Peng Shuai: the drama ends + Foreign investment + Dinigeer Yilamujiang
An unsatisfactory conclusion to the drama of Peng Shuai
China continues to invest heavily abroad
IfW: Emerging economies face excessive debt
US losing patience over trade commitment
Slovenia clashes over Huawei
UK gets Chinese nuclear power plant
Profile: Uyghur torchbearer Dinigeer Yilamujiang
Dear reader,
In the shadows of the Olympic Games, IOC President Thomas Bach has met with Chinese tennis player Peng Shuai. Only on Monday, it was revealed that they had already met on Saturday evening. The International Olympic Committee has made no mention of the alleged sexual assault on Peng by Zhang Gaoli, a former high-ranking Chinese official.
The fact that Peng was unable to contact the International Tennis Federation at the time is blamed on a software change at the tennis organization. The meeting was followed by an interview with the French sports newspaper L’Equipe. But here, too, words did not remain uncensored. Marcel Grzanna describes the bizarre circumstances of the two meetings in Beijing and what consequences they will have.
There is currently plenty of talk about decoupling and China’s subsequent isolation from the rest of the world. Frank Sieren questions this narrative and, to this end, has taken a look at China’s direct foreign investments. He found that, despite current debates, China’s interest in foreign countries has by no means waned. However, the targets of Chinese investment have changed significantly: less high-tech and less real estate. Now, one of China’s biggest projects overseas are new battery factories in Germany.
I hope you enjoy today’s issue!
Your Michael Radunski
Feature
Peng Shuai: a tentative end to a bleak tale
As if nothing had happened: Peng Shuai is among the spectators at the Olympic figure skating on Monday.
For the time being, the last chapter in the dark tale of Chinese tennis player Peng Shuai has been written. Not by her personally, but by Wang Kan, the chief of staff of the Chinese Olympic Committee. Wang had taken on the role of translator when Peng met with journalists from the French sports newspaper L’Équipe at a Beijing hotel on Saturday. It was Peng’s first official interview since she accused Chinese Vice-Premier Zhang Gaoli of sexual assault.
The interview questions had been pre-arranged. Wang’s translations had to be published verbatim by the newspaper. These were the conditions for the interview. The essence: Peng Shuai had never been sexually assaulted by anyone, let alone raped. Her detailed account of a private meeting with Zhang and his wife, during which the powerful official allegedly pressured the two-time Wimbledon winner to have sexual intercourse, was a “huge misunderstanding”.
“I never said anyone sexually assaulted me,” Peng told the reporters. That is indeed true. At least if this statement is to be taken literally. Because her accusations could only be read online. And only for less than half an hour on November 2, 2021. Then the original post was deleted from her account. Why was it deleted? Because she “wanted to”.
‘I would like to know: why such concern?’
The sports world, as well as politicians and human rights organizations, were deeply concerned at the time. #WhereisPengShuai became synonymous with international outrage over the 36-year-old’s public disappearance. The French journalists also asked her about this, followed by a meager response: “Everyone could see me.” She referred to a video conference with IOC President Thomas Bach, in which Peng posed as a cheerful athlete in front of a wall of stuffed animals.
Peng now told L’Équipe that she didn’t think there would be such concern for her. ” I would like to know: why such concern?” The answer is provided by exiled Chinese. Artist Ai Weiwei, who himself once disappeared from the public for months after criticizing the Chinese leadership, told the British newspaper Guardian, “She (Peng) is in the very safe hands of the Communist party. They will make sure she behaves exactly according to the party.”
Ai believes Peng Shuai may have already realized that “she made a mistake in exposing this very deep, dark relationship (with Zhang Gaoli).” She had put the safety of her family and friends, as well as her career, at risk by doing so. “There is no spirit for her anymore. She has become another person, and whatever she tells you is not true.”
Meanwhile, Chinese human rights lawyer Teng Biao, who is in exile in the United States, is surprised by Peng’s demand in the interview that sports “should not be politicized.” This is a phrase that top party officials have been chanting like a mantra since the 2008 Summer Games.
Teng had also been detained for months because of his work as a lawyer. It is a proven tool of state security to instill fear into its victims, Teng told China.Table shortly after Peng’s disappearance. “The goal is for the victim’s fear to become so great that they are willing to do anything to avoid the consequences.”
Peng speaks for the first time about the potential end of her career
Apparently, the International Olympic Committee is not worried about such things. On Saturday evening, Thomas Bach met the tennis player for dinner that was already arranged months ago. Here, too, a Chinese official was invited and also sat at the table. The conversation was about relatively trivial matters. The former world-class fencer and the former world number one in doubles talked, among other things, about their experiences as top athletes at the Olympic Games, according to an IOC spokesman.
They did not discuss the alleged sexual assault or the mystery of Peng’s contradictory statements. The IOC is a sports organization, the statement said. The committee only considers an independent investigation necessary if Peng Shuai explicitly requests it. They agreed to stay in touch in the future. It is even planned for her to visit the IOC headquarters in Lausanne, Switzerland. It is not yet clear when she will be allowed to travel and whether she will come alone or in the company of Chinese officials.
Meanwhile, the interview in L’Équipe attracted international attention. However, the reaction in large parts of Europe and North America was critical. Especially since the question-and-answer process did not help shed any light on the matter. What was new, however, was Peng’s announcement that she would most likely end her career due to age. This would mean that more trips abroad would no longer be necessary for the foreseeable future.
Last year, the People’s Republic’s Outbound Foreign Direct Investment (OFDI) increased by 2.2 percent despite Covid and political tensions, according to Beijing’s Ministry of Commerce. Measured in dollars, this represents a year-on-year increase of 9.2 percent. Accordingly, investments amount to $145 billion. These figures show: China’s interest in foreign countries has not waned, despite the ongoing debate about isolation and decoupling. Among its biggest projects are new battery factories in Germany.
The big winners of the latest Chinese investment activity are the countries of the New Silk Road (Belt & Road Initiative, BRI). For the first time, they were able to reap an inflow of Chinese capital of more than $20 billion. This is an increase of 14 percent. The development of major projects is also noteworthy, with 560 new projects launched last year, which is 46 more than in the previous year.
The volume of foreign investment had initially slumped after peaking in 2016. At that time, the Beijing government had started to tighten controls on investment. The number of cases, mainly involving the evasion of capital controls, had increased. Since then, however, Chinese foreign investment has been steadily increasing again. However, it has still not returned to its original peak.
The figures are confirmed internationally: The US business law firm Baker McKenzies, one of the largest in the world, speaks of “stable” growth. China’s OFDI, however, has grown less than the global average. “Global M&A hit USD 5.9 trillion last year, representing an impressive jump of 71% as compared with 2020 levels,” Jannan Crozier, Global Chair of Baker McKennew Chair of the Firm’s Global M&A Practice Group, summarizes.
Strong investment in the tech sector
These figures are said to be primarily the result of record deals in the technology sector. This came to $1.1 trillion globally last year alone, Crozier says. “Chinese OFDI aligned with this global trend,” the expert says. China’s tech companies raised $138 billion for investment overseas. That’s also a slight increase from last year.
The volume of foreign investment also includes mergers and takeovers, i.e. acquisitions in other countries. Here, however, the trend was declining. Chinese outbound mergers and acquisitions (M&As) accounted for only $24 billion last year. This is a significant decline compared to 2020 when the volume was still at $29 billion. Obviously, Chinese investors now prefer their own projects, such as the construction of new factories. They are known as greenfield investments. This was the result of a study by Baker McKenzies in cooperation with the international research company Rhodium Group, also from the US.
Another remarkable finding: Despite the sanctions imposed by the EU (China.Table reported), China’s foreign direct investment in Europe increased by a whopping 25 percent to $13 billion. In North America, on the other hand, i.e. in the USA and Canada, it dropped by 34 percent to $5.8 billion.
Moderation and more controls
Despite China’s strict zero covid strategy of 3 to 5 weeks quarantine on entry, China has apparently managed to keep its outbound investment stable. The Covid strategy was necessary because healthcare in China is on average much lower-quality than in the EU. The likelihood that investment will pick up significantly once the pandemic is over is correspondingly high. Because for many M&A projects, it is important for negotiating partners to meet in person and have a chance to see their acquisition targets with their own eyes.
Unlike in the past, China’s global investments are no longer driven by large-scale infrastructure projects. Consumer goods and services ($5.2 billion) and entertainment ($4.6 billion) were the main targets of Chinese outbound activities, accounting for nearly half of total investment. Transportation and infrastructure ($3.8 billion), financial and business services ($3.3 billion), basic materials ($1.8 billion), and health ($1.2 billion) made up the remaining six.
Markets such as Oceania, Africa, and Latin America will become even more important for Chinese investors in 2022, Crozier points out. “What is certain, however, is that we can expect a dynamic and exciting year for both Chinese and global M&A activity,” predicts economist Crozier for 2022.
Less high-tech, less real estate, more automotive suppliers
While the industry has set records, Chinese high-tech M&A has also declined as regulators in Europe and the US have become warier of Chinese investment, while China has increasingly turned to building domestic tech alternatives. Foreign direct investment by Chinese companies in Europe in the ICT sector declined from $8 billion in 2016 and 2017 to $3 billion in 2020 and 2021. FDI in the same sector in North America actually declined from $10 billion in 2016 and 2017 to less than $150 million.
Foreign real estate investment has also dropped sharply. Chinese outbound real estate investment has dropped from $150 billion in 2015 to 2017 to just $8 billion in 2019 to 2021. This is also related to stricter supervision and the real estate crisis in China. Chinese developers had to begin handing over foreign projects to their creditors in 2021 after they defaulted on bond repayments.
A major growth sector for the Chinese is emerging in the automotive supplier sector. SVOLT Energy and CATL, for example, have invested $2.4 billion and $2 billion, respectively, in battery factories in Germany. Shanghai-based Envision Energy has partnered with Renault to develop electric vehicles in France for $1.2 billion. The total value of agreements within the automotive supply chain could exceed $14.5 billion over the next two years, Baker McKenzies estimates.
The power sector also experienced an upswing in Chinese M&A. This is mainly due to greater demand for materials for EVs and clean energy. Chinese mining companies have made major investments in Latin America and Africa for lithium and cobalt mining and processing worth more than $4 billion in the past three years, according to the report. Chinese investors have also acquired clean energy assets worth more than $13 billion in Chile, Mexico, Brazil, and Spain.
Energy
New Silk Road
Trade
News
Excessive debt imminent for China’s debtors
Chinese loans are causing more excessive debt for emerging economies. This is the result of a study by the Kiel Institute for the World Economy (IfW). Since 2008, there have been 71 cases of rescheduling of Chinese loans compared to just 21 restructurings of international bonds. “The number of payment problems toward Chinese creditors is surprisingly high,” says Christoph Trebesch, a financial market expert at the IfW and co-author of the study.
For China’s partner countries in the Global South, economists now expect a long decade of payment crises. High debts to China also weaken credit ratings in other areas. The results of the study thus contradict a different interpretation of the data that has recently received widespread attention in expert circles: China is by no means driving its Silk Road partners into excessive debt. China has been granting large loans to the participating countries since the beginning of the Belt and Road Initiative.
Since loan agreements often contain a non-disclosure clause, few official data on defaults are available. Moreover, the nature of the loans is typically not readily apparent. In many cases, Chinese commercial banks approve the loans, which are then categorized as private-sector transactions in statistics, even though they are in fact state-initiated. The authors have therefore used publicly available data. They speak of “hidden debt” because neither creditors nor debtors talk about emerging problems.
Closing the information gap about what is actually happening should be a priority of further research, the experts write. This issue is also relevant to the day-to-day practice of risk assessment in the financial sector: According to the study, Chinese foreign loans now account for the majority of liabilities in developing countries. fin
Related stories:
Banks
Finance
New Silk Road
USA loses patience with China
The USA has called on China to honor its commitments under the 2020 and 2021 trade agreements. As reported by Reuters, the US government is losing patience because Beijing has “not shown real signs” in recent months to fulfill its obligations. The US announced it wants to give China the opportunity to fulfill its commitments. “But our patience is wearing thin,” a US government official said.
The latest remarks by government officials come a day before the release of US trade data for 2021, and analysts expect China to fall far short of its pledge to buy more agricultural and industrial goods, power, and services from the US.
Under former US President Donald Trump, China had committed to purchasing an additional $200 billion worth of US goods and services in the so-called Phase 1 trade agreement. However, as the Peterson Institute for International Economics showed in a study, China has only fulfilled about 60 percent of its commitments as of November. America’s Secretary of Agriculture Tom Vilsack had remarked in late January that China’s had fallen short by about $13 billion in agricultural purchases alone.
One example is soybeans: The trade conflict with Washington had nearly halved Chinese imports of US soybeans. China had turned to Brazil to fill the gap. Today, Brazil continues to supply 60 percent of the country’s soybean imports while the remaining 30 percent comes from the US. (China.Table reported). A spokesman for the Chinese Embassy in Washington said that China has tried to implement the Phase 1 agreement “despite the impact of Covid-19, global recession and supply chain disruptions.” rad
Trade
USA
Opposition prevents Slovenian anti-Huawei bill
In Slovenia, the opposition has prevented a draft bill that would exclude providers such as the Chinese telecommunications group Huawei from the market. Huawei was not specifically mentioned in the bill. But the legislation would have excluded providers that have been flagged as a risk by law. Slovenia and the US had signed a non-binding agreement in summer 2020 to keep “untrustworthy” providers out of 5G technology. At the time, Washington had been talking to several Eastern and Central European governments in an effort to push Huawei out of markets there.
Huawei’s involvement in the rollout of 5G networks is a controversial subject in many countries. Huawei is suffering under the boycott of the USA. In addition to the US, Australia and New Zealand also want to completely exclude Huawei components from the 5G rollout, as do Japan and Taiwan. By October 2021, 13 of the EU’s 27 member states had taken legal measures to keep untrustworthy providers from building and operating key parts of their 5G networks. Most countries – including Sweden and Germany – are relying on requirements for telecom providers in this regard. Huawei had most recently filed a complaint against the exclusion of its technology in Sweden (China.Table reported). It is not yet clear when the decision of the international arbitration court will be made. ari
Huawei
Mobile communications
Slovenia
Technology
UK approves Chinese nuclear reactor
On Monday, the UK authorities approved the construction of a Chinese nuclear reactor. As a result, the UKHRP1000 will be allowed to be built in the United Kingdom in the future, according to a corresponding statement of the British Office for Nuclear Regulation and the Environment Agency. The reactor meets the legal requirements for safety and environmental protection. The Bradwell B project is now ready to begin. The plant is expected to supply up to four million households with power.
The Chinese reactor is based on the design of the Hualong One power plant, which was developed by the China General Nuclear Group (CGN). Monday’s decision was preceded by a years-long dispute. Back in 2017, Chinese state-owned CNG and French nuclear company EDF wanted to build the reactor in Essex. But the project was stalled when political relations between the UK and China deteriorated – partly over China’s brutal crackdown on Uyghurs in the autonomous region of Xinjiang. Last year, the British government wanted to force CGN out of plans to build another nuclear power plant at Sizewell in Suffolk, eastern UK (China.Table reported).
In July last year, China’s embassy in London again strongly endorsed the Chinese reactor. “Chinese nuclear energy companies have state-of-the-art technology and strong investment capabilities,” it said in a statement at the time. Refusing such cooperation would go against the UK’s interests.
Construction of Bradwell B will reportedly take up to twelve years. On completion, it is expected to have a capacity of 2.2 gigawatts and create around 900 new jobs. Nuclear power is a central building block in the UK’s climate plans. Prime Minister Boris Johnson aims to make the UK carbon-neutral by 2050. rad
Climate
Energy
Environment
Profile
Dinigeer Yilamujiang – the unknown star
Dinigeer Yilamujiang
Shortly after her first Olympic event, Dinigeer Yilamujiang broke the organizers’ strict protocol. Against her obligation, she did not show up in the so-called mixed zone. Journalists from all over the world wait there to get a chance to ask the athletes for an interview. Those who don’t wish to talk to reporters don’t have to. However, everyone has to traverse the mixed zone. Unless a medical emergency prevents that. Yilamujiang was healthy – and yet remained absent.
Under normal circumstances, few journalists, especially from abroad, would have been interested in the 20-year-old cross-country skier from the Chinese team. She finished in 43rd place in the so-called skiathlon, where half of the 15-km distance must be covered in classic style and the other half in free style. Yilamujiang’s result was expected. In her still young international career, she has only once made it into the top 20.
But these were not normal circumstances. Yilamujiang had lit the Olympic flame at the opening ceremony around 19 hours earlier, together with the equally unknown Nordic combined athlete Zhao Jiawen. This is considered a great honor, as it is reserved for a very select few. Many reporters would have wanted to know what was going through her mind and what she felt. After all, her appearance in front of hundreds of millions of people on TV screens became a political issue.
Dinigeer Yilamujiang is of Uyghur descent, and as such, she receives special attention in the world. This is because millions of Uyghurs are persecuted in China, placed in re-education camps, and branded as potential terrorists by the Chinese government. “Genocide” is what various governments, parliaments, and politicians of democratic states call the human rights crimes committed there. When a woman of this ethnic group lights the Olympic fire, it is only logical that a highly political debate is ignited.
The only media she eventually talked to was China’s state-run news agency Xinhua. “I was so excited when I found out that we are to light the flame. This is a huge honor for me,” she told the government mouthpiece. “That moment will encourage me every day for the rest of my life.”
A few thousand kilometers away, Yilamujiang’s mother and a few other women were crying into a camera. Men were nowhere to be seen in this brief scene. But it would have been nice to see how her father reacted to the television pictures from the capital. He is said to have been the one who introduced the daughter to winter sports as a cross-country skiing coach. Her father is said to have been a competitive athlete himself.
As a teenager, Yilamujiang, whose Uyghur surname is Ilhamjan, made it onto the national squad. In 2018, she made her international debut in a sprint race in Beitostölen, Norway. At that time, she finished as 184th. Last year, she already participated in the World Championships in Oberstdorf. With the Chinese team, she finished 13th in the team sprint.
“China has done everything it can for me, and what is left for me to do now is to train hard and bring glory to the country,” she told a daily newspaper in Xinjiang before the Olympics. Her goal, she said, is to win an Olympic medal. This dream will not come true this year. Her performance capacity is simply not high enough yet. Nevertheless, since last Friday, she has become famous. And perhaps her role as the torchbearer who lit the fire was already enough for the state. grz
Personnel
Teo Lay Lim will become the new CEO of SPH Media Group on March 1. Previously, the Singaporean was chairman at consulting firm Accenture Singapore. SPH Media Group was demerged from Singapore Press Holdings last December. It publishes, among others, The Straits Times and the Chinese daily Lianhe Zhaobao.
Dessert
Natural snow does indeed exist in China – as far as the eye can see. This magnificent shot was taken at the autonomous region of Ningxia. But the Winter Olympics will be held in dry Beijing. On a lot of artificial snow.
An unsatisfactory conclusion to the drama of Peng Shuai
China continues to invest heavily abroad
IfW: Emerging economies face excessive debt
US losing patience over trade commitment
Slovenia clashes over Huawei
UK gets Chinese nuclear power plant
Profile: Uyghur torchbearer Dinigeer Yilamujiang
Dear reader,
In the shadows of the Olympic Games, IOC President Thomas Bach has met with Chinese tennis player Peng Shuai. Only on Monday, it was revealed that they had already met on Saturday evening. The International Olympic Committee has made no mention of the alleged sexual assault on Peng by Zhang Gaoli, a former high-ranking Chinese official.
The fact that Peng was unable to contact the International Tennis Federation at the time is blamed on a software change at the tennis organization. The meeting was followed by an interview with the French sports newspaper L’Equipe. But here, too, words did not remain uncensored. Marcel Grzanna describes the bizarre circumstances of the two meetings in Beijing and what consequences they will have.
There is currently plenty of talk about decoupling and China’s subsequent isolation from the rest of the world. Frank Sieren questions this narrative and, to this end, has taken a look at China’s direct foreign investments. He found that, despite current debates, China’s interest in foreign countries has by no means waned. However, the targets of Chinese investment have changed significantly: less high-tech and less real estate. Now, one of China’s biggest projects overseas are new battery factories in Germany.
I hope you enjoy today’s issue!
Your Michael Radunski
Feature
Peng Shuai: a tentative end to a bleak tale
As if nothing had happened: Peng Shuai is among the spectators at the Olympic figure skating on Monday.
For the time being, the last chapter in the dark tale of Chinese tennis player Peng Shuai has been written. Not by her personally, but by Wang Kan, the chief of staff of the Chinese Olympic Committee. Wang had taken on the role of translator when Peng met with journalists from the French sports newspaper L’Équipe at a Beijing hotel on Saturday. It was Peng’s first official interview since she accused Chinese Vice-Premier Zhang Gaoli of sexual assault.
The interview questions had been pre-arranged. Wang’s translations had to be published verbatim by the newspaper. These were the conditions for the interview. The essence: Peng Shuai had never been sexually assaulted by anyone, let alone raped. Her detailed account of a private meeting with Zhang and his wife, during which the powerful official allegedly pressured the two-time Wimbledon winner to have sexual intercourse, was a “huge misunderstanding”.
“I never said anyone sexually assaulted me,” Peng told the reporters. That is indeed true. At least if this statement is to be taken literally. Because her accusations could only be read online. And only for less than half an hour on November 2, 2021. Then the original post was deleted from her account. Why was it deleted? Because she “wanted to”.
‘I would like to know: why such concern?’
The sports world, as well as politicians and human rights organizations, were deeply concerned at the time. #WhereisPengShuai became synonymous with international outrage over the 36-year-old’s public disappearance. The French journalists also asked her about this, followed by a meager response: “Everyone could see me.” She referred to a video conference with IOC President Thomas Bach, in which Peng posed as a cheerful athlete in front of a wall of stuffed animals.
Peng now told L’Équipe that she didn’t think there would be such concern for her. ” I would like to know: why such concern?” The answer is provided by exiled Chinese. Artist Ai Weiwei, who himself once disappeared from the public for months after criticizing the Chinese leadership, told the British newspaper Guardian, “She (Peng) is in the very safe hands of the Communist party. They will make sure she behaves exactly according to the party.”
Ai believes Peng Shuai may have already realized that “she made a mistake in exposing this very deep, dark relationship (with Zhang Gaoli).” She had put the safety of her family and friends, as well as her career, at risk by doing so. “There is no spirit for her anymore. She has become another person, and whatever she tells you is not true.”
Meanwhile, Chinese human rights lawyer Teng Biao, who is in exile in the United States, is surprised by Peng’s demand in the interview that sports “should not be politicized.” This is a phrase that top party officials have been chanting like a mantra since the 2008 Summer Games.
Teng had also been detained for months because of his work as a lawyer. It is a proven tool of state security to instill fear into its victims, Teng told China.Table shortly after Peng’s disappearance. “The goal is for the victim’s fear to become so great that they are willing to do anything to avoid the consequences.”
Peng speaks for the first time about the potential end of her career
Apparently, the International Olympic Committee is not worried about such things. On Saturday evening, Thomas Bach met the tennis player for dinner that was already arranged months ago. Here, too, a Chinese official was invited and also sat at the table. The conversation was about relatively trivial matters. The former world-class fencer and the former world number one in doubles talked, among other things, about their experiences as top athletes at the Olympic Games, according to an IOC spokesman.
They did not discuss the alleged sexual assault or the mystery of Peng’s contradictory statements. The IOC is a sports organization, the statement said. The committee only considers an independent investigation necessary if Peng Shuai explicitly requests it. They agreed to stay in touch in the future. It is even planned for her to visit the IOC headquarters in Lausanne, Switzerland. It is not yet clear when she will be allowed to travel and whether she will come alone or in the company of Chinese officials.
Meanwhile, the interview in L’Équipe attracted international attention. However, the reaction in large parts of Europe and North America was critical. Especially since the question-and-answer process did not help shed any light on the matter. What was new, however, was Peng’s announcement that she would most likely end her career due to age. This would mean that more trips abroad would no longer be necessary for the foreseeable future.
Last year, the People’s Republic’s Outbound Foreign Direct Investment (OFDI) increased by 2.2 percent despite Covid and political tensions, according to Beijing’s Ministry of Commerce. Measured in dollars, this represents a year-on-year increase of 9.2 percent. Accordingly, investments amount to $145 billion. These figures show: China’s interest in foreign countries has not waned, despite the ongoing debate about isolation and decoupling. Among its biggest projects are new battery factories in Germany.
The big winners of the latest Chinese investment activity are the countries of the New Silk Road (Belt & Road Initiative, BRI). For the first time, they were able to reap an inflow of Chinese capital of more than $20 billion. This is an increase of 14 percent. The development of major projects is also noteworthy, with 560 new projects launched last year, which is 46 more than in the previous year.
The volume of foreign investment had initially slumped after peaking in 2016. At that time, the Beijing government had started to tighten controls on investment. The number of cases, mainly involving the evasion of capital controls, had increased. Since then, however, Chinese foreign investment has been steadily increasing again. However, it has still not returned to its original peak.
The figures are confirmed internationally: The US business law firm Baker McKenzies, one of the largest in the world, speaks of “stable” growth. China’s OFDI, however, has grown less than the global average. “Global M&A hit USD 5.9 trillion last year, representing an impressive jump of 71% as compared with 2020 levels,” Jannan Crozier, Global Chair of Baker McKennew Chair of the Firm’s Global M&A Practice Group, summarizes.
Strong investment in the tech sector
These figures are said to be primarily the result of record deals in the technology sector. This came to $1.1 trillion globally last year alone, Crozier says. “Chinese OFDI aligned with this global trend,” the expert says. China’s tech companies raised $138 billion for investment overseas. That’s also a slight increase from last year.
The volume of foreign investment also includes mergers and takeovers, i.e. acquisitions in other countries. Here, however, the trend was declining. Chinese outbound mergers and acquisitions (M&As) accounted for only $24 billion last year. This is a significant decline compared to 2020 when the volume was still at $29 billion. Obviously, Chinese investors now prefer their own projects, such as the construction of new factories. They are known as greenfield investments. This was the result of a study by Baker McKenzies in cooperation with the international research company Rhodium Group, also from the US.
Another remarkable finding: Despite the sanctions imposed by the EU (China.Table reported), China’s foreign direct investment in Europe increased by a whopping 25 percent to $13 billion. In North America, on the other hand, i.e. in the USA and Canada, it dropped by 34 percent to $5.8 billion.
Moderation and more controls
Despite China’s strict zero covid strategy of 3 to 5 weeks quarantine on entry, China has apparently managed to keep its outbound investment stable. The Covid strategy was necessary because healthcare in China is on average much lower-quality than in the EU. The likelihood that investment will pick up significantly once the pandemic is over is correspondingly high. Because for many M&A projects, it is important for negotiating partners to meet in person and have a chance to see their acquisition targets with their own eyes.
Unlike in the past, China’s global investments are no longer driven by large-scale infrastructure projects. Consumer goods and services ($5.2 billion) and entertainment ($4.6 billion) were the main targets of Chinese outbound activities, accounting for nearly half of total investment. Transportation and infrastructure ($3.8 billion), financial and business services ($3.3 billion), basic materials ($1.8 billion), and health ($1.2 billion) made up the remaining six.
Markets such as Oceania, Africa, and Latin America will become even more important for Chinese investors in 2022, Crozier points out. “What is certain, however, is that we can expect a dynamic and exciting year for both Chinese and global M&A activity,” predicts economist Crozier for 2022.
Less high-tech, less real estate, more automotive suppliers
While the industry has set records, Chinese high-tech M&A has also declined as regulators in Europe and the US have become warier of Chinese investment, while China has increasingly turned to building domestic tech alternatives. Foreign direct investment by Chinese companies in Europe in the ICT sector declined from $8 billion in 2016 and 2017 to $3 billion in 2020 and 2021. FDI in the same sector in North America actually declined from $10 billion in 2016 and 2017 to less than $150 million.
Foreign real estate investment has also dropped sharply. Chinese outbound real estate investment has dropped from $150 billion in 2015 to 2017 to just $8 billion in 2019 to 2021. This is also related to stricter supervision and the real estate crisis in China. Chinese developers had to begin handing over foreign projects to their creditors in 2021 after they defaulted on bond repayments.
A major growth sector for the Chinese is emerging in the automotive supplier sector. SVOLT Energy and CATL, for example, have invested $2.4 billion and $2 billion, respectively, in battery factories in Germany. Shanghai-based Envision Energy has partnered with Renault to develop electric vehicles in France for $1.2 billion. The total value of agreements within the automotive supply chain could exceed $14.5 billion over the next two years, Baker McKenzies estimates.
The power sector also experienced an upswing in Chinese M&A. This is mainly due to greater demand for materials for EVs and clean energy. Chinese mining companies have made major investments in Latin America and Africa for lithium and cobalt mining and processing worth more than $4 billion in the past three years, according to the report. Chinese investors have also acquired clean energy assets worth more than $13 billion in Chile, Mexico, Brazil, and Spain.
Energy
New Silk Road
Trade
News
Excessive debt imminent for China’s debtors
Chinese loans are causing more excessive debt for emerging economies. This is the result of a study by the Kiel Institute for the World Economy (IfW). Since 2008, there have been 71 cases of rescheduling of Chinese loans compared to just 21 restructurings of international bonds. “The number of payment problems toward Chinese creditors is surprisingly high,” says Christoph Trebesch, a financial market expert at the IfW and co-author of the study.
For China’s partner countries in the Global South, economists now expect a long decade of payment crises. High debts to China also weaken credit ratings in other areas. The results of the study thus contradict a different interpretation of the data that has recently received widespread attention in expert circles: China is by no means driving its Silk Road partners into excessive debt. China has been granting large loans to the participating countries since the beginning of the Belt and Road Initiative.
Since loan agreements often contain a non-disclosure clause, few official data on defaults are available. Moreover, the nature of the loans is typically not readily apparent. In many cases, Chinese commercial banks approve the loans, which are then categorized as private-sector transactions in statistics, even though they are in fact state-initiated. The authors have therefore used publicly available data. They speak of “hidden debt” because neither creditors nor debtors talk about emerging problems.
Closing the information gap about what is actually happening should be a priority of further research, the experts write. This issue is also relevant to the day-to-day practice of risk assessment in the financial sector: According to the study, Chinese foreign loans now account for the majority of liabilities in developing countries. fin
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Finance
New Silk Road
USA loses patience with China
The USA has called on China to honor its commitments under the 2020 and 2021 trade agreements. As reported by Reuters, the US government is losing patience because Beijing has “not shown real signs” in recent months to fulfill its obligations. The US announced it wants to give China the opportunity to fulfill its commitments. “But our patience is wearing thin,” a US government official said.
The latest remarks by government officials come a day before the release of US trade data for 2021, and analysts expect China to fall far short of its pledge to buy more agricultural and industrial goods, power, and services from the US.
Under former US President Donald Trump, China had committed to purchasing an additional $200 billion worth of US goods and services in the so-called Phase 1 trade agreement. However, as the Peterson Institute for International Economics showed in a study, China has only fulfilled about 60 percent of its commitments as of November. America’s Secretary of Agriculture Tom Vilsack had remarked in late January that China’s had fallen short by about $13 billion in agricultural purchases alone.
One example is soybeans: The trade conflict with Washington had nearly halved Chinese imports of US soybeans. China had turned to Brazil to fill the gap. Today, Brazil continues to supply 60 percent of the country’s soybean imports while the remaining 30 percent comes from the US. (China.Table reported). A spokesman for the Chinese Embassy in Washington said that China has tried to implement the Phase 1 agreement “despite the impact of Covid-19, global recession and supply chain disruptions.” rad
Trade
USA
Opposition prevents Slovenian anti-Huawei bill
In Slovenia, the opposition has prevented a draft bill that would exclude providers such as the Chinese telecommunications group Huawei from the market. Huawei was not specifically mentioned in the bill. But the legislation would have excluded providers that have been flagged as a risk by law. Slovenia and the US had signed a non-binding agreement in summer 2020 to keep “untrustworthy” providers out of 5G technology. At the time, Washington had been talking to several Eastern and Central European governments in an effort to push Huawei out of markets there.
Huawei’s involvement in the rollout of 5G networks is a controversial subject in many countries. Huawei is suffering under the boycott of the USA. In addition to the US, Australia and New Zealand also want to completely exclude Huawei components from the 5G rollout, as do Japan and Taiwan. By October 2021, 13 of the EU’s 27 member states had taken legal measures to keep untrustworthy providers from building and operating key parts of their 5G networks. Most countries – including Sweden and Germany – are relying on requirements for telecom providers in this regard. Huawei had most recently filed a complaint against the exclusion of its technology in Sweden (China.Table reported). It is not yet clear when the decision of the international arbitration court will be made. ari
Huawei
Mobile communications
Slovenia
Technology
UK approves Chinese nuclear reactor
On Monday, the UK authorities approved the construction of a Chinese nuclear reactor. As a result, the UKHRP1000 will be allowed to be built in the United Kingdom in the future, according to a corresponding statement of the British Office for Nuclear Regulation and the Environment Agency. The reactor meets the legal requirements for safety and environmental protection. The Bradwell B project is now ready to begin. The plant is expected to supply up to four million households with power.
The Chinese reactor is based on the design of the Hualong One power plant, which was developed by the China General Nuclear Group (CGN). Monday’s decision was preceded by a years-long dispute. Back in 2017, Chinese state-owned CNG and French nuclear company EDF wanted to build the reactor in Essex. But the project was stalled when political relations between the UK and China deteriorated – partly over China’s brutal crackdown on Uyghurs in the autonomous region of Xinjiang. Last year, the British government wanted to force CGN out of plans to build another nuclear power plant at Sizewell in Suffolk, eastern UK (China.Table reported).
In July last year, China’s embassy in London again strongly endorsed the Chinese reactor. “Chinese nuclear energy companies have state-of-the-art technology and strong investment capabilities,” it said in a statement at the time. Refusing such cooperation would go against the UK’s interests.
Construction of Bradwell B will reportedly take up to twelve years. On completion, it is expected to have a capacity of 2.2 gigawatts and create around 900 new jobs. Nuclear power is a central building block in the UK’s climate plans. Prime Minister Boris Johnson aims to make the UK carbon-neutral by 2050. rad
Climate
Energy
Environment
Profile
Dinigeer Yilamujiang – the unknown star
Dinigeer Yilamujiang
Shortly after her first Olympic event, Dinigeer Yilamujiang broke the organizers’ strict protocol. Against her obligation, she did not show up in the so-called mixed zone. Journalists from all over the world wait there to get a chance to ask the athletes for an interview. Those who don’t wish to talk to reporters don’t have to. However, everyone has to traverse the mixed zone. Unless a medical emergency prevents that. Yilamujiang was healthy – and yet remained absent.
Under normal circumstances, few journalists, especially from abroad, would have been interested in the 20-year-old cross-country skier from the Chinese team. She finished in 43rd place in the so-called skiathlon, where half of the 15-km distance must be covered in classic style and the other half in free style. Yilamujiang’s result was expected. In her still young international career, she has only once made it into the top 20.
But these were not normal circumstances. Yilamujiang had lit the Olympic flame at the opening ceremony around 19 hours earlier, together with the equally unknown Nordic combined athlete Zhao Jiawen. This is considered a great honor, as it is reserved for a very select few. Many reporters would have wanted to know what was going through her mind and what she felt. After all, her appearance in front of hundreds of millions of people on TV screens became a political issue.
Dinigeer Yilamujiang is of Uyghur descent, and as such, she receives special attention in the world. This is because millions of Uyghurs are persecuted in China, placed in re-education camps, and branded as potential terrorists by the Chinese government. “Genocide” is what various governments, parliaments, and politicians of democratic states call the human rights crimes committed there. When a woman of this ethnic group lights the Olympic fire, it is only logical that a highly political debate is ignited.
The only media she eventually talked to was China’s state-run news agency Xinhua. “I was so excited when I found out that we are to light the flame. This is a huge honor for me,” she told the government mouthpiece. “That moment will encourage me every day for the rest of my life.”
A few thousand kilometers away, Yilamujiang’s mother and a few other women were crying into a camera. Men were nowhere to be seen in this brief scene. But it would have been nice to see how her father reacted to the television pictures from the capital. He is said to have been the one who introduced the daughter to winter sports as a cross-country skiing coach. Her father is said to have been a competitive athlete himself.
As a teenager, Yilamujiang, whose Uyghur surname is Ilhamjan, made it onto the national squad. In 2018, she made her international debut in a sprint race in Beitostölen, Norway. At that time, she finished as 184th. Last year, she already participated in the World Championships in Oberstdorf. With the Chinese team, she finished 13th in the team sprint.
“China has done everything it can for me, and what is left for me to do now is to train hard and bring glory to the country,” she told a daily newspaper in Xinjiang before the Olympics. Her goal, she said, is to win an Olympic medal. This dream will not come true this year. Her performance capacity is simply not high enough yet. Nevertheless, since last Friday, she has become famous. And perhaps her role as the torchbearer who lit the fire was already enough for the state. grz
Personnel
Teo Lay Lim will become the new CEO of SPH Media Group on March 1. Previously, the Singaporean was chairman at consulting firm Accenture Singapore. SPH Media Group was demerged from Singapore Press Holdings last December. It publishes, among others, The Straits Times and the Chinese daily Lianhe Zhaobao.
Dessert
Natural snow does indeed exist in China – as far as the eye can see. This magnificent shot was taken at the autonomous region of Ningxia. But the Winter Olympics will be held in dry Beijing. On a lot of artificial snow.
