Three thousand people in one room? We COVID-impaired Germans would call that a superspreader event. Yet in China, the pandemic clocks tick differently. In Beijing, 3000 delegates are gathering for this year’s “National People’s Congress”. All of them have been vaccinated with Sinopharm. But what if someone in the room is infected?
The People’s Congress started on time this Friday morning. The official Beijing reported 2953 delegates, 2907 were registered yesterday at noon. The “people’s representatives” want to discuss the fate of their country for only seven days this year. The usual two weeks of deliberations seemed too risky even to Beijing. Frank Sieren has evaluated the traditional accountability and work report of the government.
The congress will focus on the government’s plans for the next few years, the 14th Five-Year Plan and the outlook until 2035. The China.Table team has already analyzed the plans for you in the past few days. If you want to read it again: Click here for the China.Table archive. Of course, we will follow the concrete changes in the course of the next week.
For the past eight years, Wang Huning has been President Xi Jinping’s chief advisor and speechwriter; you could say Wang is Beijing’s intellectual head. Where he comes from, what he thinks, and how powerful he is, Johnny Erling has brought together for you in the Column.
First, London banned the Chinese State broadcaster CGTN, then the German state media authorities followed suit. Now, Paris has granted a broadcasting license, and it looks like the permit will put CGTN back on the air across Europe under European law. A political victory for Beijing. An embarrassment for the European Union, with its inconsistent and fractured regulation that benefits the clever whenever they want to advance their interests.
The Czech Republic should also be mentioned in this context. Germany’s neighbor to the south is currently struggling particularly desperately with the pandemic – and is now considering, in its distress, starting to buy the Chinese vaccine – apart from the currently agreed upon European – but not functioning – collective purchases. Yet, as Marcel Grzanna writes, the Czechs haven’t really had any good experiences with China recently.
The bilateral relations of the individual EU members with China are worthy of very special consideration by China.Table. A few days ago, Amelie Richter looked at Italy. We now continue this series with Marcel’s analysis.
I wish you an enjoyable read and a relaxing weekend.
You have to imagine the government’s work report as a gigantic mobile that thousands of people have balanced over the past weeks and months. Each political area naturally wants to be mentioned first in order to make it clear that its own topic has the greater weight in each case. So it is a matter of deciding on order of emphasis. Thus, the report, written in clear language, is certainly an insightful reflection of the political situation.
The report begins with a review of the past year. The problem areas are named: Recovery of the economy after COVID is not yet fully accomplished. Consumption needs to be boosted further. Investments are not sustainable enough. Too many obstacles are still being placed in the way of small and medium-sized enterprises. And it is not getting any easier to maintain the level of employment. But innovation must also be increased, and the “serious” deficits of the local government must be reduced.
But how is it to continue over the next five years? Productivity should grow faster than GDP. Unemployment must remain stable. Prices, too. China’s research and development budget is to be “over 7 percent” higher than in the past five years. The share of manufacturing in the economy is to remain stable. China is also to be further digitized. Agricultural land must remain the same size (120 million hectares). However, it will be easier for people moving from the countryside to the city to get a residence permit. New centers are to be developed. The order is important here: 1st place: Beijing-Tianjin-Hebei followed by the Yangtze Economic Belt and Greater Bay Area.
State-owned enterprises are to be further reformed. A better environment for private enterprises is to be created. 24 percent of China’s land area is to be forested. Energy consumption per capita is to be reduced by 13.5 percent, CO2 emissions by 18 percent in relation to GDP (“carbon intensity”). In addition, the government is talking about higher incomes, better schools, and a better health system. Even more, the government promises a stable energy supply and wants to guarantee 650 million metric tons of grain reserves.
The accountability report also addresses what 2021 will look like. The main points: The targeted growth should be over six percent, more than eleven million new urban jobs should be created, the urban unemployment rate should not rise above 5.5 percent, inflation should not exceed three percent. The government is also aiming for a steady increase in exports and imports, a balanced balance of payments, steady growth in incomes, and better environmental protection. Energy consumption is to be reduced by three percent per unit of GDP, and the CO2 emissions of the biggest polluters are to be cut.
In macroeconomic terms, Beijing promises “no sharp turns”. Debt is not to exceed 3.2 percent of GDP. The central government continues to cede power: local governments get 7.8 percent more money. Small taxpayers will remain exempt from VAT. Small businesses and sole proprietorships should find it easier to get loans. The corresponding credit volume will be increased by more than 30 percent to facilitate start-ups. Electricity prices are to fall, especially for small firms. The administration is to be further digitalized, and state-owned enterprises are to be reformed more quickly.
Spending on basic research will increase by 10.6 percent. Beijing promises 75 percent tax relief for research & development companies, 100 percent for R&D by manufacturing companies. Consumer industries such as health care, culture, tourism, and sports are to be promoted, online consumption expanded, while neighborhood stores are to be preserved. 53.000 small communities are to receive redevelopment funds. In rural areas, poverty is to be further combated and agriculture developed in order to ensure a secure supply of food.
The steady growth of imports and exports is planned. One wants to promote cross-border online Trade for small companies. The negative list for foreign investments will be reduced. The Hainan Free Trade Zone will be further expanded. The same goes for the BRI, the new Silk Road. On multilateral cooperation, Premier Li says: Implement the RCEP Asian Free Trade Area and the EU-China Investment Protection Agreement “expeditiously”. Beijing wants to “accelerate” FTA negotiations with Japan and South Korea. It is “actively considering” membership in the trans-Pacific TPP11 – and wants to ensure the growth of Sino-American economic relations “based on mutual benefit and mutual respect”.
The recent history of the Czech football club Slavia Prague is suitable for the script of a melodrama with a happy ending. The leading roles are played by a run-down traditional club on the brink of bankruptcy and an investor from the Far East. The short version of the story goes like this: Slavia was on the verge of having to stop playing due to a lack of money until a Chinese company took over the helm and used its money to nurture the club so that it won the championship three times after almost ten years without winning a title, like a phoenix rising from the ashes. The long version of the story is a little more complicated, but details won’t matter in football in a few years anyway. What Slavia Prague will have forever are the titles – thanks to Chinese capital.
Admittedly, such a script would not be particularly creative. But it is based on true events and is emblematic of the hopes and expectations that Chinese investors spark with their money in many parts of the world. The relationship between the Czech Republic and the People’s Republic of China has been decisively shaped by such hopes and expectations in recent years.
They were particularly encouraged by Czech Head of State Miloš Zeman. The president had visited the People’s Republic twice within a short period of time a few years ago to pave the way for the expansion of strategic cooperation between the two states. He had come to China to learn how to accelerate economic growth and stabilize society, rather than to lecture his hosts on the market economy and human rights, he once said – music to the ears of the Communist Party. And indeed, the plan seemed to be working. China’s leader Xi Jinping made a return visit in 2016, and Zeman announced shortly after that they had reached agreements on investment and trade worth €10 billion.
However, this volume has not yet been realized. This is also because the private multinational CEFC China Energy, which was supposed to set up and handle the deals, failed to meet its obligations and went bankrupt at the beginning of 2020. Czech President Zeman had even appointed the company’s CEO as one of his economic advisors. Meanwhile, the man is behind bars in China for fraud. Outstanding debts took over the state investment company CITIC already since 2018. But the state-owned company has also failed to show any proactive commitment to expanding economic relations.
So far, only an estimated ten percent of the announced mega sum has flowed, including the money for the takeover of Slavia Prague. “The expectations of possible Chinese investment were completely exaggerated and in part unrealistic. This has contributed to growing frustration on the Czech side,” says Richard Turcsanyi, who studies China’s relations with mainly Eastern European states for the Sinophone Borderlands research project at Palacky University in Olomouc. President Zeman has long since made no secret of his displeasure but nevertheless took part in the meeting of the 17+1 format between Beijing and several Central and Eastern European states in February.
The lack of economic stimulus set the stage for a deterioration in relations, which have visibly fractured in recent years. In 2018, Czech security authorities warned of Chinese technology in the rollout of the 5G network, triggering customary threat reflexes in China. What followed was a diplomatic ham-fisted comedy in which China’s ambassador Zhang Jianmin and Czech Prime Minister Andrej Babiš first spoke to each other, only to clash violently shortly after. Zhang had publicly portrayed the course of the conversation in a completely different way than Babiš had perceived it, whereupon the Czech called the ambassador a “liar”.
Zhang came under fire again two years later for writing a threatening letter to the now-deceased Czech Senate Speaker Jaroslav Kubera because he was planning a visit to Taiwan. Prime Minister Babiš then suggested that China should replace the ambassador. Kubera remained in office, but his efforts were not crowned with success. The new speaker of the Senate didn’t seem to care about China’s sensitivities either and traveled to the island with an 89-strong delegation last summer. It was a refresher visit with a symbolic character. Back in the 1990s, the Czech Republic maintained closer relations with Taiwan than most other European states.
Once again, Chinese threats followed that the Czech Republic would pay dearly for such provocations. But in fact, China lacks the means, as researcher Turcsanyi of Sinophone believes. Only about two percent of Czech exports went to the People’s Republic. Most of that is integrated auto parts in vehicles made by Skoda, which is part of the Volkswagen Group. “This, of course, makes it easier for Czech politicians to go on a confrontation course with China. Accordingly, they play the anti-Chinese card and could succeed with it in the parliamentary elections later in the year,” Turcsanyi says.
Leading the way is Prague’s mayor, Zdenek Hrib, who put the twinning agreement with Beijing to the test. The agreement requires Prague to recognize the “One China” policy. Hribs, however, considered this an encroachment on his own sovereignty and offered to continue without the Taiwan clause. China refused, whereupon the mayor terminated the partnership. Recently, Hrib followed up in an interview. He said he felt a moral duty to point out “that China is an unreliable business partner”.
Czech mistrust of the People’s Republic is also the result of growing Chinese influence on the local media. The media group Empresa has been under Chinese ownership since 2015. At its TV station TV-Barrandov and several magazines (Tyden, Instinkt), reporting on China has changed significantly for the better as a result. “Not only did all negative mentions of China disappear (in these media sources), but so did neutral reporting. This led to these media outlets reporting only positively about China,” Ivana Karáskova summarizes the results of a study by China Observers in Central and Eastern Europe (CHOICE). The composition of the topics covered had also changed and was increasingly aligned with Beijing’s interests.
So far, this has not led to the desired success on a broad level. “Xinjiang, Hong Kong, wolf diplomacy – all these issues have caused the perception of China in the Czech Republic to deteriorate further,” says Turcsanyi. He also says that the coverage in those media that are not owned by a Chinese investor is very critical.
But Chinese strategies are long-term and consistently pursue their goal. In April 2020, for example, the CITIC Group acquired a controlling interest in Médea, a company that places advertising in Czech companies and is one of the market leaders in the country. This provides the Chinese government with another tool to sway public opinion in its favor. If a newspaper does not report in China’s favor, it faces the threat of having important advertising revenues withdrawn. Turcsanyi: “Even if Chinese investment in the Czech Republic is smaller than that from Japan or Korea, for example, the takeover of Médea has caused a stir and led to a legitimate debate about how much Chinese influence on our media we want to accept.” Médea did not respond to an inquiry from China.Table.
Chinese state broadcaster Chinese Global Television Network (CGTN) is once again allowed to broadcast in Europe. The French media supervisory authority CAS granted CGTN a broadcasting permit. According to information from China.Table, the German side is now also checking whether the station will be fed back into the German network. The responsible media institutions are in exchange with CSA about the documents submitted by CGTN.
Under French law, non-European channels may be operated as long as the programs are broadcast via French satellites and the data transmission is located in France, CSA explained the decision. CGTN met these two conditions and therefore had the right to broadcast. According to the ruling, CGTN has been broadcasting in Europe since 2016 from a satellite owned by French operator Eutelsat. “These channels can be broadcast freely without prior review, but French audiovisual communication laws must be respected,” the authority’s notice said.
The broadcasters must not distribute content that includes “incitement to hatred and violence” and must guarantee “human dignity and honesty, independence and pluralism of information,” the media authority said. The CSA says it will pay particular attention to CGTN’s compliance with the regulations.
With the French license, CGTN is also accessible in Great Britain again. The basis for this is the Agreement on Transfrontier Television, a treaty made by the Council of Europe in Strasbourg, to which Great Britain also belongs. This guarantees freedom of expression, freedom of reception, and freedom of retransmission of television programs licensed in one of the contracting states.
The British broadcasting authority Ofcom had revoked the broadcasting license of the English-language foreign broadcaster CGTN at the beginning of February due to political influence on the program. Beijing reacted immediately to the decision in London and withdrew the broadcasting license of the British television station BBC World News in mainland China and Hong Kong.
In Germany, CGTN was fed into the German network by cable network operator Vodafone, among others. After the withdrawal of the license in Great Britain, Vodafone suspended the program and referred to “technical malfunctions” via a freeze-frame. ari/grz
China plans to increase its military budget again at a rate similar to “normal” years, despite the high cost of economic recovery in the wake of the COVID pandemic. Chinese experts expect an increase of around seven percent this year, according to state media, as reported by the dpa news agency. In 2020, China had spent ¥1.27 trillion (€147 billion) on the military. With an increase of seven percent, this would be around ¥1.36 trillion (€158 billion) in 2021.
China usually aligns military budget growth with increases in economic output. Last year was an exception when the National People’s Congress, which did not meet until May, increased the military budget by 6.6 percent. But the economy grew by only 2.3 percent because of the pandemic.
By 2021, the Chinese provinces have reported growth targets of between six and ten percent to Beijing (China.Table reported). Therefore, seven percent more money for the People’s Liberation Army (VBA) would be back within the usual range until 2019.
In 2019, the last “normal” year before the pandemic, the economy grew by just over six percent, while the defense budget was increased by 7.5 percent. According to a study by the US Department of Defense, the official military budget was thus around 1.3 percent of economic output.
For many years China has had the second-largest military budget in the world behind the USA world’s second-largest military budget. Washington spent $732 billion on its armed forces in 2019. Even if – as many experts believe – China, in fact, spends more on the military than the official budget indicates, it would still be a distant second. The Pentagon estimates that China spent more than $200 billion in 2019. The Stockholm International Peace Research Institute (SIPRI) even estimates $240 billion in a recent study. According to SIPRI, expenditure not included in the military budget includes payments for research, the paramilitary People’s Armed Police, construction projects, and pensions. What makes the comparison with other countries even more difficult is that many Chinese weapons systems are cheaper than their equivalents in industrialized countries like the US.
From 1989 to 2015, China’s military budget increased by double-digit percentages every year. President Xi Jinping, also chairman of the powerful Central Military Commission, limited these increases to single digits. Xi wants to create a modern military force on par with the United States by 2027, the 100th anniversary of the founding of the People’s Liberation Army. ck
The group of WHO experts investigating the origins of COVID-19 wants to cancel its planned interim report, according to a media report. The background to this is, according to the report, also the great public interest: A summary report does not yet contain all the details, the head of the WHO mission to the Chinese city of Wuhan, Ben Embarek, told the Wall Street Journal (WSJ). But because there is so much interest, the announced interim report without all the details would “not satisfy the curiosity of readers,” WSJ quotes Embarek as saying.
WHO chief Tedros Adhanom Ghebreyesus had announced in mid-February that the expert group would publish an interim report on the visit to Wuhan – but this is still pending. Just like a planned full report. Both are now to appear together, Embarek told the report. The final report “will be published in the coming weeks and will include key findings,” a WHO spokesperson said, according to the report.
A group of about 25 international scientists also issued a public letter calling for a new mission to Wuhan. In their view, the WHO team that traveled to China last month did not gain sufficient access to adequately investigate possible sources of the COVID-19, said the letter published by WSJ. ari
The US think tank Heritage Foundation has removed Hong Kong from its ranking of the world’s freest business locations. The Chinese special administrative region will now be added to China, dpa reported on Thursday. From 1995 to 2019, Hong Kong was consistently at the top of the ranking. In 2020, it had been replaced by Singapore at the top of the listing. China is ranked 107th in the 2021 edition.
The think tank said the index of the freest economies only reflected “economic freedom in independent countries where governments have sovereign control over economic policy”. In Hong Kong, policy is “ultimately controlled from Beijing,” said the Heritage Foundation.
The ranking of the freest business locations is based on 12 indicators. According to the Heritage Foundation, a business location is particularly free if, for example, property rights are protected, the tax burden for companies and individuals is low, and government spending is moderate. It also looks at whether entrepreneurs are not hampered by too much regulation, whether there are low barriers to the labor market and the greatest possible freedom to invest and trade prevail. nib
China has reacted cautiously to Lithuania’s announcement that it wants to leave the 17+1 format. The news has been noted, Foreign Ministry spokesman Wang Wenbin said at a press conference yesterday. Wang took a clear stance against the plan mentioned by Lithuania’s government to open a business mission in Taiwan: “We are firmly against the mutual establishment of official missions and official exchanges in all forms between the Taiwan region and countries with diplomatic relations with China, including Lithuania.”
The Lithuanian side is “strongly” urged to stay true to the “one-China principle” and not do anything “detrimental to bilateral political trust,” Wang said.
Regarding the cooperation between Beijing and 17 East and Central European countries (CEEC), Wang said China is not dominant in it. It was a “principle of voluntary consultation”. The cooperation has led to “fruitful results”.
Lithuania had previously announced its intention to withdraw from the 17+1 format. The cooperation program between Beijing and the CEEC had brought Lithuania “almost no advantages”, according to the EU and Nato state’s foreign minister Gabrielius Landsbergis. ari
According to a report by the National Coal Association of China, China’s coal consumption will increase by six percent in the next five years. According to the report, coal production will also increase by five percent to 4.2 billion tons by 2025. Demand for coal will remain high due to economic growth, a spokesman for the association told the business portal Caixin.
The People’s Republic is the world’s largest producer of coal-fired electricity. Its coal-fired capacity is over 1,000 gigawatts, about half the global capacity. Last year, China added nearly 30 gigawatts of new coal-fired capacity to the grid. At the same time, power plant capacity utilization fell from 61 to 50 percent between 2011 and 2020. nib
Switzerland and China want to expand their cooperation in the financial market sector. Finance Minister Ueli Maurer recently held a virtual meeting with his Chinese counterpart and Vice Prime Minister Liu He, according to the Federal Department of Finance (FDF). The two ministers discussed prospects for deepening bilateral relations in the areas of stock exchange trading, sustainable financial services, asset management, and digital central bank money.
Representatives of the respective central bank and financial market supervisory authority also took part in the online meeting. Representatives of the financial sector were also present from the Swiss side, FDF said. “Parallel to the existing free trade agreement, the financial market relations between the two countries are also to be further intensified,” the statement continued. ari
It’s always the same protocol ritual, celebrated annually on March 5. This Friday, China’s Premier Li Keqiang will open the mammoth meeting of the National People’s Congress with his accountability report and the key data for the new five-year plan and this time also for a 15-year plan. Thousands of delegates are already waiting in the Great Hall of the People when China’s seven most powerful men march up shortly before nine o’clock. Head of state Xi Jinping leads his Politburo Standing Committee at a distance of barely two meters. He lets himself be called “the core” (核心) because everything has to revolve around him. Premier Li, number 2, sits to his left in the front row of the presidium. The rest of the seven take turns sitting to the left and right of the core.
Only Xi and Li are known abroad. But it is worth taking a closer look at number 5. The 65-year-old Wang Huning is an exception among the technocrats and apparatchiks of the domestic leadership. He is the only intellectual without government experience. He has served Xi as chief adviser and speechwriter since 2012. Wang has been so since 1995, first for party leader Jiang Zemin and then for Hu Jintao (2002 to 2012). He rose in the service of three rulers, preparing their theories for them, which they passed off as their ultimate advancement of Marxism. Jiang promulgated the guidelines for modernizing the party as the “Triple Representation”, Hu his “Scientific Development” for a harmonious society. Xi shines with”China’s Dream to Revive the Nation.”
A graying party official once revealed to me in Beijing, “Wang’s handwriting is hidden in all these teachings.” That worked because everyone was aiming to make China the dominant socialist world power while safeguarding one-party rule. That had also been Wang’s dream since he became the youngest professor of political science at Shanghai’s Fudan University in 1985 at the age of 30.
It is not the only reason Wang survived politically behind the bamboo curtain of power under three party leaders and climbed the ladder, from CC secretary to Politburo and Standing Committee member. More importantly, the boyish-looking, slender academic type mastered the art of denying himself. Although he always sat next to his respective president at many dozens of international meetings, he did not attract attention for many years. Interest in him awoke only when the New York Times described Wang as a behind-the-scenes “spin doctor” or the Wall Street Journal discovered in him the “classic type of Confucian civil servant scholar” who “devoted his life to the emperor”.
China experts in the US lament how little they know about China’s leadership today. Since Wikileaks revealed what high-ranking Chinese once told US diplomats, nothing is getting through from China’s top elite.
Wang is also loyal, does not deviate even one iota from a stereotypical party Chinese in official speeches. He gives no interviews. Yet, he could talk like no one else. As dean of international politics at Fudan, he coached his students in British oratory and won first prize with them twice at the Asian Universities Debating Competition in Singapore in 1988 and 1993. Before 1995, he wrote more than a dozen books that made a splash, and China’s leaders brought him to Beijing in 1995 to join the CC’s Political Research Staff. From 2002 to 2020, he served as director of the most important advisory body for the highest party elite.
The enormously well-read Wang, who once studied French for five years, published the book “A Political Life” in January 1995 with hundreds of his diary entries from January to December 1994. He recommended reading Alexis de Tocqueville’s analysis of the French Revolution, “The Old Regime and the Revolution,” because of its current relevance for China. Eighteen years later, the Politburo prescribes the book as required reading for all Party members to answer the question: “Why is it that it is precisely in times of reform when a regime sets out to correct aberrations, that the most dangerous mixes for its survival occur?” Wang was also the first to deal with US political scientist Joseph Nye and his theory of “soft power”, thinking about the “dream” of letting China become strong. He also devoted himself to Deng Xiaoping’s statement that state sovereignty (guoquan) must take precedence over the protection of human rights (renquan), an issue that Xi Jinping has made the absolute maxim of his policy.
Wang’s out-of-print books are cult. His 1991 “USA Fights USA” (美国反对美国) was offered for sale by China’s online antiquarian Kungfz.com for 16,666 yuan, 3.000 times its former retail price after Wang wrote it as a visiting scholar at Iowa and Berkeley universities after spending six months in the US in 1988. “I visited more than 30 cities and 20 universities,” Wang said. He found a nation torn apart and full of contradictions, but at the same time achieving great things. He said he wanted to explain the phenomenon of why China lagged behind with many thousands of years of history, while the US became a world power after only 200 years. He neither demonized nor idealized the USA but described its contradictions. China’s leadership today looks at the US with just as much love-hate.
After 1986, many critically posed questions made Wang an advocate of the New Authoritarianism school (新权威主义). Socialist states, he argued, were caught between their former centralization of power and the demand for political reform and democracy. To avoid descending into instability, they would need an authoritarian system of order and rule for the transition. Wang envisions an “enlightened autocracy” that allows for a “highly effective distribution of social resources” and “rapid economic growth”. His boss, Xi, probably sees this in a similar light, but not the goal Wang once set himself of achieving more democracy. It was only a small step from the New Authoritarianism to the walling-in police state dictatorship. I wonder what Wang is thinking about that today.
Three thousand people in one room? We COVID-impaired Germans would call that a superspreader event. Yet in China, the pandemic clocks tick differently. In Beijing, 3000 delegates are gathering for this year’s “National People’s Congress”. All of them have been vaccinated with Sinopharm. But what if someone in the room is infected?
The People’s Congress started on time this Friday morning. The official Beijing reported 2953 delegates, 2907 were registered yesterday at noon. The “people’s representatives” want to discuss the fate of their country for only seven days this year. The usual two weeks of deliberations seemed too risky even to Beijing. Frank Sieren has evaluated the traditional accountability and work report of the government.
The congress will focus on the government’s plans for the next few years, the 14th Five-Year Plan and the outlook until 2035. The China.Table team has already analyzed the plans for you in the past few days. If you want to read it again: Click here for the China.Table archive. Of course, we will follow the concrete changes in the course of the next week.
For the past eight years, Wang Huning has been President Xi Jinping’s chief advisor and speechwriter; you could say Wang is Beijing’s intellectual head. Where he comes from, what he thinks, and how powerful he is, Johnny Erling has brought together for you in the Column.
First, London banned the Chinese State broadcaster CGTN, then the German state media authorities followed suit. Now, Paris has granted a broadcasting license, and it looks like the permit will put CGTN back on the air across Europe under European law. A political victory for Beijing. An embarrassment for the European Union, with its inconsistent and fractured regulation that benefits the clever whenever they want to advance their interests.
The Czech Republic should also be mentioned in this context. Germany’s neighbor to the south is currently struggling particularly desperately with the pandemic – and is now considering, in its distress, starting to buy the Chinese vaccine – apart from the currently agreed upon European – but not functioning – collective purchases. Yet, as Marcel Grzanna writes, the Czechs haven’t really had any good experiences with China recently.
The bilateral relations of the individual EU members with China are worthy of very special consideration by China.Table. A few days ago, Amelie Richter looked at Italy. We now continue this series with Marcel’s analysis.
I wish you an enjoyable read and a relaxing weekend.
You have to imagine the government’s work report as a gigantic mobile that thousands of people have balanced over the past weeks and months. Each political area naturally wants to be mentioned first in order to make it clear that its own topic has the greater weight in each case. So it is a matter of deciding on order of emphasis. Thus, the report, written in clear language, is certainly an insightful reflection of the political situation.
The report begins with a review of the past year. The problem areas are named: Recovery of the economy after COVID is not yet fully accomplished. Consumption needs to be boosted further. Investments are not sustainable enough. Too many obstacles are still being placed in the way of small and medium-sized enterprises. And it is not getting any easier to maintain the level of employment. But innovation must also be increased, and the “serious” deficits of the local government must be reduced.
But how is it to continue over the next five years? Productivity should grow faster than GDP. Unemployment must remain stable. Prices, too. China’s research and development budget is to be “over 7 percent” higher than in the past five years. The share of manufacturing in the economy is to remain stable. China is also to be further digitized. Agricultural land must remain the same size (120 million hectares). However, it will be easier for people moving from the countryside to the city to get a residence permit. New centers are to be developed. The order is important here: 1st place: Beijing-Tianjin-Hebei followed by the Yangtze Economic Belt and Greater Bay Area.
State-owned enterprises are to be further reformed. A better environment for private enterprises is to be created. 24 percent of China’s land area is to be forested. Energy consumption per capita is to be reduced by 13.5 percent, CO2 emissions by 18 percent in relation to GDP (“carbon intensity”). In addition, the government is talking about higher incomes, better schools, and a better health system. Even more, the government promises a stable energy supply and wants to guarantee 650 million metric tons of grain reserves.
The accountability report also addresses what 2021 will look like. The main points: The targeted growth should be over six percent, more than eleven million new urban jobs should be created, the urban unemployment rate should not rise above 5.5 percent, inflation should not exceed three percent. The government is also aiming for a steady increase in exports and imports, a balanced balance of payments, steady growth in incomes, and better environmental protection. Energy consumption is to be reduced by three percent per unit of GDP, and the CO2 emissions of the biggest polluters are to be cut.
In macroeconomic terms, Beijing promises “no sharp turns”. Debt is not to exceed 3.2 percent of GDP. The central government continues to cede power: local governments get 7.8 percent more money. Small taxpayers will remain exempt from VAT. Small businesses and sole proprietorships should find it easier to get loans. The corresponding credit volume will be increased by more than 30 percent to facilitate start-ups. Electricity prices are to fall, especially for small firms. The administration is to be further digitalized, and state-owned enterprises are to be reformed more quickly.
Spending on basic research will increase by 10.6 percent. Beijing promises 75 percent tax relief for research & development companies, 100 percent for R&D by manufacturing companies. Consumer industries such as health care, culture, tourism, and sports are to be promoted, online consumption expanded, while neighborhood stores are to be preserved. 53.000 small communities are to receive redevelopment funds. In rural areas, poverty is to be further combated and agriculture developed in order to ensure a secure supply of food.
The steady growth of imports and exports is planned. One wants to promote cross-border online Trade for small companies. The negative list for foreign investments will be reduced. The Hainan Free Trade Zone will be further expanded. The same goes for the BRI, the new Silk Road. On multilateral cooperation, Premier Li says: Implement the RCEP Asian Free Trade Area and the EU-China Investment Protection Agreement “expeditiously”. Beijing wants to “accelerate” FTA negotiations with Japan and South Korea. It is “actively considering” membership in the trans-Pacific TPP11 – and wants to ensure the growth of Sino-American economic relations “based on mutual benefit and mutual respect”.
The recent history of the Czech football club Slavia Prague is suitable for the script of a melodrama with a happy ending. The leading roles are played by a run-down traditional club on the brink of bankruptcy and an investor from the Far East. The short version of the story goes like this: Slavia was on the verge of having to stop playing due to a lack of money until a Chinese company took over the helm and used its money to nurture the club so that it won the championship three times after almost ten years without winning a title, like a phoenix rising from the ashes. The long version of the story is a little more complicated, but details won’t matter in football in a few years anyway. What Slavia Prague will have forever are the titles – thanks to Chinese capital.
Admittedly, such a script would not be particularly creative. But it is based on true events and is emblematic of the hopes and expectations that Chinese investors spark with their money in many parts of the world. The relationship between the Czech Republic and the People’s Republic of China has been decisively shaped by such hopes and expectations in recent years.
They were particularly encouraged by Czech Head of State Miloš Zeman. The president had visited the People’s Republic twice within a short period of time a few years ago to pave the way for the expansion of strategic cooperation between the two states. He had come to China to learn how to accelerate economic growth and stabilize society, rather than to lecture his hosts on the market economy and human rights, he once said – music to the ears of the Communist Party. And indeed, the plan seemed to be working. China’s leader Xi Jinping made a return visit in 2016, and Zeman announced shortly after that they had reached agreements on investment and trade worth €10 billion.
However, this volume has not yet been realized. This is also because the private multinational CEFC China Energy, which was supposed to set up and handle the deals, failed to meet its obligations and went bankrupt at the beginning of 2020. Czech President Zeman had even appointed the company’s CEO as one of his economic advisors. Meanwhile, the man is behind bars in China for fraud. Outstanding debts took over the state investment company CITIC already since 2018. But the state-owned company has also failed to show any proactive commitment to expanding economic relations.
So far, only an estimated ten percent of the announced mega sum has flowed, including the money for the takeover of Slavia Prague. “The expectations of possible Chinese investment were completely exaggerated and in part unrealistic. This has contributed to growing frustration on the Czech side,” says Richard Turcsanyi, who studies China’s relations with mainly Eastern European states for the Sinophone Borderlands research project at Palacky University in Olomouc. President Zeman has long since made no secret of his displeasure but nevertheless took part in the meeting of the 17+1 format between Beijing and several Central and Eastern European states in February.
The lack of economic stimulus set the stage for a deterioration in relations, which have visibly fractured in recent years. In 2018, Czech security authorities warned of Chinese technology in the rollout of the 5G network, triggering customary threat reflexes in China. What followed was a diplomatic ham-fisted comedy in which China’s ambassador Zhang Jianmin and Czech Prime Minister Andrej Babiš first spoke to each other, only to clash violently shortly after. Zhang had publicly portrayed the course of the conversation in a completely different way than Babiš had perceived it, whereupon the Czech called the ambassador a “liar”.
Zhang came under fire again two years later for writing a threatening letter to the now-deceased Czech Senate Speaker Jaroslav Kubera because he was planning a visit to Taiwan. Prime Minister Babiš then suggested that China should replace the ambassador. Kubera remained in office, but his efforts were not crowned with success. The new speaker of the Senate didn’t seem to care about China’s sensitivities either and traveled to the island with an 89-strong delegation last summer. It was a refresher visit with a symbolic character. Back in the 1990s, the Czech Republic maintained closer relations with Taiwan than most other European states.
Once again, Chinese threats followed that the Czech Republic would pay dearly for such provocations. But in fact, China lacks the means, as researcher Turcsanyi of Sinophone believes. Only about two percent of Czech exports went to the People’s Republic. Most of that is integrated auto parts in vehicles made by Skoda, which is part of the Volkswagen Group. “This, of course, makes it easier for Czech politicians to go on a confrontation course with China. Accordingly, they play the anti-Chinese card and could succeed with it in the parliamentary elections later in the year,” Turcsanyi says.
Leading the way is Prague’s mayor, Zdenek Hrib, who put the twinning agreement with Beijing to the test. The agreement requires Prague to recognize the “One China” policy. Hribs, however, considered this an encroachment on his own sovereignty and offered to continue without the Taiwan clause. China refused, whereupon the mayor terminated the partnership. Recently, Hrib followed up in an interview. He said he felt a moral duty to point out “that China is an unreliable business partner”.
Czech mistrust of the People’s Republic is also the result of growing Chinese influence on the local media. The media group Empresa has been under Chinese ownership since 2015. At its TV station TV-Barrandov and several magazines (Tyden, Instinkt), reporting on China has changed significantly for the better as a result. “Not only did all negative mentions of China disappear (in these media sources), but so did neutral reporting. This led to these media outlets reporting only positively about China,” Ivana Karáskova summarizes the results of a study by China Observers in Central and Eastern Europe (CHOICE). The composition of the topics covered had also changed and was increasingly aligned with Beijing’s interests.
So far, this has not led to the desired success on a broad level. “Xinjiang, Hong Kong, wolf diplomacy – all these issues have caused the perception of China in the Czech Republic to deteriorate further,” says Turcsanyi. He also says that the coverage in those media that are not owned by a Chinese investor is very critical.
But Chinese strategies are long-term and consistently pursue their goal. In April 2020, for example, the CITIC Group acquired a controlling interest in Médea, a company that places advertising in Czech companies and is one of the market leaders in the country. This provides the Chinese government with another tool to sway public opinion in its favor. If a newspaper does not report in China’s favor, it faces the threat of having important advertising revenues withdrawn. Turcsanyi: “Even if Chinese investment in the Czech Republic is smaller than that from Japan or Korea, for example, the takeover of Médea has caused a stir and led to a legitimate debate about how much Chinese influence on our media we want to accept.” Médea did not respond to an inquiry from China.Table.
Chinese state broadcaster Chinese Global Television Network (CGTN) is once again allowed to broadcast in Europe. The French media supervisory authority CAS granted CGTN a broadcasting permit. According to information from China.Table, the German side is now also checking whether the station will be fed back into the German network. The responsible media institutions are in exchange with CSA about the documents submitted by CGTN.
Under French law, non-European channels may be operated as long as the programs are broadcast via French satellites and the data transmission is located in France, CSA explained the decision. CGTN met these two conditions and therefore had the right to broadcast. According to the ruling, CGTN has been broadcasting in Europe since 2016 from a satellite owned by French operator Eutelsat. “These channels can be broadcast freely without prior review, but French audiovisual communication laws must be respected,” the authority’s notice said.
The broadcasters must not distribute content that includes “incitement to hatred and violence” and must guarantee “human dignity and honesty, independence and pluralism of information,” the media authority said. The CSA says it will pay particular attention to CGTN’s compliance with the regulations.
With the French license, CGTN is also accessible in Great Britain again. The basis for this is the Agreement on Transfrontier Television, a treaty made by the Council of Europe in Strasbourg, to which Great Britain also belongs. This guarantees freedom of expression, freedom of reception, and freedom of retransmission of television programs licensed in one of the contracting states.
The British broadcasting authority Ofcom had revoked the broadcasting license of the English-language foreign broadcaster CGTN at the beginning of February due to political influence on the program. Beijing reacted immediately to the decision in London and withdrew the broadcasting license of the British television station BBC World News in mainland China and Hong Kong.
In Germany, CGTN was fed into the German network by cable network operator Vodafone, among others. After the withdrawal of the license in Great Britain, Vodafone suspended the program and referred to “technical malfunctions” via a freeze-frame. ari/grz
China plans to increase its military budget again at a rate similar to “normal” years, despite the high cost of economic recovery in the wake of the COVID pandemic. Chinese experts expect an increase of around seven percent this year, according to state media, as reported by the dpa news agency. In 2020, China had spent ¥1.27 trillion (€147 billion) on the military. With an increase of seven percent, this would be around ¥1.36 trillion (€158 billion) in 2021.
China usually aligns military budget growth with increases in economic output. Last year was an exception when the National People’s Congress, which did not meet until May, increased the military budget by 6.6 percent. But the economy grew by only 2.3 percent because of the pandemic.
By 2021, the Chinese provinces have reported growth targets of between six and ten percent to Beijing (China.Table reported). Therefore, seven percent more money for the People’s Liberation Army (VBA) would be back within the usual range until 2019.
In 2019, the last “normal” year before the pandemic, the economy grew by just over six percent, while the defense budget was increased by 7.5 percent. According to a study by the US Department of Defense, the official military budget was thus around 1.3 percent of economic output.
For many years China has had the second-largest military budget in the world behind the USA world’s second-largest military budget. Washington spent $732 billion on its armed forces in 2019. Even if – as many experts believe – China, in fact, spends more on the military than the official budget indicates, it would still be a distant second. The Pentagon estimates that China spent more than $200 billion in 2019. The Stockholm International Peace Research Institute (SIPRI) even estimates $240 billion in a recent study. According to SIPRI, expenditure not included in the military budget includes payments for research, the paramilitary People’s Armed Police, construction projects, and pensions. What makes the comparison with other countries even more difficult is that many Chinese weapons systems are cheaper than their equivalents in industrialized countries like the US.
From 1989 to 2015, China’s military budget increased by double-digit percentages every year. President Xi Jinping, also chairman of the powerful Central Military Commission, limited these increases to single digits. Xi wants to create a modern military force on par with the United States by 2027, the 100th anniversary of the founding of the People’s Liberation Army. ck
The group of WHO experts investigating the origins of COVID-19 wants to cancel its planned interim report, according to a media report. The background to this is, according to the report, also the great public interest: A summary report does not yet contain all the details, the head of the WHO mission to the Chinese city of Wuhan, Ben Embarek, told the Wall Street Journal (WSJ). But because there is so much interest, the announced interim report without all the details would “not satisfy the curiosity of readers,” WSJ quotes Embarek as saying.
WHO chief Tedros Adhanom Ghebreyesus had announced in mid-February that the expert group would publish an interim report on the visit to Wuhan – but this is still pending. Just like a planned full report. Both are now to appear together, Embarek told the report. The final report “will be published in the coming weeks and will include key findings,” a WHO spokesperson said, according to the report.
A group of about 25 international scientists also issued a public letter calling for a new mission to Wuhan. In their view, the WHO team that traveled to China last month did not gain sufficient access to adequately investigate possible sources of the COVID-19, said the letter published by WSJ. ari
The US think tank Heritage Foundation has removed Hong Kong from its ranking of the world’s freest business locations. The Chinese special administrative region will now be added to China, dpa reported on Thursday. From 1995 to 2019, Hong Kong was consistently at the top of the ranking. In 2020, it had been replaced by Singapore at the top of the listing. China is ranked 107th in the 2021 edition.
The think tank said the index of the freest economies only reflected “economic freedom in independent countries where governments have sovereign control over economic policy”. In Hong Kong, policy is “ultimately controlled from Beijing,” said the Heritage Foundation.
The ranking of the freest business locations is based on 12 indicators. According to the Heritage Foundation, a business location is particularly free if, for example, property rights are protected, the tax burden for companies and individuals is low, and government spending is moderate. It also looks at whether entrepreneurs are not hampered by too much regulation, whether there are low barriers to the labor market and the greatest possible freedom to invest and trade prevail. nib
China has reacted cautiously to Lithuania’s announcement that it wants to leave the 17+1 format. The news has been noted, Foreign Ministry spokesman Wang Wenbin said at a press conference yesterday. Wang took a clear stance against the plan mentioned by Lithuania’s government to open a business mission in Taiwan: “We are firmly against the mutual establishment of official missions and official exchanges in all forms between the Taiwan region and countries with diplomatic relations with China, including Lithuania.”
The Lithuanian side is “strongly” urged to stay true to the “one-China principle” and not do anything “detrimental to bilateral political trust,” Wang said.
Regarding the cooperation between Beijing and 17 East and Central European countries (CEEC), Wang said China is not dominant in it. It was a “principle of voluntary consultation”. The cooperation has led to “fruitful results”.
Lithuania had previously announced its intention to withdraw from the 17+1 format. The cooperation program between Beijing and the CEEC had brought Lithuania “almost no advantages”, according to the EU and Nato state’s foreign minister Gabrielius Landsbergis. ari
According to a report by the National Coal Association of China, China’s coal consumption will increase by six percent in the next five years. According to the report, coal production will also increase by five percent to 4.2 billion tons by 2025. Demand for coal will remain high due to economic growth, a spokesman for the association told the business portal Caixin.
The People’s Republic is the world’s largest producer of coal-fired electricity. Its coal-fired capacity is over 1,000 gigawatts, about half the global capacity. Last year, China added nearly 30 gigawatts of new coal-fired capacity to the grid. At the same time, power plant capacity utilization fell from 61 to 50 percent between 2011 and 2020. nib
Switzerland and China want to expand their cooperation in the financial market sector. Finance Minister Ueli Maurer recently held a virtual meeting with his Chinese counterpart and Vice Prime Minister Liu He, according to the Federal Department of Finance (FDF). The two ministers discussed prospects for deepening bilateral relations in the areas of stock exchange trading, sustainable financial services, asset management, and digital central bank money.
Representatives of the respective central bank and financial market supervisory authority also took part in the online meeting. Representatives of the financial sector were also present from the Swiss side, FDF said. “Parallel to the existing free trade agreement, the financial market relations between the two countries are also to be further intensified,” the statement continued. ari
It’s always the same protocol ritual, celebrated annually on March 5. This Friday, China’s Premier Li Keqiang will open the mammoth meeting of the National People’s Congress with his accountability report and the key data for the new five-year plan and this time also for a 15-year plan. Thousands of delegates are already waiting in the Great Hall of the People when China’s seven most powerful men march up shortly before nine o’clock. Head of state Xi Jinping leads his Politburo Standing Committee at a distance of barely two meters. He lets himself be called “the core” (核心) because everything has to revolve around him. Premier Li, number 2, sits to his left in the front row of the presidium. The rest of the seven take turns sitting to the left and right of the core.
Only Xi and Li are known abroad. But it is worth taking a closer look at number 5. The 65-year-old Wang Huning is an exception among the technocrats and apparatchiks of the domestic leadership. He is the only intellectual without government experience. He has served Xi as chief adviser and speechwriter since 2012. Wang has been so since 1995, first for party leader Jiang Zemin and then for Hu Jintao (2002 to 2012). He rose in the service of three rulers, preparing their theories for them, which they passed off as their ultimate advancement of Marxism. Jiang promulgated the guidelines for modernizing the party as the “Triple Representation”, Hu his “Scientific Development” for a harmonious society. Xi shines with”China’s Dream to Revive the Nation.”
A graying party official once revealed to me in Beijing, “Wang’s handwriting is hidden in all these teachings.” That worked because everyone was aiming to make China the dominant socialist world power while safeguarding one-party rule. That had also been Wang’s dream since he became the youngest professor of political science at Shanghai’s Fudan University in 1985 at the age of 30.
It is not the only reason Wang survived politically behind the bamboo curtain of power under three party leaders and climbed the ladder, from CC secretary to Politburo and Standing Committee member. More importantly, the boyish-looking, slender academic type mastered the art of denying himself. Although he always sat next to his respective president at many dozens of international meetings, he did not attract attention for many years. Interest in him awoke only when the New York Times described Wang as a behind-the-scenes “spin doctor” or the Wall Street Journal discovered in him the “classic type of Confucian civil servant scholar” who “devoted his life to the emperor”.
China experts in the US lament how little they know about China’s leadership today. Since Wikileaks revealed what high-ranking Chinese once told US diplomats, nothing is getting through from China’s top elite.
Wang is also loyal, does not deviate even one iota from a stereotypical party Chinese in official speeches. He gives no interviews. Yet, he could talk like no one else. As dean of international politics at Fudan, he coached his students in British oratory and won first prize with them twice at the Asian Universities Debating Competition in Singapore in 1988 and 1993. Before 1995, he wrote more than a dozen books that made a splash, and China’s leaders brought him to Beijing in 1995 to join the CC’s Political Research Staff. From 2002 to 2020, he served as director of the most important advisory body for the highest party elite.
The enormously well-read Wang, who once studied French for five years, published the book “A Political Life” in January 1995 with hundreds of his diary entries from January to December 1994. He recommended reading Alexis de Tocqueville’s analysis of the French Revolution, “The Old Regime and the Revolution,” because of its current relevance for China. Eighteen years later, the Politburo prescribes the book as required reading for all Party members to answer the question: “Why is it that it is precisely in times of reform when a regime sets out to correct aberrations, that the most dangerous mixes for its survival occur?” Wang was also the first to deal with US political scientist Joseph Nye and his theory of “soft power”, thinking about the “dream” of letting China become strong. He also devoted himself to Deng Xiaoping’s statement that state sovereignty (guoquan) must take precedence over the protection of human rights (renquan), an issue that Xi Jinping has made the absolute maxim of his policy.
Wang’s out-of-print books are cult. His 1991 “USA Fights USA” (美国反对美国) was offered for sale by China’s online antiquarian Kungfz.com for 16,666 yuan, 3.000 times its former retail price after Wang wrote it as a visiting scholar at Iowa and Berkeley universities after spending six months in the US in 1988. “I visited more than 30 cities and 20 universities,” Wang said. He found a nation torn apart and full of contradictions, but at the same time achieving great things. He said he wanted to explain the phenomenon of why China lagged behind with many thousands of years of history, while the US became a world power after only 200 years. He neither demonized nor idealized the USA but described its contradictions. China’s leadership today looks at the US with just as much love-hate.
After 1986, many critically posed questions made Wang an advocate of the New Authoritarianism school (新权威主义). Socialist states, he argued, were caught between their former centralization of power and the demand for political reform and democracy. To avoid descending into instability, they would need an authoritarian system of order and rule for the transition. Wang envisions an “enlightened autocracy” that allows for a “highly effective distribution of social resources” and “rapid economic growth”. His boss, Xi, probably sees this in a similar light, but not the goal Wang once set himself of achieving more democracy. It was only a small step from the New Authoritarianism to the walling-in police state dictatorship. I wonder what Wang is thinking about that today.