Table.Briefing: China (English)

Orbán in Beijing + Third Plenum in sight

Dear reader,

Viktor Orbán has pulled off another surprise: He turned up in Beijing early Monday morning. He already made a statement by traveling from Russia to China. After all, he traveled along the allied axis against a free Ukraine within its original borders.

By going it alone, Orbán is once again living up to his image as the bane of the EU. By coming up with a peace agenda that primarily fulfills Russian demands, he is undermining the efforts of a long line of EU representatives who have consistently delivered the same message in Beijing: Ukraine’s territorial integrity is a core European interest. Instead, Orbán once again shows how divided the EU really is, writes Michael Radunski.

Meanwhile, the CCP is preparing for a crucial meeting of the Central Committee, the most important body of the most powerful party on the planet. This Third Plenum will focus on economic matters and, consequently, on setting the course that will also be crucial for the fate of the German economy. Christiane Kuehl describes the conflicting positions within the party in the run-up – and how the sole ruler, Xi, might ultimately decide.

Your
Finn Mayer-Kuckuk
Image of Finn  Mayer-Kuckuk

Feature

Orbán in Beijing: How a ‘peace mission’ snubs the EU

Viktor Orbán with Xi Jinping in Beijing on Monday.

Viktor Orbán is on a “peace mission 3.0,” as Hungary’s Prime Minister described his trip to China on Monday. He met with China’s party and state leader Xi Jinping at the Diaoyutai Guest House to discuss the war in Ukraine. Before his trip to China, Orbán had traveled to Kyiv and Moscow.

And so it seems that Viktor Orbán does everything right: Holding talks with all warring parties and Russia’s main ally, China. But Orbán’s China visit reveals three fundamental problems above all:

  • Orbán willingly allows himself to be duped by Xi (and Putin).
  • Beijing supports Moscow and wants to divide the West.
  • And Orbán is China’s obedient ally in the EU.

Accordingly, Orbán’s traveling diplomacy has not resulted in any concrete proposals. Instead, Xi merely ignited rhetorical smokescreens. On Monday, he once again called for a ceasefire with subsequent negotiations. He said that the situation in Ukraine must be cooled down as much as possible. Unfortunately, Xi did not say precisely how this should happen or what steps Beijing could take to achieve this. His recipe: “positive energy” is needed.

Xi (and Putin) dupe Orbán

Yet Orbán’s analysis is correct. “The number of countries that can talk to both warring sides is diminishing,” he said. “Hungary is slowly becoming the only country in Europe that can speak to everyone.” A few days ago, Hungary took over the rotating presidency of the EU Council. On top of this, in addition to Ukraine and Russia, China, Vladimir Putin’s main partner, must also be involved.

But it had already become clear in Russia that Moscow, like Beijing, focused less on peace and more on propaganda. Orbán had come to Moscow as a top representative of the European Council, Vladimir Putin interpreted accordingly. In response, several high-ranking European officials pointed out that Orbán was not speaking on behalf of the EU, but could only discuss bilateral relations. His visits to Ukraine, Russia and China were not coordinated within the EU.

The picture is similar in Beijing, where there is no talk of war at all, but still of a crisis in Ukraine – a wording that once again shows how Beijing really thinks about the brutal Russian war of aggression that has left countless dead on both sides. CCTV’s Chinese website shows a distinctly different focus of the talks: The excellent Sino-Hungarian relations, which have recently been upgraded to the new era of an “all-weather comprehensive strategic partnership” (我们宣布将中匈关系提升为新时代全天候全面战略伙伴关系).

Beijing is not neutral

But what about China’s peace efforts in Ukraine? Fairly poor. Officially, China claims to be neutral. But Chinese customs data, American intelligence information and evidence found on the battlefields in Ukraine show the true extent of China’s support for the Russian war machine.

Only recently, Xi reiterated that China firmly supports Russia in matters that affect its core interests – and nothing else is Putin’s obsession with Ukraine. According to Xi, a solution must respect legitimate security concerns – one of Putin’s justifications for the Russian attack. He says the aim is to create a new, balanced, effective and sustainable security architecture.

Moreover, it emerged at the start of the week that Chinese troops will participate in military exercises in Belarus in mid-July. The Chinese Ministry of Defence announced this on Sunday. A brief reminder: Belarus’ head of state, Alexander Lukashenko, granted Putin’s troops free access so that they could attack Ukraine from the north.

Rift in the West and NATO

Instead of peace, Beijing pursues a much greater goal: The division of the West. And so it was no coincidence that Orbán and Xi met just one day before the upcoming NATO summit in Washington. After all, US President Joe Biden and the other heads of state and government will likely decide to support Ukraine further in its battle against the Russian invasion. And: Diplomatic circles claim that NATO plans to criticize China for its support of the Russian invasion of Ukraine in its summit communiqué.

China rejects any criticism – and blames the West instead. NATO “has a blind faith in the use of force, holds on to a Cold War mentality, and creates bloc confrontation, which is the real threat to peace and stability in the region and the world.”

Orbán as Beijing’s obedient helper

Both Washington and Brussels realize how important a unified stance is in this war. And this is where Viktor Orbán suddenly becomes very important for the leadership in Beijing. On Monday, Xi expressed his hope that Hungary, as the rotating presidency of the EU Council, will play a positive role in promoting relations between China and the EU.

After all, Orbán has molded his country into a Chinese asset in the EU, one that Beijing needs more than ever. While Brussels focuses on de-risking, Budapest firmly stands by Beijing. Hungary has repeatedly vetoed EU proposals condemning China for human rights violations or regarding Hong Kong or Taiwan. According to a calculation by the Budapest-based online portal valaszonline. hu, around 60 percent of vetoes against Russia or China have come from Hungary in the past six years. Against this backdrop, Orbán’s peace mission 3.0 unfortunately appears in a different light.

  • De-Risking

Third Plenum: Chinese economists expect these reforms

The long-awaited Third Plenum of the current 20th Central Committee of the Communist Party of China is just around the corner. It traditionally sets the economic policy course for the next five years.

The CCP announced that the Third Plenum will begin on July 15. In CP terminology, a plenum is a meeting of all members of the Central Committee. The 367 members of the 20th Central Committee since the founding of the Party are in charge. Previous statements from the CP indicate that a “deepening of comprehensive reforms to promote Chinese modernization” will once again be adopted.

Only phrases in the run-up

This formula indicates a continuation of previous policies rather than a fundamental change. Party leader Xi Jinping has been using it for years. The Communist Party already has a separate commission with this goal, founded and chaired by Xi himself.

The title of the Communist Party’s most important economic meeting in years reveals little at first. The agenda will only be officially unveiled at the plenary session and is expected to contain a lot of party-speak, such as “high-quality development” and “new productive forces.” Some of the Third Plenums of the past have sparked profound changes, such as the start of the opening-up policy under reform patriarch Deng Xiaoping. The ailing Chinese economy could do with something similar today.

Chinese economists call for reforms

A continuation of the current economic policy means that the focus will continue to be on higher spending on new production facilities and even higher manufacturing capacities. So far, Xi has favored a supply-side policy to bolster the economy: subsidizing companies and investments – and not the targeted stimulation of consumption and, thus, the demand side. Despite all his Communist propaganda, Xi rejects direct public aid payments to citizens.

This may also be thanks to his advisors: China’s high-ranking economists today have been influenced by the study of neoliberal Western supply-side policies in the era of Ronald Reagan and Margaret Thatcher, economics professor Li Dekui from Tsinghua University admitted at an event in June. “We’re supposed to say, okay, the government should work hard on the supply side; don’t worry about demand side; too much social welfare will kill the enthusiasm of the population for working hard. So I think we were wrong.” Li now advocates measures such as making it easier to buy a home or a consumption-orientated local policy. In other words, he is calling for a shift in economic policy.

Experts want to strengthen the demand side

Other advisors have also changed their minds. Chinese economists, Communist Party officials and the Consultative People’s Political Consultative Conference (CPPCC) have called for a policy shift towards more demand-orientation in various areas. Some would like to see tax reforms to give financially struggling local governments more leeway and a consumption-orientated local policy.

Others have proposals for better health insurance. Some are calling for a proper reform of the hukou system, which still excludes migrant workers in the cities from many public services. All this would allow consumers to spend more and save less. That would be important, as consumer confidence has barely recovered from the pandemic so far.

Han Wenxiu’s expectations from the Third Plenum

Han Wenxiu, Deputy Director of the Office of the Central Financial and Economic Affairs, wrote in mid-June in the Central Committee magazine Qiushi about his expectations for the Third Plenum. Zichen Wang from the Center for China and Globalisation translated the much-noticed text in his blog Pekingnology – despite the many CP clauses, he finds it interesting because Han is involved in shaping economic policy and is close to the decision-makers.

However, Han only ranks demand policy fifth out of six important points for the Third Plenum:

  • “Deepening reform”: Things that are not running smoothly must change in supply-side policy, the “new productive forces” (such as the cleantech industry) are to support the traditional industries, which Han believes will continue to be important.
  • Urban-rural divide: The development gap must be closed; Han mentions poverty reduction and hukou reform – in other words, they also demand policy approaches. He advocates a new form of urban-rural integration.
  • Green policy and energy transition: This is set to become the focus of Chinese modernization. Han calls for better political measures and standards in finance, investment, and pricing for green development.
  • Open-door policy and dual circulation: Both economic cycles must be mutually beneficial, but Han places the domestic economy at the center. To this end, administrative barriers and local protectionism should be dismantled to accelerate the development of a single national market. Han also wants to maintain multilateralism. For example, China should actively participate in reforms to the World Trade Organization (WTO) and work towards a fairer global economic system.
  • Demand: Han would like to see a sense of security and happiness created here, partly by improving the social welfare system to cover the entire population without the current urban-rural divide. Interestingly, Han also sees promoting births as a part of this point, especially by reducing the costs of childbirth and schooling.
  • Security: Han touches on all areas, from internal, external, and economic security to disaster prevention, energy, and life safety, or sufficient capacities for strategic reserves.

Economist wants to consolidate past reforms

Despite Hans’ closeness to the central government, it is, of course, unclear to what extent these points actually reflect the CP’s plans and how they will be taken into account in the Third Plenum’s final communiqué.

Yao Yang, Director of the China Centre for Economic Research (CCER) at Peking University, does not expect a new reform impetus. “The significant reforms in China were completed in the 1990s,” he said in a speech. “What we need to do now is not to initiate more reforms, but to consolidate the achievements of the reforms from the 1990s.”

In fact, the CCP leadership under Xi is currently eroding many liberalization steps of the reform era. This is why some experts call for more trust in the market to allow private companies to become more active again. The latter suffer under ever-new regulations, upheavals, or the obligation to integrate CCP cells into their companies. Private companies themselves also hope for market-orientated reforms. Yao expects the Third Plenum to announce economic targets for 2035.

  • Domestic policy of the CP China
  • Economic policy
  • Economy
  • WTO

News

Chips: Why the head of ASML calls for an end to sanctions

ASML CEO Christoph Fouquet (right) with his predecessor Peter Wennink at the high-tech group’s annual General Meeting in April.

The CEO of Dutch chip manufacturer ASML has called for an end to the sanctions against China. In an interview with the German business newspaper Handelsblatt, Christophe Fouquet said that China produces chips that are urgently needed in the West. “It makes no sense to stop someone from producing something that you need.” With Russian gas, it has been understood that alternatives have to be found first, but apparently not with chips, he said. ASML is a leading manufacturer of the technology used to produce the world’s most advanced semiconductors.

Fouquet’s position is geopolitically sensitive. The USA is pushing for more and more chip export restrictions against China. The US government wants to ban even more chip manufacturing equipment from being delivered to the country. So far, the sanctions have only applied to machines for expensive and specialized chips. Japan and the Netherlands, where ASML is headquartered, have also joined this initiative. The USA has also tried to prevent ASML from servicing the equipment it has already sold to Chinese customers. Fouquet is now openly opposing the US policy. The former ASML CEO, Peter Wennink, also sees such geopolitical superiority as a problem.

Fouquet is clear about what politicians should do instead: “We then recommend that governments build their own plants. Because you can’t make manufacturing more difficult for China and not create alternatives yourself.” rad

  • ASML

Bribery: How corrupt Chinese officials are

Chinese officials exponentially line their own pockets. This is the result of a study conducted by the Leibniz Centre for European Economic Research (ZEW) in collaboration with the City University of New York. It found that civil servants earn an average of eight to fourteen times their regular salary through corruption. The higher up a civil servant is in the administrative hierarchy, the more money they earn illegally.

Regularly, only seven percent of corrupt officials belong to the top one percent of earners in urban China. However, if illegal income is included, 91 percent of this group would be corrupt. According to the ZEW, however, the far-reaching measures already taken by China, with 3.7 million punishments, systematically inhibit corruption. The analysis also showed that corruption increases with the level of education, hierarchical level and length of membership in the Chinese Communist Party.

The study examined the conditions under which corruption occurs in China and calculated its impact on inequality in the country and on the income of corrupt officials. For the first time, the influence of corruption on income distribution can be estimated. The calculation is based on a dataset of 1,451 corruption convictions between 2012 and 2021. The data comes from the Central Discipline Inspection Commission of the Communist Party, which has been documenting corruption cases since 2012 in order to show the effect of the state’s anti-corruption campaign. grz

  • Korruption
  • KP Chinas

Diplomacy: What the EU ambassador criticizes China’s leadership for

Europe’s ambassador to China has accused the People’s Republic of actively hindering exchanges with the European Union. In a speech at the World Peace Forum in Beijing on Sunday, EU Ambassador Jorge Toledo Albiñana noted that interpersonal exchanges between China and the bloc had not recovered since the pandemic. On the contrary, Toledo said exchanges are “very off” from pre-pandemic levels, according to a South China Morning Post report.

“We thought when the Covid restrictions were over, we will be able to meet Chinese professors freely again, Chinese students freely again, Chinese think tanks freely again.” But the opposite is the case. “No we can’t. They all need authorization to meet us, and sometimes [the] authorizations don’t come.”

The EU ambassador thus confirmed the opinion of Nicholas Burns, the US envoy to China. Burns criticized China last month for making interpersonal exchanges “impossible,” among other things, by preventing Chinese citizens from participating in American government programs. According to Burns, Chinese officials have interfered with 61 public events organized by the US embassy in Beijing since November. rad

  • Geopolitik

South China Sea: How Japan and the Philippines move closer together

Japan and the Philippines want to cooperate more closely regarding the territorial disputes in the South China Sea. To this end, the governments have signed an important defense agreement. It is intended to enable both countries to send troops to each other for joint military exercises.

It is a remarkable rapprochement, as relations between the two countries are historically strained. The Philippines was under Japanese occupation during the Second World War. Today, however, it is relying on a stronger alliance with Tokyo to respond to the threat posed by China, which is increasingly asserting its claim to power in the region.

The conflict in the South China Sea has recently escalated dramatically, particularly between the Philippines and China. There is a risk of armed conflict on three reefs. As a result, a majority of the population in the Philippines now even supports military measures to counter the threat posed by China in the South China Sea. rad

  • Geopolitik

Despite subsidies: What ails the Chinese car market

Car sales in China have continued to fall despite government incentives. According to the China Passenger Car Association (CPCA) on Monday, sales fell by 6.9 percent year-on-year to 1.78 million vehicles. This is the third consecutive month of shrinking car sales in China.

The price war that has been raging in the world’s largest vehicle market since 2023 initially boosted sales figures, but even government subsidies for vehicle replacement have not been able to halt the slowdown in recent months. Although 9.9 percent more EVs were sold in the People’s Republic in June, this figure was still 27.4 percent in May.

In contrast, so-called New Energy Vehicles (NEV) recorded strong growth. Sales in this category rose by 67.2 percent, following an increase of 61.1 percent in the previous month. Chinese export figures also rose by 28 percent – a trend that could, however, slow down due to the countervailing tariffs on Chinese EVs by the EU. rtr

  • Export

Heads

Hassan Sunny: Why a restaurant in Singapore receives donations from Chinese soccer fans

Singapurs Torhüter Hassan Sunny
Singapore goalkeeper Hassan Sunny.

Eleven saves made Hassan Sunny a soccer god in China. The goalkeeper of Singapore’s national team might not have been able to prevent his team from losing 3-1 in the World Cup qualifier against Thailand. However, it was only thanks to his outstanding reflexes that the Chinese were able to avoid a heavier defeat and remain in second place in the final table ahead of the Thais. This allowed China to advance to the final qualification round and keep their hopes of a second World Cup appearance after 2002 alive.

The joy in soccer-mad China was correspondingly great. Hassan Sunny was showered with exuberant gratitude, and emotions ran high on social media. The fact that a goalkeeper fought like a mother lion for her offspring right up to the last second and prevented his team from losing another goal, despite the game only having statistical significance for his team, was celebrated in the People’s Republic as an act of human greatness and kindness.

Donations to his family business

Word quickly spread on the internet that the 40-year-old’s family ran the small Dapur Hassan restaurant in a hawker food center in Singapore. The stall quickly became a magnet for Chinese tourists and expatriates. Everyone wanted a photo to express gratitude to the goalkeeper’s family. For days, long queues of Chinese guests formed in front of the counter – ostensibly to satisfy their hunger, but in reality to give back some of the joy that Sunny Hassan had brought them.

Someone then came up with the idea of spreading the QR code of Dapur Hassan’s digital Alipay account on Chinese social media. And because soccer generates such strong emotions, many fans felt the need to express their gratitude to Sunny Hassan from afar and transferred money to the family business’s account in return.

Rumors about millions

The matter took on such a dynamic that after a few days, the goalkeeper felt compelled to urge an end to the donation campaign publicly. “I did enjoy it for a while. I was like, oh okay, money coming in. But having said that, I was thinking when is this going to stop? Is this legal?” Sunny told Channel News Asia (CNA). “Concerned people,” as he calls them, had advised him to “stay away from all this to avoid misunderstandings.” Scammers had also jumped on the bandwagon, spreading fake QR codes to steal the payments.

It is not officially known how much money flowed from China. Rumors estimate it to be several million euros, but it is unknown whether this is really true. Hassan initially said he wanted to save part of the money and invest another part in expanding the restaurant. He has since announced that he intends to donate the entire sum to charity.

Secure goalkeeper equals secure crypto exchange

Either way, his excellent performance will pay off financially. A global financial company from Singapore immediately put the goalkeeper on a plane to Shanghai to present him personally and exclusively to Chinese fans and media, certainly not without compensation.

The cryptocurrency exchange HTX also grabbed the opportunity and made Sunny its security officer. The post may be a short-lived invention. But HTX hopes that Sunny’s involvement will quickly boost its image – especially in Asia, which has a large market for digital currencies. The concept is obvious: Secure gatekeeper equals secure crypto exchange. “Just as Sunny fearlessly protects his goal on the field, HTX is committed to protecting every user’s assets with the same determination,” the company markets the collaboration.

However, if the soccer experts are right, the hype surrounding Hassan Sunny in China could be over in a few months. That is if the footballers from the People’s Republic fail on the home straight to the World Cup, which is widely expected. Then, Hassan Sunny will only be a fond memory of the time when the dream was still alive. Marcel Grzanna

Executive Moves

Fanny Huang becomes Head of the Taiwan & China Representative Office of DHL Supply Chain. Huang joined the logistics company in 2018 as Director of Strategic Deal Management and subsequently established the DHL Summit Solutions division in the Philippines.

Hailin Xu becomes CEO of the Saurer Group. Xu joined the Swiss manufacturer of textile machinery and vehicle transmissions as Senior Vice President and Managing Director in 2018. Before joining Saurer, the Tsinghua University-educated chemical engineer worked for the ABB Group in Switzerland as Vice President of Global Supply Chain from 2008 to 2018.

Is something changing in your organization? Let us know at heads@table.media!

Dessert

Until recently, the far north-east of China was not particularly popular with tourists: Due to the long and icy winters and the many heavy industrial plants from the times when Stalin was still supporting the People’s Republic economically. Today, the trend has changed. Since climate change has made the summer months in the south and east of China so unbearably hot and humid, more and more travelers are flocking to Heilongjiang province. They are looking for a cooling respite in northeast China.

Municipalities like the town of Mohe in this photo spruce themselves up accordingly. Even in Heilongjiang, temperatures can exceed 30 degrees in summer. But that is still more bearable than what people back home in Hangzhou, Shanghai or Shenzhen have to endure these days with temperatures of over 40 degrees and extremely high humidity.

China.Table editorial team

CHINA.TABLE EDITORIAL OFFICE

Licenses:
    Dear reader,

    Viktor Orbán has pulled off another surprise: He turned up in Beijing early Monday morning. He already made a statement by traveling from Russia to China. After all, he traveled along the allied axis against a free Ukraine within its original borders.

    By going it alone, Orbán is once again living up to his image as the bane of the EU. By coming up with a peace agenda that primarily fulfills Russian demands, he is undermining the efforts of a long line of EU representatives who have consistently delivered the same message in Beijing: Ukraine’s territorial integrity is a core European interest. Instead, Orbán once again shows how divided the EU really is, writes Michael Radunski.

    Meanwhile, the CCP is preparing for a crucial meeting of the Central Committee, the most important body of the most powerful party on the planet. This Third Plenum will focus on economic matters and, consequently, on setting the course that will also be crucial for the fate of the German economy. Christiane Kuehl describes the conflicting positions within the party in the run-up – and how the sole ruler, Xi, might ultimately decide.

    Your
    Finn Mayer-Kuckuk
    Image of Finn  Mayer-Kuckuk

    Feature

    Orbán in Beijing: How a ‘peace mission’ snubs the EU

    Viktor Orbán with Xi Jinping in Beijing on Monday.

    Viktor Orbán is on a “peace mission 3.0,” as Hungary’s Prime Minister described his trip to China on Monday. He met with China’s party and state leader Xi Jinping at the Diaoyutai Guest House to discuss the war in Ukraine. Before his trip to China, Orbán had traveled to Kyiv and Moscow.

    And so it seems that Viktor Orbán does everything right: Holding talks with all warring parties and Russia’s main ally, China. But Orbán’s China visit reveals three fundamental problems above all:

    • Orbán willingly allows himself to be duped by Xi (and Putin).
    • Beijing supports Moscow and wants to divide the West.
    • And Orbán is China’s obedient ally in the EU.

    Accordingly, Orbán’s traveling diplomacy has not resulted in any concrete proposals. Instead, Xi merely ignited rhetorical smokescreens. On Monday, he once again called for a ceasefire with subsequent negotiations. He said that the situation in Ukraine must be cooled down as much as possible. Unfortunately, Xi did not say precisely how this should happen or what steps Beijing could take to achieve this. His recipe: “positive energy” is needed.

    Xi (and Putin) dupe Orbán

    Yet Orbán’s analysis is correct. “The number of countries that can talk to both warring sides is diminishing,” he said. “Hungary is slowly becoming the only country in Europe that can speak to everyone.” A few days ago, Hungary took over the rotating presidency of the EU Council. On top of this, in addition to Ukraine and Russia, China, Vladimir Putin’s main partner, must also be involved.

    But it had already become clear in Russia that Moscow, like Beijing, focused less on peace and more on propaganda. Orbán had come to Moscow as a top representative of the European Council, Vladimir Putin interpreted accordingly. In response, several high-ranking European officials pointed out that Orbán was not speaking on behalf of the EU, but could only discuss bilateral relations. His visits to Ukraine, Russia and China were not coordinated within the EU.

    The picture is similar in Beijing, where there is no talk of war at all, but still of a crisis in Ukraine – a wording that once again shows how Beijing really thinks about the brutal Russian war of aggression that has left countless dead on both sides. CCTV’s Chinese website shows a distinctly different focus of the talks: The excellent Sino-Hungarian relations, which have recently been upgraded to the new era of an “all-weather comprehensive strategic partnership” (我们宣布将中匈关系提升为新时代全天候全面战略伙伴关系).

    Beijing is not neutral

    But what about China’s peace efforts in Ukraine? Fairly poor. Officially, China claims to be neutral. But Chinese customs data, American intelligence information and evidence found on the battlefields in Ukraine show the true extent of China’s support for the Russian war machine.

    Only recently, Xi reiterated that China firmly supports Russia in matters that affect its core interests – and nothing else is Putin’s obsession with Ukraine. According to Xi, a solution must respect legitimate security concerns – one of Putin’s justifications for the Russian attack. He says the aim is to create a new, balanced, effective and sustainable security architecture.

    Moreover, it emerged at the start of the week that Chinese troops will participate in military exercises in Belarus in mid-July. The Chinese Ministry of Defence announced this on Sunday. A brief reminder: Belarus’ head of state, Alexander Lukashenko, granted Putin’s troops free access so that they could attack Ukraine from the north.

    Rift in the West and NATO

    Instead of peace, Beijing pursues a much greater goal: The division of the West. And so it was no coincidence that Orbán and Xi met just one day before the upcoming NATO summit in Washington. After all, US President Joe Biden and the other heads of state and government will likely decide to support Ukraine further in its battle against the Russian invasion. And: Diplomatic circles claim that NATO plans to criticize China for its support of the Russian invasion of Ukraine in its summit communiqué.

    China rejects any criticism – and blames the West instead. NATO “has a blind faith in the use of force, holds on to a Cold War mentality, and creates bloc confrontation, which is the real threat to peace and stability in the region and the world.”

    Orbán as Beijing’s obedient helper

    Both Washington and Brussels realize how important a unified stance is in this war. And this is where Viktor Orbán suddenly becomes very important for the leadership in Beijing. On Monday, Xi expressed his hope that Hungary, as the rotating presidency of the EU Council, will play a positive role in promoting relations between China and the EU.

    After all, Orbán has molded his country into a Chinese asset in the EU, one that Beijing needs more than ever. While Brussels focuses on de-risking, Budapest firmly stands by Beijing. Hungary has repeatedly vetoed EU proposals condemning China for human rights violations or regarding Hong Kong or Taiwan. According to a calculation by the Budapest-based online portal valaszonline. hu, around 60 percent of vetoes against Russia or China have come from Hungary in the past six years. Against this backdrop, Orbán’s peace mission 3.0 unfortunately appears in a different light.

    • De-Risking

    Third Plenum: Chinese economists expect these reforms

    The long-awaited Third Plenum of the current 20th Central Committee of the Communist Party of China is just around the corner. It traditionally sets the economic policy course for the next five years.

    The CCP announced that the Third Plenum will begin on July 15. In CP terminology, a plenum is a meeting of all members of the Central Committee. The 367 members of the 20th Central Committee since the founding of the Party are in charge. Previous statements from the CP indicate that a “deepening of comprehensive reforms to promote Chinese modernization” will once again be adopted.

    Only phrases in the run-up

    This formula indicates a continuation of previous policies rather than a fundamental change. Party leader Xi Jinping has been using it for years. The Communist Party already has a separate commission with this goal, founded and chaired by Xi himself.

    The title of the Communist Party’s most important economic meeting in years reveals little at first. The agenda will only be officially unveiled at the plenary session and is expected to contain a lot of party-speak, such as “high-quality development” and “new productive forces.” Some of the Third Plenums of the past have sparked profound changes, such as the start of the opening-up policy under reform patriarch Deng Xiaoping. The ailing Chinese economy could do with something similar today.

    Chinese economists call for reforms

    A continuation of the current economic policy means that the focus will continue to be on higher spending on new production facilities and even higher manufacturing capacities. So far, Xi has favored a supply-side policy to bolster the economy: subsidizing companies and investments – and not the targeted stimulation of consumption and, thus, the demand side. Despite all his Communist propaganda, Xi rejects direct public aid payments to citizens.

    This may also be thanks to his advisors: China’s high-ranking economists today have been influenced by the study of neoliberal Western supply-side policies in the era of Ronald Reagan and Margaret Thatcher, economics professor Li Dekui from Tsinghua University admitted at an event in June. “We’re supposed to say, okay, the government should work hard on the supply side; don’t worry about demand side; too much social welfare will kill the enthusiasm of the population for working hard. So I think we were wrong.” Li now advocates measures such as making it easier to buy a home or a consumption-orientated local policy. In other words, he is calling for a shift in economic policy.

    Experts want to strengthen the demand side

    Other advisors have also changed their minds. Chinese economists, Communist Party officials and the Consultative People’s Political Consultative Conference (CPPCC) have called for a policy shift towards more demand-orientation in various areas. Some would like to see tax reforms to give financially struggling local governments more leeway and a consumption-orientated local policy.

    Others have proposals for better health insurance. Some are calling for a proper reform of the hukou system, which still excludes migrant workers in the cities from many public services. All this would allow consumers to spend more and save less. That would be important, as consumer confidence has barely recovered from the pandemic so far.

    Han Wenxiu’s expectations from the Third Plenum

    Han Wenxiu, Deputy Director of the Office of the Central Financial and Economic Affairs, wrote in mid-June in the Central Committee magazine Qiushi about his expectations for the Third Plenum. Zichen Wang from the Center for China and Globalisation translated the much-noticed text in his blog Pekingnology – despite the many CP clauses, he finds it interesting because Han is involved in shaping economic policy and is close to the decision-makers.

    However, Han only ranks demand policy fifth out of six important points for the Third Plenum:

    • “Deepening reform”: Things that are not running smoothly must change in supply-side policy, the “new productive forces” (such as the cleantech industry) are to support the traditional industries, which Han believes will continue to be important.
    • Urban-rural divide: The development gap must be closed; Han mentions poverty reduction and hukou reform – in other words, they also demand policy approaches. He advocates a new form of urban-rural integration.
    • Green policy and energy transition: This is set to become the focus of Chinese modernization. Han calls for better political measures and standards in finance, investment, and pricing for green development.
    • Open-door policy and dual circulation: Both economic cycles must be mutually beneficial, but Han places the domestic economy at the center. To this end, administrative barriers and local protectionism should be dismantled to accelerate the development of a single national market. Han also wants to maintain multilateralism. For example, China should actively participate in reforms to the World Trade Organization (WTO) and work towards a fairer global economic system.
    • Demand: Han would like to see a sense of security and happiness created here, partly by improving the social welfare system to cover the entire population without the current urban-rural divide. Interestingly, Han also sees promoting births as a part of this point, especially by reducing the costs of childbirth and schooling.
    • Security: Han touches on all areas, from internal, external, and economic security to disaster prevention, energy, and life safety, or sufficient capacities for strategic reserves.

    Economist wants to consolidate past reforms

    Despite Hans’ closeness to the central government, it is, of course, unclear to what extent these points actually reflect the CP’s plans and how they will be taken into account in the Third Plenum’s final communiqué.

    Yao Yang, Director of the China Centre for Economic Research (CCER) at Peking University, does not expect a new reform impetus. “The significant reforms in China were completed in the 1990s,” he said in a speech. “What we need to do now is not to initiate more reforms, but to consolidate the achievements of the reforms from the 1990s.”

    In fact, the CCP leadership under Xi is currently eroding many liberalization steps of the reform era. This is why some experts call for more trust in the market to allow private companies to become more active again. The latter suffer under ever-new regulations, upheavals, or the obligation to integrate CCP cells into their companies. Private companies themselves also hope for market-orientated reforms. Yao expects the Third Plenum to announce economic targets for 2035.

    • Domestic policy of the CP China
    • Economic policy
    • Economy
    • WTO

    News

    Chips: Why the head of ASML calls for an end to sanctions

    ASML CEO Christoph Fouquet (right) with his predecessor Peter Wennink at the high-tech group’s annual General Meeting in April.

    The CEO of Dutch chip manufacturer ASML has called for an end to the sanctions against China. In an interview with the German business newspaper Handelsblatt, Christophe Fouquet said that China produces chips that are urgently needed in the West. “It makes no sense to stop someone from producing something that you need.” With Russian gas, it has been understood that alternatives have to be found first, but apparently not with chips, he said. ASML is a leading manufacturer of the technology used to produce the world’s most advanced semiconductors.

    Fouquet’s position is geopolitically sensitive. The USA is pushing for more and more chip export restrictions against China. The US government wants to ban even more chip manufacturing equipment from being delivered to the country. So far, the sanctions have only applied to machines for expensive and specialized chips. Japan and the Netherlands, where ASML is headquartered, have also joined this initiative. The USA has also tried to prevent ASML from servicing the equipment it has already sold to Chinese customers. Fouquet is now openly opposing the US policy. The former ASML CEO, Peter Wennink, also sees such geopolitical superiority as a problem.

    Fouquet is clear about what politicians should do instead: “We then recommend that governments build their own plants. Because you can’t make manufacturing more difficult for China and not create alternatives yourself.” rad

    • ASML

    Bribery: How corrupt Chinese officials are

    Chinese officials exponentially line their own pockets. This is the result of a study conducted by the Leibniz Centre for European Economic Research (ZEW) in collaboration with the City University of New York. It found that civil servants earn an average of eight to fourteen times their regular salary through corruption. The higher up a civil servant is in the administrative hierarchy, the more money they earn illegally.

    Regularly, only seven percent of corrupt officials belong to the top one percent of earners in urban China. However, if illegal income is included, 91 percent of this group would be corrupt. According to the ZEW, however, the far-reaching measures already taken by China, with 3.7 million punishments, systematically inhibit corruption. The analysis also showed that corruption increases with the level of education, hierarchical level and length of membership in the Chinese Communist Party.

    The study examined the conditions under which corruption occurs in China and calculated its impact on inequality in the country and on the income of corrupt officials. For the first time, the influence of corruption on income distribution can be estimated. The calculation is based on a dataset of 1,451 corruption convictions between 2012 and 2021. The data comes from the Central Discipline Inspection Commission of the Communist Party, which has been documenting corruption cases since 2012 in order to show the effect of the state’s anti-corruption campaign. grz

    • Korruption
    • KP Chinas

    Diplomacy: What the EU ambassador criticizes China’s leadership for

    Europe’s ambassador to China has accused the People’s Republic of actively hindering exchanges with the European Union. In a speech at the World Peace Forum in Beijing on Sunday, EU Ambassador Jorge Toledo Albiñana noted that interpersonal exchanges between China and the bloc had not recovered since the pandemic. On the contrary, Toledo said exchanges are “very off” from pre-pandemic levels, according to a South China Morning Post report.

    “We thought when the Covid restrictions were over, we will be able to meet Chinese professors freely again, Chinese students freely again, Chinese think tanks freely again.” But the opposite is the case. “No we can’t. They all need authorization to meet us, and sometimes [the] authorizations don’t come.”

    The EU ambassador thus confirmed the opinion of Nicholas Burns, the US envoy to China. Burns criticized China last month for making interpersonal exchanges “impossible,” among other things, by preventing Chinese citizens from participating in American government programs. According to Burns, Chinese officials have interfered with 61 public events organized by the US embassy in Beijing since November. rad

    • Geopolitik

    South China Sea: How Japan and the Philippines move closer together

    Japan and the Philippines want to cooperate more closely regarding the territorial disputes in the South China Sea. To this end, the governments have signed an important defense agreement. It is intended to enable both countries to send troops to each other for joint military exercises.

    It is a remarkable rapprochement, as relations between the two countries are historically strained. The Philippines was under Japanese occupation during the Second World War. Today, however, it is relying on a stronger alliance with Tokyo to respond to the threat posed by China, which is increasingly asserting its claim to power in the region.

    The conflict in the South China Sea has recently escalated dramatically, particularly between the Philippines and China. There is a risk of armed conflict on three reefs. As a result, a majority of the population in the Philippines now even supports military measures to counter the threat posed by China in the South China Sea. rad

    • Geopolitik

    Despite subsidies: What ails the Chinese car market

    Car sales in China have continued to fall despite government incentives. According to the China Passenger Car Association (CPCA) on Monday, sales fell by 6.9 percent year-on-year to 1.78 million vehicles. This is the third consecutive month of shrinking car sales in China.

    The price war that has been raging in the world’s largest vehicle market since 2023 initially boosted sales figures, but even government subsidies for vehicle replacement have not been able to halt the slowdown in recent months. Although 9.9 percent more EVs were sold in the People’s Republic in June, this figure was still 27.4 percent in May.

    In contrast, so-called New Energy Vehicles (NEV) recorded strong growth. Sales in this category rose by 67.2 percent, following an increase of 61.1 percent in the previous month. Chinese export figures also rose by 28 percent – a trend that could, however, slow down due to the countervailing tariffs on Chinese EVs by the EU. rtr

    • Export

    Heads

    Hassan Sunny: Why a restaurant in Singapore receives donations from Chinese soccer fans

    Singapurs Torhüter Hassan Sunny
    Singapore goalkeeper Hassan Sunny.

    Eleven saves made Hassan Sunny a soccer god in China. The goalkeeper of Singapore’s national team might not have been able to prevent his team from losing 3-1 in the World Cup qualifier against Thailand. However, it was only thanks to his outstanding reflexes that the Chinese were able to avoid a heavier defeat and remain in second place in the final table ahead of the Thais. This allowed China to advance to the final qualification round and keep their hopes of a second World Cup appearance after 2002 alive.

    The joy in soccer-mad China was correspondingly great. Hassan Sunny was showered with exuberant gratitude, and emotions ran high on social media. The fact that a goalkeeper fought like a mother lion for her offspring right up to the last second and prevented his team from losing another goal, despite the game only having statistical significance for his team, was celebrated in the People’s Republic as an act of human greatness and kindness.

    Donations to his family business

    Word quickly spread on the internet that the 40-year-old’s family ran the small Dapur Hassan restaurant in a hawker food center in Singapore. The stall quickly became a magnet for Chinese tourists and expatriates. Everyone wanted a photo to express gratitude to the goalkeeper’s family. For days, long queues of Chinese guests formed in front of the counter – ostensibly to satisfy their hunger, but in reality to give back some of the joy that Sunny Hassan had brought them.

    Someone then came up with the idea of spreading the QR code of Dapur Hassan’s digital Alipay account on Chinese social media. And because soccer generates such strong emotions, many fans felt the need to express their gratitude to Sunny Hassan from afar and transferred money to the family business’s account in return.

    Rumors about millions

    The matter took on such a dynamic that after a few days, the goalkeeper felt compelled to urge an end to the donation campaign publicly. “I did enjoy it for a while. I was like, oh okay, money coming in. But having said that, I was thinking when is this going to stop? Is this legal?” Sunny told Channel News Asia (CNA). “Concerned people,” as he calls them, had advised him to “stay away from all this to avoid misunderstandings.” Scammers had also jumped on the bandwagon, spreading fake QR codes to steal the payments.

    It is not officially known how much money flowed from China. Rumors estimate it to be several million euros, but it is unknown whether this is really true. Hassan initially said he wanted to save part of the money and invest another part in expanding the restaurant. He has since announced that he intends to donate the entire sum to charity.

    Secure goalkeeper equals secure crypto exchange

    Either way, his excellent performance will pay off financially. A global financial company from Singapore immediately put the goalkeeper on a plane to Shanghai to present him personally and exclusively to Chinese fans and media, certainly not without compensation.

    The cryptocurrency exchange HTX also grabbed the opportunity and made Sunny its security officer. The post may be a short-lived invention. But HTX hopes that Sunny’s involvement will quickly boost its image – especially in Asia, which has a large market for digital currencies. The concept is obvious: Secure gatekeeper equals secure crypto exchange. “Just as Sunny fearlessly protects his goal on the field, HTX is committed to protecting every user’s assets with the same determination,” the company markets the collaboration.

    However, if the soccer experts are right, the hype surrounding Hassan Sunny in China could be over in a few months. That is if the footballers from the People’s Republic fail on the home straight to the World Cup, which is widely expected. Then, Hassan Sunny will only be a fond memory of the time when the dream was still alive. Marcel Grzanna

    Executive Moves

    Fanny Huang becomes Head of the Taiwan & China Representative Office of DHL Supply Chain. Huang joined the logistics company in 2018 as Director of Strategic Deal Management and subsequently established the DHL Summit Solutions division in the Philippines.

    Hailin Xu becomes CEO of the Saurer Group. Xu joined the Swiss manufacturer of textile machinery and vehicle transmissions as Senior Vice President and Managing Director in 2018. Before joining Saurer, the Tsinghua University-educated chemical engineer worked for the ABB Group in Switzerland as Vice President of Global Supply Chain from 2008 to 2018.

    Is something changing in your organization? Let us know at heads@table.media!

    Dessert

    Until recently, the far north-east of China was not particularly popular with tourists: Due to the long and icy winters and the many heavy industrial plants from the times when Stalin was still supporting the People’s Republic economically. Today, the trend has changed. Since climate change has made the summer months in the south and east of China so unbearably hot and humid, more and more travelers are flocking to Heilongjiang province. They are looking for a cooling respite in northeast China.

    Municipalities like the town of Mohe in this photo spruce themselves up accordingly. Even in Heilongjiang, temperatures can exceed 30 degrees in summer. But that is still more bearable than what people back home in Hangzhou, Shanghai or Shenzhen have to endure these days with temperatures of over 40 degrees and extremely high humidity.

    China.Table editorial team

    CHINA.TABLE EDITORIAL OFFICE

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