Open letter to Olaf Scholz + China concerns become mainstream + Hong Kong Financial Summit

Dear reader,

The uproar over the sale of a stake in the Port of Hamburg to Cosco marks a tipping point in the perception of China. Never before was the German public so united in its view that China should be approached with more caution, analyzes Marcel Grzanna. After all, more caution would also have been called for with Russia. Admittedly, for many people, the People’s Republic is still very far away. But they now take notice whenever China is mentioned. Because the consequences of the Ukraine war have long since reached into every home.

This new awareness of the risks and pitfalls when dealing with China now weighs heavily on Chancellor Scholz’s shoulders. In Beijing, he will have to find clear words during his visit on Friday, but he also must avoid snubbing autocrat Xi to the point of damaging economic relations. A balancing act that will be difficult to say the least, if not impossible.

An open letter exclusively published by China.Table is also likely to add to the critical perception of China this week. In it, over 180 dissidents, of whom more than half live in Mainland China, address Olaf Scholz directly. Their message: “Do not travel to China in these times.” Human rights are still being violated in Xinjiang, Tibet and Inner Mongolia. Dictator Xi has broken too many promises and made too many threats, be it in Hong Kong or Taiwan, to simply continue business as usual with him now, they write. “Therefore, we appeal to the conscience of people in Germany and around the world to raise their voices,” write the signatories, who include writer Liao Yiwu and former student leaders Wang Dan and Wu’er Kaixi.

Representatives of the world’s biggest financial institutions will meet in Hong Kong this week to put the battered special economic zone back on the map at a major financial summit. Following the introduction of the security law, the city is considered an unsafe destination. An above-average number of top executives leave the city. In his analysis, Frank Sieren explains how government executive John Lee wants to restore confidence in the big players on Wall Street. That, too, is a balancing act.

Your
Fabian Peltsch

China skepticism becomes mainstream

Tipping point reached? Cosco container ship at the Tollerort terminal in Hamburg.

By

Marcel Grzanna

Environment, data protection, social justice – and now China. The German citizens’ movement Campact broke new ground at the end of October with its signature campaign against Chinese influence. For the first time in its 18-year history, the leaders of the non-governmental organization mobilized a protest that specifically accused German politics of economically cozying up to the “despots” in Beijing.

Campact took advantage of the media attention the matter received in recent weeks to generate a strong response from the public. Only a handful of people had indeed gathered in front of the German Chancellor’s Office to protest against the partial sale of a port terminal in Hamburg and to ask Olaf Scholz with a poster whether he was still aware of anything at all. But within 36 hours, 251,000 people signed the Internet petition.

Campact dedicates itself to many topics and goes “in where there is fire,” a spokeswoman explained. The port deal apparently had produced enough smoke to let the appeal reach effective dimensions. “Instead of making Germany even more susceptible to extortion in the future, Scholz must specifically protect central infrastructure, especially from the grip of autocratic states,” the organization warned.

While the petition was unsuccessful. The partial acquisition by Cosco of the operator of the Tollerort port terminal is a done deal, albeit on conditions that give China less power. But the growing concern in Germany about China’s influence is something the social-democratic Chancellor Scholz will have to take with him as extra baggage on his short trip to Beijing on Thursday.

‘Reducing dependence on autocratic states’

Scholz faces heavy criticism for his concessions to China, because elsewhere his coined term “Zeitenwende” (turning point) has a broader definition than he might have intended. Even from the ranks of the liberal coalition partner FDP come words of warning. “The chancellor’s dealings with China show that he has not learned any lessons from the failed Russia policy of recent years. The Zeitenwende cannot be limited to one country, but requires that we reduce our dependence on all autocratic states,” said Renata Alt, Chair of the Human Rights Committee in the German Bundestag.

That the tide will turn in the short term seems rather unlikely. “I’m repeatedly struck by the sheer scale of the skepticism towards China among the German public and business world,” is how Oliver Moody, the Berlin correspondent of the British Times, describes the trend on Twitter. But as yet, the growing awareness of the problem is not reflected in trade data, he wrote. “It’s interesting to see that (A) there is very widespread recognition in Germany of the strategic trap yawning in front of it; and (B) most of the economic data seem to suggest it’s headed into that trap regardless.”

At the head of the movement – at least in the public perception – is Scholz with the port deal. But it is not just the Chancellor himself who further drives dependency (China.Table reported). Many companies, institutions from research and science, but also state or local politicians keep turning the wheel for their own benefit. A sponsorship for a professor at a German university or research cooperation here, some big investment promises worth millions there, these tempt those in charge at many levels of society to move closer together with the regime.

Smoke over Kuka sale soon vanished

Regardless of how detailed the broad mass of signatories to the Campact petition actually looked into the core issue of the sale of critical infrastructure to the People’s Republic, the high number of signatories is evidence of a development that has been unfolding in Germany for several years. The perception of China’s strategic acquisitions in Europe and especially in Germany – and the associated political risks – reached the emotional mainstream of the population.

People who have never before seriously thought about how and where China already is embedded in Germany’s critical infrastructure are suddenly starting to take at least a superficial interest in the topic and think about possible consequences. Also because the German media landscape extensively covered the partial sale of the Tollerort terminal.

Given the sheer flood of news every day, this is a remarkable process. Because for many people, China is still just very far away – not only in Germany, but also in many other Western countries. Now, however, the People’s Republic seems to have come a significant bit closer to everyday life in Germany.

Although this is not the first time that takeovers by Chinese investors have sparked an uproar. In 2016, the matter came to a head when a bidder from the People’s Republic acquired the German robotics market leader Kuka. In response, the German Ministry for Economic Affairs and Energy tightened the Foreign Trade and Payments Act and reserved the right to stricter scrutiny of foreign investments. But the smoke soon cleared, and the big picture of China’s industrial policy strategy faded back into the shadows. Now, however, concerns about growing dependence are reaching segments of the population for whom Beijing’s industrial policy previously meant nothing more than boring news in the business section.

Dependence on Russian gas exacerbates concern

The situation in 2022 is different than it was six years ago. Public opinion toward China has become drastically more critical. The German Marshall Fund’s latest Transatlantic Trends Report states that of 14 countries surveyed, only a larger proportion of the population in the US and Canada considers China a rival than in Germany. And only in the United Kingdom is the number of those who consider China a partner as small as in Germany (12 percent). The Berlin Pulse Report of the Körber Stiftung also found that two-thirds of Germans are willing to reduce their economic dependence on China, even if this means economic sacrifices.

The ongoing de-democratization of Hong Kong since 2019, the evidence of systematic and extensive human rights crimes in Xinjiang and Tibet, the aggressive posturing of Wolf Warrior diplomats in foreign countries, or the threats against Taiwan all left their mark on Germany. However, the magnitude of these events was only amplified by the realization of Germany’s dependence on Russian raw materials. If Putin had not attacked Ukraine, the partial sale of the Hamburg terminal might have received little attention. Now it is something of a tipping point for the perception of China’s strategies in Germany.

Bankers meet with Hong Kong’s government

By

Frank Sieren

Hong Kong is back. On Wednesday, the financial metropolis invited the 100 leading Western financial institutions to the Global Financial Leaders’ Investment Summit. And they are indeed coming: Some 40 financial institutions will even send their chairmen or CEOs to the meeting organized by the Hong Kong Monetary Authority, including the biggest players on Wall Street: Daniel Pinto of JPMorgan will be attending, as will David Solomon of Goldman Sachs and James P. Gorman of Morgan Stanley. The heads of Blackrock, UBS, Blackstone and HSBC also arrived. A total of around 12,000 participants are expected to attend. It is to be a kind of “coming out party” for Hong Kong, writes Reuters. The motto: “Navigating behind the uncertainties”.

Particular attention is being paid to the participation of the US financial giants. This is because Washington recently designated the People’s Republic as a greater security risk than Russia and created very high hurdles for chip deals between US companies and China (China.Table reported). But so far, Washington has not stepped in when it came to snatching shares of the Chinese financial market in Hong Kong – regardless of all the tensions. Only the leaders of the US Congress’s China Group, Senator Jeff Merkley and Representative Jim McGovern of the Democrats expressed criticism. Representatives of the Committee for Freedom in Hong Kong Foundation (CFHK) also criticized the summit.

Hong Kong: relatively crisis-proof for IPOs

There’s a lot to talk about: The assessment at the end of the Covid pandemic and after the harsh crackdown on the protest movement from 2019 is mixed. After all, the 7.4 million metropolis maintained its position as the world’s fourth-largest financial hub behind New York and London and Singapore in the latest Global Financial Centres Index released in September. Hong Kong and Singapore change places occasionally.

The fear that a large part of the financial sector would move to Singapore because of zero-Covid and the rigid security policy imposed by Beijing has not yet materialized. Hong Kong’s proximity to the Chinese market is too important for that. This is above all apparent in the number of new IPOs. Hong Kong is expected to overtake Seoul this year and take third place in the global ranking of initial listings, behind Shanghai and Shenzhen. New York and London, on the other hand, were not even among the world’s top ten stock exchanges for IPOs in the first nine months of 2022.

The value of issued shares is simply higher in Hong Kong. The largest IPO on its stock exchange this year was by China Tourism Group Duty Free in August, with a volume of $2.1 billion. It was the sixth-largest listing worldwide. While new shares worth $8.8 billion were launched in Hong Kong between January and September, according to Refinitiv, and as much as $25 billion and $20 billion each in Shanghai and Shenzhen, respectively, the figure on New York’s Nasdaq was just $3.8 billion. In light of the slump on the global IPO market, Hong Kong is thus now considered comparatively crisis-proof.

Hong Kong managed to withstand Covid

The global financial industry certainly took note that, despite the crisis, Hong Kong largely managed to maintain its strengths, even in comparison to its rival Singapore. In 2021, the market value of the Hong Kong stock exchange was seven times higher than that of Singapore, and the trend is upward this year. With 2,500 companies, three times as many companies are traded in Hong Kong as in Singapore.

The situation is similar for bonds: In the growing segment of climate-friendly bonds, Hong Kong accounts for one-third of the Asian market. The volume is six times larger than what is traded in Singapore. Assets managed in Hong Kong, despite the crisis, are also six times higher than in Singapore at $190 billion.

Brain drain and zero growth in Hong Kong

But there are problems, which are largely attributed to Covid policy and the political situation. Only since Oct. 1 is it possible to enter Hong Kong again without quarantine. The border to China remains largely closed, however. Immigration from China is not possible, but the line of entrepreneurs and top executives from China who maintain a second foothold in Hong Kong is long. By the same token, an above-average number of top executives are leaving the city, largely because of the political situation since the National Security Act 2020 was enacted at Beijing’s behest. With 1.6 percent in 2021, the city at least lost significantly less population than originally expected.

But the brain drain weighs on growth. But most market participants believe that the metropolis will recover very quickly now that it appears to have at least lifted its own Covid regulations (China.Table reported).

Government Chief Executive John Lee aims to bring top talent back to the city and provides substantial funding to this end. He wants to return to business as usual as quickly as possible. Lee’s goal is to have 100 new tech companies set up shop in Hong Kong over the next five years. He also wants to make it easier for high-tech companies to be listed on the stock exchange, even if they are still making little or no profit.

Hong Kong’s human rights situation under criticism

But international criticism of the dwindling rights to freedom of speech and assembly remains. While the bankers are in session, the leaders of the protest movement serve their prison sentences, including publisher Jimmy Lai (14 months in prison) and activist Joshua Wong (17 months). Wong and 29 others are still on trial for allegedly violating national security.

Wall Street walks a tightrope act. When Citigroup CEO Jane Fraser was asked if she condemns China’s human rights violations, she replied, “Condemn is a very strong word. We certainly are very distressed to see it going on.” Her bank alone has invested more than $20 billion in China. But she had to cancel her trip to Hong Kong on short notice because of a Covid infection.

Lee, who is on the US sanctions list, also performs a balancing act. On the one hand, Lee, as Beijing’s governor, wants and needs to keep the scope for critical civil society as small as possible. On the other hand, freedom of information is particularly important for financial institutions. After all, unlike on the Mainland, the Internet is not censored in Hong Kong, the rule of law in the financial and economic sectors is on par with international standards, and the Hong Kong media are, despite everything, significantly freer than in Mainland China. One of the most important Asian dailies, the Hong Kong South China Morning Post, still reports critically, even though it is owned by Alibaba founder Jack Ma.

Stock markets at rock bottom

So what will global bankers want to talk to Lee about? What the markets think of Xi Jinping’s policies or the new Politburo Standing Committee packed with Xi loyalists? On the Monday after the Party Congress, investors sent weak stock markets further tumbling another 6.4 percent, which was also a demonstration of their power.

The list of complaints is long. Foreign investment banks are fuming since they are performing worse than their domestic competitors. According to Dealogic, the combined market share of the five largest US investment banks in Hong Kong nearly halved from a year ago to 21 percent. On the Mainland, their share shrank by two-thirds to a single percent.

US banks now want to know what Beijing will do to help them get back on track. After all, Beijing has promised to open its markets to Western financial services providers. But too little has happened, Wall Street bankers grumble. That is one reason why the first day of the financial summit will be held behind closed doors.

Foxconn increases bonus payments for Zhengzhou workers

After numerous employees fled from the factory of Apple supplier Foxconn in Zhengzhou, the company is quadrupling its bonus payments. In November, it plans to pay an additional ¥400 (about €55) per day to employees of the electronics division of the factory affected by the Covid lockdown. Foxconn announced this on WeChat on Tuesday. The Taiwanese corporation had initially announced a payment of ¥100. However, this apparently could not sufficiently alleviate the resentment in the factory over strict Covid measures.

Over the weekend, footage surfaced on Chinese online networks that allegedly showed tens of thousands of Foxconn employees fleeing the premises (China.Table reported). Some of them tried to reach their hometowns on foot over roads and fields. The videos could not be independently verified. As a result, iPhone production could drop by up to 30 percent, which is why Foxconn apparently wants to ramp up production at its Shenzhen factory (China.Table reported). Foxconn employs between 200,000 and 300,000 workers at its Zhengzhou plant. Foxconn confirmed a small number of Covid infections. The Financial Times, on the other hand, reported more than 10,000 infected. rtr/ck

Tesla sends Shanghai engineers to the USA

Tesla plans to transfer engineers and production workers from its recently upgraded factory in Shanghai to its plant in Fremont, California. The company hopes this will boost production at the US facility, Bloomberg reported on Tuesday, citing people familiar with the plans. According to the report, the main focus is on automation and control experts, who would stay in the US for at least three months. Tesla declined to comment on the matter.

Tesla is currently benefiting enormously from the modernization and capacity expansion of Gigafactory 3 in Shanghai by around 30 percent to about one million cars (Model 3 and Y) per year. This has allowed the American EV manufacturer to reduce waiting times to between one and four weeks. In September, Tesla reached record monthly sales in China with 83,135 vehicles (China.Table reported).

Within about five weeks, Tesla carried out improvements and maintenance work on the machines in Shanghai, according to Bloomberg – under the supervision of the very automation and control engineers who are now apparently also to be deployed to California. In Fremont, Tesla manufactures the Model S, X, 3 and Y; the annual capacity is 650,000 cars. ck

Tesla sends Shanghai engineers to the USA

Tesla plans to transfer engineers and production workers from its recently upgraded factory in Shanghai to its plant in Fremont, California. The company hopes this will boost production at the US facility, Bloomberg reported on Tuesday, citing people familiar with the plans. According to the report, the main focus is on automation and control experts, who would stay in the US for at least three months. Tesla declined to comment on the matter.

Tesla is currently benefiting enormously from the modernization and capacity expansion of Gigafactory 3 in Shanghai by around 30 percent to about one million cars (Model 3 and Y) per year. This has allowed the American EV manufacturer to reduce waiting times to between one and four weeks. In September, Tesla reached record monthly sales in China with 83,135 vehicles (China.Table reported).

Within about five weeks, Tesla carried out improvements and maintenance work on the machines in Shanghai, according to Bloomberg – under the supervision of the very automation and control engineers who are now apparently also to be deployed to California. In Fremont, Tesla manufactures the Model S, X, 3 and Y; the annual capacity is 650,000 cars. ck

German Ambassador Flor has to go into quarantine after Scholz visit

German Ambassador Patricia Flor and the German diplomats in China who will be present during Chancellor Olaf Scholz’s visit to Beijing next Friday will have to go into central quarantine for ten days after the end of the meeting. Table.Media learned this from official Chinese circles. A spokesman for the German Embassy confirmed the period of quarantine.

The same applies to employees of the Chinese Foreign Ministry. This is how the Chinese government allows the chancellor and his delegation to enter the country without quarantine. The Covid policy is also the main reason why Scholz will not spend the night in Beijing, but will fly back to Germany on the same evening. Currently, all inbound travelers must spend seven days in quarantine at a central facility, usually hotels prepared for this purpose. After that, three additional days of quarantine at home are mandatory.

A so-called bubble is specifically created for Scholz’s delegation. All those who enter this bubble and do not leave the country with Scholz will then have to go into quarantine. On her own entry into office, Ambassador Flor was allowed to spend her quarantine period in her residence, which is located on the embassy grounds, as is customary for all ambassadors.

It is an already well-rehearsed procedure. The Bubble was first used for Western politicians on John Kerry’s visit. The former Secretary of State and US President Joe Biden’s climate change envoy already entered China twice – in April and September 202. Both times, he and his delegation were allowed in and out without quarantine, while US diplomats stationed in China had to enter quarantine. The situation was similar when Deputy Secretary of State Wendy Sherman visited China in July 2021. At the time, she was received by State Councilor and Foreign Minister Wang Yi. frs

Propaganda accusations against ‘The China Project’

The well-known American China platform “The China Project” has come under fire in the US Congress. It filed a complaint accusing the platform of engaging in propaganda in the service of the Chinese government. US Senator Marco Rubio commented on the complaint, saying that “American citizens acting as agents of a hostile foreign government should not be allowed to operate in the shadows by exploiting our laws and freedoms.” Rubio and US Rep. Chris Smith called on editors to disclose within the Foreign Agents Registration Act (FARA) “who they are ultimately working for.” The two politicians, who are considered hawk politicians, thus placed the portal on par with the official Chinese news service Xinhua and the Russian state broadcaster RT.

“The China Project” and its affiliated podcast “Sinica” are considered one of the best-informed China channels in the US. Jeremy Goldkorn, editor-in-chief of the platform, called the accusations “absurd” in an open letter. He said the channel provides “balanced and fair coverage of China.” Critical reporting on topics such as human rights violations in Xinjiang and Hong Kong are part of its daily business, Goldkorn said. The channel, which was labeled an “anti-China organization” by Chinese state media as recently as March this year, has been blocked in the People’s Republic since 2018.

The complaint was initiated by American journalist Shannon Van Sant, who worked for The China Project for two months in 2020. In it, Van Sant, who now lives in Europe and writes for Politico, stated, among other things, that she had been criticized by editors for trying to write more about Chinese human rights abuses. Van Sant’s complaint also referred to an investor in the China project, Clarence Kwan, writes US media startup Semafor. Kwan is a longtime Deloitte executive who is listed in his Linkedin bio as a director of the China Overseas Exchange Association – a nonprofit organization that claims on its website to be overseen by a government agency.

Van Sant was a “disgruntled former employee” who was “exploiting the political atmosphere in Washington D.C. to seek revenge,” said Editor-in-Chief Goldkorn. The only connection anyone ever had to the Chinese state, he said, was Van Sant’s employment: The journalist was an employee of state media outlet China Central TV (now CGTN) from 2006 to 2008. fpe

NGOs: ‘Not the time for friendly visits’

Several renowned human rights organizations are calling on the German government to improve the enforcement of due diligence when dealing with deliveries from Xinjiang. “Chancellor Olaf Scholz’s decision to now travel to Beijing with a business delegation shows that for Germany, profit continues to come before human rights,” Dolkun Isa, President of the World Uyghur Congress, said at a press conference in Berlin on Wednesday. Scholz would thus disregard the government coalition agreement, which envisages a stronger emphasis on ethical aspects of trade policy. “Many countries are readjusting their China strategy after Xi Jinping’s re-election for a third term.”

The other organizations also stressed that now is “not the right time for friendly visits” and normal operation of China relations. Criticism was voiced by

Human Rights Watch,
the Society for Threatened Peoples,
the World Uyghur Congress,
Suedwind e.V. and
the International Campaign for Tibet

about the Chancellor’s trip and the reckless supply chain policies of German companies. The event was held at the Federal Press Conference (BPK) in Berlin. As the association reported, the Chinese embassy had contacted the board of the Federal Press Conference in advance. Apparently, it wanted to influence the event attended by the human rights groups. The BPK rejected the attempt.

All NGOs present based their demands on assessments by international bodies that have identified rights violations in China. These include the International Labor Organization (ILO), the High Commissioner for Human Rights, and, on Wednesday, a group of 50 UN states, including Germany, who denounced “serious and systematic” human rights violations in Xinjiang. fin

‘Mr. Scholz, please do not travel to China’

Among the initiators are history professor Wang Dan (USA), activists Wu’er Kaixi (Taiwan) and Zhou Fengsuo (USA), who led the 1989 Tiananmen Square protests in Beijing, along with documentary filmmaker Yang Weidong (Germany). Notable supporters of the campaign include Berlin-based writer Liao Yiwu, former student leader Chai Ling, gymnastics coach Gao Jian, who led the Chinese women’s team to Olympic gold in 2008, and author and poet Chen Maiping, Secretary General of the independent Chinese PEN Club.

Dear Chancellor Scholz,

We are a group of former Chinese students, artists, writers, poets and intellectuals who have been forced to live in exile around the world since the 1989 Tiananmen Massacre in Beijing, as well as dutiful Chinese who have recently been exiled from Hong Kong to other parts of the world. We were very surprised to learn that you have planned a visit to China in November.

Therefore, we would like to ask you the following questions:

1) The Covid-19 pandemic: Although there is still no knowledge about the origin of the global pandemic, will you visit China at this time?

2) Xi Jinping’s dictatorship: At the 20th Party Congress of the Chinese Communist Party, Xi Jinping abused his power and realized his goal of ruling China for the third time in a row. Although Xi is now a veritable dictator, will you visit China at this time?

3) Human Rights/Genocide: Numerous human rights crimes have been committed throughout China, including genocide in the Xinjiang Autonomous Region, Tibet, and Southern Mongolia, as well as the stupid and cruel zero-Covid policy that makes life difficult for the Chinese people over the country. Although people’s grievances are boiling, will you visit China at this time?

4) The Hong Kong issue: The Chinese Communist Party declared that the “Sino-British Joint Declaration has become a historical document”. Xi Jinping thus broke the CCP’s promise that Hong Kong citizens would govern the region for the next 50 years if the principle of “one country, two systems” remained unchanged. The Party manipulated the Hong Kong Legislative Council into passing the notorious National Security Law, creating a large number of “Hong Kong refugees”. Although this has devastating consequences for China and the world, will you visit China at this time?

5) The Taiwan issue: The Republic of China was founded in 1911 and has existed as an independent country for over 100 years. Although Xi Jinping’s plans to forcibly unify Taiwan are becoming more concrete during his third term, will you visit China at this time?

We are aware that the above issues are mostly China’s domestic problems, which have less to do with the world and Germany. You are leading an economic delegation during your visit to China. But as a politician, do you consider that China today is not only a centralized state but also gradually becoming a new Nazi-style dictatorship?

Xi Jinping’s current regime is troubled both internally and externally, with infighting and public grievances, emerging one after another. As a representative of the world’s liberal democracies who is about to visit China under Xi Jinping’s dictatorship, what views are you going to express to him?

Hereby, we call on the people of conscience in Germany and around the world to make their voices heard, “Mr. Scholz, please stop going to China”!

Wang Dan, Wuer Kaixi, Zhou Fengsuo, Yang Weidong, Liao Yiwu, Chen Maiping, Wang Longmeng, Guo Zhaohui, Huang Xizhi, Jia Guoqing, Su Xiaokang, Su Yutong, Yan Geling, Hu Ping, Yan Jiaqi, Gao Gao, Wang Juntao, Yang Jianli, Zhang Boli, Xiong Yan, Chen Pokong, Tang Kai, Chai Ling, Feng Congde, Wang Wen, Bai Meng, Xu Li, Ye Qiuli, Meng Jinghui, Shi Hang, Wang Dai, Gong Zexun, Chen Shujun, Huang Xuetao, Chen Li, Shi Meilan, Feng Jianzhong, Mo Li, Fu Zhengming, Wang Guoxing, Wei Jingsheng, Wu Hong, Zhang Guoting, Tie Niu, Li Zhen, Pan Yongzhong, Fei Liangyong, Cheng Binlin, Zhu Hongyi, Shi Kangcheng, Shi Lin, Ran Na, Li Shulan, Ma Yanling, Gao Jian, Li Furong, Fang Zhongning, Qian Ailing, Qin Jin, Ruan Jie, Feifei, Xu Xiang, Lin Ren, Jiang Hao, Yang Lian, Zhang Gang, Wang Ge, Chen Peixi, Zhou Wei, Fang Boge, Maggie Cheung, Shao Guoqiang, Xu Zhiqing, Ma Like, Wang Lingling, Chen Jiefu, Dong Changjun, Xiao Min, Chen Lan, Zhang Yu, Lin Yuxiao, Bai Yun, Sun Yifeng, Zhao Chengmin, Wang Rui, Lu Baixue, Ni Hui, Wang Mingliang, Yin Xiangnan, Fu Bangde, Zhang Jiwei, Lin Guorui, Lin Minshu, Lin Yanan, Jiang Yiyun, Liu Baihong, Ruan Jianan, Lin Zifan, Xia Zhihao, Ji Ruding, Li Zhongbing, Huang Wenlong, Xie Yanwen, Nakano , Fu Zhixiang, Hong Zhenxia, Liu Ziting, Rong Zikang, Lu Zhiying, Fang Yiqiang, Li Yungui, Zheng Yiwen, Lei Jinbao, Wu Meilong, Wu Xinzhen, Wang Meizhu, Guo Fangtian, Li Yahui, Chen Wenting, Cao Minyou, Wang Yiting, Chen Wanxuan, Wu Meiyu, Cai Yiting, Zheng Changmeng, Lin Jia Lun, Huang Likun, Aibayashi, Li Yuquan, Huang Yunhuan, Wu Yunru, Li Zhaofen, Lu Muzhong, Li Chengbai, Fang Zhaoyu, Liu Yihui, Ding Hanzhen, Wu Jiarui, Shu Lupei, Zhou Baizhi, Zhang Ziyu, Zhang Honglun, Zhou Qiongwen, Ni Yifang, Guo Guifei, Yang Peifang, Huang Wenwang, Huang Shengmei, Zheng Liqing, Xu Zhiyun, Zhang Menghan, Li Xiaoai, Wang Enlong, Zhu Zhengting, Deng Shihan, Chen Zhengqian, Wu Junbo, Ruan Xinxue, Weng Huizhu, Wu Sihan, Lin Peiling, Deng Hailai, Chen Yiyi, Li Jianzhi, Wu Shufen, Jin Yaqi, Lai Yiyi, Huang Yulin, Zhang Yihu, Wang Junmin, Zhang Shigang, Mingming Wang, Lei Jin, Zhang Xiaoling, Shi Yang, Wang Junmei, Li Sanmu, Tian Linyuan, Shi Qingnian, Li Geyan, Shi Qing, Huang Peiyu, Gao Ku, Emi Itamoto, Zhao Minkang, Fan Qianfan

A girl from Shenyang in the northeastern province of Liaoning dressed up as a Hulk with pumpkin braids for Halloween. In China, this year’s celebration was themed around the pandemic. Social media videos show people dressed up as Batman and zombies lining up for the Covid test before the Halloween party. One young man dressed up as a Covid test station – and was immediately stopped by the police.

CHINA.TABLE EDITORIAL OFFICE

Amelie
Richter

Marcel
Grzanna

Fabian
Peltsch

Julia
Fiedler

Angela
Köckritz

Jörn
Petring

Dear reader,

The uproar over the sale of a stake in the Port of Hamburg to Cosco marks a tipping point in the perception of China. Never before was the German public so united in its view that China should be approached with more caution, analyzes Marcel Grzanna. After all, more caution would also have been called for with Russia. Admittedly, for many people, the People’s Republic is still very far away. But they now take notice whenever China is mentioned. Because the consequences of the Ukraine war have long since reached into every home.

This new awareness of the risks and pitfalls when dealing with China now weighs heavily on Chancellor Scholz’s shoulders. In Beijing, he will have to find clear words during his visit on Friday, but he also must avoid snubbing autocrat Xi to the point of damaging economic relations. A balancing act that will be difficult to say the least, if not impossible.

An open letter exclusively published by China.Table is also likely to add to the critical perception of China this week. In it, over 180 dissidents, of whom more than half live in Mainland China, address Olaf Scholz directly. Their message: “Do not travel to China in these times.” Human rights are still being violated in Xinjiang, Tibet and Inner Mongolia. Dictator Xi has broken too many promises and made too many threats, be it in Hong Kong or Taiwan, to simply continue business as usual with him now, they write. “Therefore, we appeal to the conscience of people in Germany and around the world to raise their voices,” write the signatories, who include writer Liao Yiwu and former student leaders Wang Dan and Wu’er Kaixi.

Representatives of the world’s biggest financial institutions will meet in Hong Kong this week to put the battered special economic zone back on the map at a major financial summit. Following the introduction of the security law, the city is considered an unsafe destination. An above-average number of top executives leave the city. In his analysis, Frank Sieren explains how government executive John Lee wants to restore confidence in the big players on Wall Street. That, too, is a balancing act.

Your
Fabian Peltsch

China skepticism becomes mainstream

By

Marcel Grzanna

Environment, data protection, social justice – and now China. The German citizens’ movement Campact broke new ground at the end of October with its signature campaign against Chinese influence. For the first time in its 18-year history, the leaders of the non-governmental organization mobilized a protest that specifically accused German politics of economically cozying up to the “despots” in Beijing.

Campact took advantage of the media attention the matter received in recent weeks to generate a strong response from the public. Only a handful of people had indeed gathered in front of the German Chancellor’s Office to protest against the partial sale of a port terminal in Hamburg and to ask Olaf Scholz with a poster whether he was still aware of anything at all. But within 36 hours, 251,000 people signed the Internet petition.

Campact dedicates itself to many topics and goes “in where there is fire,” a spokeswoman explained. The port deal apparently had produced enough smoke to let the appeal reach effective dimensions. “Instead of making Germany even more susceptible to extortion in the future, Scholz must specifically protect central infrastructure, especially from the grip of autocratic states,” the organization warned.

While the petition was unsuccessful. The partial acquisition by Cosco of the operator of the Tollerort port terminal is a done deal, albeit on conditions that give China less power. But the growing concern in Germany about China’s influence is something the social-democratic Chancellor Scholz will have to take with him as extra baggage on his short trip to Beijing on Thursday.

‘Reducing dependence on autocratic states’

Scholz faces heavy criticism for his concessions to China, because elsewhere his coined term “Zeitenwende” (turning point) has a broader definition than he might have intended. Even from the ranks of the liberal coalition partner FDP come words of warning. “The chancellor’s dealings with China show that he has not learned any lessons from the failed Russia policy of recent years. The Zeitenwende cannot be limited to one country, but requires that we reduce our dependence on all autocratic states,” said Renata Alt, Chair of the Human Rights Committee in the German Bundestag.

That the tide will turn in the short term seems rather unlikely. “I’m repeatedly struck by the sheer scale of the skepticism towards China among the German public and business world,” is how Oliver Moody, the Berlin correspondent of the British Times, describes the trend on Twitter. But as yet, the growing awareness of the problem is not reflected in trade data, he wrote. “It’s interesting to see that (A) there is very widespread recognition in Germany of the strategic trap yawning in front of it; and (B) most of the economic data seem to suggest it’s headed into that trap regardless.”

At the head of the movement – at least in the public perception – is Scholz with the port deal. But it is not just the Chancellor himself who further drives dependency (China.Table reported). Many companies, institutions from research and science, but also state or local politicians keep turning the wheel for their own benefit. A sponsorship for a professor at a German university or research cooperation here, some big investment promises worth millions there, these tempt those in charge at many levels of society to move closer together with the regime.

Smoke over Kuka sale soon vanished

Regardless of how detailed the broad mass of signatories to the Campact petition actually looked into the core issue of the sale of critical infrastructure to the People’s Republic, the high number of signatories is evidence of a development that has been unfolding in Germany for several years. The perception of China’s strategic acquisitions in Europe and especially in Germany – and the associated political risks – reached the emotional mainstream of the population.

People who have never before seriously thought about how and where China already is embedded in Germany’s critical infrastructure are suddenly starting to take at least a superficial interest in the topic and think about possible consequences. Also because the German media landscape extensively covered the partial sale of the Tollerort terminal.

Given the sheer flood of news every day, this is a remarkable process. Because for many people, China is still just very far away – not only in Germany, but also in many other Western countries. Now, however, the People’s Republic seems to have come a significant bit closer to everyday life in Germany.

Although this is not the first time that takeovers by Chinese investors have sparked an uproar. In 2016, the matter came to a head when a bidder from the People’s Republic acquired the German robotics market leader Kuka. In response, the German Ministry for Economic Affairs and Energy tightened the Foreign Trade and Payments Act and reserved the right to stricter scrutiny of foreign investments. But the smoke soon cleared, and the big picture of China’s industrial policy strategy faded back into the shadows. Now, however, concerns about growing dependence are reaching segments of the population for whom Beijing’s industrial policy previously meant nothing more than boring news in the business section.

Dependence on Russian gas exacerbates concern

The situation in 2022 is different than it was six years ago. Public opinion toward China has become drastically more critical. The German Marshall Fund’s latest Transatlantic Trends Report states that of 14 countries surveyed, only a larger proportion of the population in the US and Canada considers China a rival than in Germany. And only in the United Kingdom is the number of those who consider China a partner as small as in Germany (12 percent). The Berlin Pulse Report of the Körber Stiftung also found that two-thirds of Germans are willing to reduce their economic dependence on China, even if this means economic sacrifices.

The ongoing de-democratization of Hong Kong since 2019, the evidence of systematic and extensive human rights crimes in Xinjiang and Tibet, the aggressive posturing of Wolf Warrior diplomats in foreign countries, or the threats against Taiwan all left their mark on Germany. However, the magnitude of these events was only amplified by the realization of Germany’s dependence on Russian raw materials. If Putin had not attacked Ukraine, the partial sale of the Hamburg terminal might have received little attention. Now it is something of a tipping point for the perception of China’s strategies in Germany.

Bankers meet with Hong Kong’s government

By

Frank Sieren

Hong Kong is back. On Wednesday, the financial metropolis invited the 100 leading Western financial institutions to the Global Financial Leaders’ Investment Summit. And they are indeed coming: Some 40 financial institutions will even send their chairmen or CEOs to the meeting organized by the Hong Kong Monetary Authority, including the biggest players on Wall Street: Daniel Pinto of JPMorgan will be attending, as will David Solomon of Goldman Sachs and James P. Gorman of Morgan Stanley. The heads of Blackrock, UBS, Blackstone and HSBC also arrived. A total of around 12,000 participants are expected to attend. It is to be a kind of “coming out party” for Hong Kong, writes Reuters. The motto: “Navigating behind the uncertainties”.

Particular attention is being paid to the participation of the US financial giants. This is because Washington recently designated the People’s Republic as a greater security risk than Russia and created very high hurdles for chip deals between US companies and China (China.Table reported). But so far, Washington has not stepped in when it came to snatching shares of the Chinese financial market in Hong Kong – regardless of all the tensions. Only the leaders of the US Congress’s China Group, Senator Jeff Merkley and Representative Jim McGovern of the Democrats expressed criticism. Representatives of the Committee for Freedom in Hong Kong Foundation (CFHK) also criticized the summit.

Hong Kong: relatively crisis-proof for IPOs

There’s a lot to talk about: The assessment at the end of the Covid pandemic and after the harsh crackdown on the protest movement from 2019 is mixed. After all, the 7.4 million metropolis maintained its position as the world’s fourth-largest financial hub behind New York and London and Singapore in the latest Global Financial Centres Index released in September. Hong Kong and Singapore change places occasionally.

The fear that a large part of the financial sector would move to Singapore because of zero-Covid and the rigid security policy imposed by Beijing has not yet materialized. Hong Kong’s proximity to the Chinese market is too important for that. This is above all apparent in the number of new IPOs. Hong Kong is expected to overtake Seoul this year and take third place in the global ranking of initial listings, behind Shanghai and Shenzhen. New York and London, on the other hand, were not even among the world’s top ten stock exchanges for IPOs in the first nine months of 2022.

The value of issued shares is simply higher in Hong Kong. The largest IPO on its stock exchange this year was by China Tourism Group Duty Free in August, with a volume of $2.1 billion. It was the sixth-largest listing worldwide. While new shares worth $8.8 billion were launched in Hong Kong between January and September, according to Refinitiv, and as much as $25 billion and $20 billion each in Shanghai and Shenzhen, respectively, the figure on New York’s Nasdaq was just $3.8 billion. In light of the slump on the global IPO market, Hong Kong is thus now considered comparatively crisis-proof.

Hong Kong managed to withstand Covid

The global financial industry certainly took note that, despite the crisis, Hong Kong largely managed to maintain its strengths, even in comparison to its rival Singapore. In 2021, the market value of the Hong Kong stock exchange was seven times higher than that of Singapore, and the trend is upward this year. With 2,500 companies, three times as many companies are traded in Hong Kong as in Singapore.

The situation is similar for bonds: In the growing segment of climate-friendly bonds, Hong Kong accounts for one-third of the Asian market. The volume is six times larger than what is traded in Singapore. Assets managed in Hong Kong, despite the crisis, are also six times higher than in Singapore at $190 billion.

Brain drain and zero growth in Hong Kong

But there are problems, which are largely attributed to Covid policy and the political situation. Only since Oct. 1 is it possible to enter Hong Kong again without quarantine. The border to China remains largely closed, however. Immigration from China is not possible, but the line of entrepreneurs and top executives from China who maintain a second foothold in Hong Kong is long. By the same token, an above-average number of top executives are leaving the city, largely because of the political situation since the National Security Act 2020 was enacted at Beijing’s behest. With 1.6 percent in 2021, the city at least lost significantly less population than originally expected.

But the brain drain weighs on growth. But most market participants believe that the metropolis will recover very quickly now that it appears to have at least lifted its own Covid regulations (China.Table reported).

Government Chief Executive John Lee aims to bring top talent back to the city and provides substantial funding to this end. He wants to return to business as usual as quickly as possible. Lee’s goal is to have 100 new tech companies set up shop in Hong Kong over the next five years. He also wants to make it easier for high-tech companies to be listed on the stock exchange, even if they are still making little or no profit.

Hong Kong’s human rights situation under criticism

But international criticism of the dwindling rights to freedom of speech and assembly remains. While the bankers are in session, the leaders of the protest movement serve their prison sentences, including publisher Jimmy Lai (14 months in prison) and activist Joshua Wong (17 months). Wong and 29 others are still on trial for allegedly violating national security.

Wall Street walks a tightrope act. When Citigroup CEO Jane Fraser was asked if she condemns China’s human rights violations, she replied, “Condemn is a very strong word. We certainly are very distressed to see it going on.” Her bank alone has invested more than $20 billion in China. But she had to cancel her trip to Hong Kong on short notice because of a Covid infection.

Lee, who is on the US sanctions list, also performs a balancing act. On the one hand, Lee, as Beijing’s governor, wants and needs to keep the scope for critical civil society as small as possible. On the other hand, freedom of information is particularly important for financial institutions. After all, unlike on the Mainland, the Internet is not censored in Hong Kong, the rule of law in the financial and economic sectors is on par with international standards, and the Hong Kong media are, despite everything, significantly freer than in Mainland China. One of the most important Asian dailies, the Hong Kong South China Morning Post, still reports critically, even though it is owned by Alibaba founder Jack Ma.

Stock markets at rock bottom

So what will global bankers want to talk to Lee about? What the markets think of Xi Jinping’s policies or the new Politburo Standing Committee packed with Xi loyalists? On the Monday after the Party Congress, investors sent weak stock markets further tumbling another 6.4 percent, which was also a demonstration of their power.

The list of complaints is long. Foreign investment banks are fuming since they are performing worse than their domestic competitors. According to Dealogic, the combined market share of the five largest US investment banks in Hong Kong nearly halved from a year ago to 21 percent. On the Mainland, their share shrank by two-thirds to a single percent.

US banks now want to know what Beijing will do to help them get back on track. After all, Beijing has promised to open its markets to Western financial services providers. But too little has happened, Wall Street bankers grumble. That is one reason why the first day of the financial summit will be held behind closed doors.

Foxconn increases bonus payments for Zhengzhou workers

After numerous employees fled from the factory of Apple supplier Foxconn in Zhengzhou, the company is quadrupling its bonus payments. In November, it plans to pay an additional ¥400 (about €55) per day to employees of the electronics division of the factory affected by the Covid lockdown. Foxconn announced this on WeChat on Tuesday. The Taiwanese corporation had initially announced a payment of ¥100. However, this apparently could not sufficiently alleviate the resentment in the factory over strict Covid measures.

Over the weekend, footage surfaced on Chinese online networks that allegedly showed tens of thousands of Foxconn employees fleeing the premises (China.Table reported). Some of them tried to reach their hometowns on foot over roads and fields. The videos could not be independently verified. As a result, iPhone production could drop by up to 30 percent, which is why Foxconn apparently wants to ramp up production at its Shenzhen factory (China.Table reported). Foxconn employs between 200,000 and 300,000 workers at its Zhengzhou plant. Foxconn confirmed a small number of Covid infections. The Financial Times, on the other hand, reported more than 10,000 infected. rtr/ck

Tesla sends Shanghai engineers to the USA

Tesla plans to transfer engineers and production workers from its recently upgraded factory in Shanghai to its plant in Fremont, California. The company hopes this will boost production at the US facility, Bloomberg reported on Tuesday, citing people familiar with the plans. According to the report, the main focus is on automation and control experts, who would stay in the US for at least three months. Tesla declined to comment on the matter.

Tesla is currently benefiting enormously from the modernization and capacity expansion of Gigafactory 3 in Shanghai by around 30 percent to about one million cars (Model 3 and Y) per year. This has allowed the American EV manufacturer to reduce waiting times to between one and four weeks. In September, Tesla reached record monthly sales in China with 83,135 vehicles (China.Table reported).

Within about five weeks, Tesla carried out improvements and maintenance work on the machines in Shanghai, according to Bloomberg – under the supervision of the very automation and control engineers who are now apparently also to be deployed to California. In Fremont, Tesla manufactures the Model S, X, 3 and Y; the annual capacity is 650,000 cars. ck

Tesla sends Shanghai engineers to the USA

Tesla plans to transfer engineers and production workers from its recently upgraded factory in Shanghai to its plant in Fremont, California. The company hopes this will boost production at the US facility, Bloomberg reported on Tuesday, citing people familiar with the plans. According to the report, the main focus is on automation and control experts, who would stay in the US for at least three months. Tesla declined to comment on the matter.

Tesla is currently benefiting enormously from the modernization and capacity expansion of Gigafactory 3 in Shanghai by around 30 percent to about one million cars (Model 3 and Y) per year. This has allowed the American EV manufacturer to reduce waiting times to between one and four weeks. In September, Tesla reached record monthly sales in China with 83,135 vehicles (China.Table reported).

Within about five weeks, Tesla carried out improvements and maintenance work on the machines in Shanghai, according to Bloomberg – under the supervision of the very automation and control engineers who are now apparently also to be deployed to California. In Fremont, Tesla manufactures the Model S, X, 3 and Y; the annual capacity is 650,000 cars. ck

German Ambassador Flor has to go into quarantine after Scholz visit

German Ambassador Patricia Flor and the German diplomats in China who will be present during Chancellor Olaf Scholz’s visit to Beijing next Friday will have to go into central quarantine for ten days after the end of the meeting. Table.Media learned this from official Chinese circles. A spokesman for the German Embassy confirmed the period of quarantine.

The same applies to employees of the Chinese Foreign Ministry. This is how the Chinese government allows the chancellor and his delegation to enter the country without quarantine. The Covid policy is also the main reason why Scholz will not spend the night in Beijing, but will fly back to Germany on the same evening. Currently, all inbound travelers must spend seven days in quarantine at a central facility, usually hotels prepared for this purpose. After that, three additional days of quarantine at home are mandatory.

A so-called bubble is specifically created for Scholz’s delegation. All those who enter this bubble and do not leave the country with Scholz will then have to go into quarantine. On her own entry into office, Ambassador Flor was allowed to spend her quarantine period in her residence, which is located on the embassy grounds, as is customary for all ambassadors.

It is an already well-rehearsed procedure. The Bubble was first used for Western politicians on John Kerry’s visit. The former Secretary of State and US President Joe Biden’s climate change envoy already entered China twice – in April and September 202. Both times, he and his delegation were allowed in and out without quarantine, while US diplomats stationed in China had to enter quarantine. The situation was similar when Deputy Secretary of State Wendy Sherman visited China in July 2021. At the time, she was received by State Councilor and Foreign Minister Wang Yi. frs

Propaganda accusations against ‘The China Project’

The well-known American China platform “The China Project” has come under fire in the US Congress. It filed a complaint accusing the platform of engaging in propaganda in the service of the Chinese government. US Senator Marco Rubio commented on the complaint, saying that “American citizens acting as agents of a hostile foreign government should not be allowed to operate in the shadows by exploiting our laws and freedoms.” Rubio and US Rep. Chris Smith called on editors to disclose within the Foreign Agents Registration Act (FARA) “who they are ultimately working for.” The two politicians, who are considered hawk politicians, thus placed the portal on par with the official Chinese news service Xinhua and the Russian state broadcaster RT.

“The China Project” and its affiliated podcast “Sinica” are considered one of the best-informed China channels in the US. Jeremy Goldkorn, editor-in-chief of the platform, called the accusations “absurd” in an open letter. He said the channel provides “balanced and fair coverage of China.” Critical reporting on topics such as human rights violations in Xinjiang and Hong Kong are part of its daily business, Goldkorn said. The channel, which was labeled an “anti-China organization” by Chinese state media as recently as March this year, has been blocked in the People’s Republic since 2018.

The complaint was initiated by American journalist Shannon Van Sant, who worked for The China Project for two months in 2020. In it, Van Sant, who now lives in Europe and writes for Politico, stated, among other things, that she had been criticized by editors for trying to write more about Chinese human rights abuses. Van Sant’s complaint also referred to an investor in the China project, Clarence Kwan, writes US media startup Semafor. Kwan is a longtime Deloitte executive who is listed in his Linkedin bio as a director of the China Overseas Exchange Association – a nonprofit organization that claims on its website to be overseen by a government agency.

Van Sant was a “disgruntled former employee” who was “exploiting the political atmosphere in Washington D.C. to seek revenge,” said Editor-in-Chief Goldkorn. The only connection anyone ever had to the Chinese state, he said, was Van Sant’s employment: The journalist was an employee of state media outlet China Central TV (now CGTN) from 2006 to 2008. fpe

NGOs: ‘Not the time for friendly visits’

Several renowned human rights organizations are calling on the German government to improve the enforcement of due diligence when dealing with deliveries from Xinjiang. “Chancellor Olaf Scholz’s decision to now travel to Beijing with a business delegation shows that for Germany, profit continues to come before human rights,” Dolkun Isa, President of the World Uyghur Congress, said at a press conference in Berlin on Wednesday. Scholz would thus disregard the government coalition agreement, which envisages a stronger emphasis on ethical aspects of trade policy. “Many countries are readjusting their China strategy after Xi Jinping’s re-election for a third term.”

The other organizations also stressed that now is “not the right time for friendly visits” and normal operation of China relations. Criticism was voiced by

Human Rights Watch,
the Society for Threatened Peoples,
the World Uyghur Congress,
Suedwind e.V. and
the International Campaign for Tibet