During the production of today’s Professional Briefing, the editorial team kept a keen eye on Taiwan. The big question of whether Nancy Pelosi will actually pay a visit to the US ally and the possible implications of that visit is probably at the back of the mind of every China observer these days. And opinions differ on whether Pelosi’s visit would demonstrate an important American strength toward the People’s Republic or recklessly jeopardize peace.
Those who are very familiar with China say that the country respects a strong attitude, but mercilessly exploits the weaknesses of its adversaries. Nancy Pelosi has probably heard this too. As the highest-ranking politician in the United States after the president and vice president, it is now up to her to decide whether to take the latest military threats from the Chinese Foreign Ministry seriously.
If Pelosi now changes her mind and refrains from visiting Taiwan, she would have needlessly shot the US’ bolt. It is hard to believe that she was not aware of this when she made her travel plans public. By implication, this would mean that she is willing to ignore Chinese threats. To be continued soon.
Until then, we take an in-depth look at why China’s low inflation compared to Europe or the United States is not a systemic advantage for Beijing. Another analysis looks at China’s importance for carmaker Mercedes. More luxury for customers between Jilin and Shenzhen form one pillar of the company’s future strategy.
Nancy Pelosi will travel to Taiwan after all. This was first reported on Monday by the American television station CNN, citing high-ranking Taiwanese government officials and a US official. However, it remains unclear when exactly the speaker of the US House of Representatives will land in Taipei. The New York Times quotes officials from the US government around President Joe Biden as saying that Pelosi could still change her mind about a trip to Taiwan, but that this is now very unlikely.
Meanwhile, Taiwanese media are more specific: According to their reports, the high-ranking US politician will already arrive in Taipei on Tuesday and spend the night in the capital. Taiwan’s Prime Minister Su Tseng-chang was still evasive on Monday when asked about a possible Pelosi visit. “We always warmly welcome visits to our country by distinguished foreign guests,” he said in Taipei. And Pelosi herself has still not officially confirmed the visit.
But officials at the US Department of Defense are currently working at full speed on a plan to ensure the politician’s safety during the trip. For this purpose, all Chinese movements in the region will be closely monitored.
The Speaker of the US House of Representatives is on a trip through Asia with a delegation from the US Congress. On Monday, the group landed in Singapore, where she will meet Prime Minister Lee Hsien Loong. Talks are expected to focus on trade, climate change and democratic governance. Other stops on the trip include Malaysia, South Korea and Japan. And Taiwan.
Until the very end, China tried to prevent a visit by the top US politician to Taiwan. Again on Monday, a Foreign Ministry spokesman in Beijing warned that a visit by Pelosi to Taiwan would be “a blatant interference in China’s internal affairs”. The People’s Republic’s military will not stand idly by should the speaker of the US House of Representatives arrive in Taiwan, he said. “China will take resolute and strong measures to defend its sovereignty and territorial integrity,” Zhao Lijian said at a press conference in Beijing and warned that a visit would have tremendous political repercussions.
Earlier, Chinese commentators on social media regularly outdid themselves with ever-new superlatives about the level of escalation. The short message service Twitter even had to block an open threat by the former editor-in-chief of the state-run Chinese daily Global Times for violating Twitter’s guidelines. Hu Xijin wrote: “Our fighter jets should deploy all obstructive tactics. If those are still ineffective, I think it is okay too to shoot down Pelosi’s plane.”
And China’s President Xi Jinping did not mince words either during a telephone call with US President Joe Biden. Bluntly, Xi warned his American counterpart: “Those who play with fire will eventually get burned.” (China.Table reported).
Still, Biden has decided not to personally ask Pelosi to cancel her trip. According to US government circles, the US president refrained from such a step out of respect for the independence of Congress. Biden himself served in the Senate for 36 years.
As Speaker of the US House of Representatives, Pelosi is the third highest-ranking US representative – after President Biden and Vice President Kamala Harris. It would be the highest-ranking US visit to Taipei in 25 years: In 1997, Newt Gingrich, then also Speaker of the House of Representatives, visited Taiwan.
But the balance of power between the USA and China has changed drastically in the meantime. While the USA is witnessing a decline of its global power and credibility, at the latest since Donald Trump, China has gained enormous influence. Under President Xi Jinping, the People’s Republic has long since stopped hiding under a bushel – as Deng Xiaoping once recommended to his countrymen. Rather, under Xi, China’s foreign policy is becoming increasingly resolute and it is challenging the United States and the West more and more aggressively.
Pelosi has long been known as a fierce critic of China. The probably most famous scene dates back to 1991: Just two years after the brutal crackdown on protests revolving around Tiananmen protests, she visited the Chinese capital and unrolled a narrow black banner on Tiananmen Square in honor of the protesters who died: “To those who died for democracy in China.”
In 2009, she supposedly handed a letter to then-President Hu Jintao demanding the release of imprisoned dissident Liu Xiaobo. Liu was awarded the Nobel Peace Prize a year later, and seven years later died in Chinese captivity.
With her current behavior, however, Pelosi is putting pressure not only on China, but on everyone involved. On one side is Joe Biden. After the phone call with Xi Jinping, the U.S. president is said to have carefully weighed the domestic and geostrategic costs of stopping the visit – including the impression that China could now dictate to the U.S. which U.S. officials should be allowed to visit a democracy of 23 million people.
With her current actions, however, Pelosi is not only putting pressure on China, but on all parties involved. On the one side is Joe Biden. After the phone call with Xi Jinping, the US President is said to have carefully weighed the domestic and geostrategic costs of stopping the visit – including the impression that China could now dictate to the US which US officials should be allowed to visit a democracy of 23 million people.
On the other side is President Xi Jinping. He will begin a third term as president at the 20th Party Congress of the Communist Party this fall – a process for which he specifically had to amend the Chinese constitution. Add to that a weakening economy and widespread public discontent over his strict zero-Covid policy, complete with repeated lockdowns. And as far as Taiwan is concerned, Xi has never left any doubt that the island belongs firmly to mainland China and that he will not back down one step.
In light of the threats made against Pelosi’s visit, Beijing will have to react with several possible options, ranging from entering Taiwan’s Air-Defense Identification Zone to “escorting” Pelosi’s plane (China.Table reported). Most recently, the Chinese Air Force stated that fighter jets would circle Taiwan to demonstrate its ability to defend its own territory. Exact dates for such a maneuver were not provided – certainly also to reserve the option to react directly to the route of Pelosi’s aircraft.
That leaves us with what is essentially the all-important question: What does Pelosi hope to achieve in Taiwan? Even as Speaker of the House of Representatives, she is unable to make any far-reaching promises to Taipei – especially since President Biden has repeatedly clarified America’s strategic ambivalence toward Taiwan this year and promised US support in the event of a Chinese attack (China.Table reported). In any case, she can hardly offer Taiwan anything tangible during her visit.
With everything in mind, it’s clear that Pelosi is indeed playing with fire. And let’s hope that no one gets seriously burned in the process.
For Chinese state media, the high inflation rate in the West has been a perfect target for months. Commentators have particularly focused on the USA. The fact that the US inflation reached 9.1 percent in June, the highest level in 40 years, is proof for them of how rapidly the largest economy is going downhill due to Washington’s supposedly miserable economic policy. The situation is no better in Europe: Inflation was 8.6 percent in June and 8.9 percent in July.
Indeed, China has so far been spared such massive price hikes. In June, the Chinese Consumer Price Index (CPI) was 2.5 percentage points higher than in the previous year and thus also at its highest level in two years – but compared to the West, the price increases are moderate.
Economists attribute inflation in the West to a whole range of reasons. On the one hand, they cite the extremely loose monetary policy of the central banks, whose measures have kept the economy afloat in past crises. In addition, global shipping costs skyrocketed during the Covid pandemic. Both Europe and the USA recently have to pay significantly more, especially for Chinese imports. First, there was a container shortage, then chaos reigned at ports from Tianjin to Shenzhen due to China’s strict zero-Covid policy (China.Table reported).
Furthermore, Americans have had to dig deeper into their pockets due to the punitive tariffs imposed on China. In recent weeks, US President Joe Biden has repeatedly and openly toyed with the idea of at least partially lifting the tariffs imposed by Donald Trump in order to lower inflation. China was certainly happy to hear that. But the West is already struggling with further price increases due to the war in Ukraine, especially for energy and food.
All these factors have little or only a limited impact on the Chinese inflation rate.
In part, the lower inflation in China is also due to statistical differences. For example, China uses a differently structured basket of goods to calculate the inflation rate. While the Chinese statistics office attaches more weight to clothing and food, the US places more emphasis on housing costs and transportation, which in turn depend heavily on energy prices.
The price of pork has traditionally played a particularly important role in the calculation of Chinese inflation. According to estimates, it alone accounts for 2.4 percent of the Chinese basket of goods. And this is where a special effect reveals itself. Shortly before the Covid pandemic hit in the winter of 2020, there was only one issue in China: swine fever. Millions of animals across the country had to be killed to get the crisis under control.
Prices surged in 2020. Since then, farmers have been able to replenish their stocks – until there was a recent oversupply of pigs. In the first five months of the year alone, pork prices have now dropped by 37 percent. This means that a cyclical effect is also significantly dampening inflation for China this year. Joern Petring/Gregor Koppenburg
Mercedes is currently experiencing both sides of the crisis. First, overall sales were down 16 percent in the first half of the year compared with the previous year. This decline was spread over a 25 percent drop in China (to 163,700 cars) and a 10 percent drop in Europe (to 154,300 cars). This was caused by the much-cited chip shortage. Supply chains are disrupted and production cannot meet demand. Neither in Europe nor China. Customers already have to wait several years for certain models, such as the rather anachronistic G-Class or the electric flagship EQS.
But on the other hand, this means that Mercedes is turning the price screws. Although the brand is selling fewer vehicles, the return on investment remains good. The first quarter, for example, saw a 10 percent drop in car sales contrasted with a 20 percent increase in operating profit.
Mercedes is not alone in this success. 2021 was the best year in the history of the DAX. And 2022 is set to be even better – despite the Covid pandemic, inflation and the Ukraine war. A total of €132 billion in profit has been budgeted.
This is probably one of the reasons why Mercedes wants to change its product policy. The A- and B-Class are to be discontinued. The C-Class is to become the brand’s entry-level model. Mercedes wants to use this tactic to win new customers, especially in China. Mercedes CEO Ola Källenius’ plan is to sell a quarter fewer compact cars in the future. In return, 60 percent more vehicles will be sold in the top-end segment, reports the German Manager Magazin.
Such a change would not be that big. In the second quarter, compact car sales plummeted by around 30 percent. In return, Mercedes sold more S-Classes and Maybachs than ever before. In the future, an average Mercedes is expected to cost between €70,000 and €85,000. One in five cars is expected to break the magic barrier of €100,000. Even if this target is not without controversy within the Group, it seems to be paying off. The new target return is 12 to 14 percent.
There is also a technical reason: Mercedes has shifted its focus to electric cars. But since the battery packs of the new MMA platform are quite large, compact models are difficult to implement. Even before that, Mercedes lacked the economies of scale of its biggest competitors in the A- and B-Class.
But to be able to charge more, the performance must match. A study by the auditing firm Deloitte concluded that customers in Germany and China are certainly ready to pay more for advanced technology. The Chinese, however, are much more price-sensitive. One example is security technologies. Here, 70 percent of Germans are prepared to pay around €400 more. This compares to only 48 percent of customers from the People’s Republic. When it comes to autonomous driving, 69 percent of Germans and only 37 percent of Chinese are prepared to pay more.
What is probably far more important, however, is the finding of the Deloitte study on electric mobility. Just 15 percent of Germans and 17 percent of Chinese prefer a model without an internal combustion engine for their next car purchase. So it continues to be a cash cow. But Mercedes will not be able to rely on it for too long. At the COP26 world climate summit in Glasgow, the company signed a declaration to bid the internal combustion engine farewell. By 2040, all new cars are to have zero local emissions. Mercedes even wants to reach the target as early as 2030.
This is where the brand’s luxury strategy comes full circle. After all, enthusiasm for EVs is much greater in the premium segment. In Germany, 80 percent of drivers of premium cars want to switch to an EV in the next five years. In China, 64 percent. This is the result of a Kantar survey commissioned by Mercedes-Benz Mobility.
Källenius explains his contribution to the COP26 declaration as follows: “I signed because we assume that customers in the premium segment will have faster access to charging infrastructure. Once you start swimming, you want to get to the other shore.” Those who own a house with a garage are also more likely to have a charging socket, the Mercedes boss muses.
To justify the high prices in China in the future, Mercedes has entered into a cooperation with the tech giant Tencent. In early July, Tencent announced that it would help the automaker further develop autonomous driving. As a result, Mercedes would be allowed to use cloud computing, Big Data and the group’s AI technologies. A joint test lab is also being set up, Tencent said.
Shanghai continues to feel the aftermath of the Covid lockdown. Wherever new cases emerge, individual buildings or entire neighborhoods are sealed off, and residents must undergo regular testing, or else face restrictions on their freedom of movement. An end to the strict controls is not in sight as long as the central government in Beijing, as announced, sticks to its zero-Covid strategy.
However, the population of the 25-million-strong metropolis on the Huangpu River hopes that they will be spared another nationwide lockdown. Last spring’s uncompromising, and at times incomprehensible measures, pushed Shanghai’s residents to their psychological limits.
The documentary Shanghai Spring (上海之春) (Revised) offers an impressive depiction of the conditions in Shanghai between April 10 and May 10 of this year. The non-profit organization China Change has compiled individual private videos and turned them into a 100-minute collection of ten episodes, including English subtitles, on its YouTube channel.
The scenes are uncommented and document the events from many perspectives. Shanghai Spring is an edited version of the documentary Lockdown Shanghai 2022, which was released in April. YouTube blocked the first version a few days after its release because it included several scenes of suicides. In the new edition, these scenes are no longer shown. grz
On the evening of his 30th birthday, Sascha Pallenberg sits with his best friend and has an emotional fit. He lives in a shared apartment, has three computers under his desk, and lives his life one day at a time. He has no vision and decides: I have to change something. Five days later, he takes his savings and starts a company that imports computers from Taiwan. He is invited to the country, gives speeches, blogs and writes about sustainable tech gadgets. Now, he has a vision.
Pallenberg has lived in Taipei for 13 years. Taiwan, says Pallenberg, is the hub of the IT world, especially when it comes to consumer electronics. This is where Pallenberg founded a company, where he pays lower taxes than in Germany and where he has his center of life. “The city is extremely dynamic, the people have no prejudices and are kind,” he says.
The conflict between Taiwan and China, which sees the democratically governed island as part of its territory and poses an increasingly large military threat, has accompanied Pallenberg ever since. How does he perceive the situation in the country? “Taiwan carries an extremely positively charged patriotism and a desire to be recognized,” he says.
During his early days in the country, he was asked: Do people outside the country even know the situation in Taiwan? Don’t you know the geopolitical predicament we’re in and what we’ve achieved? “That definitely hurts Taiwanese people.” The country has evolved from a classic worker and farmer state in the 1970s to an IT metropolis.
What Pallenberg sees as his greatest strength? “I put in a lot of effort. And I have a great passion for change.” A look at his biography is proof of that. In 2017, after many years as a blogger, Pallenberg joined Daimler-Benz and served for four years as Head of Digital Transformation. He was responsible for transformative processes and is also in charge of corporate communications. His goal: To make the company and its core products carbon-neutral.
Pallenberg loved his job, earned good money and had a long-term employment. But he desired a change. “I wanted shorter decision-making paths and to devote myself more broadly to the topic of environmental protection,” says Pallenberg. At the end of 2020, he resigned from his position at Daimler and, a few months later, joined the Berlin-based start-up Aware.
He is now a remote Chief Awareness Officer at the company. “We are trying to do our part to prevent the climate crisis from becoming a climate catastrophe,” says Pallenberg. “Our industry has a very large carbon footprint.” Pallenberg and his colleagues train companies, and give talks and workshops on sustainability. How does sustainable communication work? How can I prevent green-claiming from becoming greenwashing? Aware’s clients include Porsche, BMW and Fujitsu.
Maybe the fact that Pallenberg is campaigning for more climate protection also has something to do with his chosen home of Taipei. In recent months, the city has been hit by several major earthquakes. Pallenberg says, “In Taipei, I realize the power of nature. It can be frightening. Above all, it makes me humble.” David Holzapfel
Birthday surprise for Ding Ding in Moscow: The female giant panda was allowed to feast on bamboo cake decorated with fruit on Sunday, just like her male companion Ru Yi. While Ding Ding turned five years old on Saturday, Ru Yi celebrated his sixth birthday a day later. The two animals were loaned from China to the zoo in the Russian capital in 2019.
During the production of today’s Professional Briefing, the editorial team kept a keen eye on Taiwan. The big question of whether Nancy Pelosi will actually pay a visit to the US ally and the possible implications of that visit is probably at the back of the mind of every China observer these days. And opinions differ on whether Pelosi’s visit would demonstrate an important American strength toward the People’s Republic or recklessly jeopardize peace.
Those who are very familiar with China say that the country respects a strong attitude, but mercilessly exploits the weaknesses of its adversaries. Nancy Pelosi has probably heard this too. As the highest-ranking politician in the United States after the president and vice president, it is now up to her to decide whether to take the latest military threats from the Chinese Foreign Ministry seriously.
If Pelosi now changes her mind and refrains from visiting Taiwan, she would have needlessly shot the US’ bolt. It is hard to believe that she was not aware of this when she made her travel plans public. By implication, this would mean that she is willing to ignore Chinese threats. To be continued soon.
Until then, we take an in-depth look at why China’s low inflation compared to Europe or the United States is not a systemic advantage for Beijing. Another analysis looks at China’s importance for carmaker Mercedes. More luxury for customers between Jilin and Shenzhen form one pillar of the company’s future strategy.
Nancy Pelosi will travel to Taiwan after all. This was first reported on Monday by the American television station CNN, citing high-ranking Taiwanese government officials and a US official. However, it remains unclear when exactly the speaker of the US House of Representatives will land in Taipei. The New York Times quotes officials from the US government around President Joe Biden as saying that Pelosi could still change her mind about a trip to Taiwan, but that this is now very unlikely.
Meanwhile, Taiwanese media are more specific: According to their reports, the high-ranking US politician will already arrive in Taipei on Tuesday and spend the night in the capital. Taiwan’s Prime Minister Su Tseng-chang was still evasive on Monday when asked about a possible Pelosi visit. “We always warmly welcome visits to our country by distinguished foreign guests,” he said in Taipei. And Pelosi herself has still not officially confirmed the visit.
But officials at the US Department of Defense are currently working at full speed on a plan to ensure the politician’s safety during the trip. For this purpose, all Chinese movements in the region will be closely monitored.
The Speaker of the US House of Representatives is on a trip through Asia with a delegation from the US Congress. On Monday, the group landed in Singapore, where she will meet Prime Minister Lee Hsien Loong. Talks are expected to focus on trade, climate change and democratic governance. Other stops on the trip include Malaysia, South Korea and Japan. And Taiwan.
Until the very end, China tried to prevent a visit by the top US politician to Taiwan. Again on Monday, a Foreign Ministry spokesman in Beijing warned that a visit by Pelosi to Taiwan would be “a blatant interference in China’s internal affairs”. The People’s Republic’s military will not stand idly by should the speaker of the US House of Representatives arrive in Taiwan, he said. “China will take resolute and strong measures to defend its sovereignty and territorial integrity,” Zhao Lijian said at a press conference in Beijing and warned that a visit would have tremendous political repercussions.
Earlier, Chinese commentators on social media regularly outdid themselves with ever-new superlatives about the level of escalation. The short message service Twitter even had to block an open threat by the former editor-in-chief of the state-run Chinese daily Global Times for violating Twitter’s guidelines. Hu Xijin wrote: “Our fighter jets should deploy all obstructive tactics. If those are still ineffective, I think it is okay too to shoot down Pelosi’s plane.”
And China’s President Xi Jinping did not mince words either during a telephone call with US President Joe Biden. Bluntly, Xi warned his American counterpart: “Those who play with fire will eventually get burned.” (China.Table reported).
Still, Biden has decided not to personally ask Pelosi to cancel her trip. According to US government circles, the US president refrained from such a step out of respect for the independence of Congress. Biden himself served in the Senate for 36 years.
As Speaker of the US House of Representatives, Pelosi is the third highest-ranking US representative – after President Biden and Vice President Kamala Harris. It would be the highest-ranking US visit to Taipei in 25 years: In 1997, Newt Gingrich, then also Speaker of the House of Representatives, visited Taiwan.
But the balance of power between the USA and China has changed drastically in the meantime. While the USA is witnessing a decline of its global power and credibility, at the latest since Donald Trump, China has gained enormous influence. Under President Xi Jinping, the People’s Republic has long since stopped hiding under a bushel – as Deng Xiaoping once recommended to his countrymen. Rather, under Xi, China’s foreign policy is becoming increasingly resolute and it is challenging the United States and the West more and more aggressively.
Pelosi has long been known as a fierce critic of China. The probably most famous scene dates back to 1991: Just two years after the brutal crackdown on protests revolving around Tiananmen protests, she visited the Chinese capital and unrolled a narrow black banner on Tiananmen Square in honor of the protesters who died: “To those who died for democracy in China.”
In 2009, she supposedly handed a letter to then-President Hu Jintao demanding the release of imprisoned dissident Liu Xiaobo. Liu was awarded the Nobel Peace Prize a year later, and seven years later died in Chinese captivity.
With her current behavior, however, Pelosi is putting pressure not only on China, but on everyone involved. On one side is Joe Biden. After the phone call with Xi Jinping, the U.S. president is said to have carefully weighed the domestic and geostrategic costs of stopping the visit – including the impression that China could now dictate to the U.S. which U.S. officials should be allowed to visit a democracy of 23 million people.
With her current actions, however, Pelosi is not only putting pressure on China, but on all parties involved. On the one side is Joe Biden. After the phone call with Xi Jinping, the US President is said to have carefully weighed the domestic and geostrategic costs of stopping the visit – including the impression that China could now dictate to the US which US officials should be allowed to visit a democracy of 23 million people.
On the other side is President Xi Jinping. He will begin a third term as president at the 20th Party Congress of the Communist Party this fall – a process for which he specifically had to amend the Chinese constitution. Add to that a weakening economy and widespread public discontent over his strict zero-Covid policy, complete with repeated lockdowns. And as far as Taiwan is concerned, Xi has never left any doubt that the island belongs firmly to mainland China and that he will not back down one step.
In light of the threats made against Pelosi’s visit, Beijing will have to react with several possible options, ranging from entering Taiwan’s Air-Defense Identification Zone to “escorting” Pelosi’s plane (China.Table reported). Most recently, the Chinese Air Force stated that fighter jets would circle Taiwan to demonstrate its ability to defend its own territory. Exact dates for such a maneuver were not provided – certainly also to reserve the option to react directly to the route of Pelosi’s aircraft.
That leaves us with what is essentially the all-important question: What does Pelosi hope to achieve in Taiwan? Even as Speaker of the House of Representatives, she is unable to make any far-reaching promises to Taipei – especially since President Biden has repeatedly clarified America’s strategic ambivalence toward Taiwan this year and promised US support in the event of a Chinese attack (China.Table reported). In any case, she can hardly offer Taiwan anything tangible during her visit.
With everything in mind, it’s clear that Pelosi is indeed playing with fire. And let’s hope that no one gets seriously burned in the process.
For Chinese state media, the high inflation rate in the West has been a perfect target for months. Commentators have particularly focused on the USA. The fact that the US inflation reached 9.1 percent in June, the highest level in 40 years, is proof for them of how rapidly the largest economy is going downhill due to Washington’s supposedly miserable economic policy. The situation is no better in Europe: Inflation was 8.6 percent in June and 8.9 percent in July.
Indeed, China has so far been spared such massive price hikes. In June, the Chinese Consumer Price Index (CPI) was 2.5 percentage points higher than in the previous year and thus also at its highest level in two years – but compared to the West, the price increases are moderate.
Economists attribute inflation in the West to a whole range of reasons. On the one hand, they cite the extremely loose monetary policy of the central banks, whose measures have kept the economy afloat in past crises. In addition, global shipping costs skyrocketed during the Covid pandemic. Both Europe and the USA recently have to pay significantly more, especially for Chinese imports. First, there was a container shortage, then chaos reigned at ports from Tianjin to Shenzhen due to China’s strict zero-Covid policy (China.Table reported).
Furthermore, Americans have had to dig deeper into their pockets due to the punitive tariffs imposed on China. In recent weeks, US President Joe Biden has repeatedly and openly toyed with the idea of at least partially lifting the tariffs imposed by Donald Trump in order to lower inflation. China was certainly happy to hear that. But the West is already struggling with further price increases due to the war in Ukraine, especially for energy and food.
All these factors have little or only a limited impact on the Chinese inflation rate.
In part, the lower inflation in China is also due to statistical differences. For example, China uses a differently structured basket of goods to calculate the inflation rate. While the Chinese statistics office attaches more weight to clothing and food, the US places more emphasis on housing costs and transportation, which in turn depend heavily on energy prices.
The price of pork has traditionally played a particularly important role in the calculation of Chinese inflation. According to estimates, it alone accounts for 2.4 percent of the Chinese basket of goods. And this is where a special effect reveals itself. Shortly before the Covid pandemic hit in the winter of 2020, there was only one issue in China: swine fever. Millions of animals across the country had to be killed to get the crisis under control.
Prices surged in 2020. Since then, farmers have been able to replenish their stocks – until there was a recent oversupply of pigs. In the first five months of the year alone, pork prices have now dropped by 37 percent. This means that a cyclical effect is also significantly dampening inflation for China this year. Joern Petring/Gregor Koppenburg
Mercedes is currently experiencing both sides of the crisis. First, overall sales were down 16 percent in the first half of the year compared with the previous year. This decline was spread over a 25 percent drop in China (to 163,700 cars) and a 10 percent drop in Europe (to 154,300 cars). This was caused by the much-cited chip shortage. Supply chains are disrupted and production cannot meet demand. Neither in Europe nor China. Customers already have to wait several years for certain models, such as the rather anachronistic G-Class or the electric flagship EQS.
But on the other hand, this means that Mercedes is turning the price screws. Although the brand is selling fewer vehicles, the return on investment remains good. The first quarter, for example, saw a 10 percent drop in car sales contrasted with a 20 percent increase in operating profit.
Mercedes is not alone in this success. 2021 was the best year in the history of the DAX. And 2022 is set to be even better – despite the Covid pandemic, inflation and the Ukraine war. A total of €132 billion in profit has been budgeted.
This is probably one of the reasons why Mercedes wants to change its product policy. The A- and B-Class are to be discontinued. The C-Class is to become the brand’s entry-level model. Mercedes wants to use this tactic to win new customers, especially in China. Mercedes CEO Ola Källenius’ plan is to sell a quarter fewer compact cars in the future. In return, 60 percent more vehicles will be sold in the top-end segment, reports the German Manager Magazin.
Such a change would not be that big. In the second quarter, compact car sales plummeted by around 30 percent. In return, Mercedes sold more S-Classes and Maybachs than ever before. In the future, an average Mercedes is expected to cost between €70,000 and €85,000. One in five cars is expected to break the magic barrier of €100,000. Even if this target is not without controversy within the Group, it seems to be paying off. The new target return is 12 to 14 percent.
There is also a technical reason: Mercedes has shifted its focus to electric cars. But since the battery packs of the new MMA platform are quite large, compact models are difficult to implement. Even before that, Mercedes lacked the economies of scale of its biggest competitors in the A- and B-Class.
But to be able to charge more, the performance must match. A study by the auditing firm Deloitte concluded that customers in Germany and China are certainly ready to pay more for advanced technology. The Chinese, however, are much more price-sensitive. One example is security technologies. Here, 70 percent of Germans are prepared to pay around €400 more. This compares to only 48 percent of customers from the People’s Republic. When it comes to autonomous driving, 69 percent of Germans and only 37 percent of Chinese are prepared to pay more.
What is probably far more important, however, is the finding of the Deloitte study on electric mobility. Just 15 percent of Germans and 17 percent of Chinese prefer a model without an internal combustion engine for their next car purchase. So it continues to be a cash cow. But Mercedes will not be able to rely on it for too long. At the COP26 world climate summit in Glasgow, the company signed a declaration to bid the internal combustion engine farewell. By 2040, all new cars are to have zero local emissions. Mercedes even wants to reach the target as early as 2030.
This is where the brand’s luxury strategy comes full circle. After all, enthusiasm for EVs is much greater in the premium segment. In Germany, 80 percent of drivers of premium cars want to switch to an EV in the next five years. In China, 64 percent. This is the result of a Kantar survey commissioned by Mercedes-Benz Mobility.
Källenius explains his contribution to the COP26 declaration as follows: “I signed because we assume that customers in the premium segment will have faster access to charging infrastructure. Once you start swimming, you want to get to the other shore.” Those who own a house with a garage are also more likely to have a charging socket, the Mercedes boss muses.
To justify the high prices in China in the future, Mercedes has entered into a cooperation with the tech giant Tencent. In early July, Tencent announced that it would help the automaker further develop autonomous driving. As a result, Mercedes would be allowed to use cloud computing, Big Data and the group’s AI technologies. A joint test lab is also being set up, Tencent said.
Shanghai continues to feel the aftermath of the Covid lockdown. Wherever new cases emerge, individual buildings or entire neighborhoods are sealed off, and residents must undergo regular testing, or else face restrictions on their freedom of movement. An end to the strict controls is not in sight as long as the central government in Beijing, as announced, sticks to its zero-Covid strategy.
However, the population of the 25-million-strong metropolis on the Huangpu River hopes that they will be spared another nationwide lockdown. Last spring’s uncompromising, and at times incomprehensible measures, pushed Shanghai’s residents to their psychological limits.
The documentary Shanghai Spring (上海之春) (Revised) offers an impressive depiction of the conditions in Shanghai between April 10 and May 10 of this year. The non-profit organization China Change has compiled individual private videos and turned them into a 100-minute collection of ten episodes, including English subtitles, on its YouTube channel.
The scenes are uncommented and document the events from many perspectives. Shanghai Spring is an edited version of the documentary Lockdown Shanghai 2022, which was released in April. YouTube blocked the first version a few days after its release because it included several scenes of suicides. In the new edition, these scenes are no longer shown. grz
On the evening of his 30th birthday, Sascha Pallenberg sits with his best friend and has an emotional fit. He lives in a shared apartment, has three computers under his desk, and lives his life one day at a time. He has no vision and decides: I have to change something. Five days later, he takes his savings and starts a company that imports computers from Taiwan. He is invited to the country, gives speeches, blogs and writes about sustainable tech gadgets. Now, he has a vision.
Pallenberg has lived in Taipei for 13 years. Taiwan, says Pallenberg, is the hub of the IT world, especially when it comes to consumer electronics. This is where Pallenberg founded a company, where he pays lower taxes than in Germany and where he has his center of life. “The city is extremely dynamic, the people have no prejudices and are kind,” he says.
The conflict between Taiwan and China, which sees the democratically governed island as part of its territory and poses an increasingly large military threat, has accompanied Pallenberg ever since. How does he perceive the situation in the country? “Taiwan carries an extremely positively charged patriotism and a desire to be recognized,” he says.
During his early days in the country, he was asked: Do people outside the country even know the situation in Taiwan? Don’t you know the geopolitical predicament we’re in and what we’ve achieved? “That definitely hurts Taiwanese people.” The country has evolved from a classic worker and farmer state in the 1970s to an IT metropolis.
What Pallenberg sees as his greatest strength? “I put in a lot of effort. And I have a great passion for change.” A look at his biography is proof of that. In 2017, after many years as a blogger, Pallenberg joined Daimler-Benz and served for four years as Head of Digital Transformation. He was responsible for transformative processes and is also in charge of corporate communications. His goal: To make the company and its core products carbon-neutral.
Pallenberg loved his job, earned good money and had a long-term employment. But he desired a change. “I wanted shorter decision-making paths and to devote myself more broadly to the topic of environmental protection,” says Pallenberg. At the end of 2020, he resigned from his position at Daimler and, a few months later, joined the Berlin-based start-up Aware.
He is now a remote Chief Awareness Officer at the company. “We are trying to do our part to prevent the climate crisis from becoming a climate catastrophe,” says Pallenberg. “Our industry has a very large carbon footprint.” Pallenberg and his colleagues train companies, and give talks and workshops on sustainability. How does sustainable communication work? How can I prevent green-claiming from becoming greenwashing? Aware’s clients include Porsche, BMW and Fujitsu.
Maybe the fact that Pallenberg is campaigning for more climate protection also has something to do with his chosen home of Taipei. In recent months, the city has been hit by several major earthquakes. Pallenberg says, “In Taipei, I realize the power of nature. It can be frightening. Above all, it makes me humble.” David Holzapfel
Birthday surprise for Ding Ding in Moscow: The female giant panda was allowed to feast on bamboo cake decorated with fruit on Sunday, just like her male companion Ru Yi. While Ding Ding turned five years old on Saturday, Ru Yi celebrated his sixth birthday a day later. The two animals were loaned from China to the zoo in the Russian capital in 2019.
