Justified criticism has been pelting IOC chief Thomas Bach in recent days. The association has allowed itself to be harnessed by Beijing’s propaganda machine. Bach’s video call with tennis player Peng Shuai was supposed to prove to the world that the 35-year-old was fine. But even video recordings prove absolutely nothing, says human rights lawyer Teng Biao.
He spoke with our author Marcel Grzanna about his own disappearance about ten years ago. For 70 days, Teng was imprisoned and tortured by state security at that time. He suspects that Peng Shuai, although not physically injured, is put under massive psychological pressure. “The goal is for the victims’ fear to become so great that they are willing to do anything to avoid the consequences,” Teng describes the authorities’ approach in an interview with China.Table.
The case of the well-known athlete is particularly troublesome for Beijing – just months before the Winter Olympics kick off, it has the potential to drag the morale and character of China’s most powerful men into the spotlight. William Nee of Chinese Human Rights Defenders (CHRD), an international coalition of human rights organizations, suspects the government is still trying to find a solution as to how best to handle the matter.
And whether Peng Shuai will ever be able to stand on the court again and pursue her sports career is more than questionable.
Sleep deprivation, beatings, and hours of cross-legged sitting: for 70 days in 2011, human rights lawyer Teng Biao was psychologically and physically tortured by Chinese security forces. For 70 days, the now 48-year-old disappeared from the face of the earth – locked away in a hotel that the police and state security had converted for their own purposes. Family and friends knew nothing of Teng’s whereabouts. His crime: He had tried to take Chinese laws at their word and defend victims of human rights abuses against the state.
Ten years later, Teng looks at the case of tennis player Peng Shuai from his exile in the US. “She is a very famous person. So I don’t think they are physically torturing her. But I know from my own experience that they put her under enormous psychological pressure,” says Teng in an interview with China.Table.
Peng accuses one of the country’s most powerful politicians of sexual assault. Her public accusation via short message service Weibo was the catalyst for her disappearance in early November. While photos and videos circulated via state media in recent days suggest that Peng is physically unharmed, no one outside China believes that she can move freely, as the images suggest. “I assume she is being held in a hotel and doesn’t know what is going on outside,” Teng says.
The lawyer is certain that Peng neither has access to her mobile phone nor any other means to access information. Being sealed off from the outside world is a popular tool used by state security to instill fear into the victims of its arbitrariness. The detainees are supposed to interiorize the gravity of their situation so intensively that they willingly agree to anything afterward. They are threatened with long prison sentences and consequences for family members if they refuse to cooperate.
The method often leads to victims seeing their tormentors, of all people, as the last resort in a hopeless situation. Teng recalls the so-called Stockholm syndrome, which describes a growing relationship of trust between a hostage and her captor. “The goal is for the victim’s fear to become so great that they are willing to do anything to avoid the consequences,” Teng says.
To achieve this, it would be necessary to keep detainees like Peng in the dark about their situation for an extended period. “The state security likes to take its time to offer the victims a way out. It figures that anyone who can get out of their situation after just two days with a signature can’t be serious about their promises.” Peng Shuai, too, will probably not know how long she will be kept under control.
Teng himself was punched in the face “50 to 60 times” during his clandestine detention. After two weeks of showing no sign of cooperation with the authorities, he was forced to sit motionless, cross-legged, and with his eyes open every day, from six in the morning until midnight, he says. When the pain became so great that he begged for relief, the guards allowed him to get up for a few minutes. For five weeks at a time, he had to wear handcuffs around the clock.
He was not broken, says Teng. But after 70 days, his longing for his wife and children was so great that he willingly signed an agreement. In it, he pledged to stop his work as a human rights lawyer and to refrain from any form of activism. He kept his promise for a few months after his release, before he began again to publish critical texts on the human rights situation in the People’s Republic. His initial fear was dispelled by his conviction that he was doing the right thing. After further harassment and another arrest in 2013, Teng managed to flee to the US a year later.
The sensitive aspect of the Peng Shuai case is the fact that Peng is an esteemed athlete in China. She has done great service to Chinese sports with her Grand Slam titles in doubles, including the world’s most important tournament at Wimbledon. Due to her successes in the name of the fatherland, she was also held in high regard by the Communist Party. But her accusations against Zhang Gaoli, a former member of the Politburo Standing Committee, now cast a shadow over the Chinese leadership. It has the potential to drag the morals and character of the country’s most powerful men into the spotlight. Accordingly, the censors swiftly erase all mention of the issue.
“The Peng case is a very special one. I suspect that the government is still trying to figure out the best way to handle the matter,” says William Nee of Chinese Human Rights Defenders (CHRD), an international coalition of human rights organizations. A few months before the start of the Winter Olympics in Beijing, the situation remains “very complicated” for the party leadership. In part because dealing with Zhang Gaoli is likely to cause the regime headaches, as Nee believes. Zhang is considered one of the driving forces behind Beijing’s successful bid for the Winter Games.
Even Nee does not dare to guess when Peng Shuai will be released. His organization documents similar cases in which people are abducted and held by the Chinese state without formal charges. As a rule, the security forces use a measure called Residential Surveillance at a Designated Location (RSDL), which has existed since 1954 and has been part of Chinese criminal law since 1979.
Originally, RSDL was designed to legally detain sick or pregnant individuals who were unable to leave their homes. Today, RSDL allows authorities to make people literally disappear for six months. During this time, relatives do not have to be informed about the detention, nor do those who have been abducted have to be provided legal assistance.
Since 2015, human rights organizations have registered a dramatic increase in the number of RSDL proceedings. The measure was also applied to the two Canadians, Michael Kovrig and Michael Spavor. The two had been detained by Chinese authorities – as retaliation for the house arrest of Huawei manager Meng Wanzhou in Canada.
However, human rights activist Nee does not believe Peng is held under RSDL because the measure usually targets political activists or corrupt officials. “Secretly locking people away has become a common tool in China. To be sure, the United Nations is urging China to abandon the practice. But Beijing refuses,” Nee says.
With the Olympic Games approaching, people abroad hope that there will soon be clarity about the whereabouts of Peng Shuai. By what means her cooperation might ultimately be forced remains speculation, even for lawyer Teng Biao. “Perhaps she will be accused of tax evasion,” says Teng. Meanwhile, he considers it unlikely that the 35-year-old will return to the international tennis circuit. “I suspect that Peng Shuai’s professional career is over.”
It was supposed to be a big breakthrough and bring China’s chip industry closer to the top of the world. But after numerous grand announcements, the euphoria ended in bankruptcy. In the end, employees were even laid off without compensation: The company Wuhan Hongxin Semiconductor Manufacturing (HSMC) is one of the most glittering cases of waste of state subsidies in China.
The supposed chip giant HSMC was founded in late 2017. With investments of the equivalent of $18.5 billion, the management wanted to quickly produce modern semiconductors and even push into the advanced field of 7-nanometer chips. The Wuhan district government was convinced by the plans and invested the equivalent of about $2.1 billion in HSMC. But the authorities had been fooled. The man behind HSMC operated under a false name. He even pretended to be a vice president of the chip giant TSCM. The whole spectacle apparently served only one purpose: to grab state subsidies and stuff them into his own pocket.
The example of HSMC shows what ambitious goals China’s industrial policy is pursuing – but also what can go wrong in the process. The government is making great efforts to promote innovation and is moving a lot of money around. But this also stirs greed and creates inefficiency.
Since the turn of the millennium, spending on R&D as part of economic output has almost tripled. By 2025, spending is expected to increase by seven percent annually. This is because China wants to lead the world in innovations and technologies by the middle of the century.
Innovation policy plays a pivotal role in the 14th Five-Year Plan adopted at the beginning of the year. It has been identified as a key driver of future growth. Beijing is focusing on seven high-tech areas (China.Table reported):
In addition, basic research is also to be expanded and more skilled personnel trained. China still has major gaps in these fields, as Wolfgang Krieger of the Federation of German Industries (BDI) said in Beijing at an event hosted by the Institute for the World Economy (IfW) on Thursday. But Germany could also learn a lot from China’s innovation policy. For example, China is much better at putting knowledge into practice. Beyond basic research, knowledge and innovations are much more frequently transformed into actual products, Krieger said.
The BDI representative also sees challenges for Germany in China’s innovation policy. For example, increasing competitive pressure on German companies. Krieger also warns against the misuse and outflow of intellectual property by the Chinese side.
But is it also true that Chinese companies are benefiting from unfair subsidies? A new study by the Centre for European Economic Research (ZEW) shows how often government subsidies in the field of research and development were misused by Chinese companies. ZEW researchers Bettina Peters and Philipp Böing found that between 2001 and 2011, almost half of all subsidy beneficiaries(42 percent) spent state research aid entirely or partially on other purposes. More than half of all subsidies (53 percent) were misused. The misuse of subsidies can lead to the rapid reduction of production costs and distortion of competition on international markets, the researchers noted. It is difficult for foreign competition authorities to detect the misuse of subsidies.
However, the problem has not gone unnoticed in China either. Since 2006, the state has been doing more to curb the misuse of subsidies. In 2001, 81 percent of subsidized companies misappropriated funds. In 2011, the figure was only 18 percent, according to ZEW researchers. The reason? In 2006, the allocation of subsidies was reformed. The state allocated funds more selectively. The monitoring of subsidized companies became stricter.
The ZEW researchers have not much positive to say about this policy. It has successfully reduced the misuse of R&D subsidies. However, the productivity of companies has not increased as a result of research spending and the associated innovations. According to Böing, this is a significant problem. That’s because business productivity determines the competitiveness of an economy. “Productivity in China is one-third of the US level,” Böing says. “Productivity growth rates have been relatively low since the financial crisis.” China will have a hard time catching up with the US in terms of productivity growth.
Nor did the number of high-tech inventions increase as a result of government-funded research spending. Subsidies to high-tech companies did not even contribute to an increase in R&D spending in the sector. Nor did more university collaborations or the employment of more foreign researchers occur, as the ZEW researchers show.
However, the study’s findings do not mean that companies competing with Chinese firms can breathe easy. “China has already been able to address some structural problems in its innovation system,” says co-author Peters. If the funding instruments can be further improved and misuse further curbed, “China will become an increasingly innovative competitor on the global market,” Böing also says.
The next event in the IfW’s Global China Conversations series will take place on December 16 under the title “Transforming global industrial chains: opportunities for China”. China.Table is a media partner of the event series.
Group CEO Xu Jiayin is desperately trying to avert the bankruptcy of his Evergrande Group. The real estate developer has accumulated around 300 billion euros in debt (China.Table reported). Under pressure from the Communist Party, Xu has already mortgaged two Hong Kong villas for $105 million to service overdue payments. He also had to sell off parts of his art collection.
Evergrande New Energy Vehicle (NEV), the group’s EV subsidiary, on the other hand, is on the rise. Its shares gained about 12 percent on the Hong Kong Stock Exchange on Monday (Nov. 22) and have continued to make strong gains since then. On the previous Friday, Xu reiterated that electric mobility should become the group’s core business.
To secure financing for EVs, the company had sold 900 million shares on the same day at a unit price of three Hong Kong dollars (33 euro cents). This price is 15 percent below the closing price of the previous day. Six investors thus secured nine percent of the company for 347 million dollars. It is already the second capital injection, which has fetched the company this month. On Wednesday, November 10, share sales already brought about 64 million dollars.
The money is urgently needed to be able to deliver vehicles in spring 2022 as announced. In September, in the wake of the parent company’s problems, Evergrande NEV confessed to having payment difficulties. Yet, the startup has a goal of selling one million EVs in 2025 – the same number that global conglomerate VW is targeting in China. (China.Table reported). However, Evergrande NEV has long since scaled back its plans to offer sedans, vans, and SUVs. Now the compact SUV Hengchi 5 is supposed to be its saving grace. With it, the goal should remain within reach.
Whether Xu’s optimism is justified, however, could be doubted. The rebuilding plans sound more like an attempt to spruce up the bride once more. After all, the EV brand has been said to be up for sale for months. Xiaomi is said to be a potential buyer (China.Table reported). The electronics manufacturer is said to be interested in entering the electromobility market and, with the acquisition, could theoretically bridge its know-how gap to Nio and Xpeng.
In addition, the financial position of the Evergrande Group is visibly crumbling. The German Market Screening Agency (DMSA), one of Evergrande’s creditors, recently filed for bankruptcy against the group. This shows how far the crisis is spreading. A Chinese creditor is also said to have already taken this step. In China, the criminal offense of delaying bankruptcy does not exist, as Elske Fehl-Weileder, a lawyer specializing in Chinese bankruptcy law, explains in an interview with China.Table. Evergrande could thus admit its bankruptcy far too late, or not at all, to its creditors.
Looking at Evergrande NEV, the bankruptcy of the parent company could have several implications, Fehl-Weileder said. “If Evergrande NEV is a healthy company, it could be preserved as such, since a possible bankruptcy trustee can only transfer the shares.” That’s because there would be no change to operations or workflows. So a trustee would sell the Evergrande-NEV shares so that the proceeds would go into the bankruptcy estate to serve Evergrande creditors. But, “It doesn’t have to be a bankruptcy trustee’s top priority to consider what would and wouldn’t be beneficial to the subsidiary’s operations.” His job is to liquidate Evergrande’s assets in the best interests of its creditors.
A timely sale of all shares to Xiaomi could therefore ensure the continued operation of the EV brand. If the shares are sold in small packages to a large number of investors, it could become more difficult. The chance that no buyer is found at all is also not unrealistic. After all, it is an ailing company in a highly competitive market.
But there is one piece of good news. “A bankruptcy trustee of Evergrande would not be able to interfere with the business operations of Evergrande NEV,” Fehl-Weileder says. The trustee would not have the powers of a director as far as Evergrande NEV’s assets are concerned. Land or production lines would not be allowed to be sold. Their value would only be a drop in the ocean for the parent company Evergrande anyway because of its high level of debt. Christian Domke Seidel
Like many of his fellow political science graduates, Tamás Matura actually wanted to specialize in the European Union. But then China piqued his interest – and the emerging superpower never let go of the Hungarian politics student. “There have been countless competent EU experts and also many Orientalists who dealt with important questions of China’s culture, history, and calligraphy. But only a handful of people in Hungary knew anything about modern Chinese politics and economics – even though it was already clear that China would become the power of the 21st century,” the 37-year-old recalls.
A short time later, it became clear that Tamás Matura had chosen his niche wisely: in 2012, China established the “16+1” economic cooperation with Central and Eastern European countries in Budapest, and he was involved as a young researcher. Today, Matura works as an assistant professor at the Corvinus University of Budapest and is the founder of the Central and Eastern European Center for Asian Studies.
Hungary’s Prime Minister Viktor Orbán makes sure that his field of research is more exciting than ever, and his opinions remain in high demand among European and US academics. “Our government has been pursuing a pretty spectacular China policy over the last decade, and ironically, this puts a disproportionate focus on Hungary compared to its size,” says Matura. To be precise, the Hungarian government positions itself as China’s best friend in the European Union and even helps China’s leader Xi Jinping in his disputes with the EU, despite all the critical remarks from Brussels and Washington.
The Hungarian expert is convinced that the behavior of the prime minister of his home country is often misunderstood abroad: “Hungary is often wrongly described as China’s Trojan horse and Xi Jinping’s puppet. In fact, our country is much more economically dependent on Germany. And the Chinese government frequently disagrees with Hungary’s actions. In reality, however, China and Hungary take advantage of each other to pursue their own interests.”
Matura sees himself as a pan-European China expert and does not want to be reduced to his home country. “Some people think Hungary, as a former socialist country, has a better understanding of China than Western European countries.” He resolutely disagrees: “I do not believe that, because I myself, for example, have no personal memories of the socialist regime. And many Eastern European countries like Lithuania are harshly critical of China.”
As for how EU-China relations will develop in the future, Matura believes that will largely depend on how the new German government positions itself toward China. But whether Viktor Orbán is re-elected in Hungary is also crucial for the advancement of relations. Janna Degener-Storr
Bruce Lee has a new outfit: The statue of the martial arts legend on the Avenue of Stars in Tsim Sha Tsui in Hong Kong has been given a sweatshirt for fall. According to media reports, the Bruce Lee fan club has collaborated with underwear brand Lee Kung Man. The look is to recreate Lee’s appearance in the 1971 film “The Big Boss” to celebrate the late Kung Fu star’s 81st birthday. By dressing the statue, the fan club says it is referring to the clothing-change tradition in Brussels, where the statue Le Petit Julien, also known as Manneken Pis, is regularly dressed in different outfits. According to the report, the Bruce Lee fan club hopes to work with artists and designers in the future to create new looks for the statue.
Justified criticism has been pelting IOC chief Thomas Bach in recent days. The association has allowed itself to be harnessed by Beijing’s propaganda machine. Bach’s video call with tennis player Peng Shuai was supposed to prove to the world that the 35-year-old was fine. But even video recordings prove absolutely nothing, says human rights lawyer Teng Biao.
He spoke with our author Marcel Grzanna about his own disappearance about ten years ago. For 70 days, Teng was imprisoned and tortured by state security at that time. He suspects that Peng Shuai, although not physically injured, is put under massive psychological pressure. “The goal is for the victims’ fear to become so great that they are willing to do anything to avoid the consequences,” Teng describes the authorities’ approach in an interview with China.Table.
The case of the well-known athlete is particularly troublesome for Beijing – just months before the Winter Olympics kick off, it has the potential to drag the morale and character of China’s most powerful men into the spotlight. William Nee of Chinese Human Rights Defenders (CHRD), an international coalition of human rights organizations, suspects the government is still trying to find a solution as to how best to handle the matter.
And whether Peng Shuai will ever be able to stand on the court again and pursue her sports career is more than questionable.
Sleep deprivation, beatings, and hours of cross-legged sitting: for 70 days in 2011, human rights lawyer Teng Biao was psychologically and physically tortured by Chinese security forces. For 70 days, the now 48-year-old disappeared from the face of the earth – locked away in a hotel that the police and state security had converted for their own purposes. Family and friends knew nothing of Teng’s whereabouts. His crime: He had tried to take Chinese laws at their word and defend victims of human rights abuses against the state.
Ten years later, Teng looks at the case of tennis player Peng Shuai from his exile in the US. “She is a very famous person. So I don’t think they are physically torturing her. But I know from my own experience that they put her under enormous psychological pressure,” says Teng in an interview with China.Table.
Peng accuses one of the country’s most powerful politicians of sexual assault. Her public accusation via short message service Weibo was the catalyst for her disappearance in early November. While photos and videos circulated via state media in recent days suggest that Peng is physically unharmed, no one outside China believes that she can move freely, as the images suggest. “I assume she is being held in a hotel and doesn’t know what is going on outside,” Teng says.
The lawyer is certain that Peng neither has access to her mobile phone nor any other means to access information. Being sealed off from the outside world is a popular tool used by state security to instill fear into the victims of its arbitrariness. The detainees are supposed to interiorize the gravity of their situation so intensively that they willingly agree to anything afterward. They are threatened with long prison sentences and consequences for family members if they refuse to cooperate.
The method often leads to victims seeing their tormentors, of all people, as the last resort in a hopeless situation. Teng recalls the so-called Stockholm syndrome, which describes a growing relationship of trust between a hostage and her captor. “The goal is for the victim’s fear to become so great that they are willing to do anything to avoid the consequences,” Teng says.
To achieve this, it would be necessary to keep detainees like Peng in the dark about their situation for an extended period. “The state security likes to take its time to offer the victims a way out. It figures that anyone who can get out of their situation after just two days with a signature can’t be serious about their promises.” Peng Shuai, too, will probably not know how long she will be kept under control.
Teng himself was punched in the face “50 to 60 times” during his clandestine detention. After two weeks of showing no sign of cooperation with the authorities, he was forced to sit motionless, cross-legged, and with his eyes open every day, from six in the morning until midnight, he says. When the pain became so great that he begged for relief, the guards allowed him to get up for a few minutes. For five weeks at a time, he had to wear handcuffs around the clock.
He was not broken, says Teng. But after 70 days, his longing for his wife and children was so great that he willingly signed an agreement. In it, he pledged to stop his work as a human rights lawyer and to refrain from any form of activism. He kept his promise for a few months after his release, before he began again to publish critical texts on the human rights situation in the People’s Republic. His initial fear was dispelled by his conviction that he was doing the right thing. After further harassment and another arrest in 2013, Teng managed to flee to the US a year later.
The sensitive aspect of the Peng Shuai case is the fact that Peng is an esteemed athlete in China. She has done great service to Chinese sports with her Grand Slam titles in doubles, including the world’s most important tournament at Wimbledon. Due to her successes in the name of the fatherland, she was also held in high regard by the Communist Party. But her accusations against Zhang Gaoli, a former member of the Politburo Standing Committee, now cast a shadow over the Chinese leadership. It has the potential to drag the morals and character of the country’s most powerful men into the spotlight. Accordingly, the censors swiftly erase all mention of the issue.
“The Peng case is a very special one. I suspect that the government is still trying to figure out the best way to handle the matter,” says William Nee of Chinese Human Rights Defenders (CHRD), an international coalition of human rights organizations. A few months before the start of the Winter Olympics in Beijing, the situation remains “very complicated” for the party leadership. In part because dealing with Zhang Gaoli is likely to cause the regime headaches, as Nee believes. Zhang is considered one of the driving forces behind Beijing’s successful bid for the Winter Games.
Even Nee does not dare to guess when Peng Shuai will be released. His organization documents similar cases in which people are abducted and held by the Chinese state without formal charges. As a rule, the security forces use a measure called Residential Surveillance at a Designated Location (RSDL), which has existed since 1954 and has been part of Chinese criminal law since 1979.
Originally, RSDL was designed to legally detain sick or pregnant individuals who were unable to leave their homes. Today, RSDL allows authorities to make people literally disappear for six months. During this time, relatives do not have to be informed about the detention, nor do those who have been abducted have to be provided legal assistance.
Since 2015, human rights organizations have registered a dramatic increase in the number of RSDL proceedings. The measure was also applied to the two Canadians, Michael Kovrig and Michael Spavor. The two had been detained by Chinese authorities – as retaliation for the house arrest of Huawei manager Meng Wanzhou in Canada.
However, human rights activist Nee does not believe Peng is held under RSDL because the measure usually targets political activists or corrupt officials. “Secretly locking people away has become a common tool in China. To be sure, the United Nations is urging China to abandon the practice. But Beijing refuses,” Nee says.
With the Olympic Games approaching, people abroad hope that there will soon be clarity about the whereabouts of Peng Shuai. By what means her cooperation might ultimately be forced remains speculation, even for lawyer Teng Biao. “Perhaps she will be accused of tax evasion,” says Teng. Meanwhile, he considers it unlikely that the 35-year-old will return to the international tennis circuit. “I suspect that Peng Shuai’s professional career is over.”
It was supposed to be a big breakthrough and bring China’s chip industry closer to the top of the world. But after numerous grand announcements, the euphoria ended in bankruptcy. In the end, employees were even laid off without compensation: The company Wuhan Hongxin Semiconductor Manufacturing (HSMC) is one of the most glittering cases of waste of state subsidies in China.
The supposed chip giant HSMC was founded in late 2017. With investments of the equivalent of $18.5 billion, the management wanted to quickly produce modern semiconductors and even push into the advanced field of 7-nanometer chips. The Wuhan district government was convinced by the plans and invested the equivalent of about $2.1 billion in HSMC. But the authorities had been fooled. The man behind HSMC operated under a false name. He even pretended to be a vice president of the chip giant TSCM. The whole spectacle apparently served only one purpose: to grab state subsidies and stuff them into his own pocket.
The example of HSMC shows what ambitious goals China’s industrial policy is pursuing – but also what can go wrong in the process. The government is making great efforts to promote innovation and is moving a lot of money around. But this also stirs greed and creates inefficiency.
Since the turn of the millennium, spending on R&D as part of economic output has almost tripled. By 2025, spending is expected to increase by seven percent annually. This is because China wants to lead the world in innovations and technologies by the middle of the century.
Innovation policy plays a pivotal role in the 14th Five-Year Plan adopted at the beginning of the year. It has been identified as a key driver of future growth. Beijing is focusing on seven high-tech areas (China.Table reported):
In addition, basic research is also to be expanded and more skilled personnel trained. China still has major gaps in these fields, as Wolfgang Krieger of the Federation of German Industries (BDI) said in Beijing at an event hosted by the Institute for the World Economy (IfW) on Thursday. But Germany could also learn a lot from China’s innovation policy. For example, China is much better at putting knowledge into practice. Beyond basic research, knowledge and innovations are much more frequently transformed into actual products, Krieger said.
The BDI representative also sees challenges for Germany in China’s innovation policy. For example, increasing competitive pressure on German companies. Krieger also warns against the misuse and outflow of intellectual property by the Chinese side.
But is it also true that Chinese companies are benefiting from unfair subsidies? A new study by the Centre for European Economic Research (ZEW) shows how often government subsidies in the field of research and development were misused by Chinese companies. ZEW researchers Bettina Peters and Philipp Böing found that between 2001 and 2011, almost half of all subsidy beneficiaries(42 percent) spent state research aid entirely or partially on other purposes. More than half of all subsidies (53 percent) were misused. The misuse of subsidies can lead to the rapid reduction of production costs and distortion of competition on international markets, the researchers noted. It is difficult for foreign competition authorities to detect the misuse of subsidies.
However, the problem has not gone unnoticed in China either. Since 2006, the state has been doing more to curb the misuse of subsidies. In 2001, 81 percent of subsidized companies misappropriated funds. In 2011, the figure was only 18 percent, according to ZEW researchers. The reason? In 2006, the allocation of subsidies was reformed. The state allocated funds more selectively. The monitoring of subsidized companies became stricter.
The ZEW researchers have not much positive to say about this policy. It has successfully reduced the misuse of R&D subsidies. However, the productivity of companies has not increased as a result of research spending and the associated innovations. According to Böing, this is a significant problem. That’s because business productivity determines the competitiveness of an economy. “Productivity in China is one-third of the US level,” Böing says. “Productivity growth rates have been relatively low since the financial crisis.” China will have a hard time catching up with the US in terms of productivity growth.
Nor did the number of high-tech inventions increase as a result of government-funded research spending. Subsidies to high-tech companies did not even contribute to an increase in R&D spending in the sector. Nor did more university collaborations or the employment of more foreign researchers occur, as the ZEW researchers show.
However, the study’s findings do not mean that companies competing with Chinese firms can breathe easy. “China has already been able to address some structural problems in its innovation system,” says co-author Peters. If the funding instruments can be further improved and misuse further curbed, “China will become an increasingly innovative competitor on the global market,” Böing also says.
The next event in the IfW’s Global China Conversations series will take place on December 16 under the title “Transforming global industrial chains: opportunities for China”. China.Table is a media partner of the event series.
Group CEO Xu Jiayin is desperately trying to avert the bankruptcy of his Evergrande Group. The real estate developer has accumulated around 300 billion euros in debt (China.Table reported). Under pressure from the Communist Party, Xu has already mortgaged two Hong Kong villas for $105 million to service overdue payments. He also had to sell off parts of his art collection.
Evergrande New Energy Vehicle (NEV), the group’s EV subsidiary, on the other hand, is on the rise. Its shares gained about 12 percent on the Hong Kong Stock Exchange on Monday (Nov. 22) and have continued to make strong gains since then. On the previous Friday, Xu reiterated that electric mobility should become the group’s core business.
To secure financing for EVs, the company had sold 900 million shares on the same day at a unit price of three Hong Kong dollars (33 euro cents). This price is 15 percent below the closing price of the previous day. Six investors thus secured nine percent of the company for 347 million dollars. It is already the second capital injection, which has fetched the company this month. On Wednesday, November 10, share sales already brought about 64 million dollars.
The money is urgently needed to be able to deliver vehicles in spring 2022 as announced. In September, in the wake of the parent company’s problems, Evergrande NEV confessed to having payment difficulties. Yet, the startup has a goal of selling one million EVs in 2025 – the same number that global conglomerate VW is targeting in China. (China.Table reported). However, Evergrande NEV has long since scaled back its plans to offer sedans, vans, and SUVs. Now the compact SUV Hengchi 5 is supposed to be its saving grace. With it, the goal should remain within reach.
Whether Xu’s optimism is justified, however, could be doubted. The rebuilding plans sound more like an attempt to spruce up the bride once more. After all, the EV brand has been said to be up for sale for months. Xiaomi is said to be a potential buyer (China.Table reported). The electronics manufacturer is said to be interested in entering the electromobility market and, with the acquisition, could theoretically bridge its know-how gap to Nio and Xpeng.
In addition, the financial position of the Evergrande Group is visibly crumbling. The German Market Screening Agency (DMSA), one of Evergrande’s creditors, recently filed for bankruptcy against the group. This shows how far the crisis is spreading. A Chinese creditor is also said to have already taken this step. In China, the criminal offense of delaying bankruptcy does not exist, as Elske Fehl-Weileder, a lawyer specializing in Chinese bankruptcy law, explains in an interview with China.Table. Evergrande could thus admit its bankruptcy far too late, or not at all, to its creditors.
Looking at Evergrande NEV, the bankruptcy of the parent company could have several implications, Fehl-Weileder said. “If Evergrande NEV is a healthy company, it could be preserved as such, since a possible bankruptcy trustee can only transfer the shares.” That’s because there would be no change to operations or workflows. So a trustee would sell the Evergrande-NEV shares so that the proceeds would go into the bankruptcy estate to serve Evergrande creditors. But, “It doesn’t have to be a bankruptcy trustee’s top priority to consider what would and wouldn’t be beneficial to the subsidiary’s operations.” His job is to liquidate Evergrande’s assets in the best interests of its creditors.
A timely sale of all shares to Xiaomi could therefore ensure the continued operation of the EV brand. If the shares are sold in small packages to a large number of investors, it could become more difficult. The chance that no buyer is found at all is also not unrealistic. After all, it is an ailing company in a highly competitive market.
But there is one piece of good news. “A bankruptcy trustee of Evergrande would not be able to interfere with the business operations of Evergrande NEV,” Fehl-Weileder says. The trustee would not have the powers of a director as far as Evergrande NEV’s assets are concerned. Land or production lines would not be allowed to be sold. Their value would only be a drop in the ocean for the parent company Evergrande anyway because of its high level of debt. Christian Domke Seidel
Like many of his fellow political science graduates, Tamás Matura actually wanted to specialize in the European Union. But then China piqued his interest – and the emerging superpower never let go of the Hungarian politics student. “There have been countless competent EU experts and also many Orientalists who dealt with important questions of China’s culture, history, and calligraphy. But only a handful of people in Hungary knew anything about modern Chinese politics and economics – even though it was already clear that China would become the power of the 21st century,” the 37-year-old recalls.
A short time later, it became clear that Tamás Matura had chosen his niche wisely: in 2012, China established the “16+1” economic cooperation with Central and Eastern European countries in Budapest, and he was involved as a young researcher. Today, Matura works as an assistant professor at the Corvinus University of Budapest and is the founder of the Central and Eastern European Center for Asian Studies.
Hungary’s Prime Minister Viktor Orbán makes sure that his field of research is more exciting than ever, and his opinions remain in high demand among European and US academics. “Our government has been pursuing a pretty spectacular China policy over the last decade, and ironically, this puts a disproportionate focus on Hungary compared to its size,” says Matura. To be precise, the Hungarian government positions itself as China’s best friend in the European Union and even helps China’s leader Xi Jinping in his disputes with the EU, despite all the critical remarks from Brussels and Washington.
The Hungarian expert is convinced that the behavior of the prime minister of his home country is often misunderstood abroad: “Hungary is often wrongly described as China’s Trojan horse and Xi Jinping’s puppet. In fact, our country is much more economically dependent on Germany. And the Chinese government frequently disagrees with Hungary’s actions. In reality, however, China and Hungary take advantage of each other to pursue their own interests.”
Matura sees himself as a pan-European China expert and does not want to be reduced to his home country. “Some people think Hungary, as a former socialist country, has a better understanding of China than Western European countries.” He resolutely disagrees: “I do not believe that, because I myself, for example, have no personal memories of the socialist regime. And many Eastern European countries like Lithuania are harshly critical of China.”
As for how EU-China relations will develop in the future, Matura believes that will largely depend on how the new German government positions itself toward China. But whether Viktor Orbán is re-elected in Hungary is also crucial for the advancement of relations. Janna Degener-Storr
Bruce Lee has a new outfit: The statue of the martial arts legend on the Avenue of Stars in Tsim Sha Tsui in Hong Kong has been given a sweatshirt for fall. According to media reports, the Bruce Lee fan club has collaborated with underwear brand Lee Kung Man. The look is to recreate Lee’s appearance in the 1971 film “The Big Boss” to celebrate the late Kung Fu star’s 81st birthday. By dressing the statue, the fan club says it is referring to the clothing-change tradition in Brussels, where the statue Le Petit Julien, also known as Manneken Pis, is regularly dressed in different outfits. According to the report, the Bruce Lee fan club hopes to work with artists and designers in the future to create new looks for the statue.
