Table.Briefing: China

Magnesium deficiency + Foldable screens + Souvenirs from the People’s Congress

  • Aluminum production: Europe is running out of magnesium
  • Royole and Airbus to revolutionize passenger displays
  • Caixin no longer “credible”
  • European Parliament calls for closer ties with Taiwan
  • Vice Premier Liu appeases Evergrande crisis
  • End for fixed electricity prices in Guangdong
  • Column: Johnny Erling on “whole-process procedural People’s Democracy”
  • Jack Ma anchors off Mallorca
Dear reader,

Europe obtains 95% of its magnesium from China. Christiane Kuehl analyses how long the current magnesium stocks of Germany and Europe would last if China stopped production as a result of the power crisis. One thing is already clear: If, in addition to the supply bottlenecks, the previously guaranteed deliveries by ship do not arrive on time or do not arrive at all, large parts of the industry will face bigger problems than just supply bottlenecks.

Shenzhen-based display and smartphone manufacturer Royole is the only manufacturer of flexible displays that meet the strict safety requirements for aircraft cabins. Frank Sieren took a closer look at how Royole and Airbus plan to revolutionize entertainment on flights.

Johnny Erling reveals why China’s state and party leader Xi Jinping is now praising the People’s Congress system. That Xi, of all people, wants to swear in the People’s Congress, which is called a “pseudo-parliament” by the West, on what “real democracy versus false democracy” is, happens mainly for selfish reasons. He wants to be re-elected next year. And he will ensure his re-election by any means necessary. The various memorabilia that Johnny Erling has collected in his 22 years as a correspondent at the People’s Congresses show with a wink what a member of Congress needs to fulfill his parliamentary duties.

Have a pleasant weekend

Your
Ning Wang
Image of Ning  Wang

Feature

Magnesium deficiency threatens European economy

China’s power crisis is spreading further and further. Now the world is running out of non-ferrous metal magnesium, as two Chinese provinces have either halted or reduced production till the end of the year to meet their power-saving targets. The production of magnesium is especially suited for this measure, as the extraction of magnesium demands a lot of power.

Magnesium is an essential raw material for the aluminum industry. As a so-called alloying agent, it increases the strength of aluminum. And China, with an 87 percent share of global magnesium production, now has an almost monopoly. About 45 percent of all Chinese exports are destined for Europe. China supplies 95 percent of Europe’s magnesium demands. So Europe has been hit particularly hard. The US at least still has its own producer, US Magnesium.

The Chinese Magnesium production is focused to such an extent, that a single region has been able to trigger this crisis. The majority of this metal is produced in a single city called Yulin in the province of Shaanxi. In early October, the local government ordered 35 of its 50 magnesium smelters to shut down until the end of the year. The rest was directed to cut production by 50 percent. Smaller production sites in neighboring Shanxi province have also received similar orders.

China: Production of magnesium and aluminum curbed

It is important to note that the production of many non-ferrous metals primarily requires electricity – and less fuel. To produce one tonne of magnesium, a whopping 35-40 megawatt-hours (MWh) of power are required. For a tonne of primary aluminum, it’s between 15 and 20 MWh per tonne. Other metals such as copper, zinc, or lead require much less power.

In addition to magnesium production, aluminum smelters have therefore also been asked to curb their production, for example in Yunnan, Guangxi, and Xinjiang. More than two million tonnes of active aluminum capacity have been affected since September, writes analyst Yao Wenyu of bank ING. Yao sees this as directly linked to the government’s climate targets – especially since, according to her study, greenhouse gas emissions per tonne are much higher for aluminum than for any other metal.

To make matters even more complicated, Magnesium cannot be stored for long: It begins to oxidize after three months. The current magnesium stocks in Germany and Europe will be exhausted by the end of November 2021 at the latest, German economic association WVMetalle estimates. “The situation is difficult to assess,” WVMetalle chief executive Franziska Erdle told China.Table. “Because the companies are not sure that promised supplies that are currently on their way to Europe by ship will actually arrive.”

The supply bottlenecks are threatening the entire global aluminum value chain. Especially as prices are also rising enormously: Imported magnesium now costs around $9000 per tonne in Europe, 75 percent more than a mere month ago. On top of this, electricity prices are rising as a result of the global energy crisis. Economic sectors such as automotive, construction, packaging, and mechanical engineering are affected by the magnesium shortage. Apart from aluminum, magnesium is also used in iron and steel production as well as in pressure die-casting.

The automotive industry, already battered by the global chip shortage, is particularly hit. 35 percent of demand for magnesium is for automotive sheet, Financial Times quotes Barclays analyst Amos Fletcher as saying. There is no substitute for the material in aluminum sheet: “If magnesium supply stops, the entire auto industry will potentially be forced to stop.” Aluminum alloys with magnesium are used in transmissions, steering columns, seat frames, and gas caps in addition to sheet metal.

Magnesium crisis: associations call for negotiations with China

WVMetalle and other associations, therefore, called on the German government to “urgently initiate diplomatic talks with China.” A situation similar to the chip crisis is expected. Magnesium has been on the EU’s list of critical raw materials since 2017. However, political-strategic considerations and measures to secure the flow of supplies have so far failed to materialize, according to WVMetalle.

In parallel, the association European Aluminium, which counts many major companies such as Norsk Hydro and Alcoa among its members, called on the EU Commission to begin negotiations with China. Magnesium should be discussed in the same forums as semiconductors. The current crisis is “a clear example of the risk the EU is taking by making its domestic economy dependent on Chinese imports.,” the association criticized in its position paper. The EU already contacted China over the issue, an official told Politico, without providing further details.

Magnesium is just one element in a long list of production losses since the early 1990s, according to European Aluminium. It stated that the production of primary aluminum – new, non-recycled aluminum – had lost more than 30 percent of its capacity since 2008. “In parallel,” the paper continues, “China continuously increased production capacity.” China’s share of global magnesium production has risen from 12 percent in 2000 to 87 percent today – with a market volume of 1.2 million tonnes per year.

In 2001, Europe had abandoned its last domestic magnesium production to cut costs, as they could no longer compete with cheap imports from China. Today, WVMetals and European Aluminium describe these imports as “dumping”. “Magnesium is not a rare commodity. It is found all over the world,” Erdle says. “However, production in Europe depends on competitive framework conditions.” These do not exist in China, she says. According to the association, the “current drastic increase in industrial electricity prices and the unforeseeable development of energy costs” stand in the way of resuming the power-intensive production in the EU.

In the end, the magnesium crisis is just another example of how Europe carelessly made itself dependent on Chinese imports in times past. In the noughties, the global division of labor was very popular. Nobody wanted to buy costly primary products just because they were produced domestically. There was no concern about supply – so domestic production was not protected by EU protective tariffs on Chinese magnesium imports. There are similar problems with rare earth elements, whose dirty extraction in the West was abandoned because of the environmental damage. This, too, has led to China’s dominant position in the market for minerals that are not actually that “rare” at all.

Solution to the magnesium crisis

According to WVMetalle, there is no reliable information on other sources of magnesium outside China. So in the short term, everyone will have to come to terms with the situation. In the long term, however, the association is calling for “a German industrial policy strategy to ensure access to industrial metals.” In collaboration with the EU, “effective measures must be taken in the medium and long term to maintain functioning and sustainable value chains,” WVMetalle demands. European Aluminum called more directly for measures to defend against unfairly subsidized imports from China.

Another way out could be to further strengthen the circular economy. Germany already produces more recycled aluminum than new aluminum. In the transport and construction sectors, for example, 95 percent is reused. Around 90 percent of packaging is also recycled. The production of this so-called secondary aluminum requires just five percent of the power needed for the making of primary aluminum. US manufacturers are beginning to scour scrap aluminum for magnesium that can be extracted, according to Financial Times. Perhaps more aluminum scrap could be imported from abroad for recycling as a temporary alternative. Whether this measure will be necessary depends on how the situation develops.

  • Autoindustrie

Royole: stretchable displays for aircraft

Royole, a Chinese start-up producing flexible displays, wants to revolutionize cabin displays in aircraft in cooperation with European aircraft manufacturer Airbus. The two companies unveiled a new prototype at Airshow China in late September. “Utilizing fully flexible displays instead of traditional Liquid-Crystal display in aircraft can reduce both cost and weight, saving fuel and reducing carbon emissions in airliners,” explains Hong Zhao, COO of Royole. The company is one of ten so-called Unicorns in Shenzhen, southern China. These types of start-ups are worth more than one billion US dollars. Royole was founded by Chinese Stanford graduates.

Hong Zhao of Royole and Alejandro Morales, Airbus Project Manager for Flexible Displays, at Airshow China.

One area of application for these ultra-thin and ultra-light displays is digital in-flight magazines. Instead of paper, Airbus and Royole want to produce them from flexible OLED displays which can be unfolded and bent like a magazine. With this device resembling an iPad, passengers can order food, pay for duty-free products via credit card, read digital editions of magazines and newspapers, stream movies and music, and, depending on the aircraft’s equipment, access the Internet.

Compared to a printed magazine, display magazines are easier to disinfect, Royole explains. Currently, the company is the only manufacturer of flexible displays that meets the strict safety requirements for aircraft cabins. And the displays are much lighter than paper screens and magazines. The screens will soon be tested on select Airbus aircraft. Airbus established an innovation center in Shenzhen back in 2019. Royole’s production is also based there.

From smartphone to LED ball

Royole is now the global market leader in the field of flexible displays. Founded in 2012, the company has offices in Beijing, Hong Kong, Japan, the United States, and the Netherlands.

Since its inception, Royole has achieved several milestones, including the world’s first mass-produced foldable smartphone. The Flexpai was revealed in 2018. However, initial tests proved the device to be disappointing due to an unwieldy centerfold. However, major smartphone manufacturers have since adopted and improved the technology. Back in 2014, the company launched the world’s thinnest full-color, fully flexible display (FFD).

Probably in part to inspire its own developments, Royole launched a developer kit this summer that allows hobbyists to create their own Android device with bendable displays. The so-called RoKit, which comes in an aluminum toolbox, includes a 7.8-inch (20-cm) OLED display with a resolution of 1920 x 1080 pixels. There’s also a microcontroller with 3 GB of RAM and 32 GB of storage. Hobbyists also get expansion boards, cables, and WLAN antennas. Price: $960.

In May of this year, Royole also unveiled a production-ready micro-LED display that can be stretched, pulled apart, rolled up, and even deformed into a ball. So basically, it can be shaped into any shape imaginable. This is the prerequisite that allows surfaces and screens to grow together, which in turn saves space. The micro-LED demo panel measures 96 × 60, can be stretched up to 130 percent and bent up to 40 degrees and has a resolution of 120 pixels per inch (PPI).

Unimagined possibilities – even for clothing

Flexible displays are still a niche. However, they have great potential to turn the tech and gadget world upside down. Mobile devices can take on any shape, sunglasses and windshields become smart devices thanks to the transparent surface, globes and maps become interactive tools.

Even clothing can be provided with smart functions through flexible displays. For example, in the form of functional sportswear or patches, that can be affixed on the skin to measure body functions. At the Cruise 2020 fashion show in New York, Royole and Louis Vuitton already presented a jointly designed bag collection equipped with a fully flexible display and sensors. Images and videos appear on the sides of the handbags, which can be controlled via a touchscreen interface. The development took more than two years, according to the manufacturers. During the development process, Royole filed more than 80 worldwide patents.

  • Airbus
  • Smartphone
  • Technology

News

Caixin booted off official media list

The Chinese government has removed the comparatively critical news portal Caixin from the list of media whose content may be published by other Chinese websites. This significantly damages Caixin’s reach. The publication focuses on financial and economic issues. It has maintained a significant degree of independence despite government censorship and is therefore considered an important source of current developments in China. Caixin is published both in Chinese and in English. Its stories tend to be more creative than that of the state media and its editorial staff enjoys an excellent reputation.

The official list of media permitted for re-publication has considerable significance for China’s publishers. It indicates which news sources Chinese websites are allowed to adopt. Many articles published on China’s news portals appear in newspapers, magazines, and online media; its source information is then found in the author’s line along with the link. This gives the original pages both clicks and credibility in search engines. Anyone who wants to read Caixin’s articles now has to go directly to their website.

China’s Internet regulator has now defended the removal of Caixin on the grounds of content deficiencies. Caixin’s articles “no longer meet requirements, have poor daily performance and lack influence,” AP news quotes a document published by the Cyberspace Administration. The authority claims to protect the “credibility” of the list by weeding out unreliable media.

Before Xi Jinping put the media back on a short leash, Caixin was able to make a name for itself with reports about grievances and corruption. Even today, Caixin maintains a relatively rebellious approach. Thanks to her good connections to politics, founder Hu Shuli was able to prevent the worst interventions in the work of her editorial team. fin

  • Caixin
  • Censorship
  • Chinese Communist Party
  • Media

EU Parliament adopts Taiwan report

With a large majority, the European Parliament has voted in favor of closer relations with Taiwan. 580 MEPs voted in favor, with only 26 MEPs objecting. Among other things, the EU Parliament is thus laying a foundation for a new bilateral investment agreement with Taipei. The key points of the resolution:

  • Bilateral agreement: MEPs call for an “impact assessment, public consultation and scoping exercise” on a bilateral investment agreement between the EU and Taiwan. This would be important for trade and economic relations regarding issues of multilateralism and the World Trade Organisation (WTO), technologies such as 5G, public health and key supplies such as semiconductors.
  • Concern over military pressure: MEPs call on the EU to increase its efforts to address tensions in the Taiwan Strait and “to protect Taiwan’s democracy, and the island’s status as an important EU partner.”
  • Name change: MEPs propose changing the name of the European Economic and Trade Office in Taiwan to the “European Union Office in Taiwan“, a move that could particularly anger Beijing (China.Table reported).

The EU Parliament’s decision is not binding for the EU Commission. However, the Brussels authority must respond to it within three months. EU Commission Vice-President Margrethe Vestager had already stressed this week that the EU needs to be more responsive to the threat posed to Taiwan by China (China.Table reported). ari

  • EU
  • Geopolitics
  • Taiwan
  • Trade

Liu: real estate market risks are manageable

China’s Vice Premier Liu He has spoken publicly for the first time about the real estate and Evergrande crisis. Although there are some problems in the real estate market, the risks are generally under control, he said. The overall trend of healthy development of the property market will not change, Liu said in his speech at a financial forum in Beijing.

China will coordinate the prevention and control of financial risks and properly manage the default risks of certain large enterprises, Liu added. He stressed that the financial system should better serve the real economy and announced monetary policy adjustments

Property sales already dropped 20 percent in August, the first drop since early 2020. The rate of failed land auctions rose to its highest level since at least 2018, Caixin reported. Due to the debt crisis surrounding property developer Evergrande, sales of the 100 largest developers in the country plunged 36 percent in September from a year earlier.

Fears of a widening debt crisis emanating from Evergrande have intensified following a surprise default by Fantasia Holdings Group and a wave of credit rating downgrades for other developers (China.Table reported).

Nevertheless, officials, including central bank governor Yi Gang and Zou Lan, head of the central bank’s financial market department, had recently given assurances that the risks posed by Evergrande to the financial system could be contained. niw

  • Evergrande
  • Finance
  • Liu He
  • Real Estate

Guangdong abolishes fixed electricity rates for industry

The southern Chinese industrial stronghold of Guangdong plans to abolish state-set electricity rates for industrial and commercial users, Bloomberg reports. Industrial users requiring high-voltage electricity will have to acquire their power through public auctions at market prices from now on, according to the report. These new regulations would not apply to agricultural power users and citizens.

Just two weeks ago, China’s State Council issued a new guideline according to which electricity rates for particularly demanding industries would no longer be subject to a cap (China.Table reported). The reform in Guangdong should be seen against the backdrop of China’s current power crisis.

Until now, coal-fired power plants were hardly allowed to pass on high coal prices to power consumers. Power prices were largely fixed by the government and could only fluctuate minimally. As a result, only a few power plants were able to operate profitably. This led them to curb power generation (China.Table reported). nib

  • Energy
  • Guangdong
  • Industry

Column

Erasing for China’s future

By Johnny Erling
Ein Bild von Johnny Erling

China’s leadership is once again preparing for a battle of the systems after US President Joe Biden declared its motto: “Democracy versus Authoritarianism”. Party leader Xi Jinping retaliated with: “Real democracy versus false democracy.” And during a conference last week, he gave the starting signal. He praised China’s National People’s Congress (NPC), called a “pseudo-parliament” in the West. Among the Chinese people, its deputies, who meet once a year in Beijing’s “Great Hall of the People”, were once known as “hand-raisers” because they simply rubber-stamped everything that the government put on the table.

They are now allowed to vote electronically via a simple push of a button. However, they must do this in such a way that the person sitting next to them will notice when they press no. Xi, however, praises the system of people’s congresses as the hallmark of a flawless democracy into which China’s socialist system of rule has been transformed, especially under his leadership. He even coined a new word for it.

For two days, the 300 members of the Central Committee of the Communist Party met in secret. The public learned of their meeting – on Wednesday and Thursday of last week – only after it had ended. It wasn’t until Thursday night that China’s CCTV news station revealed what Xi said in a 15-minute summary. Addressing China’s most powerful officials – none of whom are freely and democratically elected – he called the People’s Congress system “a great creation in the political history of the human race by our party, and a significant brand new system in the history of the political development of our country and even that of the world.”

Because the traditional concept of “people’s democracy” alone is no longer suitable for propaganda purposes, since it is reminiscent of the haggard Eastern Bloc, Xi coined the new word of a “whole-process procedural people’s democracy” (全过 程人民民主). According to it, people’s congresses were the “chain of connected individual links of an all-embracing and all-covering, most far-reaching, truest and most effective socialist democracy” (是全链条、全方位、全覆盖的民主,是最广泛、最真实、最管用的社会主义民主).

Of the Western system, he only sneered, “It is not real democracy when the people are roused only at election time but are put to sleep again afterward; when they are told the most beautiful slogans during elections but have not the slightest say afterward; when they are flattered only to vote, but are plunged into obscurity afterward.” (如果人民只有在投票时被唤醒、投票后就进入休眠期,只有竞选时聆听天花乱坠的口号、竞选后就毫无发言权,只有拉票时受宠、选举后就被冷落,这样的民主不是真正的民主)。

State-owned enterprises produce everything China’s People’s Congress deputies need for their meetings. In the IT age of smartphones and tablets, pencils for taking notes and erasers for corrections are still part of the package, always with the imprint “Great Hall of the People”.

Why does Xi resort to such ideological pull-ups, claiming that China’s democracy provides for “orderly and legal succession of leadership,” for “effective controls and balances on power,” for “the broadest participation of the people”? According to Hong Kong’s South China Morning Post (SCMP), Beijing is responding to the two major democracy summits announced for December by US President Joe Biden. Xi alluded to this in his speech: Competition between political systems is a “key aspect” for competition between nations and could become a “key advantage for the country in gaining the strategic initiative.”

Xi’s calculation goes even further: With his conference, he incapacitated the much-lauded People’s Congress (NPC). News agency Xinhua revealed it was “the first time in the history of the CCP and in the history of the work of the People’s Congress that the Party Central Committee held a work conference on the NPC.” The conference was titled “Central People’s Congress Work Conference.” (中央人大工作会议). Hidden behind this is Xi’s message for the upcoming 2022 election party congress, where he plans to have his sole rule extended: China’s party does not need political reforms that could empower the People’s Congress to limit its absolute rule. After all, the People’s Congress is already a perfect democratic system.

In truth, the same spectacle occurs in China’s socialist parliament every year when its 3,000 or so voting deputies gather for the NPC session. China’s premier opens the mammoth session, which lasts 10 to 14 days, on the set date of March 5th with a report on the state of the nation. At the same time, he will also introduce the government’s new annual plan, laws, and plans. Accredited correspondents are allowed to listen to what the MPs have to say in the following days. Divided into dozens of small groups, they read out prepared eulogies. Sometimes they supplement what has been said with constructive proposals.

Deputies are also provided with teacup coasters, napkins, and toothpicks. All imprinted with “Great Hall of the People”.

I had stowed away special mementos of China’s annual parliament play in my luggage when I returned to Germany in late 2019 after 22 years as a Beijing correspondent. I brought with me a small collection of multicolored pencils, pencil sharpeners, scribbling paper, and erasers issued straight by the headquarters of the People’s Congress. They all had the words “Great Hall of the People” printed on them, as well as on combs or shoeshine utensils. Basically, on everything that a Chinese People’s Deputy needs to fulfill his parliamentary duties. State-owned light industry enterprises supply the deputies with these items.

To the outside world, Beijing gives the impression that its deputies actually had something to say or write. The tools of the trade for this are available in small takeaway trays at the entrance to their meeting rooms. I packed a few pencils and other utensils for myself at the end of each debate. I was particularly fond of the erasers. Each year, I would check to see if, in the much-vaunted new era, erasers finally became incompatible with the technology age. But nothing changed, year after year, just as it did at the People’s Congress itself. Despite allowing “no” votes, I never witnessed China’s deputies ever reject a government proposal.

Under Xi, China is increasingly detaching itself from the world. It is no longer just highlighting its independent development, history, culture, and values. Now it wants to set global standards in technology and society. And in addition to its own version of a market economy and globalization, China is now invoking its own democracy, which is superior to all others.

Combs, shoe polishers, or tea mugs are also included.
  • Chinese Communist Party
  • Democracy
  • National People’s Congress
  • Xi Jinping

Executive Moves

Alexander Ron joined FAW-Volkswagen in Changchun as an IT expert at the beginning of September. He previously worked for Audi AG in Ingolstadt.

Matthias Duenckelmeyer is the new Senior Manager Middle and Back Office for the BMW Treasury Center in Beijing. Duenckelmeyer previously held various positions at BMW Germany.

  • BMW

Dessert

The 88-meter super yacht ZEN owned by Jack Ma, founder of online giant Alibaba, is currently moored off the bay of Santa Ponça in Spain. Ma himself is said to be enjoying the Spanish sun at the moment. And relaxation is probably something he sorely needs: Beijing had scrutinized Alibaba’s business practices as the first of the tech giants in the country and prevented its financial arm from going public. Jack Ma had previously fallen from grace with China’s leadership when he made disparaging remarks about China’s financial regulators last October. Ma subsequently disappeared from the public eye for 87 days – only to reappear with nothing but praise for the Chinese government for its success in fighting poverty. Now he left the country for the first time since then, recuperating in Mallorca.

  • Jack Ma

China.Table Editors

CHINA.TABLE EDITORIAL OFFICE

Licenses:
    • Aluminum production: Europe is running out of magnesium
    • Royole and Airbus to revolutionize passenger displays
    • Caixin no longer “credible”
    • European Parliament calls for closer ties with Taiwan
    • Vice Premier Liu appeases Evergrande crisis
    • End for fixed electricity prices in Guangdong
    • Column: Johnny Erling on “whole-process procedural People’s Democracy”
    • Jack Ma anchors off Mallorca
    Dear reader,

    Europe obtains 95% of its magnesium from China. Christiane Kuehl analyses how long the current magnesium stocks of Germany and Europe would last if China stopped production as a result of the power crisis. One thing is already clear: If, in addition to the supply bottlenecks, the previously guaranteed deliveries by ship do not arrive on time or do not arrive at all, large parts of the industry will face bigger problems than just supply bottlenecks.

    Shenzhen-based display and smartphone manufacturer Royole is the only manufacturer of flexible displays that meet the strict safety requirements for aircraft cabins. Frank Sieren took a closer look at how Royole and Airbus plan to revolutionize entertainment on flights.

    Johnny Erling reveals why China’s state and party leader Xi Jinping is now praising the People’s Congress system. That Xi, of all people, wants to swear in the People’s Congress, which is called a “pseudo-parliament” by the West, on what “real democracy versus false democracy” is, happens mainly for selfish reasons. He wants to be re-elected next year. And he will ensure his re-election by any means necessary. The various memorabilia that Johnny Erling has collected in his 22 years as a correspondent at the People’s Congresses show with a wink what a member of Congress needs to fulfill his parliamentary duties.

    Have a pleasant weekend

    Your
    Ning Wang
    Image of Ning  Wang

    Feature

    Magnesium deficiency threatens European economy

    China’s power crisis is spreading further and further. Now the world is running out of non-ferrous metal magnesium, as two Chinese provinces have either halted or reduced production till the end of the year to meet their power-saving targets. The production of magnesium is especially suited for this measure, as the extraction of magnesium demands a lot of power.

    Magnesium is an essential raw material for the aluminum industry. As a so-called alloying agent, it increases the strength of aluminum. And China, with an 87 percent share of global magnesium production, now has an almost monopoly. About 45 percent of all Chinese exports are destined for Europe. China supplies 95 percent of Europe’s magnesium demands. So Europe has been hit particularly hard. The US at least still has its own producer, US Magnesium.

    The Chinese Magnesium production is focused to such an extent, that a single region has been able to trigger this crisis. The majority of this metal is produced in a single city called Yulin in the province of Shaanxi. In early October, the local government ordered 35 of its 50 magnesium smelters to shut down until the end of the year. The rest was directed to cut production by 50 percent. Smaller production sites in neighboring Shanxi province have also received similar orders.

    China: Production of magnesium and aluminum curbed

    It is important to note that the production of many non-ferrous metals primarily requires electricity – and less fuel. To produce one tonne of magnesium, a whopping 35-40 megawatt-hours (MWh) of power are required. For a tonne of primary aluminum, it’s between 15 and 20 MWh per tonne. Other metals such as copper, zinc, or lead require much less power.

    In addition to magnesium production, aluminum smelters have therefore also been asked to curb their production, for example in Yunnan, Guangxi, and Xinjiang. More than two million tonnes of active aluminum capacity have been affected since September, writes analyst Yao Wenyu of bank ING. Yao sees this as directly linked to the government’s climate targets – especially since, according to her study, greenhouse gas emissions per tonne are much higher for aluminum than for any other metal.

    To make matters even more complicated, Magnesium cannot be stored for long: It begins to oxidize after three months. The current magnesium stocks in Germany and Europe will be exhausted by the end of November 2021 at the latest, German economic association WVMetalle estimates. “The situation is difficult to assess,” WVMetalle chief executive Franziska Erdle told China.Table. “Because the companies are not sure that promised supplies that are currently on their way to Europe by ship will actually arrive.”

    The supply bottlenecks are threatening the entire global aluminum value chain. Especially as prices are also rising enormously: Imported magnesium now costs around $9000 per tonne in Europe, 75 percent more than a mere month ago. On top of this, electricity prices are rising as a result of the global energy crisis. Economic sectors such as automotive, construction, packaging, and mechanical engineering are affected by the magnesium shortage. Apart from aluminum, magnesium is also used in iron and steel production as well as in pressure die-casting.

    The automotive industry, already battered by the global chip shortage, is particularly hit. 35 percent of demand for magnesium is for automotive sheet, Financial Times quotes Barclays analyst Amos Fletcher as saying. There is no substitute for the material in aluminum sheet: “If magnesium supply stops, the entire auto industry will potentially be forced to stop.” Aluminum alloys with magnesium are used in transmissions, steering columns, seat frames, and gas caps in addition to sheet metal.

    Magnesium crisis: associations call for negotiations with China

    WVMetalle and other associations, therefore, called on the German government to “urgently initiate diplomatic talks with China.” A situation similar to the chip crisis is expected. Magnesium has been on the EU’s list of critical raw materials since 2017. However, political-strategic considerations and measures to secure the flow of supplies have so far failed to materialize, according to WVMetalle.

    In parallel, the association European Aluminium, which counts many major companies such as Norsk Hydro and Alcoa among its members, called on the EU Commission to begin negotiations with China. Magnesium should be discussed in the same forums as semiconductors. The current crisis is “a clear example of the risk the EU is taking by making its domestic economy dependent on Chinese imports.,” the association criticized in its position paper. The EU already contacted China over the issue, an official told Politico, without providing further details.

    Magnesium is just one element in a long list of production losses since the early 1990s, according to European Aluminium. It stated that the production of primary aluminum – new, non-recycled aluminum – had lost more than 30 percent of its capacity since 2008. “In parallel,” the paper continues, “China continuously increased production capacity.” China’s share of global magnesium production has risen from 12 percent in 2000 to 87 percent today – with a market volume of 1.2 million tonnes per year.

    In 2001, Europe had abandoned its last domestic magnesium production to cut costs, as they could no longer compete with cheap imports from China. Today, WVMetals and European Aluminium describe these imports as “dumping”. “Magnesium is not a rare commodity. It is found all over the world,” Erdle says. “However, production in Europe depends on competitive framework conditions.” These do not exist in China, she says. According to the association, the “current drastic increase in industrial electricity prices and the unforeseeable development of energy costs” stand in the way of resuming the power-intensive production in the EU.

    In the end, the magnesium crisis is just another example of how Europe carelessly made itself dependent on Chinese imports in times past. In the noughties, the global division of labor was very popular. Nobody wanted to buy costly primary products just because they were produced domestically. There was no concern about supply – so domestic production was not protected by EU protective tariffs on Chinese magnesium imports. There are similar problems with rare earth elements, whose dirty extraction in the West was abandoned because of the environmental damage. This, too, has led to China’s dominant position in the market for minerals that are not actually that “rare” at all.

    Solution to the magnesium crisis

    According to WVMetalle, there is no reliable information on other sources of magnesium outside China. So in the short term, everyone will have to come to terms with the situation. In the long term, however, the association is calling for “a German industrial policy strategy to ensure access to industrial metals.” In collaboration with the EU, “effective measures must be taken in the medium and long term to maintain functioning and sustainable value chains,” WVMetalle demands. European Aluminum called more directly for measures to defend against unfairly subsidized imports from China.

    Another way out could be to further strengthen the circular economy. Germany already produces more recycled aluminum than new aluminum. In the transport and construction sectors, for example, 95 percent is reused. Around 90 percent of packaging is also recycled. The production of this so-called secondary aluminum requires just five percent of the power needed for the making of primary aluminum. US manufacturers are beginning to scour scrap aluminum for magnesium that can be extracted, according to Financial Times. Perhaps more aluminum scrap could be imported from abroad for recycling as a temporary alternative. Whether this measure will be necessary depends on how the situation develops.

    • Autoindustrie

    Royole: stretchable displays for aircraft

    Royole, a Chinese start-up producing flexible displays, wants to revolutionize cabin displays in aircraft in cooperation with European aircraft manufacturer Airbus. The two companies unveiled a new prototype at Airshow China in late September. “Utilizing fully flexible displays instead of traditional Liquid-Crystal display in aircraft can reduce both cost and weight, saving fuel and reducing carbon emissions in airliners,” explains Hong Zhao, COO of Royole. The company is one of ten so-called Unicorns in Shenzhen, southern China. These types of start-ups are worth more than one billion US dollars. Royole was founded by Chinese Stanford graduates.

    Hong Zhao of Royole and Alejandro Morales, Airbus Project Manager for Flexible Displays, at Airshow China.

    One area of application for these ultra-thin and ultra-light displays is digital in-flight magazines. Instead of paper, Airbus and Royole want to produce them from flexible OLED displays which can be unfolded and bent like a magazine. With this device resembling an iPad, passengers can order food, pay for duty-free products via credit card, read digital editions of magazines and newspapers, stream movies and music, and, depending on the aircraft’s equipment, access the Internet.

    Compared to a printed magazine, display magazines are easier to disinfect, Royole explains. Currently, the company is the only manufacturer of flexible displays that meets the strict safety requirements for aircraft cabins. And the displays are much lighter than paper screens and magazines. The screens will soon be tested on select Airbus aircraft. Airbus established an innovation center in Shenzhen back in 2019. Royole’s production is also based there.

    From smartphone to LED ball

    Royole is now the global market leader in the field of flexible displays. Founded in 2012, the company has offices in Beijing, Hong Kong, Japan, the United States, and the Netherlands.

    Since its inception, Royole has achieved several milestones, including the world’s first mass-produced foldable smartphone. The Flexpai was revealed in 2018. However, initial tests proved the device to be disappointing due to an unwieldy centerfold. However, major smartphone manufacturers have since adopted and improved the technology. Back in 2014, the company launched the world’s thinnest full-color, fully flexible display (FFD).

    Probably in part to inspire its own developments, Royole launched a developer kit this summer that allows hobbyists to create their own Android device with bendable displays. The so-called RoKit, which comes in an aluminum toolbox, includes a 7.8-inch (20-cm) OLED display with a resolution of 1920 x 1080 pixels. There’s also a microcontroller with 3 GB of RAM and 32 GB of storage. Hobbyists also get expansion boards, cables, and WLAN antennas. Price: $960.

    In May of this year, Royole also unveiled a production-ready micro-LED display that can be stretched, pulled apart, rolled up, and even deformed into a ball. So basically, it can be shaped into any shape imaginable. This is the prerequisite that allows surfaces and screens to grow together, which in turn saves space. The micro-LED demo panel measures 96 × 60, can be stretched up to 130 percent and bent up to 40 degrees and has a resolution of 120 pixels per inch (PPI).

    Unimagined possibilities – even for clothing

    Flexible displays are still a niche. However, they have great potential to turn the tech and gadget world upside down. Mobile devices can take on any shape, sunglasses and windshields become smart devices thanks to the transparent surface, globes and maps become interactive tools.

    Even clothing can be provided with smart functions through flexible displays. For example, in the form of functional sportswear or patches, that can be affixed on the skin to measure body functions. At the Cruise 2020 fashion show in New York, Royole and Louis Vuitton already presented a jointly designed bag collection equipped with a fully flexible display and sensors. Images and videos appear on the sides of the handbags, which can be controlled via a touchscreen interface. The development took more than two years, according to the manufacturers. During the development process, Royole filed more than 80 worldwide patents.

    • Airbus
    • Smartphone
    • Technology

    News

    Caixin booted off official media list

    The Chinese government has removed the comparatively critical news portal Caixin from the list of media whose content may be published by other Chinese websites. This significantly damages Caixin’s reach. The publication focuses on financial and economic issues. It has maintained a significant degree of independence despite government censorship and is therefore considered an important source of current developments in China. Caixin is published both in Chinese and in English. Its stories tend to be more creative than that of the state media and its editorial staff enjoys an excellent reputation.

    The official list of media permitted for re-publication has considerable significance for China’s publishers. It indicates which news sources Chinese websites are allowed to adopt. Many articles published on China’s news portals appear in newspapers, magazines, and online media; its source information is then found in the author’s line along with the link. This gives the original pages both clicks and credibility in search engines. Anyone who wants to read Caixin’s articles now has to go directly to their website.

    China’s Internet regulator has now defended the removal of Caixin on the grounds of content deficiencies. Caixin’s articles “no longer meet requirements, have poor daily performance and lack influence,” AP news quotes a document published by the Cyberspace Administration. The authority claims to protect the “credibility” of the list by weeding out unreliable media.

    Before Xi Jinping put the media back on a short leash, Caixin was able to make a name for itself with reports about grievances and corruption. Even today, Caixin maintains a relatively rebellious approach. Thanks to her good connections to politics, founder Hu Shuli was able to prevent the worst interventions in the work of her editorial team. fin

    • Caixin
    • Censorship
    • Chinese Communist Party
    • Media

    EU Parliament adopts Taiwan report

    With a large majority, the European Parliament has voted in favor of closer relations with Taiwan. 580 MEPs voted in favor, with only 26 MEPs objecting. Among other things, the EU Parliament is thus laying a foundation for a new bilateral investment agreement with Taipei. The key points of the resolution:

    • Bilateral agreement: MEPs call for an “impact assessment, public consultation and scoping exercise” on a bilateral investment agreement between the EU and Taiwan. This would be important for trade and economic relations regarding issues of multilateralism and the World Trade Organisation (WTO), technologies such as 5G, public health and key supplies such as semiconductors.
    • Concern over military pressure: MEPs call on the EU to increase its efforts to address tensions in the Taiwan Strait and “to protect Taiwan’s democracy, and the island’s status as an important EU partner.”
    • Name change: MEPs propose changing the name of the European Economic and Trade Office in Taiwan to the “European Union Office in Taiwan“, a move that could particularly anger Beijing (China.Table reported).

    The EU Parliament’s decision is not binding for the EU Commission. However, the Brussels authority must respond to it within three months. EU Commission Vice-President Margrethe Vestager had already stressed this week that the EU needs to be more responsive to the threat posed to Taiwan by China (China.Table reported). ari

    • EU
    • Geopolitics
    • Taiwan
    • Trade

    Liu: real estate market risks are manageable

    China’s Vice Premier Liu He has spoken publicly for the first time about the real estate and Evergrande crisis. Although there are some problems in the real estate market, the risks are generally under control, he said. The overall trend of healthy development of the property market will not change, Liu said in his speech at a financial forum in Beijing.

    China will coordinate the prevention and control of financial risks and properly manage the default risks of certain large enterprises, Liu added. He stressed that the financial system should better serve the real economy and announced monetary policy adjustments

    Property sales already dropped 20 percent in August, the first drop since early 2020. The rate of failed land auctions rose to its highest level since at least 2018, Caixin reported. Due to the debt crisis surrounding property developer Evergrande, sales of the 100 largest developers in the country plunged 36 percent in September from a year earlier.

    Fears of a widening debt crisis emanating from Evergrande have intensified following a surprise default by Fantasia Holdings Group and a wave of credit rating downgrades for other developers (China.Table reported).

    Nevertheless, officials, including central bank governor Yi Gang and Zou Lan, head of the central bank’s financial market department, had recently given assurances that the risks posed by Evergrande to the financial system could be contained. niw

    • Evergrande
    • Finance
    • Liu He
    • Real Estate

    Guangdong abolishes fixed electricity rates for industry

    The southern Chinese industrial stronghold of Guangdong plans to abolish state-set electricity rates for industrial and commercial users, Bloomberg reports. Industrial users requiring high-voltage electricity will have to acquire their power through public auctions at market prices from now on, according to the report. These new regulations would not apply to agricultural power users and citizens.

    Just two weeks ago, China’s State Council issued a new guideline according to which electricity rates for particularly demanding industries would no longer be subject to a cap (China.Table reported). The reform in Guangdong should be seen against the backdrop of China’s current power crisis.

    Until now, coal-fired power plants were hardly allowed to pass on high coal prices to power consumers. Power prices were largely fixed by the government and could only fluctuate minimally. As a result, only a few power plants were able to operate profitably. This led them to curb power generation (China.Table reported). nib

    • Energy
    • Guangdong
    • Industry

    Column

    Erasing for China’s future

    By Johnny Erling
    Ein Bild von Johnny Erling

    China’s leadership is once again preparing for a battle of the systems after US President Joe Biden declared its motto: “Democracy versus Authoritarianism”. Party leader Xi Jinping retaliated with: “Real democracy versus false democracy.” And during a conference last week, he gave the starting signal. He praised China’s National People’s Congress (NPC), called a “pseudo-parliament” in the West. Among the Chinese people, its deputies, who meet once a year in Beijing’s “Great Hall of the People”, were once known as “hand-raisers” because they simply rubber-stamped everything that the government put on the table.

    They are now allowed to vote electronically via a simple push of a button. However, they must do this in such a way that the person sitting next to them will notice when they press no. Xi, however, praises the system of people’s congresses as the hallmark of a flawless democracy into which China’s socialist system of rule has been transformed, especially under his leadership. He even coined a new word for it.

    For two days, the 300 members of the Central Committee of the Communist Party met in secret. The public learned of their meeting – on Wednesday and Thursday of last week – only after it had ended. It wasn’t until Thursday night that China’s CCTV news station revealed what Xi said in a 15-minute summary. Addressing China’s most powerful officials – none of whom are freely and democratically elected – he called the People’s Congress system “a great creation in the political history of the human race by our party, and a significant brand new system in the history of the political development of our country and even that of the world.”

    Because the traditional concept of “people’s democracy” alone is no longer suitable for propaganda purposes, since it is reminiscent of the haggard Eastern Bloc, Xi coined the new word of a “whole-process procedural people’s democracy” (全过 程人民民主). According to it, people’s congresses were the “chain of connected individual links of an all-embracing and all-covering, most far-reaching, truest and most effective socialist democracy” (是全链条、全方位、全覆盖的民主,是最广泛、最真实、最管用的社会主义民主).

    Of the Western system, he only sneered, “It is not real democracy when the people are roused only at election time but are put to sleep again afterward; when they are told the most beautiful slogans during elections but have not the slightest say afterward; when they are flattered only to vote, but are plunged into obscurity afterward.” (如果人民只有在投票时被唤醒、投票后就进入休眠期,只有竞选时聆听天花乱坠的口号、竞选后就毫无发言权,只有拉票时受宠、选举后就被冷落,这样的民主不是真正的民主)。

    State-owned enterprises produce everything China’s People’s Congress deputies need for their meetings. In the IT age of smartphones and tablets, pencils for taking notes and erasers for corrections are still part of the package, always with the imprint “Great Hall of the People”.

    Why does Xi resort to such ideological pull-ups, claiming that China’s democracy provides for “orderly and legal succession of leadership,” for “effective controls and balances on power,” for “the broadest participation of the people”? According to Hong Kong’s South China Morning Post (SCMP), Beijing is responding to the two major democracy summits announced for December by US President Joe Biden. Xi alluded to this in his speech: Competition between political systems is a “key aspect” for competition between nations and could become a “key advantage for the country in gaining the strategic initiative.”

    Xi’s calculation goes even further: With his conference, he incapacitated the much-lauded People’s Congress (NPC). News agency Xinhua revealed it was “the first time in the history of the CCP and in the history of the work of the People’s Congress that the Party Central Committee held a work conference on the NPC.” The conference was titled “Central People’s Congress Work Conference.” (中央人大工作会议). Hidden behind this is Xi’s message for the upcoming 2022 election party congress, where he plans to have his sole rule extended: China’s party does not need political reforms that could empower the People’s Congress to limit its absolute rule. After all, the People’s Congress is already a perfect democratic system.

    In truth, the same spectacle occurs in China’s socialist parliament every year when its 3,000 or so voting deputies gather for the NPC session. China’s premier opens the mammoth session, which lasts 10 to 14 days, on the set date of March 5th with a report on the state of the nation. At the same time, he will also introduce the government’s new annual plan, laws, and plans. Accredited correspondents are allowed to listen to what the MPs have to say in the following days. Divided into dozens of small groups, they read out prepared eulogies. Sometimes they supplement what has been said with constructive proposals.

    Deputies are also provided with teacup coasters, napkins, and toothpicks. All imprinted with “Great Hall of the People”.

    I had stowed away special mementos of China’s annual parliament play in my luggage when I returned to Germany in late 2019 after 22 years as a Beijing correspondent. I brought with me a small collection of multicolored pencils, pencil sharpeners, scribbling paper, and erasers issued straight by the headquarters of the People’s Congress. They all had the words “Great Hall of the People” printed on them, as well as on combs or shoeshine utensils. Basically, on everything that a Chinese People’s Deputy needs to fulfill his parliamentary duties. State-owned light industry enterprises supply the deputies with these items.

    To the outside world, Beijing gives the impression that its deputies actually had something to say or write. The tools of the trade for this are available in small takeaway trays at the entrance to their meeting rooms. I packed a few pencils and other utensils for myself at the end of each debate. I was particularly fond of the erasers. Each year, I would check to see if, in the much-vaunted new era, erasers finally became incompatible with the technology age. But nothing changed, year after year, just as it did at the People’s Congress itself. Despite allowing “no” votes, I never witnessed China’s deputies ever reject a government proposal.

    Under Xi, China is increasingly detaching itself from the world. It is no longer just highlighting its independent development, history, culture, and values. Now it wants to set global standards in technology and society. And in addition to its own version of a market economy and globalization, China is now invoking its own democracy, which is superior to all others.

    Combs, shoe polishers, or tea mugs are also included.
    • Chinese Communist Party
    • Democracy
    • National People’s Congress
    • Xi Jinping

    Executive Moves

    Alexander Ron joined FAW-Volkswagen in Changchun as an IT expert at the beginning of September. He previously worked for Audi AG in Ingolstadt.

    Matthias Duenckelmeyer is the new Senior Manager Middle and Back Office for the BMW Treasury Center in Beijing. Duenckelmeyer previously held various positions at BMW Germany.

    • BMW

    Dessert

    The 88-meter super yacht ZEN owned by Jack Ma, founder of online giant Alibaba, is currently moored off the bay of Santa Ponça in Spain. Ma himself is said to be enjoying the Spanish sun at the moment. And relaxation is probably something he sorely needs: Beijing had scrutinized Alibaba’s business practices as the first of the tech giants in the country and prevented its financial arm from going public. Jack Ma had previously fallen from grace with China’s leadership when he made disparaging remarks about China’s financial regulators last October. Ma subsequently disappeared from the public eye for 87 days – only to reappear with nothing but praise for the Chinese government for its success in fighting poverty. Now he left the country for the first time since then, recuperating in Mallorca.

    • Jack Ma

    China.Table Editors

    CHINA.TABLE EDITORIAL OFFICE

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