Omid Nouripour doesn’t mince matters: Germany needs to show more strength in its relations with China, says the Green Party foreign policy expert. In the long run, dialogue alone simply won’t suffice. In his opinion, the political agreement to finalize the EU investment agreement with China (CAI) was signed too quickly – Berlin and Paris had agreed on the deal with Beijing without consulting the other member states. The German automobile industry has also earned its share of criticism: It needs to “get out of its hammock” and make greater use of its innovative strength in the competition with China, Nouripour demands in the interview with Michael Radunski.
The EU Chamber of Commerce in Beijing communicates much more diplomatically – also because the recipient is different. In this year’s position paper, the Chamber criticizes the growing tendency of the People’s Republic towards decoupling. China is harming itself by passing up the advantages of the international division of labor and the exchange with foreign specialists. The Chamber also has some advice for European companies in China. Finn Mayer-Kuckuk has analyzed the paper.
Big (climate) news sometimes comes in passing. In his speech to the UN General Assembly, Xi Jinping announced that China will no longer build new coal power plants abroad. That is good news for the fight against global warming – since Beijing is the last major backer of climate-harming coal power. The People’s Republic has also used coal financing to export excess capacity of its own coal industry overseas. Will Beijing keep its promise, or is it just creating loopholes?
We hope you enjoy our latest issue!
The world is in turmoil: the West is experiencing the greatest debacle in its recent history, while China’s rise seems almost unstoppable. What is happening?
We are witnessing the end of all power projection by the West. It was most recently shattered at the Hindu Kush. The West has failed – and China didn’t even have to do much to make it happen.
That sounds a bit like China is behind this debacle, which makes it basically the bad guy. Are you serious about this?
No, on the contrary. China’s rise is a blessing for humanity if China would abide by international rules and law. But more and more we see that this is not happening – be it in Hong Kong, in Xinjiang, or the South China Sea. It is simply not enough to profess multilateralism whenever it is convenient and otherwise blatantly ignore arbitration rulings, such as those on the South China Sea, when its power allows it.
What does this mean for Europe?
The EU has built a triangle consisting of partner, competitor, and systemic rival. That is not wrong, but we must be clear that this is not an even triangle. Sometimes China presents itself as a partner, sometimes as a competitor. On the other hand, China is always a systemic rival.
And what follows from this?
First, it means that it finally must be acknowledged. And second, it means that dialogue and toughness are needed. Cooperation on the human task of climate change, but toughness on human rights violations, distortions of competition, or threats against neighboring nations.
That almost sounds as if Germany is not doing that. How do you rate the China policy under Chancellor Angela Merkel?
We have the following situation in foreign policy: with Russia, the SPD is the problem, and with China, it’s the Chancellor’s Office.
In what way?
There is a great deal of dialogue. But when it comes to a coherent EU against China or curbing Beijing’s influence, nothing at all happens.
What exactly do you mean by that?
Gladly. The CAI investment agreement. For years, we have worked to make the 17+1 format less important and to prevent the EU from being divided, because, in the end, China always has the upper hand in bilateral exchanges. We have achieved a lot in this respect recently. But then this CAI comes along – and many people are now asking me whether we now want a 2+1 format, with Berlin, Paris, and Beijing sorting everything out amongst themselves. Not to mention that the CAI also lacks substance, for example on the subject of forced labor.
But the CAI is not a German but a European agreement with China.
True, but it was massively pushed by Germany during its Council Presidency. The German Government has pressed to close the deal by any means. In its current form, the CAI belongs in the trash.
Let us get back to your findings: The EU states are divided in their position towards China. How do you plan to change that?
The main problem is decision-making within the EU, the unanimity rule. If one state backs away, Europe is blocked, then, we are no longer able to ratify anything. It is worth taking a look at Europe’s history to see how it could work, namely with variable geometries: with a few states leading the way. Then the letterhead would no longer say Josep Borrell – High Representative of the Union for Foreign Affairs and Security Policy, but instead the names of 23 EU states, perhaps together with the UK and Canada. That would be a huge step forward.
Is Germany still not showing adequate effort in this respect?
Yes. Yes. Yes. Germany has even contributed to the fact that the EU has allowed itself to be divided so easily. My impression is that the Chancellery has simply accepted this. By the way, Article 44 of the Lisbon Treaty already allows working with these different geometries. So we only have to do it.
Doesn’t Germany have a plan on how to deal with China?
No. And if it does, that plan is all talk, no strength. But that’s not how it’s going to work in the long run, whether it is about critical infrastructure, its growing influence, or other issues. You can’t deal with China the way Germany tries to.
Let’s stay very briefly with geopolitics. Xi Jinping presents the Chinese model as an alternative to the West and clearly distances himself from Western values. What do we have to do?
If the Chinese side officially proclaims a systemic competition, then we must finally pull our heads out of the sand and accept this competition.
How?
First, by recognizing it as competition – and stop pretending like there are no problems. Second, strengthening the EU, as I have already mentioned. And third, realizing that our democracy is at stake. As someone who grew up in an unjust state, I can assure you that our democracy is worth fighting for.
At this point, Beijing would point to its decades of economic growth and say that their people are doing better and better, getting richer and richer, and are allowed to do more and more. In short, they clearly have a better system.
Exactly, its systemic superiority is always emphasized by the Chinese and based on two points: First, they say, with their elections, they can plan much further ahead than the West. And second, they claim to be much more effective.
But neither of these things is true. The example of Hong Kong shows that a change of power in China even leads to a situation where international treaties are no longer adhered to. And the true efficiency of the Chinese system was clear to see at the beginning of the Corona pandemic. At that time, the global community lost precious time in the fight against the virus because it had to wait for the Party Congress in Hubei before Beijing took action against the virus. China lacks the culture of error that exists in democracies. Improvement through mistakes is not how the CCP makes decisions in China.
And a thing about Chinese economic growth: Again, it is a blessing that China has lifted hundreds of millions of people out of poverty. But in comparison, you always have to look at where you’re coming from. And it’s not a free pass to break international rules, not in Hong Kong, not in Xinjiang, not anywhere else.
If Beijing breaks treaties and rules like this, can China be trusted at all?
One of the biggest mistakes of the Obama administration was not getting involved in the Asian Infrastructure Investment Bank (AIIB). The Chinese are currently setting up several institutions, such as the AIIB, the Silk Road, and more, in an attempt to create parallel structures in which they call the shots. That is understandable in Machiavellian terms. But for the Americans to maintain distance and not trying to influence it from within is completely wrong. The American policy of decoupling is devastatingly wrong.
You can certainly see it that way, but allow me to make an observation. To me, it all sounds a bit like this: We can’t make it, but we blame others first and foremost. Now you are pointing at the Americans.
No. What I want to say is that you can only have as much influence as you are prepared to invest. The Chinese are showing us how it’s done; their commitment, but also their influence in international organizations, is steadily increasing. This starts at the General Assembly of the United Nations and certainly doesn’t stop at the International Organization for Standardization.
And are German politicians aware of this?
I’m a politician, and I’m talking about it right now.
Fair enough. Is the government aware?
We had a hearing at the Committee on Foreign Affairs on the subject of standardization, which was very exciting. But the government has shown no heightened interest in it. Shall I give you an example?
Please do.
E-gaming is a billion-dollar business. Twenty years ago, you could almost only buy games about Americans fighting in Iraq or defeating the Nazis. Today, it’s about the Chinese fleet defeating the Americans in the East China Sea. The reason behind this is that, for one thing, the Chinese have set new standards in e-gaming, and for another, there isn’t any major game developer left that doesn’t depend on Chinese stakeholders. And in the end, these are ways in which new narratives are being set for the systemic competition in the digital age.
And what are we supposed to do about it?
Understand that there is a problem in the first place – and then deal with it. We need to think sectorally about where we need to invest far more.
Germany hardly plays a role in the field of e-gaming, but it does in the automotive market. But when it comes to electromobility, you get the impression that as soon as Beijing turns to E, the German headquarters suddenly only talk about e-mobility. What does that say about the state of the German economy?
This is driving me nuts. Just a few days ago, I spoke to a relevant manager of a Chinese car manufacturer. He told me that they are now building the batteries that the Germans said couldn’t be done. In Germany, the carmakers get so many soft cushions from the government that they rest on them and believe their successes will last forever. They believe that innovations don’t have to be mass-produced. In addition, the Chinese are currently building charging stations: every 100 kilometers from Beijing to Shenzhen. At these stations, you don’t charge your battery forever, you just swap it out and keep driving. They’ve calculated that you’re 3.5 minutes faster that way than if you keep filling up with 60 liters. He told me that very proudly.
And what does that say about the German economy?
That they need to get the hell out of their hammock and use their own creativity and innovation instead of relying on cheating software. This is dramatic because the German automotive industry is a core pillar of German prosperity. Where is the pressure from German politics on industry to finally build that too?
Do we lose…
…yeah, yeah. We’re completely losing touch right now. And it is all the more likely that we will no longer be part of the next innovation stage. We can see this in the mobile communications sector and 5G, where no German company can offer the corresponding servers anymore. That cannot be allowed to happen to us with 6G.
Omid Nouripour is the representative of the German party Alliance 90/The Greens in the Foreign Affairs Committee of the German Bundestag. The 46-year-old was born in Iran.
The EU Chamber of Commerce in China fears a decline in the internationality of the Chinese market. As a result of this trend, its economy could lose dynamism and innovative strength: “The corresponding loss of competition on the market will also affect China’s ambitions to become a leader in high-tech industries,” writes Chamber President Jörg Wuttke in the introduction to the “European Business in China Position Paper 2021/2022”, published today. There is a risk that Beijing will abandon the courageous reforms that the country has been pushing ahead with since the 1970s.
The position paper of the EU Chamber is published annually and is a fixed institution in Beijing’s calendar. It bundles praise and complaints about the Chinese market of 1,700 member companies from all EU countries. This year, three topics dominate the extensive document, in particular:
The EU Chamber therefore also takes a critical position on “dual circulation”, the latest economic concept of the Chinese leadership. The idea behind it: One circuit is the commodity trade with foreign nations, i.e. integration into the global economy. The second circuit is the Chinese domestic economy, which should be able to function without the outside world if necessary. Both circuits are only meant to be loosely connected to avoid that outside investment and demand are driving growth. “The pursuit of self-reliance, however, runs counter to the spirit of comprehensive reform and opening up the economy,” the position paper warns.
For European companies operating in China, the ideas of the leadership generation under Xi Jinping are already having very concrete effects. The less the country trades with foreign nations and the less recognition international brands enjoy, the lower the sales opportunities. However, the Chamber also sees disadvantages for China: better goods are cheaper to obtain in the international division of labor. China is therefore missing out on a considerable potential for prosperity by trying to do everything on its own.
The Chamber, therefore, advises China to continue with its market-oriented reforms. Moreover, the country should continue its opening-up policy instead of rolling it back. While the tendency to decouple is understandable since the US, for its part, denies access to technology, China should not allow itself to be provoked into an extreme retaliation.
The chamber also attributes the trend of increasing isolation to the low number of foreigners in China. In particular, qualified employees from developed countries are becoming increasingly rare. Their numbers in Beijing have dropped from more than 100,000 to just over 60,000 since 2010. The chamber cites tiny Luxembourg, home to 300,000 foreign nationals, as a counterexample. The lack of diversity is seen as particularly harmful to innovation.
With concern, the Chamber also notes that economic policy decisions are now dictated by issues of national security. Local European banks, for example, fear that they will soon have to completely disconnect their computers in China from the global corporate network. “This increasingly limits their ability to offer cross-border services,” write members of the chamber’s finance working group. Some European banks have already left the Chinese market.
According to the current five-year plan, numerous other industries are also to become less dependent on foreign countries. According to the Chamber report, European companies from these industries report that their Chinese customers are becoming increasingly cautious. They are signaling that sourcing from foreign suppliers is becoming more difficult. Even if the effects are currently limited, the Chamber sees this trend with concern.
However, the current position paper also sees many industries on the upswing. “For those that contribute technology that China needs, the red carpet is being rolled out.” This includes, for example, technologies that serve to move away from coal. Or anything that upgrades the quality of its own industry, such as machinery, materials, or semiconductors. While undesirable industries find themselves in the “cargo hold”, desirable industries travel in the “business class” of the Chinese economy towards growth and profit.
The Chamber advises the local European subsidiaries to discuss the adaptation to these new framework conditions with their headquarters now. Because the companies in the “cargo hold” could be ejected sooner or later. “Localize or leave,” is the only choice for managers when this happens. Sole import or only final production for the Chinese market will then no longer be options.
The Chamber makes the following demands of China in light of these developments:
The Chamber makes the following demands of the EU:
The position paper also has advice for European companies:
In the big picture, however, the Chamber acknowledges that there are only limited options for EU companies on their own. In the age of wolf warriors and rising nationalism (China.Table reported), protectionist tendencies are among the overarching trends. This makes it all the more important for Chamber President Wuttke to oppose these tendencies.
“China will not build new coal-fired power projects abroad.” Instead, the People’s Republic wants to “step up support for other developing countries in developing green and low carbon energy” – this was announced by President Xi Jinping in his speech to the UN General Assembly on Tuesday. Climate and energy experts see the announcement as an important step. The People’s Republic was the last major state to finance coal projects abroad.
South Korea and Japan also announced their withdrawal from coal financing abroad in the recent past. And Western states and development organizations had already committed in recent years to no longer financing projects that were particularly harmful to the climate.
China had become the largest public financier of coal-fired power plants abroad in the past. With more than 44 billion euros, China’s two major development banks, the Export-Import Bank of China and the China Development Bank have financed coal-fired power in other countries over the past 20 years. This money was used to build 66 power plants, according to a Boston University database. Without these export credits, loans, and grants, many projects could not have been realized.
The climate consequences of Xi’s announcement should not be underestimated. Coal-fired power plants built abroad with Chinese state money since 2000 will emit twelve gigatons of CO2 during their 40-year lifespan (China.Table reported). That is more than China’s annual CO2 emissions.
Currently, coal projects backed by Chinese financing with a capacity of 40 gigawatts are still under development, according to Byford Tsang, an analyst at the climate think tank E3G. That is equivalent to Germany’s current coal capacity.
The financing of coal-fired power plants abroad has so far also served China’s industrial policy objectives. Chinese boilers, steam turbines, and generators were used in a large proportion in these projects. Chinese contractors were chosen in two out of three projects. This was intended to make use of excess capacities in Chinese industry. Xi’s announcement is thus also a signal to his own industry.
The announcement of providing more support for green and low-carbon energy projects will fall on open ears among foreign partners. Since 2000, major development banks of the People’s Republic have financed overseas solar projects with the equivalent of only €2.2 billion and wind energy projects with only €1 billion. However, €37.5 billion have flowed into hydropower projects.
Analysts also see Xi’s announcement as a “business opportunity”: China is the world’s largest producer of solar and wind power and has in the past announced plans to make the Belt and Road Initiative more sustainable.
Climate experts and activists praise China’s announcement as an important step in the fight against climate change. Li Shuo of Greenpeace East Asia sees Xi’s promise as a “good step forward”. However, the details are now important: “Does the announcement apply immediately? Does it only apply to state actors?”
Byford Tsang of E3G is also curious about the details. It is crucial whether the announcement also includes state and commercial banks – that would be one step more than the commitments made by the G7 countries. Western commercial banks continue to finance coal projects abroad.
Chinese banks have already “distanced themselves from new coal deals overseas” in recent months, following guidance from the political leadership, says Lauri Myllyvirta, energy analyst at think tank Centre for Research on Energy and Clean Air. But Myllyvirta also points out that China needs to be more specific about the announcement: “Chinese banks and firms play a major role [in the coal sector] in public and private debt financing, equity investment, equipment supply, etc.,” Myllyvirta writes.
According to him, the key implication of Xi’s statement is that “any new financing or equity investment commitments to coal power projects overseas would be toxic for any Chinese bank or power company.”
However, climate journalist and advisor Liu Hongqiao urges caution as Xi had not directly addressed financing. One must “wait for the official Chinese announcements” in this regard.
Experts agree that, in terms of climate policy, China’s domestic plans will become even more important in the future. The People’s Republic is the largest CO2 emitter in the world. Coal-fired power covers two-thirds of China’s power needs. China accounts for half of the coal-fired electricity generated worldwide. In the wake of the Covid pandemic, capacity was even expanded further to boost the economy.
In April, Xi had announced at a high-level climate summit that he would “strictly control” coal consumption by 2025. By 2030, the People’s Republic wants to begin a “gradual reduction in coal consumption,” Xi said. This was the first time China gave a specific date for dropping its coal consumption. However, to play its part in achieving the two-degree target, China would need to reduce coal demand “at a much faster rate than currently planned“, write experts of the Climate Action Tracker. It will be decisive whether Xi makes new commitments at the climate conference in Glasgow in November, or fleshes out his own climate plans.
For its part, the EU has explicitly decided against financing fossil fuels – including coal – with the new financing instrument for foreign and development policy, Global Europe (2021-27). Thus, the law of the 76 billion instrument includes an exclusion clause: activities that are “incompatible under the Paris Agreement or promote investment in fossil fuels” may not receive funds. Instead, the money will flow into the development of renewable energy.
In particular, the 53.5 billion European Fund for Sustainable Development (EFSD+), which provides funding, budgetary guarantees, and blending, only allows for “environmentally sustainable” investments, which are subject to strict due diligence.
The European Investment Bank has already decided in 2019 not to support any new financing for fossil fuel projects from 2021 onwards. According to the decision, the money is to be used increasingly for the development of clean energies, energy efficiency, and renewable energies. Collaboration: Charlotte Wirth
“It was a goosebump moment,” says Green Party politician Margarete Bause, looking back on her meeting with Ai Weiwei in 2014. The Chinese artist was under placed house arrest and was not allowed to leave the country for of his anti-government statements. “I asked him if it was of any use if Western politicians would come to China and address human rights.” He had replied that it was the only thing that gave people like him hope. The conversation moved her deeply and to this day remains “a mission” to stand up for human rights.
At the time, Bause was parliamentary group leader of the Green Party in the Bavarian state parliament and accompanied Minister-President Horst Seehofer on his trip to China. “Human rights were not on the agenda then.” She still managed to arrange a meeting with Ai – outside the schedule. Afterward, she looked into the human rights situation in China even more closely. In 2017, Bause then moved into the German parliament, where she became the Greens’ spokesperson for human rights and humanitarian aid.
The 62-year-old is passionate about her job, and she is particularly enthusiastic about meeting human rights activists from all over the world. Many are active under dangerous conditions, risking their lives. Bause finds conversations with them as rewarding but humbling at the same time, she says. She spent a large time of her life in Bavaria, where she also studied sociology. Through it, she learned to see social processes in a wider context.
“You can also use that very well in politics,” she explains. Germany’s China policy currently lacks this larger context, a coherent strategy. “So far, the statements and goals of the Ministry of Economics have often been different from those made by the Foreign Office or the Ministry of Development.” She points to the formula “dialogue and toughness” Green Party candidate for the chancellorship, Annalena Baerbock, formulated in spring in regard to dealing with China. Bause now finds allies for this approach in the other parliamentary groups in the German Bundestag. The perception of China is changing.
She advocates a more self-confident approach: “China is at least as dependent on Europe as vice versa.” Nevertheless, existing dependencies must be reduced and, if possible, no new ones created. Bause is optimistic that this can be achieved. During the last legislative period, she was particularly concerned about China’s human rights violations against the Uyghur minority.
That’s another reason why she is pushing for tougher supply chain laws. The law passed in July is just the beginning: “On a scale of zero to ten, we’re now at four.” Bause sees a lot of work left to be done and wants to continue campaigning for human rights after the election. “But gladly not in the same position, but on the side of the governing party,” Bause says with a mischievous smile. Paul Meerkamp
Two bugs on the moon: What looks like two oversized insects are blue shining drones. These flying objects are putting on a show in Yantai in the province of Shandong to mark the Moon Festival. One of the shapes they formed was a bridge in the night sky. The moon festival was celebrated on Tuesday under an impressive full autumn moon.
Omid Nouripour doesn’t mince matters: Germany needs to show more strength in its relations with China, says the Green Party foreign policy expert. In the long run, dialogue alone simply won’t suffice. In his opinion, the political agreement to finalize the EU investment agreement with China (CAI) was signed too quickly – Berlin and Paris had agreed on the deal with Beijing without consulting the other member states. The German automobile industry has also earned its share of criticism: It needs to “get out of its hammock” and make greater use of its innovative strength in the competition with China, Nouripour demands in the interview with Michael Radunski.
The EU Chamber of Commerce in Beijing communicates much more diplomatically – also because the recipient is different. In this year’s position paper, the Chamber criticizes the growing tendency of the People’s Republic towards decoupling. China is harming itself by passing up the advantages of the international division of labor and the exchange with foreign specialists. The Chamber also has some advice for European companies in China. Finn Mayer-Kuckuk has analyzed the paper.
Big (climate) news sometimes comes in passing. In his speech to the UN General Assembly, Xi Jinping announced that China will no longer build new coal power plants abroad. That is good news for the fight against global warming – since Beijing is the last major backer of climate-harming coal power. The People’s Republic has also used coal financing to export excess capacity of its own coal industry overseas. Will Beijing keep its promise, or is it just creating loopholes?
We hope you enjoy our latest issue!
The world is in turmoil: the West is experiencing the greatest debacle in its recent history, while China’s rise seems almost unstoppable. What is happening?
We are witnessing the end of all power projection by the West. It was most recently shattered at the Hindu Kush. The West has failed – and China didn’t even have to do much to make it happen.
That sounds a bit like China is behind this debacle, which makes it basically the bad guy. Are you serious about this?
No, on the contrary. China’s rise is a blessing for humanity if China would abide by international rules and law. But more and more we see that this is not happening – be it in Hong Kong, in Xinjiang, or the South China Sea. It is simply not enough to profess multilateralism whenever it is convenient and otherwise blatantly ignore arbitration rulings, such as those on the South China Sea, when its power allows it.
What does this mean for Europe?
The EU has built a triangle consisting of partner, competitor, and systemic rival. That is not wrong, but we must be clear that this is not an even triangle. Sometimes China presents itself as a partner, sometimes as a competitor. On the other hand, China is always a systemic rival.
And what follows from this?
First, it means that it finally must be acknowledged. And second, it means that dialogue and toughness are needed. Cooperation on the human task of climate change, but toughness on human rights violations, distortions of competition, or threats against neighboring nations.
That almost sounds as if Germany is not doing that. How do you rate the China policy under Chancellor Angela Merkel?
We have the following situation in foreign policy: with Russia, the SPD is the problem, and with China, it’s the Chancellor’s Office.
In what way?
There is a great deal of dialogue. But when it comes to a coherent EU against China or curbing Beijing’s influence, nothing at all happens.
What exactly do you mean by that?
Gladly. The CAI investment agreement. For years, we have worked to make the 17+1 format less important and to prevent the EU from being divided, because, in the end, China always has the upper hand in bilateral exchanges. We have achieved a lot in this respect recently. But then this CAI comes along – and many people are now asking me whether we now want a 2+1 format, with Berlin, Paris, and Beijing sorting everything out amongst themselves. Not to mention that the CAI also lacks substance, for example on the subject of forced labor.
But the CAI is not a German but a European agreement with China.
True, but it was massively pushed by Germany during its Council Presidency. The German Government has pressed to close the deal by any means. In its current form, the CAI belongs in the trash.
Let us get back to your findings: The EU states are divided in their position towards China. How do you plan to change that?
The main problem is decision-making within the EU, the unanimity rule. If one state backs away, Europe is blocked, then, we are no longer able to ratify anything. It is worth taking a look at Europe’s history to see how it could work, namely with variable geometries: with a few states leading the way. Then the letterhead would no longer say Josep Borrell – High Representative of the Union for Foreign Affairs and Security Policy, but instead the names of 23 EU states, perhaps together with the UK and Canada. That would be a huge step forward.
Is Germany still not showing adequate effort in this respect?
Yes. Yes. Yes. Germany has even contributed to the fact that the EU has allowed itself to be divided so easily. My impression is that the Chancellery has simply accepted this. By the way, Article 44 of the Lisbon Treaty already allows working with these different geometries. So we only have to do it.
Doesn’t Germany have a plan on how to deal with China?
No. And if it does, that plan is all talk, no strength. But that’s not how it’s going to work in the long run, whether it is about critical infrastructure, its growing influence, or other issues. You can’t deal with China the way Germany tries to.
Let’s stay very briefly with geopolitics. Xi Jinping presents the Chinese model as an alternative to the West and clearly distances himself from Western values. What do we have to do?
If the Chinese side officially proclaims a systemic competition, then we must finally pull our heads out of the sand and accept this competition.
How?
First, by recognizing it as competition – and stop pretending like there are no problems. Second, strengthening the EU, as I have already mentioned. And third, realizing that our democracy is at stake. As someone who grew up in an unjust state, I can assure you that our democracy is worth fighting for.
At this point, Beijing would point to its decades of economic growth and say that their people are doing better and better, getting richer and richer, and are allowed to do more and more. In short, they clearly have a better system.
Exactly, its systemic superiority is always emphasized by the Chinese and based on two points: First, they say, with their elections, they can plan much further ahead than the West. And second, they claim to be much more effective.
But neither of these things is true. The example of Hong Kong shows that a change of power in China even leads to a situation where international treaties are no longer adhered to. And the true efficiency of the Chinese system was clear to see at the beginning of the Corona pandemic. At that time, the global community lost precious time in the fight against the virus because it had to wait for the Party Congress in Hubei before Beijing took action against the virus. China lacks the culture of error that exists in democracies. Improvement through mistakes is not how the CCP makes decisions in China.
And a thing about Chinese economic growth: Again, it is a blessing that China has lifted hundreds of millions of people out of poverty. But in comparison, you always have to look at where you’re coming from. And it’s not a free pass to break international rules, not in Hong Kong, not in Xinjiang, not anywhere else.
If Beijing breaks treaties and rules like this, can China be trusted at all?
One of the biggest mistakes of the Obama administration was not getting involved in the Asian Infrastructure Investment Bank (AIIB). The Chinese are currently setting up several institutions, such as the AIIB, the Silk Road, and more, in an attempt to create parallel structures in which they call the shots. That is understandable in Machiavellian terms. But for the Americans to maintain distance and not trying to influence it from within is completely wrong. The American policy of decoupling is devastatingly wrong.
You can certainly see it that way, but allow me to make an observation. To me, it all sounds a bit like this: We can’t make it, but we blame others first and foremost. Now you are pointing at the Americans.
No. What I want to say is that you can only have as much influence as you are prepared to invest. The Chinese are showing us how it’s done; their commitment, but also their influence in international organizations, is steadily increasing. This starts at the General Assembly of the United Nations and certainly doesn’t stop at the International Organization for Standardization.
And are German politicians aware of this?
I’m a politician, and I’m talking about it right now.
Fair enough. Is the government aware?
We had a hearing at the Committee on Foreign Affairs on the subject of standardization, which was very exciting. But the government has shown no heightened interest in it. Shall I give you an example?
Please do.
E-gaming is a billion-dollar business. Twenty years ago, you could almost only buy games about Americans fighting in Iraq or defeating the Nazis. Today, it’s about the Chinese fleet defeating the Americans in the East China Sea. The reason behind this is that, for one thing, the Chinese have set new standards in e-gaming, and for another, there isn’t any major game developer left that doesn’t depend on Chinese stakeholders. And in the end, these are ways in which new narratives are being set for the systemic competition in the digital age.
And what are we supposed to do about it?
Understand that there is a problem in the first place – and then deal with it. We need to think sectorally about where we need to invest far more.
Germany hardly plays a role in the field of e-gaming, but it does in the automotive market. But when it comes to electromobility, you get the impression that as soon as Beijing turns to E, the German headquarters suddenly only talk about e-mobility. What does that say about the state of the German economy?
This is driving me nuts. Just a few days ago, I spoke to a relevant manager of a Chinese car manufacturer. He told me that they are now building the batteries that the Germans said couldn’t be done. In Germany, the carmakers get so many soft cushions from the government that they rest on them and believe their successes will last forever. They believe that innovations don’t have to be mass-produced. In addition, the Chinese are currently building charging stations: every 100 kilometers from Beijing to Shenzhen. At these stations, you don’t charge your battery forever, you just swap it out and keep driving. They’ve calculated that you’re 3.5 minutes faster that way than if you keep filling up with 60 liters. He told me that very proudly.
And what does that say about the German economy?
That they need to get the hell out of their hammock and use their own creativity and innovation instead of relying on cheating software. This is dramatic because the German automotive industry is a core pillar of German prosperity. Where is the pressure from German politics on industry to finally build that too?
Do we lose…
…yeah, yeah. We’re completely losing touch right now. And it is all the more likely that we will no longer be part of the next innovation stage. We can see this in the mobile communications sector and 5G, where no German company can offer the corresponding servers anymore. That cannot be allowed to happen to us with 6G.
Omid Nouripour is the representative of the German party Alliance 90/The Greens in the Foreign Affairs Committee of the German Bundestag. The 46-year-old was born in Iran.
The EU Chamber of Commerce in China fears a decline in the internationality of the Chinese market. As a result of this trend, its economy could lose dynamism and innovative strength: “The corresponding loss of competition on the market will also affect China’s ambitions to become a leader in high-tech industries,” writes Chamber President Jörg Wuttke in the introduction to the “European Business in China Position Paper 2021/2022”, published today. There is a risk that Beijing will abandon the courageous reforms that the country has been pushing ahead with since the 1970s.
The position paper of the EU Chamber is published annually and is a fixed institution in Beijing’s calendar. It bundles praise and complaints about the Chinese market of 1,700 member companies from all EU countries. This year, three topics dominate the extensive document, in particular:
The EU Chamber therefore also takes a critical position on “dual circulation”, the latest economic concept of the Chinese leadership. The idea behind it: One circuit is the commodity trade with foreign nations, i.e. integration into the global economy. The second circuit is the Chinese domestic economy, which should be able to function without the outside world if necessary. Both circuits are only meant to be loosely connected to avoid that outside investment and demand are driving growth. “The pursuit of self-reliance, however, runs counter to the spirit of comprehensive reform and opening up the economy,” the position paper warns.
For European companies operating in China, the ideas of the leadership generation under Xi Jinping are already having very concrete effects. The less the country trades with foreign nations and the less recognition international brands enjoy, the lower the sales opportunities. However, the Chamber also sees disadvantages for China: better goods are cheaper to obtain in the international division of labor. China is therefore missing out on a considerable potential for prosperity by trying to do everything on its own.
The Chamber, therefore, advises China to continue with its market-oriented reforms. Moreover, the country should continue its opening-up policy instead of rolling it back. While the tendency to decouple is understandable since the US, for its part, denies access to technology, China should not allow itself to be provoked into an extreme retaliation.
The chamber also attributes the trend of increasing isolation to the low number of foreigners in China. In particular, qualified employees from developed countries are becoming increasingly rare. Their numbers in Beijing have dropped from more than 100,000 to just over 60,000 since 2010. The chamber cites tiny Luxembourg, home to 300,000 foreign nationals, as a counterexample. The lack of diversity is seen as particularly harmful to innovation.
With concern, the Chamber also notes that economic policy decisions are now dictated by issues of national security. Local European banks, for example, fear that they will soon have to completely disconnect their computers in China from the global corporate network. “This increasingly limits their ability to offer cross-border services,” write members of the chamber’s finance working group. Some European banks have already left the Chinese market.
According to the current five-year plan, numerous other industries are also to become less dependent on foreign countries. According to the Chamber report, European companies from these industries report that their Chinese customers are becoming increasingly cautious. They are signaling that sourcing from foreign suppliers is becoming more difficult. Even if the effects are currently limited, the Chamber sees this trend with concern.
However, the current position paper also sees many industries on the upswing. “For those that contribute technology that China needs, the red carpet is being rolled out.” This includes, for example, technologies that serve to move away from coal. Or anything that upgrades the quality of its own industry, such as machinery, materials, or semiconductors. While undesirable industries find themselves in the “cargo hold”, desirable industries travel in the “business class” of the Chinese economy towards growth and profit.
The Chamber advises the local European subsidiaries to discuss the adaptation to these new framework conditions with their headquarters now. Because the companies in the “cargo hold” could be ejected sooner or later. “Localize or leave,” is the only choice for managers when this happens. Sole import or only final production for the Chinese market will then no longer be options.
The Chamber makes the following demands of China in light of these developments:
The Chamber makes the following demands of the EU:
The position paper also has advice for European companies:
In the big picture, however, the Chamber acknowledges that there are only limited options for EU companies on their own. In the age of wolf warriors and rising nationalism (China.Table reported), protectionist tendencies are among the overarching trends. This makes it all the more important for Chamber President Wuttke to oppose these tendencies.
“China will not build new coal-fired power projects abroad.” Instead, the People’s Republic wants to “step up support for other developing countries in developing green and low carbon energy” – this was announced by President Xi Jinping in his speech to the UN General Assembly on Tuesday. Climate and energy experts see the announcement as an important step. The People’s Republic was the last major state to finance coal projects abroad.
South Korea and Japan also announced their withdrawal from coal financing abroad in the recent past. And Western states and development organizations had already committed in recent years to no longer financing projects that were particularly harmful to the climate.
China had become the largest public financier of coal-fired power plants abroad in the past. With more than 44 billion euros, China’s two major development banks, the Export-Import Bank of China and the China Development Bank have financed coal-fired power in other countries over the past 20 years. This money was used to build 66 power plants, according to a Boston University database. Without these export credits, loans, and grants, many projects could not have been realized.
The climate consequences of Xi’s announcement should not be underestimated. Coal-fired power plants built abroad with Chinese state money since 2000 will emit twelve gigatons of CO2 during their 40-year lifespan (China.Table reported). That is more than China’s annual CO2 emissions.
Currently, coal projects backed by Chinese financing with a capacity of 40 gigawatts are still under development, according to Byford Tsang, an analyst at the climate think tank E3G. That is equivalent to Germany’s current coal capacity.
The financing of coal-fired power plants abroad has so far also served China’s industrial policy objectives. Chinese boilers, steam turbines, and generators were used in a large proportion in these projects. Chinese contractors were chosen in two out of three projects. This was intended to make use of excess capacities in Chinese industry. Xi’s announcement is thus also a signal to his own industry.
The announcement of providing more support for green and low-carbon energy projects will fall on open ears among foreign partners. Since 2000, major development banks of the People’s Republic have financed overseas solar projects with the equivalent of only €2.2 billion and wind energy projects with only €1 billion. However, €37.5 billion have flowed into hydropower projects.
Analysts also see Xi’s announcement as a “business opportunity”: China is the world’s largest producer of solar and wind power and has in the past announced plans to make the Belt and Road Initiative more sustainable.
Climate experts and activists praise China’s announcement as an important step in the fight against climate change. Li Shuo of Greenpeace East Asia sees Xi’s promise as a “good step forward”. However, the details are now important: “Does the announcement apply immediately? Does it only apply to state actors?”
Byford Tsang of E3G is also curious about the details. It is crucial whether the announcement also includes state and commercial banks – that would be one step more than the commitments made by the G7 countries. Western commercial banks continue to finance coal projects abroad.
Chinese banks have already “distanced themselves from new coal deals overseas” in recent months, following guidance from the political leadership, says Lauri Myllyvirta, energy analyst at think tank Centre for Research on Energy and Clean Air. But Myllyvirta also points out that China needs to be more specific about the announcement: “Chinese banks and firms play a major role [in the coal sector] in public and private debt financing, equity investment, equipment supply, etc.,” Myllyvirta writes.
According to him, the key implication of Xi’s statement is that “any new financing or equity investment commitments to coal power projects overseas would be toxic for any Chinese bank or power company.”
However, climate journalist and advisor Liu Hongqiao urges caution as Xi had not directly addressed financing. One must “wait for the official Chinese announcements” in this regard.
Experts agree that, in terms of climate policy, China’s domestic plans will become even more important in the future. The People’s Republic is the largest CO2 emitter in the world. Coal-fired power covers two-thirds of China’s power needs. China accounts for half of the coal-fired electricity generated worldwide. In the wake of the Covid pandemic, capacity was even expanded further to boost the economy.
In April, Xi had announced at a high-level climate summit that he would “strictly control” coal consumption by 2025. By 2030, the People’s Republic wants to begin a “gradual reduction in coal consumption,” Xi said. This was the first time China gave a specific date for dropping its coal consumption. However, to play its part in achieving the two-degree target, China would need to reduce coal demand “at a much faster rate than currently planned“, write experts of the Climate Action Tracker. It will be decisive whether Xi makes new commitments at the climate conference in Glasgow in November, or fleshes out his own climate plans.
For its part, the EU has explicitly decided against financing fossil fuels – including coal – with the new financing instrument for foreign and development policy, Global Europe (2021-27). Thus, the law of the 76 billion instrument includes an exclusion clause: activities that are “incompatible under the Paris Agreement or promote investment in fossil fuels” may not receive funds. Instead, the money will flow into the development of renewable energy.
In particular, the 53.5 billion European Fund for Sustainable Development (EFSD+), which provides funding, budgetary guarantees, and blending, only allows for “environmentally sustainable” investments, which are subject to strict due diligence.
The European Investment Bank has already decided in 2019 not to support any new financing for fossil fuel projects from 2021 onwards. According to the decision, the money is to be used increasingly for the development of clean energies, energy efficiency, and renewable energies. Collaboration: Charlotte Wirth
“It was a goosebump moment,” says Green Party politician Margarete Bause, looking back on her meeting with Ai Weiwei in 2014. The Chinese artist was under placed house arrest and was not allowed to leave the country for of his anti-government statements. “I asked him if it was of any use if Western politicians would come to China and address human rights.” He had replied that it was the only thing that gave people like him hope. The conversation moved her deeply and to this day remains “a mission” to stand up for human rights.
At the time, Bause was parliamentary group leader of the Green Party in the Bavarian state parliament and accompanied Minister-President Horst Seehofer on his trip to China. “Human rights were not on the agenda then.” She still managed to arrange a meeting with Ai – outside the schedule. Afterward, she looked into the human rights situation in China even more closely. In 2017, Bause then moved into the German parliament, where she became the Greens’ spokesperson for human rights and humanitarian aid.
The 62-year-old is passionate about her job, and she is particularly enthusiastic about meeting human rights activists from all over the world. Many are active under dangerous conditions, risking their lives. Bause finds conversations with them as rewarding but humbling at the same time, she says. She spent a large time of her life in Bavaria, where she also studied sociology. Through it, she learned to see social processes in a wider context.
“You can also use that very well in politics,” she explains. Germany’s China policy currently lacks this larger context, a coherent strategy. “So far, the statements and goals of the Ministry of Economics have often been different from those made by the Foreign Office or the Ministry of Development.” She points to the formula “dialogue and toughness” Green Party candidate for the chancellorship, Annalena Baerbock, formulated in spring in regard to dealing with China. Bause now finds allies for this approach in the other parliamentary groups in the German Bundestag. The perception of China is changing.
She advocates a more self-confident approach: “China is at least as dependent on Europe as vice versa.” Nevertheless, existing dependencies must be reduced and, if possible, no new ones created. Bause is optimistic that this can be achieved. During the last legislative period, she was particularly concerned about China’s human rights violations against the Uyghur minority.
That’s another reason why she is pushing for tougher supply chain laws. The law passed in July is just the beginning: “On a scale of zero to ten, we’re now at four.” Bause sees a lot of work left to be done and wants to continue campaigning for human rights after the election. “But gladly not in the same position, but on the side of the governing party,” Bause says with a mischievous smile. Paul Meerkamp
Two bugs on the moon: What looks like two oversized insects are blue shining drones. These flying objects are putting on a show in Yantai in the province of Shandong to mark the Moon Festival. One of the shapes they formed was a bridge in the night sky. The moon festival was celebrated on Tuesday under an impressive full autumn moon.
