Table.Briefing: China

One-China policy: dangerous clarity + CATL batteries for Mercedes

  • Beijing wants to impose its definition of ‘One-China’
  • CATL supplies Mercedes with batteries
  • Government tops up economic stimulus package
  • Bachelet under pressure over Xinjiang report
  • Taiwan increases defense budget
  • Rules for green bonds
  • Baidu builds quantum computers
  • View from China: Taiwan from the perspective of the People’s Republic
Dear reader,

Being vague can help tremendously to avoid conflict. In East Asia, it is a real art form to find consensus through ambiguity where none was possible in the first place. Anyone who lives in the region for a while soon recognizes the advantages of deliberate ambiguity.

In such a context, absolute clarity is dangerous. It dissolves the requirements for dear peace: That both sides could interpret the situation in a way acceptable to them. This is exactly the case with the Taiwan issue. Beijing is trying to impose its definition of the One-China principle everywhere in the world, writes Christiane Kühl. And it states without a doubt that Taiwan belongs to the People’s Republic. When China’s foreign policy was still weak, it quietly tolerated a different interpretation around the world: That the status was not clear for the foreseeable future, and that “One-China” could theoretically also somehow be Taiwan. The clarity that China is now insisting on is, in turn, triggering a counter-reaction from the United States.

Today we are also launching a new, regular series on Taiwan: the “China Perspective“, written by Chinese from the People’s Republic. The world appears very differently depending on one’s socialization, as the example of “One-China” shows. Therefore, we would like to present more examples of how the Chinese see things. Personal exchange has shrunk severely in the past three years. This makes it all the more important to give room to authors from the other cultural sphere.

Mercedes-Benz needs battery cells – and lots of them. If all of the Group’s cars are to be powered electrically one day, then there cannot be any shortage of electricity storage units. This is supposed to happen as early as 2025. So the company is broadening its procurement base, but is by no means turning its back on Chinese partners, writes Christian Domke Seidel. On the contrary. Chinese suppliers such as CATL are still an integral part of the strategy. To be on the safe side, they are to produce in Europe, as CATL will soon be doing in Hungary.

Your
Finn Mayer-Kuckuk
Image of Finn  Mayer-Kuckuk

Feature

Opinions on One-China principle collide

Chinese protesters outside the US Embassy in Lisbon on Tuesday: “We are one China, and Taiwan is part of China.”

The One-China principle is omnipresent in every official statement on Taiwan policy and is a standard part of diplomatic interaction with China. In the heated situation following the visit of Nancy Pelosi, Speaker of the US House of Representatives, to Taipei, however, it has once again become clear that all parties involved China, Taiwan and the United States interpret the principle differently. The US and China accuse each other of undermining the status quo on the Taiwan Strait and this includes the perception of the One-China principle.

The People’s Republic attaches great importance to keeping the formula in active use. “Pelosi’s attempt to hollow out the One-China principle is unacceptable and doomed to fail because the principle is based on historical and legal facts,” the state-run China Daily commented on Thursday. “Taiwan is an inalienable part of China, and it will remain so.” Beijing also demands that all other countries adopt this definition.

China’s One-China principle is unequivocal. According to Beijing, it states that “there is but one China in the world, Taiwan is an inalienable part of China’s territory, and the Government of the People’s Republic of China is the sole legal government representing the whole of China.” China understands adherence to the One-China principle as an “important political foundation for establishing diplomatic ties between other countries and China.” Because the People’s Republic considers Taiwan to be a Chinese province, Beijing believes it must also act and be treated internationally as a regional government.

Taiwan: understanding the One-China principle culturally

In practice, however, Taiwan acts like a state, not a province – except that it lacks diplomatic recognition from large parts of the world. According to a Taiwanese Foreign Ministry news website, Taipei has for many years taken the position “that “One China” refers to historical, geographic, and cultural China – which currently consists of two political legal entities: the People’s Republic on the mainland and the Republic of China on Taiwan.”

At the beginning of the 1990s, Taipei and Beijing had agreed to stick to each other’s interpretation of the One-China principle – and to deal with concrete issues such as investment or transport links for the time being. Time and again, there were informal meetings between Beijing and the government of Ma Ying-jeou from the Kuomintang Party (KMT), which tends to be pro-China. Such a pragmatic approach to the One-China question is no longer conceivable. The thaw period ended when Tsai Ing-wen of the Democratic Progressive Party (DPP) became president in 2016. The DPP is fundamentally in favor of independence – even though Tsai emphasizes that she will not undermine the status quo.

China and the UN: resolution 2758

Statements from Taipei are also surprisingly direct. The Foreign Ministry stated in mid-August the reaction of the Council for Mainland Affairs to China’s “Taiwan White Paper,” which was issued shortly before: The Council defined that “the Republic of China is a Sovereign State: Taiwan has never been part of the People’s Republic of China.” Furthermore that “the PRC’s claim of sovereignty over Taiwan was a flawed interpretation of United Nations General Assembly Resolution 2758, and this had been criticized and rejected by many democratic countries.” China’s white paper reiterated the claim to Taiwan.

Resolution 2758 is one of the key points in China’s argument. Because of it, the “Republic of China” in Taiwan lost its seat at the United Nations to the People’s Republic of China in 1971. The resolution recognizes that Beijing’s UN diplomats “were the only lawful representatives of China to the United Nations,” China’s ambassador Qin Gang recently wrote in a guest commentary for the Washington Post (China.Table reported). This is in line with the facts.

But that is all the resolution says, Bonnie Glaser and Jessica Drun noted in a new study for the German Marshall Fund of the United States. “There is a campaign underway by the People’s Republic of China (PRC) to reinterpret UN Resolution 2758 as based on its “One-China” Principle and spread the fallacy that, through the resolution, UN member states came to a determination that Taiwan is a part of the PRC.” At the time, then-Prime Minister Zhou Enlai acknowledged that Resolution 2758 had not yet decided Taiwan’s status, Glaser and Drun said. “However, given that Beijing did not enjoy the same level of international influence then as it does today, it did not reject the resolution when it was passed.”

China expands influence at the UN – at Taiwan’s expense

The situation now is quite different, with Beijing’s increased influence succeeding in blocking attempts to include Taiwan in UN work. “The PRC’s efforts to rewrite Taiwan’s status at the UN ramped up in the 1990s and early 2000s at the same time as the island’s democratization,” Drun and Glaser wrote. The authors accuse Beijing of making its Taiwan policy institutionalized normality at the United Nations – for example, through secret agreements with various UN bodies to exclude Taipei. These agreements of the UN organizations are still not publicly available. Among them is one made between the World Health Organization (WHO) and China in 2005.

The most important change is probably to interpret deliberately vague definitions unambiguously. “These developments have played out alongside marked shifts in the guidance of the UN Office of Legal Affairs on Taiwan, where it only 15 years ago cited an ambiguous and undefined “One-China” policy, but now reiterates the PRC position on Taiwan,” the study says, for example. Beijing has also used UN Resolution 2758, as well as bilateral agreements with other member states, “to falsely claim that its “One-China” Principle is a universally accepted norm.” Many states today vote jointly with China on Taiwan issues at the UN, it claimed.

The USA and the One-China principle

The US is critical – and, according to Drun and Glaser, has repeatedly resisted Beijing’s efforts to redefine UN Resolution 2758. In 2007, Washington reiterated its position in a paper: “The status of Taiwan is not yet decided.”

In general, the US One-China policy acknowledges Beijing’s One-China principle but does not affirm it. Officially, the United States takes no position on Taiwan’s status. That is the consensus in Washington.

Drun and Glaser recommend that the United States emphasize the differences between its One-China policy and Beijing’s One-China principle more publicly. “US officials should make clear that the United States takes note of the Chinese position that Taiwan is part of China – but does not accept the PRC’s sovereignty claims over Taiwan.” More and more people in Europe are calling for reform of the EU’s One-China policy – toward more open support for Taiwan, but without a departure from the status quo.

However, no one who maintains diplomatic relations with Beijing can officially abandon or ignore the One-China principle. India, for example, has not mentioned the principle in official Sino-Indian documents since 2008. When asked by a Xinhua reporter at a press conference held by Foreign Office spokesman Arindam Bagchi shortly after Pelosi’s visit about what India’s position was on the One-China Principle, Bagchi responded only, “India’s position on “relevant” policies is well known and consistent and does not need to be repeated.” China’s Ambassador to New Delhi Sun Weidon called on India to “publicly reaffirm the One-China Principle, as many other countries do.” India has not yet followed this request.

  • Geopolitics
  • Nancy Pelosi
  • Taiwan
  • United Nations
  • USA

CATL in Hungary secures battery cell supply for Mercedes

Battery market leader CATL is building a new factory in Debrecen, Hungary (China.Table reported). The project has an investment volume of the equivalent of €7.34 billion. Mercedes is the largest customer of this factory, but contrary to reports (for example, here or here) it is not deeper involved in the project. “We have the largest purchase volume, but are not involved financially or in any other way,” a spokeswoman for the group told Table.Media. Other media portrayed the process as if Mercedes itself was investing in the plant.

Batteries for Mercedes’ electric-only strategy

Mercedes is currently pursuing an “electric-only” strategy. Starting at the end of the decade, only EVs are to be built – at least “wherever market conditions permit,” as the company adds. From 2025, the plans call for every new vehicle architecture to be exclusively electric. Half of all new cars with a star are then to be EVs. To achieve this goal, Mercedes plans to invest around €40 billion between 2022 and 2030.

The partnership with Contemporary Amperex Technology Co. Limited (CATL) is one component of these plans. Mercedes calculates that it will require 200-gigawatt hours of battery capacity to power a sufficient number of vehicles purely electrically. In the future, the company wants to sell fewer, but more expensive cars. However, the Covid pandemic has exposed weaknesses in the supply chains. That is why Mercedes plans to position itself as broadly as possible in the supply of batteries, i.e. recruit as many suppliers as possible.

Battery production in Europe

Mercedes needs eight cell factories worldwide to produce or buy sufficient battery capacity. Four factories in Europe, four in the USA, and China. In the USA, Mercedes is cooperating with Envision AESC. There, a battery cell factory will be built near the company’s plant. In China, the partners are CATL and Farasis. Mercedes even holds three percent of the shares in Farasis, which are said to have cost around €400 million. Originally, Farasis wanted to produce battery cells for Mercedes in Germany. But the project ultimately fell through in 2021.

In Europe, Mercedes has a stake in the Automotive Cells Company (ACC) based in France – along with the Stellantis Group (Peugeot, Citroën, Fiat, Chrysler, Jeep) and the French energy company Total Energies. The goals are quite ambitious, as the company spokeswoman explains: “We have taken a stake in ACC together with Stellantis and Total Energies to build a European battery champion. Here we want to contribute our own expertise and thus accelerate ACC’s development.” This diversification is part of the “local-for-local” strategy. If production or the supply chain fails in one part of the world, factories in other countries are not entirely left high and dry. At the same time, greenhouse gases can be saved during transport.

Hungary’s e-mobility offensive

In Europe, CATL is to ensure this supply of the demanded cells. Fueled by Hungary’s economic policy. Prime Minister Viktor Orbán wants to make his country the second most important location for e-mobility – after Germany. For this, he lured Samsung SDI, among others, to Göd, a small town north of Budapest, where batteries are manufactured ever since. The company has already had to pay more than a dozen fines because of poor working conditions, noise, and pollution, as NZZ reports. South Korean companies SK One (in Ivancsa) and Ecpro BM (in Debrecen) will also soon manufacture batteries and required components in Hungary. In addition, there is the CATL plant announced by Mercedes.

Investments in e-mobility in Hungary have totaled €8 billion in recent years. The CATL plant alone will almost double this sum. Where the workforce will come from is unclear. In an interview with Table.Media, Mercedes refers to the sustainable production of the battery cells but actually only means carbon neutrality. The company spokeswoman decidedly excludes the social and economic aspects.

This poses problems for Hungary. Because there are simply not enough skilled workers in the country to meet the growing demand. Of the estimated 5,000 employees at Samsung SDI, just one hundred are said to come from Hungary, as Balogh Csaba, mayor of Göd, told NZZ. The rest of the workforce will come from Asia. How this might look at CATL is still completely open at the moment.

  • Car Industry

News

Li multiplies funds for the economy

In the face of ever-new economic difficulties, Beijing is stepping up its economic stimulus. On Thursday, the State Council, China’s cabinet, presented a package of 19 measures. Some of them are in addition to the monetary stimulus decided in June, and some are funds that have not yet been drawn down. The focus is on higher loans for cities and municipalities and infrastructure support. This marks a return to the proven instruments with which China’s government is driving up growth. The June package focused more on new technology (China.Table reported).

With a volume of ¥1 trillion (€145 billion), the additional funding is still three times higher than the current package from June, which comes to around ¥300 billion (€45 billion) in spending. According to the State Council release, it is now particularly important to ensure that the funds are used wisely, Premier Li Keqiang stressed.

The most important of the 19 measures: The government is asking state banks to provide more money for infrastructure projects. This will help the construction industry and simultaneously make rural areas more accessible. For this alone, another ¥300 billion were intended. The municipalities and cities can also issue another ¥500 billion in bonds and thus take on more debt in the short term. However, this is an existing quota, the retrieval of which is now to be accelerated. Priority will be given to projects that provide affordable housing.

A violent storm has been brewing over China’s economy. After the slowdown caused by the real estate crisis and Covid lockdowns, droughts and power shortages are added to the mix (China.Table reported). The labor market for young people, retail sales, and industrial production is weakening. fin

  • Climate
  • Coronavirus
  • Health
  • Heatwave
  • Li Keqiang
Translation missing.

Taiwan increases military spending

Taiwan wants to increase its defense budget substantially. As the government announced on Thursday, it is to rise by around 14 percent next year to a record value of the equivalent of around €19.5 billion. Since 2017, defense spending on the island claimed by China as its own territory had only grown by less than four percent. The higher budget fully takes into account the “hostile threat” and is equivalent to 2.4 percent of the gross domestic product expected next year, the defense ministry said. About €3.6 billion alone are intended for new fighter jets and other new equipment. The planned defense spending, which must still be approved by parliament, marks the sixth consecutive year of rising defense spending in Taiwan.

Chu Tzer-ming, Head of the Statistics Department, said the increase was mainly due to rising operating costs. He pointed to higher costs for fuel and maintenance for aircraft and ships. These would have to be dispatched to counter Chinese military activities near Taiwan. Taiwan’s military, he said, adheres to the principle of “preparing for war without seeking war and defending national security with strength.” China announced in March that it would increase its defense spending by seven percent this year to the equivalent of about $208 billion (China.Table reported). rtr/ari

  • Military

Stock exchanges implement new green bond regulations

China’s stock exchanges have begun implementing new green bond standards. The Shanghai Stock Exchange now requires that 100 percent of funds acquired through green bonds should be used for sustainable investments. That’s according to a statement from the exchange seen by Reuters. Previously, only 70 percent of proceeds from corporate green bonds traded on exchanges had to be used for sustainable purposes. For green bonds issued by state-owned companies, the ratio was only 50 percent. This has now been standardized. However, it is unclear whether green bonds issued by state-owned enterprises will also fall under the new standards. According to the Chinese financial website Securities Times, these bonds will be exempt from the new rules.

However, funds from green bonds can be used to build and operate natural gas transmission and storage facilities – which include pipelines and liquefied natural gas terminals, for example; and to build large-scale hydropower plants, although the resulting reservoirs often lead to massive environmental degradation. Carbon capture, utilization, and storage (CCUS) projects can also be financed with green bonds in China; as can certain nuclear power plants such as modern pressurized water reactors (China.Table reported).

In addition, the China Securities Regulatory Commission has called on the Shanghai and Shenzhen stock exchanges to revise their rules for issuing new bonds to match the recently published new green bond standards (China.Table reported). Brian Pascoe, Chairman of the International Capital Market Association, praised the fact that proceeds would now have to go entirely to sustainable projects. This would “allay concerns of international market participants” and facilitate foreign investment in China’s green finance market in the future.

The Climate Bonds Initiative (CBI), a London-based nonprofit organization that promotes investment in a low-carbon economy, has repeatedly criticized that a large proportion of green bonds from China do not meet international standards. According to the organization’s surveys, 40 percent of the supposedly green bonds did so last year alone. The chairman of the CBI also commented positively on the new standards. nib

  • Finance
  • Stock Exchange

Baidu unveils quantum computer

The AI company Baidu has presented its first commercially viable quantum computer, the “Qianshi”. Hardware and software are designed to work together in a way that allows the device to be easily operated even by external users, the company said. Possible applications include the search for new chemical compounds for better batteries or protein structures for new pharmaceuticals. Baidu is thus competing with companies such as IBM and Amazon. Quantum computing can be used to perform certain types of calculations extremely quickly. fin

  • Artificial intelligence
  • Baidu
  • Technology

China Perspective

Taiwan is a highly emotionally charged topic for the Chinese

If China decides to take Taiwan by force today, the vast majority of the Chinese would genuinely support it. Any Chinese openly against it would, at the very best, be inundated with the accusation of being a traitor. At worse, they could face imprisonment or physical violence from patriotic compatriots. The “Chinese” we are talking about here include Chinese citizens both in China and outside, and Chinese spending their impressionable years in the country but holding foreign passports now. 

Taiwan is a highly emotionally charged topic for the Chinese, topping a long list of issues rooted in the history of China being bullied by Western powers in the 19th and the first half of the 20th century. Also on the list are Hong Kong, Macao, and big swathes of territories robbed by Russia, which also played a big role in the breakaway of today’s Mongolia. 

These issues feature hugely in history textbooks for school children and college students and official media in China. They were and are very well absorbed, fostering a national victim mentality that seems to be difficult to overcome and a trauma that never heals. They have also been used to fit into the narrative of the Chinese Communist Party, which portrays itself as the sole savior for the nation from its deep humiliation. This is one of the founding myths of the People’s Republic. And it is used as a key justification of the party’s rule until today. 

Nancy Pelosi pushed emotions to a new high 

The loss of territories to Russia in the 19th century has, for obvious reasons, been downplayed in recent years. But Taiwan, backed by the United States, keeps flaring back to being a hot spot in international relations. Every new episode will conjure up the bitter past: It was exactly because of foreign intervention, mainly from the US, that the People’s Republic, when founded, wasn’t able to take Taiwan. And now, look, the US and its allies, still want to keep Taiwan from reunifying with the motherland. Their ultimate purpose, according to the Chinese, is to use Taiwan as what US general Douglas MacArthur called an “unsinkable aircraft carrier” in its effort to keep China down. 

What makes the Chinese even angrier is the fact that Taiwan has been benefitting greatly from exporting to and investing in China since the 1990s. China is so important economically that some Taiwanese pop stars have settled down in big cities like Shanghai to stay closer to the big market, although they may have to think again now with the souring relationship between the Taiwan Straits that see no sign of improvements.

The recent visit by US House Speaker Nancy Pelosi pushed the mainlanders’ hatred of the US and Taiwan to a new high. There was a very loud chorus on social media calling for and then the genuine expectation of Pelosi’s flight being shot down. The safe landing of her plane in Taipei triggered a big sigh of disappointment and even frustration, which even somehow made the following military exercises lusterless.

Yes, military action can be talked about lightly like this. In general terms, the Chinese are big-time realists, having faith in money, military force, social Darwinism, and sheer power in international relations. “Political power comes from gun barrels” by Mao Tse-tung is a saying known by heart by everybody and always has strong resonance in the Middle Kingdom. 

‘China is unique

Then what about the will of the Taiwanese people? What if, the result of a hypothetical referendum in Taiwan is a resounding yes to independence? 

There are different approaches of the general public in China to these questions. 

The first is cynicism about public opinion in democracies: It is not trustworthy because it’s always a result of manipulation by a power-thirsty politician, who represents, at the end of the day, only the rich, or different groups of the rich. The second is more straightforward: Taiwan is our land, what people living there think is simply irrelevant. If Taiwanese politicians have the guts to initiate a referendum, that move by itself will be a punishable provocation. 

Supporters of reunification by force would also cite cases outside of China in the pre-democratic history of major democracies, and in contemporary times, most conveniently in Russia’s dealing with independence-seeking Republics like Chechnya. If Ukraine eventually falls into the hands of Putin, that will be a platinum case.

Referendums in Scotland and Quebec on independence, and the peaceful divorce of the Czech Republic and Slovakia, are unheard of by the majority. For those having some knowledge of it, they can also be conveniently explained by the panacea explanation: There must be economic/financial interest behind it. Or another one-size-for-all argument for any issues regarding China: China is unique, the Taiwan issue is different, it has been Chinese territory since ancient times.

Taiwan’s convoluted history 

If confronted with the question of whether the Chinese enthusiasm for Taiwan’s reunification with China is a result of some kind of manipulation, the answer will be a categorical NO. How dare you?, a Chinese citizen might reply. Welcome to the land of fallacies comparable to the beliefs of Trump lovers and conspiracy theories. 

The history of Taiwan since the Age of Exploration is much more complicated than that of most parts of China. It was colonized twice, by the Dutch in the 17th century and by the Japanese during 1895-1945. As a result of WW II, it was returned to the Republic of China, led by Chiang Kai-shek. His government represented China as a major founding member of the UN. However, Chiang Kai-shek and his followers were defeated by the Communists in the 1945-49 civil war and retreated to Taiwan. 

Local Taiwanese at that time had to adapt to and accommodate a corrupt ROC government, whose brutal rule left a big scar on the mind of the local Taiwanese and a pestering rift between Taiwanese and mainlanders. To add to the insult, Taiwan was kicked out of the UN and gradually lost diplomatic ties with all but around a dozen countries, following the diplomatic thaw between the US and the People’s Republic in 1972. 

The Orphan of Asia is the title name of both a novel by a Taiwanese writer and a pop song. The former told the identity plight of the Taiwanese; the latter lamented the land’s isolation. However, the pains touchingly described in these works will, alas, undoubtedly fall on a deaf ear of nationalist listeners on the mainland. 

  • Geopolitics
  • Nancy Pelosi
  • USA

Executive Moves

Marianne Baeumle is Head of Controlling at Augsburg-based robot manufacturer Kuka, which is owned by the Chinese Midea Group. From 2019 to 2020, she was chief financial officer of Kuka Systems China in Shanghai. Her China experience goes back 20 years.

Andre Gantenbrink is now Assistant to the Management of Audi’s research subsidiary in Beijing. Previously, he worked in the Customer Racing division. Before that, Gantenbrink gained experience as Regional Manager at CRRC Group – Zhuzhou Times New Material Technology.

Is something changing in your organization? Why not let us know at heads@table.media!

Dessert

Safe harbor – literally: Fishing boats in the harbor of the city of Yangjiang in the southern Chinese province of Guangdong were brought to safety from Typhoon Ma-on. The typhoon reached the coast near Maoming on Thursday morning. It had earlier lashed Hong Kong with rain and wind gusts. Ma-on is the ninth typhoon this year.

China.Table editorial office

CHINA.TABLE EDITORIAL OFFICE

Licenses:
    • Beijing wants to impose its definition of ‘One-China’
    • CATL supplies Mercedes with batteries
    • Government tops up economic stimulus package
    • Bachelet under pressure over Xinjiang report
    • Taiwan increases defense budget
    • Rules for green bonds
    • Baidu builds quantum computers
    • View from China: Taiwan from the perspective of the People’s Republic
    Dear reader,

    Being vague can help tremendously to avoid conflict. In East Asia, it is a real art form to find consensus through ambiguity where none was possible in the first place. Anyone who lives in the region for a while soon recognizes the advantages of deliberate ambiguity.

    In such a context, absolute clarity is dangerous. It dissolves the requirements for dear peace: That both sides could interpret the situation in a way acceptable to them. This is exactly the case with the Taiwan issue. Beijing is trying to impose its definition of the One-China principle everywhere in the world, writes Christiane Kühl. And it states without a doubt that Taiwan belongs to the People’s Republic. When China’s foreign policy was still weak, it quietly tolerated a different interpretation around the world: That the status was not clear for the foreseeable future, and that “One-China” could theoretically also somehow be Taiwan. The clarity that China is now insisting on is, in turn, triggering a counter-reaction from the United States.

    Today we are also launching a new, regular series on Taiwan: the “China Perspective“, written by Chinese from the People’s Republic. The world appears very differently depending on one’s socialization, as the example of “One-China” shows. Therefore, we would like to present more examples of how the Chinese see things. Personal exchange has shrunk severely in the past three years. This makes it all the more important to give room to authors from the other cultural sphere.

    Mercedes-Benz needs battery cells – and lots of them. If all of the Group’s cars are to be powered electrically one day, then there cannot be any shortage of electricity storage units. This is supposed to happen as early as 2025. So the company is broadening its procurement base, but is by no means turning its back on Chinese partners, writes Christian Domke Seidel. On the contrary. Chinese suppliers such as CATL are still an integral part of the strategy. To be on the safe side, they are to produce in Europe, as CATL will soon be doing in Hungary.

    Your
    Finn Mayer-Kuckuk
    Image of Finn  Mayer-Kuckuk

    Feature

    Opinions on One-China principle collide

    Chinese protesters outside the US Embassy in Lisbon on Tuesday: “We are one China, and Taiwan is part of China.”

    The One-China principle is omnipresent in every official statement on Taiwan policy and is a standard part of diplomatic interaction with China. In the heated situation following the visit of Nancy Pelosi, Speaker of the US House of Representatives, to Taipei, however, it has once again become clear that all parties involved China, Taiwan and the United States interpret the principle differently. The US and China accuse each other of undermining the status quo on the Taiwan Strait and this includes the perception of the One-China principle.

    The People’s Republic attaches great importance to keeping the formula in active use. “Pelosi’s attempt to hollow out the One-China principle is unacceptable and doomed to fail because the principle is based on historical and legal facts,” the state-run China Daily commented on Thursday. “Taiwan is an inalienable part of China, and it will remain so.” Beijing also demands that all other countries adopt this definition.

    China’s One-China principle is unequivocal. According to Beijing, it states that “there is but one China in the world, Taiwan is an inalienable part of China’s territory, and the Government of the People’s Republic of China is the sole legal government representing the whole of China.” China understands adherence to the One-China principle as an “important political foundation for establishing diplomatic ties between other countries and China.” Because the People’s Republic considers Taiwan to be a Chinese province, Beijing believes it must also act and be treated internationally as a regional government.

    Taiwan: understanding the One-China principle culturally

    In practice, however, Taiwan acts like a state, not a province – except that it lacks diplomatic recognition from large parts of the world. According to a Taiwanese Foreign Ministry news website, Taipei has for many years taken the position “that “One China” refers to historical, geographic, and cultural China – which currently consists of two political legal entities: the People’s Republic on the mainland and the Republic of China on Taiwan.”

    At the beginning of the 1990s, Taipei and Beijing had agreed to stick to each other’s interpretation of the One-China principle – and to deal with concrete issues such as investment or transport links for the time being. Time and again, there were informal meetings between Beijing and the government of Ma Ying-jeou from the Kuomintang Party (KMT), which tends to be pro-China. Such a pragmatic approach to the One-China question is no longer conceivable. The thaw period ended when Tsai Ing-wen of the Democratic Progressive Party (DPP) became president in 2016. The DPP is fundamentally in favor of independence – even though Tsai emphasizes that she will not undermine the status quo.

    China and the UN: resolution 2758

    Statements from Taipei are also surprisingly direct. The Foreign Ministry stated in mid-August the reaction of the Council for Mainland Affairs to China’s “Taiwan White Paper,” which was issued shortly before: The Council defined that “the Republic of China is a Sovereign State: Taiwan has never been part of the People’s Republic of China.” Furthermore that “the PRC’s claim of sovereignty over Taiwan was a flawed interpretation of United Nations General Assembly Resolution 2758, and this had been criticized and rejected by many democratic countries.” China’s white paper reiterated the claim to Taiwan.

    Resolution 2758 is one of the key points in China’s argument. Because of it, the “Republic of China” in Taiwan lost its seat at the United Nations to the People’s Republic of China in 1971. The resolution recognizes that Beijing’s UN diplomats “were the only lawful representatives of China to the United Nations,” China’s ambassador Qin Gang recently wrote in a guest commentary for the Washington Post (China.Table reported). This is in line with the facts.

    But that is all the resolution says, Bonnie Glaser and Jessica Drun noted in a new study for the German Marshall Fund of the United States. “There is a campaign underway by the People’s Republic of China (PRC) to reinterpret UN Resolution 2758 as based on its “One-China” Principle and spread the fallacy that, through the resolution, UN member states came to a determination that Taiwan is a part of the PRC.” At the time, then-Prime Minister Zhou Enlai acknowledged that Resolution 2758 had not yet decided Taiwan’s status, Glaser and Drun said. “However, given that Beijing did not enjoy the same level of international influence then as it does today, it did not reject the resolution when it was passed.”

    China expands influence at the UN – at Taiwan’s expense

    The situation now is quite different, with Beijing’s increased influence succeeding in blocking attempts to include Taiwan in UN work. “The PRC’s efforts to rewrite Taiwan’s status at the UN ramped up in the 1990s and early 2000s at the same time as the island’s democratization,” Drun and Glaser wrote. The authors accuse Beijing of making its Taiwan policy institutionalized normality at the United Nations – for example, through secret agreements with various UN bodies to exclude Taipei. These agreements of the UN organizations are still not publicly available. Among them is one made between the World Health Organization (WHO) and China in 2005.

    The most important change is probably to interpret deliberately vague definitions unambiguously. “These developments have played out alongside marked shifts in the guidance of the UN Office of Legal Affairs on Taiwan, where it only 15 years ago cited an ambiguous and undefined “One-China” policy, but now reiterates the PRC position on Taiwan,” the study says, for example. Beijing has also used UN Resolution 2758, as well as bilateral agreements with other member states, “to falsely claim that its “One-China” Principle is a universally accepted norm.” Many states today vote jointly with China on Taiwan issues at the UN, it claimed.

    The USA and the One-China principle

    The US is critical – and, according to Drun and Glaser, has repeatedly resisted Beijing’s efforts to redefine UN Resolution 2758. In 2007, Washington reiterated its position in a paper: “The status of Taiwan is not yet decided.”

    In general, the US One-China policy acknowledges Beijing’s One-China principle but does not affirm it. Officially, the United States takes no position on Taiwan’s status. That is the consensus in Washington.

    Drun and Glaser recommend that the United States emphasize the differences between its One-China policy and Beijing’s One-China principle more publicly. “US officials should make clear that the United States takes note of the Chinese position that Taiwan is part of China – but does not accept the PRC’s sovereignty claims over Taiwan.” More and more people in Europe are calling for reform of the EU’s One-China policy – toward more open support for Taiwan, but without a departure from the status quo.

    However, no one who maintains diplomatic relations with Beijing can officially abandon or ignore the One-China principle. India, for example, has not mentioned the principle in official Sino-Indian documents since 2008. When asked by a Xinhua reporter at a press conference held by Foreign Office spokesman Arindam Bagchi shortly after Pelosi’s visit about what India’s position was on the One-China Principle, Bagchi responded only, “India’s position on “relevant” policies is well known and consistent and does not need to be repeated.” China’s Ambassador to New Delhi Sun Weidon called on India to “publicly reaffirm the One-China Principle, as many other countries do.” India has not yet followed this request.

    • Geopolitics
    • Nancy Pelosi
    • Taiwan
    • United Nations
    • USA

    CATL in Hungary secures battery cell supply for Mercedes

    Battery market leader CATL is building a new factory in Debrecen, Hungary (China.Table reported). The project has an investment volume of the equivalent of €7.34 billion. Mercedes is the largest customer of this factory, but contrary to reports (for example, here or here) it is not deeper involved in the project. “We have the largest purchase volume, but are not involved financially or in any other way,” a spokeswoman for the group told Table.Media. Other media portrayed the process as if Mercedes itself was investing in the plant.

    Batteries for Mercedes’ electric-only strategy

    Mercedes is currently pursuing an “electric-only” strategy. Starting at the end of the decade, only EVs are to be built – at least “wherever market conditions permit,” as the company adds. From 2025, the plans call for every new vehicle architecture to be exclusively electric. Half of all new cars with a star are then to be EVs. To achieve this goal, Mercedes plans to invest around €40 billion between 2022 and 2030.

    The partnership with Contemporary Amperex Technology Co. Limited (CATL) is one component of these plans. Mercedes calculates that it will require 200-gigawatt hours of battery capacity to power a sufficient number of vehicles purely electrically. In the future, the company wants to sell fewer, but more expensive cars. However, the Covid pandemic has exposed weaknesses in the supply chains. That is why Mercedes plans to position itself as broadly as possible in the supply of batteries, i.e. recruit as many suppliers as possible.

    Battery production in Europe

    Mercedes needs eight cell factories worldwide to produce or buy sufficient battery capacity. Four factories in Europe, four in the USA, and China. In the USA, Mercedes is cooperating with Envision AESC. There, a battery cell factory will be built near the company’s plant. In China, the partners are CATL and Farasis. Mercedes even holds three percent of the shares in Farasis, which are said to have cost around €400 million. Originally, Farasis wanted to produce battery cells for Mercedes in Germany. But the project ultimately fell through in 2021.

    In Europe, Mercedes has a stake in the Automotive Cells Company (ACC) based in France – along with the Stellantis Group (Peugeot, Citroën, Fiat, Chrysler, Jeep) and the French energy company Total Energies. The goals are quite ambitious, as the company spokeswoman explains: “We have taken a stake in ACC together with Stellantis and Total Energies to build a European battery champion. Here we want to contribute our own expertise and thus accelerate ACC’s development.” This diversification is part of the “local-for-local” strategy. If production or the supply chain fails in one part of the world, factories in other countries are not entirely left high and dry. At the same time, greenhouse gases can be saved during transport.

    Hungary’s e-mobility offensive

    In Europe, CATL is to ensure this supply of the demanded cells. Fueled by Hungary’s economic policy. Prime Minister Viktor Orbán wants to make his country the second most important location for e-mobility – after Germany. For this, he lured Samsung SDI, among others, to Göd, a small town north of Budapest, where batteries are manufactured ever since. The company has already had to pay more than a dozen fines because of poor working conditions, noise, and pollution, as NZZ reports. South Korean companies SK One (in Ivancsa) and Ecpro BM (in Debrecen) will also soon manufacture batteries and required components in Hungary. In addition, there is the CATL plant announced by Mercedes.

    Investments in e-mobility in Hungary have totaled €8 billion in recent years. The CATL plant alone will almost double this sum. Where the workforce will come from is unclear. In an interview with Table.Media, Mercedes refers to the sustainable production of the battery cells but actually only means carbon neutrality. The company spokeswoman decidedly excludes the social and economic aspects.

    This poses problems for Hungary. Because there are simply not enough skilled workers in the country to meet the growing demand. Of the estimated 5,000 employees at Samsung SDI, just one hundred are said to come from Hungary, as Balogh Csaba, mayor of Göd, told NZZ. The rest of the workforce will come from Asia. How this might look at CATL is still completely open at the moment.

    • Car Industry

    News

    Li multiplies funds for the economy

    In the face of ever-new economic difficulties, Beijing is stepping up its economic stimulus. On Thursday, the State Council, China’s cabinet, presented a package of 19 measures. Some of them are in addition to the monetary stimulus decided in June, and some are funds that have not yet been drawn down. The focus is on higher loans for cities and municipalities and infrastructure support. This marks a return to the proven instruments with which China’s government is driving up growth. The June package focused more on new technology (China.Table reported).

    With a volume of ¥1 trillion (€145 billion), the additional funding is still three times higher than the current package from June, which comes to around ¥300 billion (€45 billion) in spending. According to the State Council release, it is now particularly important to ensure that the funds are used wisely, Premier Li Keqiang stressed.

    The most important of the 19 measures: The government is asking state banks to provide more money for infrastructure projects. This will help the construction industry and simultaneously make rural areas more accessible. For this alone, another ¥300 billion were intended. The municipalities and cities can also issue another ¥500 billion in bonds and thus take on more debt in the short term. However, this is an existing quota, the retrieval of which is now to be accelerated. Priority will be given to projects that provide affordable housing.

    A violent storm has been brewing over China’s economy. After the slowdown caused by the real estate crisis and Covid lockdowns, droughts and power shortages are added to the mix (China.Table reported). The labor market for young people, retail sales, and industrial production is weakening. fin

    • Climate
    • Coronavirus
    • Health
    • Heatwave
    • Li Keqiang
    Translation missing.

    Taiwan increases military spending

    Taiwan wants to increase its defense budget substantially. As the government announced on Thursday, it is to rise by around 14 percent next year to a record value of the equivalent of around €19.5 billion. Since 2017, defense spending on the island claimed by China as its own territory had only grown by less than four percent. The higher budget fully takes into account the “hostile threat” and is equivalent to 2.4 percent of the gross domestic product expected next year, the defense ministry said. About €3.6 billion alone are intended for new fighter jets and other new equipment. The planned defense spending, which must still be approved by parliament, marks the sixth consecutive year of rising defense spending in Taiwan.

    Chu Tzer-ming, Head of the Statistics Department, said the increase was mainly due to rising operating costs. He pointed to higher costs for fuel and maintenance for aircraft and ships. These would have to be dispatched to counter Chinese military activities near Taiwan. Taiwan’s military, he said, adheres to the principle of “preparing for war without seeking war and defending national security with strength.” China announced in March that it would increase its defense spending by seven percent this year to the equivalent of about $208 billion (China.Table reported). rtr/ari

    • Military

    Stock exchanges implement new green bond regulations

    China’s stock exchanges have begun implementing new green bond standards. The Shanghai Stock Exchange now requires that 100 percent of funds acquired through green bonds should be used for sustainable investments. That’s according to a statement from the exchange seen by Reuters. Previously, only 70 percent of proceeds from corporate green bonds traded on exchanges had to be used for sustainable purposes. For green bonds issued by state-owned companies, the ratio was only 50 percent. This has now been standardized. However, it is unclear whether green bonds issued by state-owned enterprises will also fall under the new standards. According to the Chinese financial website Securities Times, these bonds will be exempt from the new rules.

    However, funds from green bonds can be used to build and operate natural gas transmission and storage facilities – which include pipelines and liquefied natural gas terminals, for example; and to build large-scale hydropower plants, although the resulting reservoirs often lead to massive environmental degradation. Carbon capture, utilization, and storage (CCUS) projects can also be financed with green bonds in China; as can certain nuclear power plants such as modern pressurized water reactors (China.Table reported).

    In addition, the China Securities Regulatory Commission has called on the Shanghai and Shenzhen stock exchanges to revise their rules for issuing new bonds to match the recently published new green bond standards (China.Table reported). Brian Pascoe, Chairman of the International Capital Market Association, praised the fact that proceeds would now have to go entirely to sustainable projects. This would “allay concerns of international market participants” and facilitate foreign investment in China’s green finance market in the future.

    The Climate Bonds Initiative (CBI), a London-based nonprofit organization that promotes investment in a low-carbon economy, has repeatedly criticized that a large proportion of green bonds from China do not meet international standards. According to the organization’s surveys, 40 percent of the supposedly green bonds did so last year alone. The chairman of the CBI also commented positively on the new standards. nib

    • Finance
    • Stock Exchange

    Baidu unveils quantum computer

    The AI company Baidu has presented its first commercially viable quantum computer, the “Qianshi”. Hardware and software are designed to work together in a way that allows the device to be easily operated even by external users, the company said. Possible applications include the search for new chemical compounds for better batteries or protein structures for new pharmaceuticals. Baidu is thus competing with companies such as IBM and Amazon. Quantum computing can be used to perform certain types of calculations extremely quickly. fin

    • Artificial intelligence
    • Baidu
    • Technology

    China Perspective

    Taiwan is a highly emotionally charged topic for the Chinese

    If China decides to take Taiwan by force today, the vast majority of the Chinese would genuinely support it. Any Chinese openly against it would, at the very best, be inundated with the accusation of being a traitor. At worse, they could face imprisonment or physical violence from patriotic compatriots. The “Chinese” we are talking about here include Chinese citizens both in China and outside, and Chinese spending their impressionable years in the country but holding foreign passports now. 

    Taiwan is a highly emotionally charged topic for the Chinese, topping a long list of issues rooted in the history of China being bullied by Western powers in the 19th and the first half of the 20th century. Also on the list are Hong Kong, Macao, and big swathes of territories robbed by Russia, which also played a big role in the breakaway of today’s Mongolia. 

    These issues feature hugely in history textbooks for school children and college students and official media in China. They were and are very well absorbed, fostering a national victim mentality that seems to be difficult to overcome and a trauma that never heals. They have also been used to fit into the narrative of the Chinese Communist Party, which portrays itself as the sole savior for the nation from its deep humiliation. This is one of the founding myths of the People’s Republic. And it is used as a key justification of the party’s rule until today. 

    Nancy Pelosi pushed emotions to a new high 

    The loss of territories to Russia in the 19th century has, for obvious reasons, been downplayed in recent years. But Taiwan, backed by the United States, keeps flaring back to being a hot spot in international relations. Every new episode will conjure up the bitter past: It was exactly because of foreign intervention, mainly from the US, that the People’s Republic, when founded, wasn’t able to take Taiwan. And now, look, the US and its allies, still want to keep Taiwan from reunifying with the motherland. Their ultimate purpose, according to the Chinese, is to use Taiwan as what US general Douglas MacArthur called an “unsinkable aircraft carrier” in its effort to keep China down. 

    What makes the Chinese even angrier is the fact that Taiwan has been benefitting greatly from exporting to and investing in China since the 1990s. China is so important economically that some Taiwanese pop stars have settled down in big cities like Shanghai to stay closer to the big market, although they may have to think again now with the souring relationship between the Taiwan Straits that see no sign of improvements.

    The recent visit by US House Speaker Nancy Pelosi pushed the mainlanders’ hatred of the US and Taiwan to a new high. There was a very loud chorus on social media calling for and then the genuine expectation of Pelosi’s flight being shot down. The safe landing of her plane in Taipei triggered a big sigh of disappointment and even frustration, which even somehow made the following military exercises lusterless.

    Yes, military action can be talked about lightly like this. In general terms, the Chinese are big-time realists, having faith in money, military force, social Darwinism, and sheer power in international relations. “Political power comes from gun barrels” by Mao Tse-tung is a saying known by heart by everybody and always has strong resonance in the Middle Kingdom. 

    ‘China is unique

    Then what about the will of the Taiwanese people? What if, the result of a hypothetical referendum in Taiwan is a resounding yes to independence? 

    There are different approaches of the general public in China to these questions. 

    The first is cynicism about public opinion in democracies: It is not trustworthy because it’s always a result of manipulation by a power-thirsty politician, who represents, at the end of the day, only the rich, or different groups of the rich. The second is more straightforward: Taiwan is our land, what people living there think is simply irrelevant. If Taiwanese politicians have the guts to initiate a referendum, that move by itself will be a punishable provocation. 

    Supporters of reunification by force would also cite cases outside of China in the pre-democratic history of major democracies, and in contemporary times, most conveniently in Russia’s dealing with independence-seeking Republics like Chechnya. If Ukraine eventually falls into the hands of Putin, that will be a platinum case.

    Referendums in Scotland and Quebec on independence, and the peaceful divorce of the Czech Republic and Slovakia, are unheard of by the majority. For those having some knowledge of it, they can also be conveniently explained by the panacea explanation: There must be economic/financial interest behind it. Or another one-size-for-all argument for any issues regarding China: China is unique, the Taiwan issue is different, it has been Chinese territory since ancient times.

    Taiwan’s convoluted history 

    If confronted with the question of whether the Chinese enthusiasm for Taiwan’s reunification with China is a result of some kind of manipulation, the answer will be a categorical NO. How dare you?, a Chinese citizen might reply. Welcome to the land of fallacies comparable to the beliefs of Trump lovers and conspiracy theories. 

    The history of Taiwan since the Age of Exploration is much more complicated than that of most parts of China. It was colonized twice, by the Dutch in the 17th century and by the Japanese during 1895-1945. As a result of WW II, it was returned to the Republic of China, led by Chiang Kai-shek. His government represented China as a major founding member of the UN. However, Chiang Kai-shek and his followers were defeated by the Communists in the 1945-49 civil war and retreated to Taiwan. 

    Local Taiwanese at that time had to adapt to and accommodate a corrupt ROC government, whose brutal rule left a big scar on the mind of the local Taiwanese and a pestering rift between Taiwanese and mainlanders. To add to the insult, Taiwan was kicked out of the UN and gradually lost diplomatic ties with all but around a dozen countries, following the diplomatic thaw between the US and the People’s Republic in 1972. 

    The Orphan of Asia is the title name of both a novel by a Taiwanese writer and a pop song. The former told the identity plight of the Taiwanese; the latter lamented the land’s isolation. However, the pains touchingly described in these works will, alas, undoubtedly fall on a deaf ear of nationalist listeners on the mainland. 

    • Geopolitics
    • Nancy Pelosi
    • USA

    Executive Moves

    Marianne Baeumle is Head of Controlling at Augsburg-based robot manufacturer Kuka, which is owned by the Chinese Midea Group. From 2019 to 2020, she was chief financial officer of Kuka Systems China in Shanghai. Her China experience goes back 20 years.

    Andre Gantenbrink is now Assistant to the Management of Audi’s research subsidiary in Beijing. Previously, he worked in the Customer Racing division. Before that, Gantenbrink gained experience as Regional Manager at CRRC Group – Zhuzhou Times New Material Technology.

    Is something changing in your organization? Why not let us know at heads@table.media!

    Dessert

    Safe harbor – literally: Fishing boats in the harbor of the city of Yangjiang in the southern Chinese province of Guangdong were brought to safety from Typhoon Ma-on. The typhoon reached the coast near Maoming on Thursday morning. It had earlier lashed Hong Kong with rain and wind gusts. Ma-on is the ninth typhoon this year.

    China.Table editorial office

    CHINA.TABLE EDITORIAL OFFICE

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