For EU institutions, China often remains the notorious elephant in the room. Everyone knows what it’s about, everyone knows who it is, but no one talks about it. Official communication only speaks of it as “other important economies”. Earlier this week, even the declaration of the EU foreign ministers on “globally networked Europe” was keeping quiet about the obvious. Not a single word about the People’s Republic – and that of all things in an Initiative, with which Brussels wants to directly challenge China’s New Silk Road.
But an alternative to the BRI is not only of importance for the EU. In a joint report by the Munich Security Conference, Berlin-based research institute Merics and the US think tank Aspen Strategy Group, it is considered as one of the core tasks for a fresh start of transatlantic policy on China. Marcel Grzanna analyses the key points of the 67-page paper. And one thing is clear in advance: there is a lot of work to be done to make up for the shortcomings of the recent past.
In today’s issue, our author Christiane Kühl takes you on a relaxing trip to China’s capital of electric cars. Liuzhou is teeming with small, colorful electric cars. The city, with a population of around four million people, including its suburbs, is one of the largest local markets for electric cars in the world. Only Oslo has more electric cars per capita. How did Liuzhou manage this?
We hope you enjoy today’s issue of China.Table!
The report is 67 pages long and full of appeals, admonitions, and proposals. In their joint publication ‘Mind the Gap: Priorities for Transatlantic China Policy‘, the Munich Security Conference (MSC), the Berlin-based research institute Merics, and the US think tank Aspen Strategy Group urge Western partners to adopt a rapid and concerted policy in response to the challenges posed by Chinese ambitions in the 21st century. 67 pages, which also convey the impression that for a long time both North America and Europe lived in a fantasy, that the People’s Republic of China not only somehow magically integrates into the international community but above all without harming Western interests.
For a long time, the ‘Chinese Century’ propagated by Beijing itself seemed a long way off for many of the world’s governments. A century is long, and China’s technological, economic, and military backlog was so vast in the past 15 or 20 years that Western leaders preferred to sit back in self-righteous comfort instead of preparing for the rise of an authoritarian government with little interest in playing a supporting role on the world stage. As the paper points out, the drowsiness of democratic states is painfully reflected in various statistics and figures,
One question asks which country the population of G7 countries as well as China and India expect to be the technological leader in the 2070s. The results of the surveys make two things clear. First, that confidence in their own abilities and strengths has suffered greatly in many Western countries. Take Germany, for example, 52 percent now believe that China will have taken the global leadership in 50 years at the latest. Only 16 percent are convinced that the European Union will take the top spot. Only in Japan, the USA and India a slight majority still believes in the superiority of the US.
On the other hand, figures show that the People’s Republic has succeeded in implanting a sense of superiority in the minds of Western states, primarily Europe. And it has done so with sufficient credibility, partly because for too long, the EU neglected to instill a belief in its own competence among the population. Beijing’s success in this regard is mainly owed to a psychological infiltration of the West.
The Chinese government has skillfully used the two major crises of the past decades – the financial crisis of 2008 and the Covid pandemic – to position itself as the victor at an early stage and thus set the psychological course. In Germany, there is a widely prevalent notion that, in regard to economics, Europe no longer stands a chance against the giant empire of China. These are signs of resignation, which are, among other things, the result of China’s clever moves. With rivals whose will to win is faltering and are plagued with crumbling spirits, the People’s Republic should face little challenge in the coming decades.
Western Europe has apparently long underestimated the importance of technology in geostrategic development in the near future. This became clear at the 2020 security conference, when the USA, then still ruled by Donald Trump, launched a sharp confrontation with the Europeans. And Chinese network equipment supplier Huawei served as a projection screen. If Europe doesn’t understand the threat posed by Huawei and continues to turn a blind eye, “it could endanger NATO, the most successful military alliance in history.”
For this very reason, the paper’s title ‘Mind the gap’ is not surprising. It is a reminder of still existing differences, primarily between Americans and Europeans, in the perception and handling of an authoritarian challenge on the global stage. The title also implies the urgency of revitalizing transatlantic relations after the Trump era. “The reason is diverging perceptions of China and different basic approaches to foreign, economic, and security policy”. In part, the gap reflects differences in levels of economic and financial commitment. Furthermore, reasons are differences in security interests and defense commitments,” as written in the preface by MSC chief Wolfgang Ischinger and Joseph S. Nye Jr. of the Aspen Strategy Group.
This is the paper’s core message. The foundation of all resistance to the growing influence of Chinese interests in the world to the detriment of North Americans and Europeans, and thus of the central bloc of the community of democracies, is to bridge this gap. Not on all levels and not on every point of dispute, this would simply be too much to ask and is not even necessary, as the authors put it. But this gap must be bridged just enough, they say, to jointly develop a strategy and concrete measures to preserve and represent interests on both sides of the Atlantic. “Neither of us wants to engage in a ‘new Cold War.’ We recognize that China has a rightful place in the international community, and we believe that dialogue is paramount,” Ischinger and Nye wrote.
The paper conveys another important message: time is short – the authors recommend implementing seven key measures within the next 6 to 18 months. These include a sustained joint push for an economic level playing field with China and a grip on leadership in technological development and research. An alternative to the New Silk Road (as China.Table reported) is needed, and transatlantic cooperation must protect the freedom and security of the Indo-Pacific region. The proposals thus largely coincide with the current plans of Brussels and Washington, which are being addressed and pursued through various channels.
However, the goal should not be to seek a direct confrontation with China, i.e. a direct measure of strength, but to create specific counter-offers in all fields in which the People’s Republic and the West are vying for control and influence. Technological developments in Europe and the USA should be more closely coordinated, according to the authors. With combined efforts, global standards are to be established in order to prevent Western players from being forced to follow Chinese guidelines. After all, in globalized value creation, technical standards inevitably lead to political strength. Closer coordination among Western partners could at the same time be used as leverage to persuade China to make concessions on market access, protection of intellectual property, public tenders or state subsidies. On both sides of the Atlantic, all attempts towards closer investment screening should be continued in order to create greater economic security
The authors consider the strengthening and, where necessary, reformation of international institutions such as the World Trade Organization as key. Consideration must also be given to the establishment of new institutions. The preservation of free societies and the promotion of human rights are central values along which Europe and North America must orient their policies.
Liuzhou is situated between lush green hills in southwestern China. The city has some of the purest air and cleanest water in the country – despite the huge industrial complex of ‘Liuzhou Iron and Steel’ on the city outskirts. The secret is an unbureaucratic promotion of small electric cars, which has made Liuzhou China’s electric capital.
Liuzhou has a clear geographic advantage: the city is home to the 3-way joint venture between Shanghai Automotive (SAIC), General Motors and local manufacturer Wuling, also called SGM-Wuling. Hugely successful in the past thanks to simple minibuses, the joint venture is now focusing on super-cheap mini electric cars about the size of a smart car. The small models are currently the biggest seller among China’s electric cars: from January to May, SGM-Wuling sold 128,796 electric vehicles, according to data compiled by auto expert and investment consultant Michael Dunne, putting it well ahead of Tesla and BYD. Most buyers of these brands are now private customers, Dunne says – rather than fleet operators pushed to buy electric, as in the past.
Many of these small electric vehicles, of which there are three different models, are sold by SGM-Wuling in Liuzhou. Around 30 percent of all cars sold in the city in 2020 run on electricity, according to reports by the China Daily newspaper, citing the consulting company Ways Information Technology in Guangzhou. That would make the city with a population of around four million, one of the largest local electric car markets in the world. Only Oslo has more electric cars per capita, as the Bloomberg news agency writes.
How did this succeed? Local authorities incentivize the purchase of electric cars and cooperated with SGM-Wuling in promoting this new type of vehicle from the beginning. “The local government took a grassroots approach and motivated its citizens to try out an electric car,” says auto expert Tu Le of Sino Auto Insights Newsletter. Back in 2017, the city offered free 10-month test drives of the Baojun E100 model. The test was so popular, according to Bloomberg, that the available 15,000 slots were gone within minutes at the time. Later, 70 percent of all test drives resulted in a purchase. The government then used the data collected during tests to determine the ideal range of an electric car, Tu Le said – in part to ensure “that the car would not be too elaborately designed.” SGM-Wuling then tailored the Baojun E100 for a daily commute of fewer than 30 kilometers.
This positioning of its models as simple commuter cars with a smaller battery allowed SGM-Wuling to offer a retail price starting at the equivalent of about 4,500 euros for the smallest of its three models, the Hongguang Mini EV. The model has a range of between 120 and 170 kilometers – enough for short trips to work or shopping in Liuzhou and elsewhere. The costs of these mini cars for battery charging or insurance are also very low. The size of these models has enabled the city government to create around 15,000 additional parking spaces, as they easily fit between trees, on the edge of the pavement or in narrower passageways.
All of this is also based on the ambition to establish Liuzhou as a center for the production of electric vehicles. The city also promotes the foundation of suppliers and supports technological innovation and exports. SGM-Wuling has also participated in the development of 117 international, national and local industry standards in the electric segment, according to an article by China Daily.
Currently there is no data on how many of these microcars are currently rolling along Liuzhou’s streets. But photos of the city show streets flooded with colorful mini-vehicles – some of them with imprints like Hello Kitty or Pokemon, which SGM-Wuling offers for a small surcharge. In residential complexes, they are lined up at charging stations, cables plugged in from the front like a smartphone.
Liuzhou is certainly an exception as SGM Wuling location, said Bill Russo, founder of Automobility, a Shanghai-based consulting company specializing in new mobility, in an interview with China.Table.“Nonetheless, there is a potentially huge market for low-cost urban electric mobility across China.” Smaller Chinese cities, just like many European ones, lack public transportation. Affordable and convenient electric cars are an ideal alternative for commuters and could replace bicycles or scooters, according to Russo.
On the streets of wealthier cities such as Shanghai or Beijing, electric cars of premium brands are dominant: latest models of Tesla models and Chinese electric startups, or e-models in the volume segment such as those of BYD or Beijing Automotive. For small towns in the hinterland, however, even the latter are still too expensive – that’s why the idea of electric microcars seems ideal for an expansion of electric mobility into the country’s many small towns.
Even China’s central government is on the lookout for different types of incentives once purchase grants for electric vehicles expire. According to China Daily, the National Development and Reform Commission (NDRC) has released a document that, among other things, will mandate planners of new residential complexes to equip every parking space with a charging station. Increased construction of charging infrastructure in residential areas is a crucial part of the plan to accelerate the transition from the internal combustion engine to electric mobility, the document states. Because China is also aware, that electric cars must be just as convenient to use as conventional passenger vehicles.
Things seem to have succeeded in Liuzhou. Bloomberg interviewed people in Liuzhou who own one of the small electric vehicles. Most of those interviewed said they also had a regular gasoline-powered car at home, which they hardly use anymore – because electric vehicles are more practical and cheaper. One man said he paid about 0,1 yuan per kilometer – about 1,3 cents – for charging. Parking in the allocated electric car spaces is free, as is the first two hours in a regular car garage.
Initially, many people held the usual reservations about electric cars, Bloomberg quoted Gou Yi, deputy head of the local NDRC office: “So, we made sure our citizens feel that operating electric vehicles feels very convenient.” And, those who drive them a lot even get a cash bonus – like himself.
As of April 2021, China had around 868,000 public charging spots, according to official figures (as China.Table reported). In a period from January to May, 950,000 electric cars and plug-in hybrids were sold in the country – an increase of 225 percent year-on-year. Estimates for the rest of the year remain positive, according to forecasts by the car manufacturers association, CAAM – which has set a target of 1,8 million electric vehicles sold this year. Michael Dunne expects this number to be even higher: “China is in the process of selling over 2.4 million electric vehicles in 2021 and take Europe’s the title as largest sales market.” If things continue to go well, simple concepts and cheap e-cars like those in Liuzhou will have a made significant contribution.
US politicians from both congressional parties are worried that China is overtaking America as the global leader in science and technology. In a rare display of bipartisanship, the normally gridlocked Senate passed a bill in early June to spend close to $250 billion in the next decade to promote cutting-edge research. But lawmakers may be fretting unnecessarily, because the Chinese government seems to be doing everything possible to lose its tech race with America.
The latest example of China’s penchant for self-harm is the sudden and arbitrary regulatory action taken by the Cyberspace Administration of China (CAC) against Didi Chuxing, a ride-hailing company that recently raised $4.4 billion in an IPO on the New York Stock Exchange. On July 2, just two days after Didi’s successful offering, which valued the firm at more than $70 billion, the CAC, a department of the ruling Communist Party of China (CPC) masquerading as a state agency, announced a data-security review of the company. Two days later, the CAC abruptly ordered the removal of Didi from app stores, a move that wiped out nearly a quarter of the firm’s market value.
The CPC’s crackdown against Didi under the pretext of data security seems to be just the beginning of a wider campaign to assert control over China’s thriving tech sector. On July 9, the CAC further shocked tech entrepreneurs and their Western investors with an official announcement that all companies with data from more than one million users must pass its security review before listing on overseas stock exchanges. Once fully implemented, this new policy could choke off Chinese tech firms’ access to foreign capital.
Ironically, US-China hawks have long dreamed of accomplishing just that. In December last year, Congress passed a law authorizing the delisting of Chinese companies from US stock exchanges if they fail to meet US auditing standards. Now, it seems that Congress need not have bothered. Its nemesis, the CPC, will be doing the same job far more effectively and thoroughly from now on.
Any so-called data-security review conducted by a secretive party agency with little technical expertise, no legal accountability, and a responsibility only to its political masters will erect another unpredictable regulatory hurdle deterring most, if not all, foreign investors. Since foreign backers of Chinese tech start-ups usually plan to exit their investment through an overseas listing – preferably in New York – the prospect of a CPC agency wielding a veto over future listings may make them extremely reluctant to invest.
Foreign investors, usually well-established venture-capital firms, bring not only much-needed financing but also valuable expertise and best governance practices that are vital to the success of tech start-ups. Almost all dominant Chinese tech giants, including Alibaba, Tencent, and Baidu, relied on foreign funding to grow into spectacularly thriving companies. Had the CPC required a similar data-security review two decades ago, none of them would have existed – and China’s tech landscape today would be desolate.
The CAC’s crackdown on China’s most successful tech firms is not driven by concerns about data security. China’s surveillance state offers citizens no data security or privacy to speak of. And given that China’s data-security law already requires all tech companies to store their data inside the country’s borders, the government’s worries about a potential data leak by a ride-sharing platform such as Didi hardly merit radical rule changes and arbitrary restrictions. Minor regulatory tweaks would be more than adequate to address policymakers’ legitimate national-security concerns.
But foreign investors hoping that Chinese leaders will realize their folly and reverse course should think again. Killing the proverbial golden goose seems to be a CPC specialty. In fact, neither Didi nor Alibaba – which in April received a record $2.8 billion antitrust fine from the Chinese government – even come close to being the biggest such creature China has slaughtered recently. That unwanted distinction belongs to Hong Kong, whose autonomy and prosperity are in grave peril following the government’s imposition of a draconian national-security law last year.
Paranoia, bullying instincts, and contempt for property rights are deeply embedded in the CPC’s collective psyche, predisposing the Chinese government to self-destructive policies, regardless of well-intentioned advice or even evidence of their harmful consequences. And over-centralization of power under strongman rule in China today has made self-correction nearly impossible.
For China’s tech entrepreneurs, Didi’s travails should serve as a rude awakening. Many may think that they can thrive under a dictatorship as long as they stay out of politics and focus on making money. But, to paraphrase Leon Trotsky, they may not be interested in the dictatorship, but the dictatorship is very interested in them.
A well-known Chinese proverb applies to the CPC. The party keeps “hurting loved ones and delighting the enemy” (qintong choukuai). China’s tech bosses are learning the hard way that they may well have more to fear from their own government than from America’s bipartisan Sinophobia.
Minxin Pei is Professor of Government at Claremont McKenna College and a non-resident senior fellow at the German Marshall Fund of the United States.
Copyright: Project Syndicate, 2021.
www.project-syndicate.org
Fishy solar panel art: At the Photovoltaic TopRunner Base in Sihong, a group of solar panels forms the top view of a fish. Sihong is located on the lower reaches of the Huai River in the northwest of Jiangsu Province. Back in 2017, Sihong was approved as the third batch for the “National Photovoltaic TopRunner Base”. The photovoltaic base is expected to have a total capacity of 1000 MW, with other batches located in Tiangang and Xiangtao lakes. The “Fishery-Solar Complementary” project is expected to generate around 260 million kWh of electricity.
For EU institutions, China often remains the notorious elephant in the room. Everyone knows what it’s about, everyone knows who it is, but no one talks about it. Official communication only speaks of it as “other important economies”. Earlier this week, even the declaration of the EU foreign ministers on “globally networked Europe” was keeping quiet about the obvious. Not a single word about the People’s Republic – and that of all things in an Initiative, with which Brussels wants to directly challenge China’s New Silk Road.
But an alternative to the BRI is not only of importance for the EU. In a joint report by the Munich Security Conference, Berlin-based research institute Merics and the US think tank Aspen Strategy Group, it is considered as one of the core tasks for a fresh start of transatlantic policy on China. Marcel Grzanna analyses the key points of the 67-page paper. And one thing is clear in advance: there is a lot of work to be done to make up for the shortcomings of the recent past.
In today’s issue, our author Christiane Kühl takes you on a relaxing trip to China’s capital of electric cars. Liuzhou is teeming with small, colorful electric cars. The city, with a population of around four million people, including its suburbs, is one of the largest local markets for electric cars in the world. Only Oslo has more electric cars per capita. How did Liuzhou manage this?
We hope you enjoy today’s issue of China.Table!
The report is 67 pages long and full of appeals, admonitions, and proposals. In their joint publication ‘Mind the Gap: Priorities for Transatlantic China Policy‘, the Munich Security Conference (MSC), the Berlin-based research institute Merics, and the US think tank Aspen Strategy Group urge Western partners to adopt a rapid and concerted policy in response to the challenges posed by Chinese ambitions in the 21st century. 67 pages, which also convey the impression that for a long time both North America and Europe lived in a fantasy, that the People’s Republic of China not only somehow magically integrates into the international community but above all without harming Western interests.
For a long time, the ‘Chinese Century’ propagated by Beijing itself seemed a long way off for many of the world’s governments. A century is long, and China’s technological, economic, and military backlog was so vast in the past 15 or 20 years that Western leaders preferred to sit back in self-righteous comfort instead of preparing for the rise of an authoritarian government with little interest in playing a supporting role on the world stage. As the paper points out, the drowsiness of democratic states is painfully reflected in various statistics and figures,
One question asks which country the population of G7 countries as well as China and India expect to be the technological leader in the 2070s. The results of the surveys make two things clear. First, that confidence in their own abilities and strengths has suffered greatly in many Western countries. Take Germany, for example, 52 percent now believe that China will have taken the global leadership in 50 years at the latest. Only 16 percent are convinced that the European Union will take the top spot. Only in Japan, the USA and India a slight majority still believes in the superiority of the US.
On the other hand, figures show that the People’s Republic has succeeded in implanting a sense of superiority in the minds of Western states, primarily Europe. And it has done so with sufficient credibility, partly because for too long, the EU neglected to instill a belief in its own competence among the population. Beijing’s success in this regard is mainly owed to a psychological infiltration of the West.
The Chinese government has skillfully used the two major crises of the past decades – the financial crisis of 2008 and the Covid pandemic – to position itself as the victor at an early stage and thus set the psychological course. In Germany, there is a widely prevalent notion that, in regard to economics, Europe no longer stands a chance against the giant empire of China. These are signs of resignation, which are, among other things, the result of China’s clever moves. With rivals whose will to win is faltering and are plagued with crumbling spirits, the People’s Republic should face little challenge in the coming decades.
Western Europe has apparently long underestimated the importance of technology in geostrategic development in the near future. This became clear at the 2020 security conference, when the USA, then still ruled by Donald Trump, launched a sharp confrontation with the Europeans. And Chinese network equipment supplier Huawei served as a projection screen. If Europe doesn’t understand the threat posed by Huawei and continues to turn a blind eye, “it could endanger NATO, the most successful military alliance in history.”
For this very reason, the paper’s title ‘Mind the gap’ is not surprising. It is a reminder of still existing differences, primarily between Americans and Europeans, in the perception and handling of an authoritarian challenge on the global stage. The title also implies the urgency of revitalizing transatlantic relations after the Trump era. “The reason is diverging perceptions of China and different basic approaches to foreign, economic, and security policy”. In part, the gap reflects differences in levels of economic and financial commitment. Furthermore, reasons are differences in security interests and defense commitments,” as written in the preface by MSC chief Wolfgang Ischinger and Joseph S. Nye Jr. of the Aspen Strategy Group.
This is the paper’s core message. The foundation of all resistance to the growing influence of Chinese interests in the world to the detriment of North Americans and Europeans, and thus of the central bloc of the community of democracies, is to bridge this gap. Not on all levels and not on every point of dispute, this would simply be too much to ask and is not even necessary, as the authors put it. But this gap must be bridged just enough, they say, to jointly develop a strategy and concrete measures to preserve and represent interests on both sides of the Atlantic. “Neither of us wants to engage in a ‘new Cold War.’ We recognize that China has a rightful place in the international community, and we believe that dialogue is paramount,” Ischinger and Nye wrote.
The paper conveys another important message: time is short – the authors recommend implementing seven key measures within the next 6 to 18 months. These include a sustained joint push for an economic level playing field with China and a grip on leadership in technological development and research. An alternative to the New Silk Road (as China.Table reported) is needed, and transatlantic cooperation must protect the freedom and security of the Indo-Pacific region. The proposals thus largely coincide with the current plans of Brussels and Washington, which are being addressed and pursued through various channels.
However, the goal should not be to seek a direct confrontation with China, i.e. a direct measure of strength, but to create specific counter-offers in all fields in which the People’s Republic and the West are vying for control and influence. Technological developments in Europe and the USA should be more closely coordinated, according to the authors. With combined efforts, global standards are to be established in order to prevent Western players from being forced to follow Chinese guidelines. After all, in globalized value creation, technical standards inevitably lead to political strength. Closer coordination among Western partners could at the same time be used as leverage to persuade China to make concessions on market access, protection of intellectual property, public tenders or state subsidies. On both sides of the Atlantic, all attempts towards closer investment screening should be continued in order to create greater economic security
The authors consider the strengthening and, where necessary, reformation of international institutions such as the World Trade Organization as key. Consideration must also be given to the establishment of new institutions. The preservation of free societies and the promotion of human rights are central values along which Europe and North America must orient their policies.
Liuzhou is situated between lush green hills in southwestern China. The city has some of the purest air and cleanest water in the country – despite the huge industrial complex of ‘Liuzhou Iron and Steel’ on the city outskirts. The secret is an unbureaucratic promotion of small electric cars, which has made Liuzhou China’s electric capital.
Liuzhou has a clear geographic advantage: the city is home to the 3-way joint venture between Shanghai Automotive (SAIC), General Motors and local manufacturer Wuling, also called SGM-Wuling. Hugely successful in the past thanks to simple minibuses, the joint venture is now focusing on super-cheap mini electric cars about the size of a smart car. The small models are currently the biggest seller among China’s electric cars: from January to May, SGM-Wuling sold 128,796 electric vehicles, according to data compiled by auto expert and investment consultant Michael Dunne, putting it well ahead of Tesla and BYD. Most buyers of these brands are now private customers, Dunne says – rather than fleet operators pushed to buy electric, as in the past.
Many of these small electric vehicles, of which there are three different models, are sold by SGM-Wuling in Liuzhou. Around 30 percent of all cars sold in the city in 2020 run on electricity, according to reports by the China Daily newspaper, citing the consulting company Ways Information Technology in Guangzhou. That would make the city with a population of around four million, one of the largest local electric car markets in the world. Only Oslo has more electric cars per capita, as the Bloomberg news agency writes.
How did this succeed? Local authorities incentivize the purchase of electric cars and cooperated with SGM-Wuling in promoting this new type of vehicle from the beginning. “The local government took a grassroots approach and motivated its citizens to try out an electric car,” says auto expert Tu Le of Sino Auto Insights Newsletter. Back in 2017, the city offered free 10-month test drives of the Baojun E100 model. The test was so popular, according to Bloomberg, that the available 15,000 slots were gone within minutes at the time. Later, 70 percent of all test drives resulted in a purchase. The government then used the data collected during tests to determine the ideal range of an electric car, Tu Le said – in part to ensure “that the car would not be too elaborately designed.” SGM-Wuling then tailored the Baojun E100 for a daily commute of fewer than 30 kilometers.
This positioning of its models as simple commuter cars with a smaller battery allowed SGM-Wuling to offer a retail price starting at the equivalent of about 4,500 euros for the smallest of its three models, the Hongguang Mini EV. The model has a range of between 120 and 170 kilometers – enough for short trips to work or shopping in Liuzhou and elsewhere. The costs of these mini cars for battery charging or insurance are also very low. The size of these models has enabled the city government to create around 15,000 additional parking spaces, as they easily fit between trees, on the edge of the pavement or in narrower passageways.
All of this is also based on the ambition to establish Liuzhou as a center for the production of electric vehicles. The city also promotes the foundation of suppliers and supports technological innovation and exports. SGM-Wuling has also participated in the development of 117 international, national and local industry standards in the electric segment, according to an article by China Daily.
Currently there is no data on how many of these microcars are currently rolling along Liuzhou’s streets. But photos of the city show streets flooded with colorful mini-vehicles – some of them with imprints like Hello Kitty or Pokemon, which SGM-Wuling offers for a small surcharge. In residential complexes, they are lined up at charging stations, cables plugged in from the front like a smartphone.
Liuzhou is certainly an exception as SGM Wuling location, said Bill Russo, founder of Automobility, a Shanghai-based consulting company specializing in new mobility, in an interview with China.Table.“Nonetheless, there is a potentially huge market for low-cost urban electric mobility across China.” Smaller Chinese cities, just like many European ones, lack public transportation. Affordable and convenient electric cars are an ideal alternative for commuters and could replace bicycles or scooters, according to Russo.
On the streets of wealthier cities such as Shanghai or Beijing, electric cars of premium brands are dominant: latest models of Tesla models and Chinese electric startups, or e-models in the volume segment such as those of BYD or Beijing Automotive. For small towns in the hinterland, however, even the latter are still too expensive – that’s why the idea of electric microcars seems ideal for an expansion of electric mobility into the country’s many small towns.
Even China’s central government is on the lookout for different types of incentives once purchase grants for electric vehicles expire. According to China Daily, the National Development and Reform Commission (NDRC) has released a document that, among other things, will mandate planners of new residential complexes to equip every parking space with a charging station. Increased construction of charging infrastructure in residential areas is a crucial part of the plan to accelerate the transition from the internal combustion engine to electric mobility, the document states. Because China is also aware, that electric cars must be just as convenient to use as conventional passenger vehicles.
Things seem to have succeeded in Liuzhou. Bloomberg interviewed people in Liuzhou who own one of the small electric vehicles. Most of those interviewed said they also had a regular gasoline-powered car at home, which they hardly use anymore – because electric vehicles are more practical and cheaper. One man said he paid about 0,1 yuan per kilometer – about 1,3 cents – for charging. Parking in the allocated electric car spaces is free, as is the first two hours in a regular car garage.
Initially, many people held the usual reservations about electric cars, Bloomberg quoted Gou Yi, deputy head of the local NDRC office: “So, we made sure our citizens feel that operating electric vehicles feels very convenient.” And, those who drive them a lot even get a cash bonus – like himself.
As of April 2021, China had around 868,000 public charging spots, according to official figures (as China.Table reported). In a period from January to May, 950,000 electric cars and plug-in hybrids were sold in the country – an increase of 225 percent year-on-year. Estimates for the rest of the year remain positive, according to forecasts by the car manufacturers association, CAAM – which has set a target of 1,8 million electric vehicles sold this year. Michael Dunne expects this number to be even higher: “China is in the process of selling over 2.4 million electric vehicles in 2021 and take Europe’s the title as largest sales market.” If things continue to go well, simple concepts and cheap e-cars like those in Liuzhou will have a made significant contribution.
US politicians from both congressional parties are worried that China is overtaking America as the global leader in science and technology. In a rare display of bipartisanship, the normally gridlocked Senate passed a bill in early June to spend close to $250 billion in the next decade to promote cutting-edge research. But lawmakers may be fretting unnecessarily, because the Chinese government seems to be doing everything possible to lose its tech race with America.
The latest example of China’s penchant for self-harm is the sudden and arbitrary regulatory action taken by the Cyberspace Administration of China (CAC) against Didi Chuxing, a ride-hailing company that recently raised $4.4 billion in an IPO on the New York Stock Exchange. On July 2, just two days after Didi’s successful offering, which valued the firm at more than $70 billion, the CAC, a department of the ruling Communist Party of China (CPC) masquerading as a state agency, announced a data-security review of the company. Two days later, the CAC abruptly ordered the removal of Didi from app stores, a move that wiped out nearly a quarter of the firm’s market value.
The CPC’s crackdown against Didi under the pretext of data security seems to be just the beginning of a wider campaign to assert control over China’s thriving tech sector. On July 9, the CAC further shocked tech entrepreneurs and their Western investors with an official announcement that all companies with data from more than one million users must pass its security review before listing on overseas stock exchanges. Once fully implemented, this new policy could choke off Chinese tech firms’ access to foreign capital.
Ironically, US-China hawks have long dreamed of accomplishing just that. In December last year, Congress passed a law authorizing the delisting of Chinese companies from US stock exchanges if they fail to meet US auditing standards. Now, it seems that Congress need not have bothered. Its nemesis, the CPC, will be doing the same job far more effectively and thoroughly from now on.
Any so-called data-security review conducted by a secretive party agency with little technical expertise, no legal accountability, and a responsibility only to its political masters will erect another unpredictable regulatory hurdle deterring most, if not all, foreign investors. Since foreign backers of Chinese tech start-ups usually plan to exit their investment through an overseas listing – preferably in New York – the prospect of a CPC agency wielding a veto over future listings may make them extremely reluctant to invest.
Foreign investors, usually well-established venture-capital firms, bring not only much-needed financing but also valuable expertise and best governance practices that are vital to the success of tech start-ups. Almost all dominant Chinese tech giants, including Alibaba, Tencent, and Baidu, relied on foreign funding to grow into spectacularly thriving companies. Had the CPC required a similar data-security review two decades ago, none of them would have existed – and China’s tech landscape today would be desolate.
The CAC’s crackdown on China’s most successful tech firms is not driven by concerns about data security. China’s surveillance state offers citizens no data security or privacy to speak of. And given that China’s data-security law already requires all tech companies to store their data inside the country’s borders, the government’s worries about a potential data leak by a ride-sharing platform such as Didi hardly merit radical rule changes and arbitrary restrictions. Minor regulatory tweaks would be more than adequate to address policymakers’ legitimate national-security concerns.
But foreign investors hoping that Chinese leaders will realize their folly and reverse course should think again. Killing the proverbial golden goose seems to be a CPC specialty. In fact, neither Didi nor Alibaba – which in April received a record $2.8 billion antitrust fine from the Chinese government – even come close to being the biggest such creature China has slaughtered recently. That unwanted distinction belongs to Hong Kong, whose autonomy and prosperity are in grave peril following the government’s imposition of a draconian national-security law last year.
Paranoia, bullying instincts, and contempt for property rights are deeply embedded in the CPC’s collective psyche, predisposing the Chinese government to self-destructive policies, regardless of well-intentioned advice or even evidence of their harmful consequences. And over-centralization of power under strongman rule in China today has made self-correction nearly impossible.
For China’s tech entrepreneurs, Didi’s travails should serve as a rude awakening. Many may think that they can thrive under a dictatorship as long as they stay out of politics and focus on making money. But, to paraphrase Leon Trotsky, they may not be interested in the dictatorship, but the dictatorship is very interested in them.
A well-known Chinese proverb applies to the CPC. The party keeps “hurting loved ones and delighting the enemy” (qintong choukuai). China’s tech bosses are learning the hard way that they may well have more to fear from their own government than from America’s bipartisan Sinophobia.
Minxin Pei is Professor of Government at Claremont McKenna College and a non-resident senior fellow at the German Marshall Fund of the United States.
Copyright: Project Syndicate, 2021.
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Fishy solar panel art: At the Photovoltaic TopRunner Base in Sihong, a group of solar panels forms the top view of a fish. Sihong is located on the lower reaches of the Huai River in the northwest of Jiangsu Province. Back in 2017, Sihong was approved as the third batch for the “National Photovoltaic TopRunner Base”. The photovoltaic base is expected to have a total capacity of 1000 MW, with other batches located in Tiangang and Xiangtao lakes. The “Fishery-Solar Complementary” project is expected to generate around 260 million kWh of electricity.
