cat. Because, as cat lovers know, our furry four-legged friends like to rub themselves against objects of all kinds and also against caring two-legged owners. Similarly, one can linguistically “rub” one’s way through everyday life in Chinese. Scrounging instead of purring is the motto. The following is a small vocabulary aid!

For example, one can rub up against anything culinary – be it edible (蹭吃 cèng chī “to freeload a meal”) or drinkable (蹭喝 cèng hē “to freeload a drink”). Others may like to save their data volume and rub on free Internet (蹭网 cèng wǎng “to surf the Internet for free” or 蹭 Wi-Fi “to grab free Wi-Fi”). Meanwhile, thrifty bookworms rub borrowed or discarded books or browse for free at the bookstore (蹭书 cèng shū “read books for free”). Those who like to be chauffeured around without paying gas money “rub up against cars” (蹭车 cèng chē “to ride with someone for free”). And anyone who brazenly sneaks into paid courses or attends training courses without paying is “course scouring” (蹭课 cèng kè).

Streaming junkies with empty pockets rub up against friends’ and acquaintances’ accounts (蹭会员 cèng huìyuán “sharing a membership account for free”). Frugal sports fans exploit basketball, badminton, and other ball courts paid for by others by simply playing for free (蹭球 cèng qiú – literally “scrounging balls”). And last but not least, the media and Internet community is very good at digital data rubbing. 蹭热度 cèng rèdù (from 热度 rèdù “heat, degree of heat”) or 蹭热点 cèng rèdiǎn (from 热点 rèdiǎn “hot topic”) is the Chinese term for when accounts and influencers jump on current online hype or social media trends to grab clicks and attention.

Finally, a bitter truth for all cat lovers: your darling is sly and a freeloading master. Not only does the furry beast make us feed it (reminder: 蹭吃 cèng chī or 蹭饭 cèng fàn – “scrounging food”). Rubbing against things or human social partners is also not only evidence of affection, but also a piece of self-interest. It is a kind of marking in which scents are released by rubbing through glands on the side of the head, cheeks, or side of the body. So your pet is using you to mark you and sort you into the “mine” drawer. But how could you blame the four-legged friends? After all, letting cats roam around you is healing and meditative. Otherwise, there would hardly be so many cat cafés in Asia.

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

  • Autoindustrie

China.Table editorial office

CHINA.TABLE EDITORIAL OFFICE

Licenses:
    • VDA head Mueller: ‘We must not isolate China’.
    • Wind power: hurdles in rotor blade recycling
    • Campaign against ‘fake news’ ahead of CP congress
    • Credit Suisse wants to expand in China
    • Customer data must remain in the country
    • Cansino receives approval for Covid spray vaccine
    • Protest against arms deal with Taiwan
    • Profile: Nargiza Salidjanova – A view of China from Washington
    • So To Speak: rubbing through life
    Dear reader,

    The automotive industry is undergoing one of the greatest upheavals in its history. The end of the combustion engine in 2035 is virtually inevitable. However, around half of the jobs in the German automotive industry still depend on the combustion engine. The fear of having to do without the Chinese market at this critical time is growing – even more so given geopolitical tensions between the West and China. Hildegard Mueller, President of the German Association of the Automotive Industry (VDA), sees a need for action. “We need an integrated China strategy,” she says in an interview with Table.Media.

    Europe must diversify and become more resilient, emphasizes the VDA boss emphatically. However, despite all the necessary caution, China should not be isolated. “Simply leaving China – that is not the solution.” Because one thing should not be forgotten either: China also still has a great interest in our involvement.

    China is and remains a country of superlatives and opportunities – also global climate policy. No other nation has recently built as many wind turbines as China. However, one downside of this renewable source is the costly recycling of the turbines. More and more turbines become obsolete and have to be dismantled. The rotor blades in particular cause problems: They are made of composite materials that are very difficult to separate.

    Especially in China, the associated costs could become a burden for companies and government climate targets, analyzes Nico Beckert. There are hardly any national standards for disposal or even concrete financial support, such as tax incentives and subsidies in China. In practice, huge devices usually end up in landfills. Yet the mixture could be turned into building materials to save carbon emissions.

    Your
    Fabian Peltsch
    Image of Fabian  Peltsch

    Interview

    ‘Simply leaving China is not the solution’

    Hildegard Mueller is the president of the German Association of the Automotive Industry (VDA)

    The end of the internal combustion engine in 2035 is practically certain. BMW, Mercedes, and VW are prepared to drive mainly EVs by the end of the decade. So are the industry’s groans more like phantom pain?

    It is too early to make a final assessment. After all, the trilogue (negotiations within the EU institutions, editor’s note) is still pending. However, I urgently warn against pushing the ambition level even higher in the EU legislative process. Instead, we need to create the right conditions to ensure that the ambitious targets can be achieved and that people are involved in the transformation process.

    At the same time, one thing is certain: The industry will succeed in bringing the EV to relevant markets. The automotive industry has accepted the challenge of transformation. It is investing around €220 billion in research and development until 2026, primarily in electric mobility. In addition, at least another €100 billion will be spent on converting plants by 2030. So no one can accuse the auto industry of failing because of us. We want the ramp-up and are driving the transformation.

    Manufacturers are doubly dependent on China today. BMW, Mercedes and VW are also fundamentally dependent on China, both as a sales market and supplier. Has the industry made itself too dependent on China?

    The question of the relationship with China goes far beyond the auto industry. Overall, we are observing fundamental changes around the world: Until now, economics has accompanied, supported and stabilized political change. Now we are seeing geo-economics being used as a political strategy by some. This is a change whose consequences we are only just becoming aware of in Europe.

    What is the consequence of this?

    The answer cannot and must not be a rejection of globalization. On the contrary, Putin’s war of aggression means that we must talk and cooperate with even more countries. In doing so, we must of course diversify more and reduce dependencies. I will never tire of repeating that we need more raw materials, energy, and trade agreements. We can’t spend 15 years negotiating CETA with Canada and then renegotiate it again when everything is ready. We need an offensive for more legally secure agreements. Other countries are very active when it comes to securing access to raw materials and energy. We are too often not involved, we are much too slow, and we are increasingly weakening the competitive conditions for Europe and thus also for our industry. Europe’s future prosperity is at stake.

    And what about corporate engagement?

    Companies are doing all they can to become more diversified and resilient, finding alternative suppliers for raw materials and inputs wherever possible and signing contracts. Trade agreements provide the framework within which these contracts can be concluded with legal certainty. The other issue is sales markets. Of course, China is very important for our industry in this respect. The revenue we make there, too, feeds into the profits that pay for the transition. Incidentally, China is also interested in our involvement.

    What does that mean?

    I would like to see more support from policymakers. We need an integrated China strategy. But I see a lot of stagnation here, both at the national and EU levels. Simply leaving China is not the solution. The country and its economic importance are too big for that. We cannot isolate China. That would be naïve – and fatal, both politically and economically.

    Mercedes has just announced its tightened luxury strategy. This is yet another intensified focus on the Chinese market. Where do you see efforts to become more independent of the Chinese sales market?

    I generally do not comment on the strategies of individual companies. Of course, it is necessary to develop India or the Asia-Pacific region better as a sales market, for example. But that can’t be done overnight.

    The chip crisis has cost manufacturers a lot of business. Does it make more sense to produce the chips at a higher price here instead of importing them from Asia with a certain risk?

    When it comes to chips, we do not have a system dominated solely by the laws of the market. On the contrary, some states have actively pursued industrial policies and provided a lot of subsidies to ensure that factories were established. Europe has long rejected this. Slowly, it is waking up. It is high time to adapt the EU competition rules to the changing geostrategic conditions. Here, what could strengthen Europe globally is quickly seen as illegal aid.

    What does that mean?

    The EU has made a course correction and launched numerous IPCEIs (Important Projects of Common European Interest, editor’s note) for chip production. This is the right way to go in this case: I think production in Europe is important to make the industry more resilient.

    Do you anticipate a slump in sales figures for German manufacturers in China as a result of the zero-Covid strategy?

    No. Our current forecast for the Chinese market assumes an increase of nine percent. This would mean around 23 million cars on the Chinese market. Obviously, demand for cars in China is also being stimulated by the fact that the country has partially reduced purchase taxes. We also have to wait and see whether the situation in the supply chains will ease. This will depend on whether the manufacturers at the European locations can ramp up production numbers once again.

    Hildegard Mueller was a member of the German Bundestag for the CDU from 2002 to 2008. From 2005 to 2008, she was Minister of State in the Federal Chancellery and Commissioner for Coordination between the Federal Government and the Federal States in Angela Merkel’s government. Since February 2020, the 55-year-old has been President of the German Association of the Automotive Industry.

    • Autoindustrie
    • Hildegard Müller

    Feature

    The wind industry’s recycling problem

    The assembly and dismantling of wind turbines are very expensive in China, which makes recycling more difficult.

    China’s National Energy Administration (NEA) calls on wind turbine developers to replace old turbines with new ones after 15 years. For this purpose, a subsidy program has even been extended. By 2025, more than 30 gigawatts of old turbines must be dismantled. And by 2040, the figure will be as high as 263 gigawatts.

    Most parts of wind turbines can be recycled very effectively. But rotor blades still pose problems for the industry. A good 80 to 90 percent of them consist of composite materials. The synthetic resins used, form a strong bond with the glass and carbon fibers that is almost impossible to separate. For this reason – and also because it costs less – many countries dispose of the rotor blades in landfills. In the EU, landfilling is banned only in Germany, Austria, the Netherlands, and Finland.

    So far, no data on old wind turbine blades has been collected in China. However, the People’s Republic generates one million tons of composite waste per year, rotor blades included. According to estimates, only about ten percent of this waste is recycled. “The figure is likely to be lower still for turbine blades,” Cosimo Ries of the consulting firm Trivium China tells China.Table.

    Rotor blades often burned

    Presently, the disposal of the blades cannot be tracked. “Currently, there are no clear rules on how disused rotor blades should be disposed of,” says Frank Haugwitz, a renewable energy expert at consulting agency Apricum. A large proportion is burned, dumped in landfills, or stacked in large piles in scrapyards, Ries adds.

    But China intends to improve recycling. Through a Five-Year Plan for the circular economy, which was published last summer, recycling centers are to be established in around 60 cities, as Haugwitz says. Rotor blades are also to be explicitly disposed of there.

    But with the recycling of wind turbine blades, companies face several problems. The obsolete wind turbines are often located in remote regions that are poorly connected to infrastructure. Recycling would come with “extremely high logistical and labor cost,” Ries says. The Trivium expert cites the example of the power producer China Datang. The company had to pay ¥18.5 million (the equivalent of €2.7 million) to dismantle eleven wind turbines from a wind farm in Guizhou. “This is a very significant amount of money, especially when you consider the amount of that will be retired in the decades ahead,” Ries said. The cost could become a “heavy burden” for companies. Presently, there are also few national standards and certifications, which are essential for a recycling economy.

    No profitable business model

    At present, there is no profitable business model in China for recycling wind turbines and their blades. This is also because the turbines do not contain as many critical raw materials as, for example, the batteries in electric cars. Yet rotor blades could indirectly help to reduce carbon dioxide emissions. The first companies in the USA and Europe shred the blades to sell the material to cement manufacturers, which use it to produce a cement-like building material with material properties almost identical to the original.

    By using recycled rotor blades, fewer raw materials need to be utilized for cement production. According to various calculations, adding the material produces 16 to 27 percent less carbon. An even simpler way would be to burn the blades directly and use the heat to produce cement. This is what geocycle and building materials company Lafarge did in a cement kiln in Germany. Burning old wind turbine blades produces less carbon than using fossil fuels.

    Whether such procedures will catch on and become profitable soon due to the high costs is still unclear. The government in China has the topic on its agenda, as shown by the plans to build up a recycling industry. It states that industrial raw materials are to be better recycled and new industries in the field are to be promoted. Research and development are to be strengthened to put waste from wind and solar plants to a second industrial use.

    Plans are implemented poorly

    However, the concrete implementation of these plans is currently lagging. “We haven’t seen any policies containing concrete financial support measures, such as tax incentives and subsidies, that will help the industry develop,” says Ries. Accordingly, it remains unclear how high on the agenda the problem is among those with political responsibility, says the Trivium expert.

    • Climate
    • Energy
    • Recycling
    • Renewable energies
    • Sustainability
    • Wind power

    News

    Ahead of CP congress: cyber authority plans stricter monitoring

    China’s cyberspace watchdog has launched a three-month campaign ahead of the CP congress in October to crack down on online “fake news”. The campaign launched by the Cyberspace Administration of China (CAC) is aimed at “online rumors and fake information about major meetings, important events, and policies,” according to a statement. Violators should be punished “strictly, quickly and severely”. The punishment for violations has not been disclosed.

    The measure also aims to stop “rumors” about labor safety, transportation, natural disasters, as well as false information about the society, the economy, epidemics, and the slander of China’s “heroes and martyrs,” according to a Reuters report. Online platforms have been asked to blacklist accounts that publish such content.

    Xi Jinping is widely expected to secure a third term in office on October 16 (China.Table reported). However, the country faces severe challenges, from high unemployment to weakening economic growth and resentment over the government’s strict zero-Covid policy. rtr/fpe

    • Chinese Communist Party
    • Monitoring
    • Society
    • Technology

    Credit Suisse wants to enter the investment business

    Major Swiss bank Credit Suisse plans to start its wealth management business in China next year. “In spite of all these rumors flying around that Credit Suisse is pulling back or pulling out of China, China is a long-term play for us,” Benjamin Cavalli, head of the wealth management business in the Asia Pacific region, told Reuters news agency. The go-ahead should happen after the full acquisition of the Chinese securities joint venture is completed, Cavalli said. This is likely to be the case by the first quarter of 2023.

    Cavalli stresses that the potential for selling wealth management products in the world’s second-largest economy is enormous. According to official data, China’s asset management market totaled ¥29 trillion ($4 trillion) in June. “We will never go into a new market where we feel we have to have a payback of three or four years,” the manager says.

    As part of Beijing’s opening up to foreign financial companies, the Swiss had received approval to take control of their previous Chinese joint venture only two years ago. At the same time, the crisis-ridden major bank plans to cut around 5,000 jobs, according to insiders. fpe

    • Banks
    • Finance

    New data transfer law in force

    Last Thursday, China’s new data transfer law came into force. This was announced by the responsible Cyberspace Administration of China (CAC) on its website. In all likelihood, the law on cross-border data transfer will lead to foreign companies increasingly storing their data in China. So far, the CAC authorities require all affected companies to fill out a series of documents and submit them to the country’s Internet regulator for review, as reported by the South China Morning Post.

    Among the documents required by the CAC is a self-assessment report that includes detailed information about the company that wants to export data, the recipient abroad, and how the data will be handled. Once the documentation is completed, the Internet regulator conducts a security review, which can take up to 45 business days.

    Some international apps and online services had withdrawn from the Chinese market. The main reason was concern about China’s new digital strategy and the associated financial and bureaucratic challenges (China.Table reported). For many small and medium-sized companies, the additional expense is thus no longer worthwhile. niw

    • Data
    • Data protection
    • Technology

    Cansino vaccine receives emergency approval

    A vaccine by the company Cansino Biologics has been approved for emergency use as a booster by China’s drug regulator. However, there is no mRNA agent under development, but a nasal spray. The agent uses a viral vector to stimulate the production of components of Sars-CoV-2 in cells. In this way, it is similar to Astrazeneca’s product.

    Spraying vaccines into the nose is considered to be a useful method. Many patients are more likely to accept this than an injection. In addition, the vaccine acts where viruses hit first: on the mucous membranes of the respiratory tract. It is still uncertain when Cansino’s nasal spray vaccine will be made available, as further approvals are still required.

    On Friday, authorities already granted emergency approval to a vaccine from China’s Livzon Pharmaceutical Group as a booster. This vaccine uses individual viral proteins to provoke an immune response. Thus, the effect is similar to the US product Novavax. Approval for an mRNA vaccine is still pending in China. Only this approval is considered a breakthrough for rapidly producing high immunity in the population under zero-Covid conditions.

    China continues to maintain its strict zero-Covid measures. On Saturday, the tech metropolis of Shenzhen ordered the closure of entertainment and cultural venues in four districts – an unspecified mini-lockdown. In Chengdu, the capital of Sichuan province, about 21 million people were sent into lockdown on Thursday over 132 new infections. In total, authorities reported 1,848 new Covid cases on September 3, including both symptomatic and asymptomatic infections. fin/fpe

    • Corona Vaccines
    • Health

    Arms deal with Taiwan: China threatens retaliatory measures

    China is threatening the US with retaliatory measures over an announced arms deal with Taiwan. China will “resolutely take legitimate and necessary countermeasures,” Liu Pengyu, Chinese Embassy spokesman in Washington, said on Saturday.

    The US government must immediately halt arms sales and military interactions with Taiwan “so that it does not cause more damage to China-US relations, as well as to peace and stability across the Taiwan Strait,” Liu added.

    According to insiders, the US has approved arms exports to Taiwan worth $1.1 billion. The package includes 60 anti-ship missiles and 100 air-to-air missiles (China.Table reported). US President Joe Biden justifies the military support by citing increasing pressure from China on democratically-ruled Taiwan. However, according to Washington, the arms package is only intended to maintain Taiwan’s defense capability, not to expand the island’s military capabilities. fpe

    • Military

    Heads

    Nargiza Salidjanova – China perspective from Washington

    Nargiza Salidjanova, Director of the China Department of Rhodium Group.

    Sometimes the right timing is crucial for success. This is what Nargiza Salidjanova experienced herself. “My career in China studies has been characterized by really good timing so far,” says the current Director of the China department at Rhodium Group, an independent research institute headquartered in New York. When Salidjanova first began to focus more closely on China during her undergraduate studies, the People’s Republic had just been admitted to the World Trade Organization. “What an excellent opportunity for a business student to follow the integration of a communist country into the global economic system in real time.” In 2007, she traveled to China for the first time. The country was preparing for the Summer Olympics, and the global financial crisis was looming on the horizon – another pivotal year.

    She earned her master’s degree in international economic policy at the American University. Prior to joining Rhodium Group she served as Director of Economic and Trade Affairs at the US-China Economic and Security Review Commission, an advisory body to the US Congress. At Rhodium Group, Salidjanova is primarily involved in economic data analysis and the holistic assessment of current developments in the People’s Republic.

    Information is harder to come by

    She has noticed over the years that the work of China analysts can be very complicated due to the lack of information, unreliable sources, and insufficient access. “The pandemic and the shock of Russia’s war in Ukraine have made the situation even more difficult,” Salidjanova says. “Analysts need to be creative, but also remain cautious as China’s government focuses on establishing tighter and tighter controls regarding the flow of information.”

    Salidjanova’s analyses are naturally influenced by her political views, as the Washington-based analyst reveals. She thinks the slowdown in China’s economy is self-inflicted because Beijing insists on government regulations instead of pushing ahead with reforms. “Stakeholders on both sides of the Atlantic and elsewhere are currently intensifying the discussion about dependence on Chinese products and imports.” There is a strong inclination toward self-sufficiency in the CP’s worldview, she said. At the same time, China is unwilling to become independent of foreign countries and to do it alone, she states further.

    Nuanced analysis more important than ever

    Once again, she sees China at a turning point. “China’s macroeconomic slowdown and growing geopolitical tensions increase the need for complex yet nuanced analysis,” she explains, referring to the China Pathfinder project that Rhodium launched with the Atlantic Council last year. This project aims to assess whether China is opening up again or closing itself off even further to the free market economy.

    “Given China’s importance in the global system, the country is too important not to interact with, but the tenor of cooperation depends primarily on the decisions made in Beijing,” Salidjanova argues, from her perspective of the US capital. In any case, even currently, the timing couldn’t be more suited for an analyst to engage with the multi-faceted People’s Republic. Constantin Eckner

    • Chinese Communist Party
    • Nargiza Salidjanova
    • Rhodium Group
    • Technology
    • Trade

    Executive Moves

    Haixin Ying joined the consulting firm PKF Fasselt as a tax consultant on September 1. He is to strengthen PKF’s Duisburg Inner Harbor China Desk team, which serves 70 Chinese companies in Germany. Ying was previously Head of Tax at Huawei Germany. He has more than ten years of professional experience and his areas of expertise include transfer pricing and VAT.

    Uwe Pichler-Necek has held the position of Managing Director of Porsche Engineering in China since July. Porsche Engineering had only expanded its presence in Beijing at the end of August with a new R&D center in the Chaoyang district. Pichler-Necek already joined Porsche Engineering in Shanghai in April to replace the previous Managing Director Kurt Schwaiger. Schwaiger is retiring after a six-year Chinastay.

    Is something changing in your organization? Why not let us know at heads@table.media!

    So To Speak

    Rubbing through

    蹭 – cèng – “rubbing through”

    Let’s face it: haven’t we all rubbed up against someone else’s cooked food? Or maybe chafed against someone else’s car? No? But you’ve certainly rubbed up against free Internet, I bet!

    If you’re rubbing your eyes in confusion, you have heard correctly. In Chinese, 蹭 cèng “rub, scrub” is an all-round expression for everything that has to do with a freeloader mentality. Depending on the context, the meaning ranges from snatching something discreetly to brazen sponging. As a mnemonic, pictures a cat. Because, as cat lovers know, our furry four-legged friends like to rub themselves against objects of all kinds and also against caring two-legged owners. Similarly, one can linguistically “rub” one’s way through everyday life in Chinese. Scrounging instead of purring is the motto. The following is a small vocabulary aid!

    For example, one can rub up against anything culinary – be it edible (蹭吃 cèng chī “to freeload a meal”) or drinkable (蹭喝 cèng hē “to freeload a drink”). Others may like to save their data volume and rub on free Internet (蹭网 cèng wǎng “to surf the Internet for free” or 蹭 Wi-Fi “to grab free Wi-Fi”). Meanwhile, thrifty bookworms rub borrowed or discarded books or browse for free at the bookstore (蹭书 cèng shū “read books for free”). Those who like to be chauffeured around without paying gas money “rub up against cars” (蹭车 cèng chē “to ride with someone for free”). And anyone who brazenly sneaks into paid courses or attends training courses without paying is “course scouring” (蹭课 cèng kè).

    Streaming junkies with empty pockets rub up against friends’ and acquaintances’ accounts (蹭会员 cèng huìyuán “sharing a membership account for free”). Frugal sports fans exploit basketball, badminton, and other ball courts paid for by others by simply playing for free (蹭球 cèng qiú – literally “scrounging balls”). And last but not least, the media and Internet community is very good at digital data rubbing. 蹭热度 cèng rèdù (from 热度 rèdù “heat, degree of heat”) or 蹭热点 cèng rèdiǎn (from 热点 rèdiǎn “hot topic”) is the Chinese term for when accounts and influencers jump on current online hype or social media trends to grab clicks and attention.

    Finally, a bitter truth for all cat lovers: your darling is sly and a freeloading master. Not only does the furry beast make us feed it (reminder: 蹭吃 cèng chī or 蹭饭 cèng fàn – “scrounging food”). Rubbing against things or human social partners is also not only evidence of affection, but also a piece of self-interest. It is a kind of marking in which scents are released by rubbing through glands on the side of the head, cheeks, or side of the body. So your pet is using you to mark you and sort you into the “mine” drawer. But how could you blame the four-legged friends? After all, letting cats roam around you is healing and meditative. Otherwise, there would hardly be so many cat cafés in Asia.

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

    • Autoindustrie

    China.Table editorial office

    CHINA.TABLE EDITORIAL OFFICE

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