Silenced economists + Hydrogen cars on China’s roads
Criticism of zero-Covid policy not welcome
Hydrogen cars go into series production for the first time
Sinolytics.Radar: State banks – saviors in the time of need?
Fighter jets in Taiwan’s airspace
Tesla and VW continue closed-loop
Municipalities receive financial boost
Trade agreement with Switzerland on hold
Profile: Yannic Han Biao Federer – writing the way family trauma away
Dear reader,
The lockdown in Shanghai is coming to an end. But in many areas of daily life, Covid measures have even intensified social restrictions. This applies not least to public criticism of government decisions: Chinese economists have been systematically silenced in the past weeks. Any criticism about the economic consequences of the Covid measures remains undesirable, as our Beijing team reports. All those who still voice their opinions are to be “resolutely combated,” as the Politburo declared last Friday. In the end, the whole world pays the bill for all the heads buried in the sand.
Since April, the car manufacturer Changan has been producing China’s first mass-produced fuel cell car, the “C385”. This could become a milestone for the hydrogen industry. The technology, which promises an even better environmental balance sheet than electric cars and even faster refueling, has so far been considered too inefficient to be used in ordinary passenger cars. In the West, many manufacturers like Daimler have already given up on it. The fact that Chinese automakers have never stopped experimenting with fuel cells is primarily due to the government’s political will, writes Frank Sieren. Just as in e-mobility, China wants to set global standards – no matter the cost.
Your Fabian Peltsch
Feature
Beijing silences critical economists
Hong Hao was a respected and popular financial analyst in China. At least until a few weeks ago. Foreign media also frequently quoted him when it came to describing the state of the Chinese economy. But since the beginning of May, there has been hardly anything from Hong. He left his previous employer, the Chinese investment company Bocom. For “personal reasons,” according to the company.
There is much that suggests that the authorities have silenced Hong. The analyst had repeatedly highlighted the tense situation of the Chinese economy on social media, where millions of people followed him. As a result, the censors deleted many of his posts and blocked his user accounts. Only some of Hong’s posts can still be found on Twitter. “Shanghai: zero movement, zero GDP,” is one of his last posts.
Covid measures are pure poison
With that, the analyst has actually summed up the situation accurately: Harsh lockdowns in the country’s biggest economic metropolis and in other cities with millions of residents are brutally stifling the growth of the Chinese economy. For tens of millions in China, who have been stuck in quarantine in Shanghai or elsewhere for weeks and are no longer allowed to leave their homes, the government’s strict policy has long since become a nightmare that they have to endure each day anew.
But the measures are also pure poison for the economy and the business of foreign companies. The mood of European companies in China is worse than ever before. In a new survey by the European Chamber of Commerce in Beijing, 75 percent of companies surveyed stated that the strict containment measures were having a negative impact on their business (China.Table reported). The companies mainly complained about problems in logistics, warehousing and supply chains. But China’s state media have not reported any of this.
Although the government in Beijing itself speaks of “challenges” and a “difficult situation”, reports that analyze exactly how President Xi Jinping’s zero-Covid policy is crippling the country’s economy are virtually nonexistent. That government line critics are systematically silenced is nothing new in China. Foreign journalists who try to contact economists at Chinese universities are usually turned down. Only a few experts still dare to speak to foreign media. And if they do, they occasionally retract their quotes at the last minute because they have been reprimanded by their superiors.
Numerous economists affected
Analyst Hong is not alone. The short messaging service Weibo also recently suspended the accounts of numerous other economists and market analysts, including Fu Peng, Chief Economist at Northeast Securities, Dan Bin, Chairman of Shenzhen Oriental Harbor Investment, and Wu Yuefeng, Partner and Fund Manager at Beijing-based Funding Capital. Authorities gave extremely vague reasons for the suspensions, citing violations of “laws and regulations”.
Wang Sicong also found himself in the censors’ crosshairs. The son of Wang Jianlin, one of China’s most powerful real estate moguls, had 40 million followers on Weibo until a few weeks ago. But then the censors also blocked his account without warning. The influencer had mocked the government’s Covid policy. Dai Yiyi, a management professor at the university in the eastern Chinese metropolis of Xiamen, was also temporarily silenced on Toutiao, a news aggregator run by Beijing-based ByteDance. He, too, had expressed criticism of zero-Covid.
The Chinese Stock Exchange Traders Association (SAC) also made a direct threat recently. “As public figures, the words and actions of securities analysts are highly regarded by society and the media,” the association said. “Inappropriate” comments and actions would damage both the reputation of their institutions and that of the entire securities industry. Public statements by analysts would have to be “better managed” from now on. All reports should first be subjected to thorough “quality control” before publication.
Large parts of the economy are paralyzed
A rare insight into what is actually going on in the minds of China’s elite investors these days is offered by a video that was leaked to the British Financial Times. It shows Weijian Shan, founder of the Hong Kong investment company PAG. In the recording, he mercilessly takes issue with the zero-Covid policy. Large parts of the Chinese economy, including Shanghai, are “semi-paralyzed”. The impact will be very “profound”, Shan said. “We have a leadership who thinks they know what is best for the economy and what is best for the livelihood of the people. Unfortunately, I think their knowledge and their rationality are both limited“
China’s President Xi Jinping and other top leaders of the country do not want to hear anything about it. After its latest meeting last Friday, the powerful Politburo once again proclaimed that there is no alternative to the zero-Covid policy. Critics of the measures are to be fought “resolutely”. Jörn Petring/Gregor Koppenburg
Coronavirus
Society
Trade
Hydrogen will power cars in the future
SAIC’s Maxus Euniq 7 at a technology fair in Shanghai: state-owned enterprises discover the fuel cell.
In the middle of the worst lockdown month of April, Changan Automobile has begun manufacturing the first Chinese hydrogen car. What is happening in Chongqing, a city with 32 million people in western China, has so far only been achieved on a small scale by Toyota in Japan and Hyundai in South Korea. The car, running under the code “C385,” will be marketed under the “Changan Automobile DeepBlue” brand. Changan is the fourth-largest state-owned car manufacturer.
Once the car is available for purchase in the second half of this year, it will most likely be the starting point of a new Chinese trend towards more hydrogen mobility. Earlier this year, Beijing announced plans to have 50,000 fuel cell cars on China’s roads by 2025. To reach this goal, the government subsidizes manufacturers who invest in this field.
A fuel cell generates power from hydrogen and atmospheric oxygen. The full name for the technology is Hydrogen Fuel Cell Electric Vehicle, which is why the abbreviation FCEV is widely used among industry experts. So far, it is only a tiny niche market. Last year, only around 17,000 FCEVs were sold worldwide, with just under 1,600 of them in China. Toyota and Hyundai hold 98 percent of the market for fuel cell cars.
Western car manufacturers have not played a role so far. However, BMW plans to launch 100 test units of a hydrogen version of its X5 on the market this year. In the Volkswagen Group, Audi is researching this field. Daimler has discontinued its hydrogen SUV GLC F-Cell after producing only 3,000 units and now focuses on trucks. Nobody has announced serial production like Changan in Germany yet. Is Germany now on the defensive, as it is with batteries?
Disadvantages of hydrogen mobility
According to unconfirmed media reports, the C835 will cost the equivalent of around €34,000. That is around €12,000 more than the same car with an LFP battery. So it is already clear that without even higher government subsidies, the car will hardly be marketable. Changan Auto has jointly developed three platforms for the project with Huawei and the global battery market leader CTAL under the label “CHN-Project”. The C835 will feature Huawei’s “Harmony Smart Cockpit,” the electronics giant’s software and display technology. With a wheelbase of 2.90 meters, it is a mid-size vehicle. Its design is supposed to convey a high-end feel.
The car is said to have a range of just over 700 kilometers and can be refueled in just three minutes, provided a hydrogen filling station is found. At least consumption would then be only 0.65 kilograms per 100 kilometers. That would make the car competitive, at least in this segment. In the end, five factors come into play for FCEVs:
the purchasing price,
the availability of refueling stations,
the safety of handling, a difficult task for engineers
eco-friendliness of hydrogen production, and
the running costs.
Currently, the biggest problem for drivers of hydrogen cars is the low number of refueling stations. Despite all the investments made by the government, this is still the case in Japan. While it is possible to install a charging station for batteries in one’s garage, this is not possible for hydrogen. Without a refueling station network, only tech enthusiasts will buy such a vehicle. That’s why even the Chinese government has long relied only on hydrogen trucks. For a freight forwarding company with a large fleet, a dedicated refueling station is well worth it, and for trucks, refueling stations at major hubs are enough.
Invisible in driving practice, but crucial for the positioning of the product in the climate debate is the availability of green hydrogen. It is produced from renewable energy instead of natural gas or coal-fired power. Only with the green variant is FCEV more eco-friendly than a conventional car.
But the technical challenges should not be underestimated either. A normal fuel tank is not sufficient for hydrogen. If hydrogen is gaseous, the tank must withstand high pressure. In liquid form, it is stored at minus 253 degrees. There can be no margin for error with a gas that explodes easily when combined with air and can push its way through many materials.
China rapidly advances its hydrogen car plans
The two biggest shortcomings of hydrogen mobility are now being addressed in China. In February last year, the Chinese oil company Sinopec already announced plansto build at least 1,000 hydrogen filling stations over the next five years. And also in May, Sinopec opened its first plant that supposedly supplies environmentally friendly hydrogen. However, it is so-called brown hydrogen, produced from the gasification of coal. It is supposed to be eco-friendly because the plant captures and stores harmful gasses generated in the process. This method is controversial in Germany. The German government’s strategy is to produce green hydrogen, in which neither coal nor gas is involved.
As far as passenger cars are concerned, more and more manufacturers in China are following suit: Dongfeng Motor presented its plans in April. At 0.75 kg of hydrogen per 100 kilometers, the consumption of the “H2–e” model is said to be slightly higher than that of Changan. However, independent test results from Chinese hydrogen mobility manufacturers are not yet available. Great Wall Motor has announced a fuel cell SUV for its C-Class. Haima Motor has begun research and development of a prototype fuel cell vehicle.
The “AION LX“, a fuel cell passenger vehicle from Guangzhou Automobile Group (GAC), is currently being tested. And the largest state-owned car manufacturer SAIC Motor from Shanghai already announced last September an “MPV”, i.e. a small minivan for up to seven people with a fuel cell called “EUNIQ7“. The West should not underestimate this wave, even if it looks quite adorable from a distance.
Autoindustrie
Sinolytics.Radar
Banks to support China’s state budget
Dieser Inhalt ist Lizenznehmern unserer Vollversion vorbehalten.
China’s ambition to achieve +5% economic growth in 2022 can only be achieved with strong support from fiscal budget channeled into infrastructure investments and stabilization of social welfare.
Generally, the Chinese government generates its fiscal revenues via four channels:
general public revenue, comprising all taxes and administrative fees,
governmental funds primarily from land sale revenues at regional levels,
business profits contributed by SOE
and, recently, special governmental debt.
Due to the fragile nature of the overall economy, it is currently difficult for the Ministry of Finance (MOF) to raise any tax rates or increase fees. Land sales revenue are also experiencing a downturn due to policy restrictions on the real estate sector.
Therefore, the Ministry of Finance has limited options to sustain its needed fiscal revenues without putting pressure on businesses/households or adding more debts. In this challenging situation, the government has turned to its historically profitable financial institutions, announcing during the “Two Sessions” that they are projected to contribute a total of RMB 1.65tn of profits to the fiscal cause in 2022 (attributed in the category “Fund transfer from other sources” in the graph)
With the new Omicron wave and the on-going disturbance of China’s economy, the government’s fiscal conditions are worsening significantly. According to NBS, the government’s general public revenue is reduced by 4.8% YoY in April 2022 and the governmental fund reduced by 27.6% YoY.
Consequently, China’s expansive fiscal policies require more alternative sources of funding, including additional profit contributions of state-owned financial institutions and possibly the “monetization of fiscal deficit”, i.e. having the central bank directly purchase debt issued by local or central governments.
Sinolytics is a European consulting and analysis company specializing in China. It advises European companies on their strategic orientation and concrete business activities in the People’s Republic.
News
Fighter jets enter Taiwan defense air zone
According to Taiwan’s Ministry of Defense, 30 Chinese aircraft, including more than 20 fighter jets, have violated Taiwan’s so-called air defense zone. In response, the Taiwanese armed forces had mobilized aircraft and air defense systems to monitor activities in the airspace over the Pratas Islands. This is the second-largest maneuver of Chinese aircraft near Taiwan this year. On January 23, 39 aircraft had entered the air defense zone.
The defense airspace is not identical to Taiwan’s airspace. It is larger and in some places overlaps with the air defense zone of Mainland China. The presence of Chinese aircraft in Taiwan’s defense airspace is not uncommon. This is Beijing’s way of trying to bolster its claim over the democratically governed island. Taiwan’s defense ministry speaks of “warfare in the gray zone”. The Chinese planes want to test and provoke Taiwan’s military in this way.
At a press conference last week, US Secretary of State Antony Blinken also called such maneuvers “increasingly provocative“. US President Joe Biden answered a journalist’s question whether the US could “participate militarily” in a Chinese invasion of Taiwan – unlike in the Russian war of aggression against Ukraine – with a clear “yes.” fpe
Geopolitics
Taiwan
USA
Despite Covid relaxation: Tesla and VW continue to keep workers in isolation
While the lockdown in Shanghai is largely lifted as of today, car manufacturers Tesla and VW have decided to continue isolating workers in their Shanghai factories in a closed loop. This concept isolates workers from the rest of society. They live, work and sleep in the factory or office. This is intended to keep the respective factory free of infections and to keep production running as normally as possible (China.Table reported).
Around 10,000 people work at Tesla’s Shanghai Gigafactory – the company’s largest production plant. They are expected to remain in the “bubble” until June 10. Tesla’s Shanghai plant was closed for three weeks at the end of March due to the Covid outbreak. To bring production back to normal, workers were then housed in decommissioned factories and an old military camp close to the production sites, with day and night shift workers apparently having to share the same beds in makeshift dormitories (China.Table reported).
VW operates a factory in Shanghai with Chinese joint venture partner SAIC Motor. A VW spokesman said SAIC-VW was still “in a closed production system and will continue to adjust production schedules based on relevant guidelines”. No timeframe for an end to the closed-loop was given. As Bloomberg reports, not a single vehicle was sold in Shanghai last month. fpe
Autoindustrie
Municipalities receive aid from Beijing
China’s Ministry of Finance is tapping the 2023 budget to help struggling local governments. This is part of efforts to prevent a crash of the economy in the wake of the country’s Covid restrictions. Under the aid program, ¥400 billion (€55 billion) will be injected, reports business portal Caixin. The background is a crash in tax revenues due to Covid aid. The goal is to close “a gap between tax revenues and necessary spending,” Caixin quotes from a ministry statement.
The growth target of around 5.5 percent is seriously threatened by COVID-19; many economists already consider it unachievable. Nevertheless, bringing forward next year’s budget is untypical in China. The government has always had enough other ways to mobilize money. Typically, it has instructed banks to be a bit more generous in lending to inject fresh funds into the economy. However, this increasingly clashes with another major goal: to make the financing of local authorities more robust. It is not sustainable to let municipalities live on credit.
Tax revenues had crashed by 41 percent in April. The reason for this is the way China has chosen to compensate for the Covid measures. Instead of direct payments for the lost revenue, as in Germany, tax breaks are granted. This burden is borne primarily by the municipalities, counties and provinces. The central government now steps in to make up for the tax losses. It already distributed billions to the municipalities in March and April. The money came from the current budget. This has now apparently been exhausted, which explains the advance to 2023. fin
Coronavirus
Finance
Health
Switzerland: trade negotiations on hold
Negotiations on the free trade agreement between Switzerland and China are not progressing due to disagreements on human rights issues, according to media reports. The last meeting took place in 2018. Since then, there have only been “informal contacts,” as the State Secretariat for Economic Affairs (Seco) confirmed to the NZZ. Switzerland would actually be interested in expanding the free trade agreement concluded in 2014, especially on industrial products. “So far it has not been possible to agree on a common list of topics that should be explored in greater depth,” Seco wrote.
“We hope to continue talks with our Chinese partners in the near future,” the State Secretariat added. However, the current situation has no impact on the existing free trade agreement. China had already put the talks on hold in 2018, as the newspapers Sonntagsblick and NZZ reported. Since then, the People’s Republic has refused to talk about the joint list of issues. Reportedly, the Chinese suspension of talks is a response to the fact that Switzerland has recently been more aggressive in denouncing violations of human rights.
Switzerland signed the agreement with China in 2014. However, efforts to renew it have been underway for several years. Among other things, more Swiss products are to be exempted from customs duty. The Swiss government had not yet publicly reacted to the documents revealed in recent weeks, which prove human rights violations against Uyghurs. rtr/ari
Civil Society
Human Rights
Switzerland
Trade
Profile
Yannic Han Biao Federer – writing the family trauma away
Yannic Han Biao Federer lives and works as a freelance writer in Cologne.
“I don’t come from a background where humanities or even artistic professions would have been a desirable option,” says Yannic Han Biao Federer. Federer’s father belonged to the Chinese minority in Indonesia before discrimination forced him to emigrate to Germany. Despite reservations from his parents, Federer studied German and Romance languages and literature and recently published his second novel, which was published by Suhrkamp Verlag.
In “Tao,” the eponymous protagonist sets out in search of his Chinese ancestors and, in the process, attempts to explore his own family biography through writing. People who talk to Federer quickly realize that Tao’s family history is similar to his own. The grandfather who was sold from China to Indonesia as a child, and the father who emigrated from Indonesia to Germany. “I asked myself for a long time how I could cope with my family history through writing,” says the 35-year-old.
In the footsteps of his Chinese ancestors
Several years ago, Federer began by researching the Chinese minority in Indonesia. “In my family, there was hardly any talk about what happened in the 1965 massacre.” An estimated 500,000 to 1 million people were killed in a bloody military coup that saw eventual President Haji Mohamed Suharto establish a new regime.
“It was communicated as if they had specifically and exclusively killed communists who had come under suspicion for an attempted coup,” Federer recounts. “But the persecution and killing went far beyond that – and among the victims were many who were victimized only because they belonged to the Chinese minority.”
For centuries, the Chinese minority in Indonesia had repeatedly been caught in the crossfire as a scapegoat whenever there were tensions and conflicts in the country. Prejudices persisted that the Chinese had become too economically powerful in Indonesia and had their hands in everything. After the 1965 massacre, Suharto enacted discriminatory laws that placed the Chinese minority under permanent suspicion. The Chinese language was banned, as were Chinese organizations. “You were pressured to change your Chinese name. My family also adopted an Indonesian name,” Federer said.
Stepping out of silence
The trauma and the silence of his family were instilled in him without him consciously reflecting on it. “Trauma means that I can’t get rid of something. It can’t be made into memory, but remains constantly present,” Federer explains. To overcome his trauma, he invents his protagonist Tao. “I needed someone to whom I could give things from myself.”
Federer has used writing to turn his own trauma into a memory. The fact that he introduces himself today with his full German-Chinese name is a result of that struggle. “My parents deliberately gave me this second, Chinese first name. It says we are still here, we still exist.” Svenja Napp
Culture
Literature
Society
Executive Moves
Stefan Justl is leaving his post as General Manager at communications agency Storymaker China on June 1. His successor will be Adam Lou.
Zhang Gong, head of China’s State Administration of Market Regulation (SAMR), has been appointed as the new Deputy Party Chief of the Chinese coastal city of Tianjin.
Dessert
你生日快乐 ! For his first birthday, giant panda baby Sheng Yi gets an icy cake with fruits. Sheng Yi lives at the Giant Panda Conservation Center at Negara Zoo near Kuala Lumpur. The baby panda’s special day coincides with the 48th anniversary of diplomatic relations between China and Malaysia – which was especially celebrated in the press.
Hydrogen cars go into series production for the first time
Sinolytics.Radar: State banks – saviors in the time of need?
Fighter jets in Taiwan’s airspace
Tesla and VW continue closed-loop
Municipalities receive financial boost
Trade agreement with Switzerland on hold
Profile: Yannic Han Biao Federer – writing the way family trauma away
Dear reader,
The lockdown in Shanghai is coming to an end. But in many areas of daily life, Covid measures have even intensified social restrictions. This applies not least to public criticism of government decisions: Chinese economists have been systematically silenced in the past weeks. Any criticism about the economic consequences of the Covid measures remains undesirable, as our Beijing team reports. All those who still voice their opinions are to be “resolutely combated,” as the Politburo declared last Friday. In the end, the whole world pays the bill for all the heads buried in the sand.
Since April, the car manufacturer Changan has been producing China’s first mass-produced fuel cell car, the “C385”. This could become a milestone for the hydrogen industry. The technology, which promises an even better environmental balance sheet than electric cars and even faster refueling, has so far been considered too inefficient to be used in ordinary passenger cars. In the West, many manufacturers like Daimler have already given up on it. The fact that Chinese automakers have never stopped experimenting with fuel cells is primarily due to the government’s political will, writes Frank Sieren. Just as in e-mobility, China wants to set global standards – no matter the cost.
Your Fabian Peltsch
Feature
Beijing silences critical economists
Hong Hao was a respected and popular financial analyst in China. At least until a few weeks ago. Foreign media also frequently quoted him when it came to describing the state of the Chinese economy. But since the beginning of May, there has been hardly anything from Hong. He left his previous employer, the Chinese investment company Bocom. For “personal reasons,” according to the company.
There is much that suggests that the authorities have silenced Hong. The analyst had repeatedly highlighted the tense situation of the Chinese economy on social media, where millions of people followed him. As a result, the censors deleted many of his posts and blocked his user accounts. Only some of Hong’s posts can still be found on Twitter. “Shanghai: zero movement, zero GDP,” is one of his last posts.
Covid measures are pure poison
With that, the analyst has actually summed up the situation accurately: Harsh lockdowns in the country’s biggest economic metropolis and in other cities with millions of residents are brutally stifling the growth of the Chinese economy. For tens of millions in China, who have been stuck in quarantine in Shanghai or elsewhere for weeks and are no longer allowed to leave their homes, the government’s strict policy has long since become a nightmare that they have to endure each day anew.
But the measures are also pure poison for the economy and the business of foreign companies. The mood of European companies in China is worse than ever before. In a new survey by the European Chamber of Commerce in Beijing, 75 percent of companies surveyed stated that the strict containment measures were having a negative impact on their business (China.Table reported). The companies mainly complained about problems in logistics, warehousing and supply chains. But China’s state media have not reported any of this.
Although the government in Beijing itself speaks of “challenges” and a “difficult situation”, reports that analyze exactly how President Xi Jinping’s zero-Covid policy is crippling the country’s economy are virtually nonexistent. That government line critics are systematically silenced is nothing new in China. Foreign journalists who try to contact economists at Chinese universities are usually turned down. Only a few experts still dare to speak to foreign media. And if they do, they occasionally retract their quotes at the last minute because they have been reprimanded by their superiors.
Numerous economists affected
Analyst Hong is not alone. The short messaging service Weibo also recently suspended the accounts of numerous other economists and market analysts, including Fu Peng, Chief Economist at Northeast Securities, Dan Bin, Chairman of Shenzhen Oriental Harbor Investment, and Wu Yuefeng, Partner and Fund Manager at Beijing-based Funding Capital. Authorities gave extremely vague reasons for the suspensions, citing violations of “laws and regulations”.
Wang Sicong also found himself in the censors’ crosshairs. The son of Wang Jianlin, one of China’s most powerful real estate moguls, had 40 million followers on Weibo until a few weeks ago. But then the censors also blocked his account without warning. The influencer had mocked the government’s Covid policy. Dai Yiyi, a management professor at the university in the eastern Chinese metropolis of Xiamen, was also temporarily silenced on Toutiao, a news aggregator run by Beijing-based ByteDance. He, too, had expressed criticism of zero-Covid.
The Chinese Stock Exchange Traders Association (SAC) also made a direct threat recently. “As public figures, the words and actions of securities analysts are highly regarded by society and the media,” the association said. “Inappropriate” comments and actions would damage both the reputation of their institutions and that of the entire securities industry. Public statements by analysts would have to be “better managed” from now on. All reports should first be subjected to thorough “quality control” before publication.
Large parts of the economy are paralyzed
A rare insight into what is actually going on in the minds of China’s elite investors these days is offered by a video that was leaked to the British Financial Times. It shows Weijian Shan, founder of the Hong Kong investment company PAG. In the recording, he mercilessly takes issue with the zero-Covid policy. Large parts of the Chinese economy, including Shanghai, are “semi-paralyzed”. The impact will be very “profound”, Shan said. “We have a leadership who thinks they know what is best for the economy and what is best for the livelihood of the people. Unfortunately, I think their knowledge and their rationality are both limited“
China’s President Xi Jinping and other top leaders of the country do not want to hear anything about it. After its latest meeting last Friday, the powerful Politburo once again proclaimed that there is no alternative to the zero-Covid policy. Critics of the measures are to be fought “resolutely”. Jörn Petring/Gregor Koppenburg
Coronavirus
Society
Trade
Hydrogen will power cars in the future
SAIC’s Maxus Euniq 7 at a technology fair in Shanghai: state-owned enterprises discover the fuel cell.
In the middle of the worst lockdown month of April, Changan Automobile has begun manufacturing the first Chinese hydrogen car. What is happening in Chongqing, a city with 32 million people in western China, has so far only been achieved on a small scale by Toyota in Japan and Hyundai in South Korea. The car, running under the code “C385,” will be marketed under the “Changan Automobile DeepBlue” brand. Changan is the fourth-largest state-owned car manufacturer.
Once the car is available for purchase in the second half of this year, it will most likely be the starting point of a new Chinese trend towards more hydrogen mobility. Earlier this year, Beijing announced plans to have 50,000 fuel cell cars on China’s roads by 2025. To reach this goal, the government subsidizes manufacturers who invest in this field.
A fuel cell generates power from hydrogen and atmospheric oxygen. The full name for the technology is Hydrogen Fuel Cell Electric Vehicle, which is why the abbreviation FCEV is widely used among industry experts. So far, it is only a tiny niche market. Last year, only around 17,000 FCEVs were sold worldwide, with just under 1,600 of them in China. Toyota and Hyundai hold 98 percent of the market for fuel cell cars.
Western car manufacturers have not played a role so far. However, BMW plans to launch 100 test units of a hydrogen version of its X5 on the market this year. In the Volkswagen Group, Audi is researching this field. Daimler has discontinued its hydrogen SUV GLC F-Cell after producing only 3,000 units and now focuses on trucks. Nobody has announced serial production like Changan in Germany yet. Is Germany now on the defensive, as it is with batteries?
Disadvantages of hydrogen mobility
According to unconfirmed media reports, the C835 will cost the equivalent of around €34,000. That is around €12,000 more than the same car with an LFP battery. So it is already clear that without even higher government subsidies, the car will hardly be marketable. Changan Auto has jointly developed three platforms for the project with Huawei and the global battery market leader CTAL under the label “CHN-Project”. The C835 will feature Huawei’s “Harmony Smart Cockpit,” the electronics giant’s software and display technology. With a wheelbase of 2.90 meters, it is a mid-size vehicle. Its design is supposed to convey a high-end feel.
The car is said to have a range of just over 700 kilometers and can be refueled in just three minutes, provided a hydrogen filling station is found. At least consumption would then be only 0.65 kilograms per 100 kilometers. That would make the car competitive, at least in this segment. In the end, five factors come into play for FCEVs:
the purchasing price,
the availability of refueling stations,
the safety of handling, a difficult task for engineers
eco-friendliness of hydrogen production, and
the running costs.
Currently, the biggest problem for drivers of hydrogen cars is the low number of refueling stations. Despite all the investments made by the government, this is still the case in Japan. While it is possible to install a charging station for batteries in one’s garage, this is not possible for hydrogen. Without a refueling station network, only tech enthusiasts will buy such a vehicle. That’s why even the Chinese government has long relied only on hydrogen trucks. For a freight forwarding company with a large fleet, a dedicated refueling station is well worth it, and for trucks, refueling stations at major hubs are enough.
Invisible in driving practice, but crucial for the positioning of the product in the climate debate is the availability of green hydrogen. It is produced from renewable energy instead of natural gas or coal-fired power. Only with the green variant is FCEV more eco-friendly than a conventional car.
But the technical challenges should not be underestimated either. A normal fuel tank is not sufficient for hydrogen. If hydrogen is gaseous, the tank must withstand high pressure. In liquid form, it is stored at minus 253 degrees. There can be no margin for error with a gas that explodes easily when combined with air and can push its way through many materials.
China rapidly advances its hydrogen car plans
The two biggest shortcomings of hydrogen mobility are now being addressed in China. In February last year, the Chinese oil company Sinopec already announced plansto build at least 1,000 hydrogen filling stations over the next five years. And also in May, Sinopec opened its first plant that supposedly supplies environmentally friendly hydrogen. However, it is so-called brown hydrogen, produced from the gasification of coal. It is supposed to be eco-friendly because the plant captures and stores harmful gasses generated in the process. This method is controversial in Germany. The German government’s strategy is to produce green hydrogen, in which neither coal nor gas is involved.
As far as passenger cars are concerned, more and more manufacturers in China are following suit: Dongfeng Motor presented its plans in April. At 0.75 kg of hydrogen per 100 kilometers, the consumption of the “H2–e” model is said to be slightly higher than that of Changan. However, independent test results from Chinese hydrogen mobility manufacturers are not yet available. Great Wall Motor has announced a fuel cell SUV for its C-Class. Haima Motor has begun research and development of a prototype fuel cell vehicle.
The “AION LX“, a fuel cell passenger vehicle from Guangzhou Automobile Group (GAC), is currently being tested. And the largest state-owned car manufacturer SAIC Motor from Shanghai already announced last September an “MPV”, i.e. a small minivan for up to seven people with a fuel cell called “EUNIQ7“. The West should not underestimate this wave, even if it looks quite adorable from a distance.
Autoindustrie
Sinolytics.Radar
Banks to support China’s state budget
Dieser Inhalt ist Lizenznehmern unserer Vollversion vorbehalten.
China’s ambition to achieve +5% economic growth in 2022 can only be achieved with strong support from fiscal budget channeled into infrastructure investments and stabilization of social welfare.
Generally, the Chinese government generates its fiscal revenues via four channels:
general public revenue, comprising all taxes and administrative fees,
governmental funds primarily from land sale revenues at regional levels,
business profits contributed by SOE
and, recently, special governmental debt.
Due to the fragile nature of the overall economy, it is currently difficult for the Ministry of Finance (MOF) to raise any tax rates or increase fees. Land sales revenue are also experiencing a downturn due to policy restrictions on the real estate sector.
Therefore, the Ministry of Finance has limited options to sustain its needed fiscal revenues without putting pressure on businesses/households or adding more debts. In this challenging situation, the government has turned to its historically profitable financial institutions, announcing during the “Two Sessions” that they are projected to contribute a total of RMB 1.65tn of profits to the fiscal cause in 2022 (attributed in the category “Fund transfer from other sources” in the graph)
With the new Omicron wave and the on-going disturbance of China’s economy, the government’s fiscal conditions are worsening significantly. According to NBS, the government’s general public revenue is reduced by 4.8% YoY in April 2022 and the governmental fund reduced by 27.6% YoY.
Consequently, China’s expansive fiscal policies require more alternative sources of funding, including additional profit contributions of state-owned financial institutions and possibly the “monetization of fiscal deficit”, i.e. having the central bank directly purchase debt issued by local or central governments.
Sinolytics is a European consulting and analysis company specializing in China. It advises European companies on their strategic orientation and concrete business activities in the People’s Republic.
News
Fighter jets enter Taiwan defense air zone
According to Taiwan’s Ministry of Defense, 30 Chinese aircraft, including more than 20 fighter jets, have violated Taiwan’s so-called air defense zone. In response, the Taiwanese armed forces had mobilized aircraft and air defense systems to monitor activities in the airspace over the Pratas Islands. This is the second-largest maneuver of Chinese aircraft near Taiwan this year. On January 23, 39 aircraft had entered the air defense zone.
The defense airspace is not identical to Taiwan’s airspace. It is larger and in some places overlaps with the air defense zone of Mainland China. The presence of Chinese aircraft in Taiwan’s defense airspace is not uncommon. This is Beijing’s way of trying to bolster its claim over the democratically governed island. Taiwan’s defense ministry speaks of “warfare in the gray zone”. The Chinese planes want to test and provoke Taiwan’s military in this way.
At a press conference last week, US Secretary of State Antony Blinken also called such maneuvers “increasingly provocative“. US President Joe Biden answered a journalist’s question whether the US could “participate militarily” in a Chinese invasion of Taiwan – unlike in the Russian war of aggression against Ukraine – with a clear “yes.” fpe
Geopolitics
Taiwan
USA
Despite Covid relaxation: Tesla and VW continue to keep workers in isolation
While the lockdown in Shanghai is largely lifted as of today, car manufacturers Tesla and VW have decided to continue isolating workers in their Shanghai factories in a closed loop. This concept isolates workers from the rest of society. They live, work and sleep in the factory or office. This is intended to keep the respective factory free of infections and to keep production running as normally as possible (China.Table reported).
Around 10,000 people work at Tesla’s Shanghai Gigafactory – the company’s largest production plant. They are expected to remain in the “bubble” until June 10. Tesla’s Shanghai plant was closed for three weeks at the end of March due to the Covid outbreak. To bring production back to normal, workers were then housed in decommissioned factories and an old military camp close to the production sites, with day and night shift workers apparently having to share the same beds in makeshift dormitories (China.Table reported).
VW operates a factory in Shanghai with Chinese joint venture partner SAIC Motor. A VW spokesman said SAIC-VW was still “in a closed production system and will continue to adjust production schedules based on relevant guidelines”. No timeframe for an end to the closed-loop was given. As Bloomberg reports, not a single vehicle was sold in Shanghai last month. fpe
Autoindustrie
Municipalities receive aid from Beijing
China’s Ministry of Finance is tapping the 2023 budget to help struggling local governments. This is part of efforts to prevent a crash of the economy in the wake of the country’s Covid restrictions. Under the aid program, ¥400 billion (€55 billion) will be injected, reports business portal Caixin. The background is a crash in tax revenues due to Covid aid. The goal is to close “a gap between tax revenues and necessary spending,” Caixin quotes from a ministry statement.
The growth target of around 5.5 percent is seriously threatened by COVID-19; many economists already consider it unachievable. Nevertheless, bringing forward next year’s budget is untypical in China. The government has always had enough other ways to mobilize money. Typically, it has instructed banks to be a bit more generous in lending to inject fresh funds into the economy. However, this increasingly clashes with another major goal: to make the financing of local authorities more robust. It is not sustainable to let municipalities live on credit.
Tax revenues had crashed by 41 percent in April. The reason for this is the way China has chosen to compensate for the Covid measures. Instead of direct payments for the lost revenue, as in Germany, tax breaks are granted. This burden is borne primarily by the municipalities, counties and provinces. The central government now steps in to make up for the tax losses. It already distributed billions to the municipalities in March and April. The money came from the current budget. This has now apparently been exhausted, which explains the advance to 2023. fin
Coronavirus
Finance
Health
Switzerland: trade negotiations on hold
Negotiations on the free trade agreement between Switzerland and China are not progressing due to disagreements on human rights issues, according to media reports. The last meeting took place in 2018. Since then, there have only been “informal contacts,” as the State Secretariat for Economic Affairs (Seco) confirmed to the NZZ. Switzerland would actually be interested in expanding the free trade agreement concluded in 2014, especially on industrial products. “So far it has not been possible to agree on a common list of topics that should be explored in greater depth,” Seco wrote.
“We hope to continue talks with our Chinese partners in the near future,” the State Secretariat added. However, the current situation has no impact on the existing free trade agreement. China had already put the talks on hold in 2018, as the newspapers Sonntagsblick and NZZ reported. Since then, the People’s Republic has refused to talk about the joint list of issues. Reportedly, the Chinese suspension of talks is a response to the fact that Switzerland has recently been more aggressive in denouncing violations of human rights.
Switzerland signed the agreement with China in 2014. However, efforts to renew it have been underway for several years. Among other things, more Swiss products are to be exempted from customs duty. The Swiss government had not yet publicly reacted to the documents revealed in recent weeks, which prove human rights violations against Uyghurs. rtr/ari
Civil Society
Human Rights
Switzerland
Trade
Profile
Yannic Han Biao Federer – writing the family trauma away
Yannic Han Biao Federer lives and works as a freelance writer in Cologne.
“I don’t come from a background where humanities or even artistic professions would have been a desirable option,” says Yannic Han Biao Federer. Federer’s father belonged to the Chinese minority in Indonesia before discrimination forced him to emigrate to Germany. Despite reservations from his parents, Federer studied German and Romance languages and literature and recently published his second novel, which was published by Suhrkamp Verlag.
In “Tao,” the eponymous protagonist sets out in search of his Chinese ancestors and, in the process, attempts to explore his own family biography through writing. People who talk to Federer quickly realize that Tao’s family history is similar to his own. The grandfather who was sold from China to Indonesia as a child, and the father who emigrated from Indonesia to Germany. “I asked myself for a long time how I could cope with my family history through writing,” says the 35-year-old.
In the footsteps of his Chinese ancestors
Several years ago, Federer began by researching the Chinese minority in Indonesia. “In my family, there was hardly any talk about what happened in the 1965 massacre.” An estimated 500,000 to 1 million people were killed in a bloody military coup that saw eventual President Haji Mohamed Suharto establish a new regime.
“It was communicated as if they had specifically and exclusively killed communists who had come under suspicion for an attempted coup,” Federer recounts. “But the persecution and killing went far beyond that – and among the victims were many who were victimized only because they belonged to the Chinese minority.”
For centuries, the Chinese minority in Indonesia had repeatedly been caught in the crossfire as a scapegoat whenever there were tensions and conflicts in the country. Prejudices persisted that the Chinese had become too economically powerful in Indonesia and had their hands in everything. After the 1965 massacre, Suharto enacted discriminatory laws that placed the Chinese minority under permanent suspicion. The Chinese language was banned, as were Chinese organizations. “You were pressured to change your Chinese name. My family also adopted an Indonesian name,” Federer said.
Stepping out of silence
The trauma and the silence of his family were instilled in him without him consciously reflecting on it. “Trauma means that I can’t get rid of something. It can’t be made into memory, but remains constantly present,” Federer explains. To overcome his trauma, he invents his protagonist Tao. “I needed someone to whom I could give things from myself.”
Federer has used writing to turn his own trauma into a memory. The fact that he introduces himself today with his full German-Chinese name is a result of that struggle. “My parents deliberately gave me this second, Chinese first name. It says we are still here, we still exist.” Svenja Napp
Culture
Literature
Society
Executive Moves
Stefan Justl is leaving his post as General Manager at communications agency Storymaker China on June 1. His successor will be Adam Lou.
Zhang Gong, head of China’s State Administration of Market Regulation (SAMR), has been appointed as the new Deputy Party Chief of the Chinese coastal city of Tianjin.
Dessert
你生日快乐 ! For his first birthday, giant panda baby Sheng Yi gets an icy cake with fruits. Sheng Yi lives at the Giant Panda Conservation Center at Negara Zoo near Kuala Lumpur. The baby panda’s special day coincides with the 48th anniversary of diplomatic relations between China and Malaysia – which was especially celebrated in the press.
