The annual National People’s Congress (NPC) has begun. With 3,000 delegates, it is theoretically the largest legislative assembly in the world. But in reality, they do not have much to say. They rubber-stamp what the party leadership hands them. The new personnel tableau after the departure of the previous Premier Li Keqiang and the experienced economist Liu He has also already been decided.
And yet: Things are not as seamless behind the scenes – and we pay attention to the details. Li Keqiang leaves office with one of the worst economic years ever. He is now presenting a program to revive the economy, writes Frank Sieren in his analysis of the government declaration. But his successor will have a hard time implementing it. The economic policy has built up far too many contradictions for that.
Another tradition at the start of the NPC is for the leadership to announce the defense budget. For 2023, it will be higher than ever before. But as our author Joern Petring analyses, it is not an excessive increase. In recent years, defense spending has already grown faster than the economy. The reason for this is the tensions with its neighbors. However, China has to a large extent entangled itself in them.
Another central issue of the government’s statement is China’s elaborate technological rise. The US is currently blocking it with sanctions on semiconductor products. But the chances are good that China will be able to acquire all the necessary capabilities to produce modern chips, says Doris Fischer, a China economist from Wuerzburg, in an interview with Finn Mayer-Kuckuk.
As you can see, we provide you with plenty of analytical reading material on this year’s People’s Congress.
Premier Li Keqiang delivered his work report on Sunday at the start of the annual session of the National People’s Congress. It was his last. Li will step down at the end of the session, and his successor (probably Li Qiang) is expected to be elected early next week.
As always, the government report focused on the economy and development. These are the most important points:
The most important nuance came at the end of his speech: Li was a little more relaxed about Taiwan. Although he no longer explicitly spoke of a military option in his speech last year, he still said the following: “We firmly oppose any separatist activities seeking ‘Taiwan independence’ and firmly oppose foreign interference”.
Instead, the tone in 2023 is now softer: While resolute steps to oppose Taiwan’s independence are being taken, Li stressed “as we Chinese on both sides of the Taiwan Strait are one family bound by blood, we should advance economic and cultural exchanges and cooperation across the Taiwan Strait.” The emphasis on blood relations tends to raise the bar for military intervention. This does not mean that the all-clear has been given, but it may well be the beginning of a trend.
On foreign policy, Li said, “China is ready, together with the world community, to implement the Global Development Initiative and the Global Security Initiative.” These are formulations that correspond to current foreign policy programs. A change in stance toward Russia and Ukraine cannot be derived from this.
Otherwise, Li’s speech mainly revolved around China’s national economy. No one wants to leave office with one of the worst economic years. But that is exactly what is happening to Premier Li. In 2022, he had the second worst growth since the reform and reopening policy of the early 1980s, at three percent. Only in the first Covid year of 2020 was worse with at 2.2 percent.
Unsurprisingly, his annual work report was dominated by the question of how quickly things will start to pick up again. The decisive factor here is that consumers and investors have mainly postponed major spending during the crises. Household savings have increased, and foreign exchange reserves are stable. Inflation is low at two percent.
So Li now wants to get people to spend their money. However, under point 1 of his economic program for 2023, the state will not merely promote domestic consumption, but rather the “vitality of private investment”. So the official goal is still to strike a balance between the public and private sectors.
The five percent target can be seen as a compromise between a promise of recovery and an attempt to avoid last year’s mistake. The target was 5.5 percent in 2022 and was missed by a wide margin. The government is now refraining from excessive optimism. Instead, it prefers to exceed its own target at the end of the year.
Point 2 calls for the digitalization of traditional industries, especially “small and medium-sized enterprises,” to become more “high-end, smarter, and environmentally friendly.” In addition, the government wants to “accelerate the research and development of cutting-edge technologies and promote their application.”
According to Li, China’s research spending has risen from 2.1 percent of the gross domestic product to 2.5 percent in the past five years. The Ministry of Finance’s draft budget published on Sunday shows that the central government plans to spend 328 billion yuan on research funding, an increase of almost ten billion yuan compared to the previous year. This figure does not include provincial, municipal and corporate spending.
Point 3 is about improving the market-economy competitiveness of private and state-owned enterprises. Li describes this with the term “double unwavering.” Private companies are to be better “encouraged and supported.” This applies especially to small and medium-sized enterprises. The relationship between the government and business people should be characterized by “friendliness and integrity,” with the goal of “increasing the confidence of the market.”
Point 4: Attracting more foreign capital. To this end, the government wants to “further relax market access,”, especially in the modern services sector. In the report, China commits itself to international trade. In addition, Li wants to “offer companies from all over the world more opportunities for their development in China.”
Only then does point 5 deal with “serious risks in the economic and financial sectors,” which then obviously exist. Particularly mentioned are large real estate companies, whose risk Li wants to “eliminate effectively.” He wants to “prevent disproportionate expansions,” and force companies to “reduce their debts and limit new borrowing.”
Point 6 focuses on agriculture: the government wants to stabilize grain production and prices for agricultural goods, increase farmers’ incomes, and thus “prevent a large-scale relapse into poverty.”
Point 7 deals with the “green transformation”. The goal here is to “strengthen” the development and expansion of environment-related infrastructure in cities and rural areas and to “protect and restore ecosystems”.
More interesting is the order of the following two sentences: “Our country will promote the clean and highly efficient use of coal and research and develop relevant technologies. The pace of building an alternative energy system will also be increased.” Coal-fired power generation is apparently experiencing a renaissance out of concern over too much international dependence.
And the last point is about social issues: more social housing, better schooling, vocational training, and higher education. It concerns the “legitimate rights and interests” of women, children, seniors, and people with physical or mental disabilities.
Things do not look like they will relax when it comes to religion. Li wants to stick to the “basic orientation of sinicising religions in our country and actively guide their adaptation to socialist society”.
Three slogans now apply to Hong Kong. “One country, two systems,” “Hong Kong people administering Hong Kong,” and “Patriots administering Hong Kong.” Li seems to see no contradiction between them.
China’s military can look forward to significantly more money this year. The draft budget presented on Sunday at the start of the People’s Congress provides for a 7.2 percent increase in defense spending to 1.5537 trillion yuan (the equivalent of 211 billion euros).
Although the increase is considerable, it is unlikely that it has to do with the current world situation. After all, Chinese military spending has been growing faster than the economy for years. An increase of 7.5 percent in 2019 was followed by increases of 6.6 percent, 6.8 percent, and most recently 7.1 percent. The now-planned budget, to be approved at the end of the People’s Congress, is thus not an upward outlier.
This sets China apart from the US, whose defense spending is growing disproportionately. In December, the Congress in Washington approved a sharp increase of eight percent to $858 billion in military spending. The generous package was justified, among other things, by necessary support measures for Ukraine and Taiwan, as the New York Times reported at the time. Soldiers also had to be granted a hefty pay raise due to the high inflation in the United States.
Unsurprisingly, China avoided mentioning the war in Ukraine at the start of the People’s Congress on Sunday. It is possible, however, that China will comment on the matter on Tuesday. The new Foreign Minister Qin Gang will give an eagerly awaited press conference on the sidelines of the People’s Congress.
In general, there was talk of “troubled waters” regarding the global situation. The terms “peaceful” or “peace” appeared twelve times in Li Keqiang’s speech – up from eight times in the previous year.
Instead, Li justified the increase in military spending with the need to further modernize the armed forces. Specifically, Li cited 2027, when the People’s Liberation Army will celebrate its 100th anniversary. Li said, until then, work must be done on “conducting military operations, improving combat readiness and enhancing military capabilities.”
The military anniversary is only one of several milestones China has set for itself. More important is the year 2035, when the modernization of the armed forces is to be “largely completed.” By 2050, the country is then supposed to have a “world-class military.” This means that further sharp increases in military spending are certain in the years to come.
How acutely are the US chip sanctions impacting the Chinese economy?
At present, Chinese companies still have many options to cushion the consequences. In some cases, they have built up chip stocks, of which they have still some left. But yes, of course, the consequences are already being felt. But that only applies to high-tech chips. The US trade restrictions do not apply to all chips but only to highly developed product classes at the limits of what is technically feasible. China cannot yet manufacture this product group.
The restrictions concern two areas: the supply of chips and equipment for their manufacturing. Which weighs more heavily?
In the short term, the restrictions on the products weigh more heavily, and, in the long term, those on the equipment. The alternative would be manufacturing the chips by buying the necessary machines abroad. This could be achieved in the short term. But the development of production machines from scratch takes much longer. These are very complex products. We are currently experiencing this in Germany as well. We are considering the production of solar panels again. That takes time.
In the solar sector, China is planning export restrictions for the EU. An exchange of blows between the national economies with ever more far-reaching sanctions is unfolding.
Do you know what the sad thing about this whole development is?
What?
That the people in China who have always said that the Americans want to keep them down are being emboldened. For a long time, this was the opinion of a minority in China and has only become a majority under Xi Jinping. The West will never accept our rise, is the tenor.
That is true at the moment.
Yes, but this has only built up over the past few years. Both Donald Trump and Xi Jinping have contributed to this, and now Joe Biden is continuing this line.
Conversely, how can China prevent chip sanctions from slowing tech advancement in the long run?
The Chinese government will do everything to ensure that its own suppliers acquire these capabilities and that dependency disappears. There have been investment programs in the relevant industries for a long time, and despite all the setbacks, it can be assumed that they will make it at some point in the future.
Japan and the Netherlands are now apparently also joining the chip sanctions. Why was it so important to the US that these two countries also restrict exports to China?
Because they are important suppliers of machines for the production of chips or sub-processes in the production of chips. Otherwise, the Chinese strategy could have been to circumvent the sanctions by purchasing these machines. But the Americans are also concerned about something else.
About what?
In fact, the concern in the US was also about dependence on Chinese supply. If they had simply allowed development to continue in the market, then chips would have continued to be designed in the US but increasingly manufactured in China or with Chinese subcontracting. But this is cutting-edge technology that is also militarily relevant, at least in part. And that is why the US would prefer to have the entire value chain on the continent.
You just mentioned it: Chips are also weapons. A generation of AI weapons like swarm drones and killer robots that require massive computing power is likely to be next on the battlefields. Is China still dependent here?
I am not a weapons expert. But China is likely working hard to create its own production capacity for the necessary semiconductor elements. This looks no different than it does for civilian applications. The complex of state and private players is working very skillfully and effectively in innovation to some extent.
Politicians in the West seem shocked at the success of China’s industrial policy and now want to get their share.
That, of course, is the irony of it all. I have argued in my research for over 20 years that perhaps industrial policy can sometimes work. For a long time, that was hardly acknowledged. In Germany, in particular, industrial policy was a no-go for a long time; it was considered improper to even use the word. Now we are seeing a complete turnaround under the influence of China. But policymakers should not forget that efficiency is falling by the wayside in the process.
Why is that?
Industrial policy requires subsidies, it is expensive. And things don’t always work out. China has a high tolerance for such failed attempts and writes off the investments as an attempted step toward higher-level goals. Our research has concluded that the Chinese government under Xi Jinping is significantly willing to accept high costs for politically motivated ventures.
The same applies to Europe and Germany in the chip industry. We are also subsidizing a semiconductor industry.
That’s why we have the same problem with rising costs compared to a division of labor in global trade. Of course, we can say: Okay, we’re no longer just looking at efficiency for – quote-unquote – higher goals. We’ll have to see whether that works out.
Doesn’t that make everything more expensive for everyone?
If we try to make everything ourselves and spend an insane amount of money on it, then things are no longer as cost-effective. China achieves enormous economies of scale in mass production.
Is there an end to these sanctions in sight?
At present, it tends to be action and reaction. The Americans are demanding an end to market-distorting subsidies as a prerequisite for rapprochement. But at the same time, they see the very existence of state-owned enterprises as a subsidy. That would mean China would have to completely turn its economic system upside down. It’s really difficult to imagine what steps can be taken to stop that. Talks with each other would be helpful. But because of the balloon story, there is rather a radio silence.
Doris Fischer is a Professor of China Business and Economics at the University of Wuerzburg. She has a background in sinology and business administration and is currently researching the role and design of industrial policy for the energy transition under the leadership of Xi Jinping.
China and Russia want a different world order, says Roderick Kefferpütz of Merics. The difference between the two unequal partners lies in the division of roles. Russia is responsible for the rough actions and is destroying the world order; the war against Ukraine is the best example. While China is using this chaos to offer its own alternative structures. “In that sense, the two complement each other very well,” Kefferpuetz explains.
In this analysis of the two authoritarian actors, Kefferpuetz looks back on seven years in the European Parliament. While others were still feeding off the China optimism of the noughties, Kefferpuetz, as Reinhard Bütikofer’s office manager, noticed how difficult dealing with China had become. “I’ve seen China use economics as a weapon, and I’ve seen that as very aggressive.” That is why the political consultant still warns against being lulled by China’s charm offensives, such as the new peace initiative.
In doing so, he says, it is important for him to always generate added value from the wealth of publications on Russia or China. To do this, he draws on data, speeches, and treaties, which he meticulously analyzes for patterns and trends. In addition, there is personal contact: “If you really want to understand what’s happening, you have to be in exchange with the people who come into contact with China.” No sooner said than done: In a large-scale study, Kefferpuetz asked numerous members of the Bundestag how they inform themselves about China.
He realized: knowledge of China comes from outside the Bundestag. That’s not a problem at first, Kefferpuetz explains, but not every member of parliament has good contacts in the think tank world. And there is the danger that inexperienced members of parliament will become victims of disinformation from China. In England or Australia, China scholars are now being hired for parliament; this could also be an idea for the Bundestag, Kefferpuetz suggests. After all, only with the right information is navigating through the shades of international politics possible.
Kefferpuetz’s path to international politics also required navigational skills: After graduating from high school in Canada, Kefferpuetz and 25 classmates sailed around the world on a college ship. Starting in Europe, they went across the Atlantic through the Panama Canal and up to the Cape of Good Hope. “The rule was always: If you’re on the water, you do classes,” he recalls. Back on land, the world wouldn’t let him go, and Kefferpuetz went to Paris and Oxford to study international relations with a focus on Russia.
He became a China expert in the office of Reinhard Bütikofer, who, just like Kefferpuetz’s current employer Merics, is under Chinese sanctions. When asked how Germany should deal with the challenging alliance between Moscow and Beijing, Kefferpuetz is certain: the so-called “Kissinger somersault” – tying China to the West to put Russia in its place – holds little promise. “We need to realize that Russia and China are pulling together,” Kefferpuetz stresses. “And then answer the question of how we deal with it.” Jonathan Lehrer
The weather, world events, the weekend TV program – these are three popular lifelines that we like to cling to when a conversation is about to turn awkward. In China, too, we are familiar with such small-talk dilemmas, in which participants try their hardest to wring the last remaining topics out of their brains to keep the conversation going. In Mandarin, such scenarios have recently been given their own linguistic label, namely 尬聊 gàliáo.
This neologism is a combination of the words 尴尬 gān’gà “awkward, uncomfortable, embarrassed” and 聊天 liáotiān “to talk, to chat”. “Ga-talk” does not describe casual small talk – in Chinese, this is called 闲聊xiánliáo, literally “idle talk” – but unpleasant “award talk”, in other words, chit-chat where embarrassing silence lurks after every sentence. So beware word dilettantes who “cannot converse” (不会聊天 bú huì liáotiān) and who repeatedly maneuver every conversation into a dead end. In Chinese, this is called “talking the sky to death” (把天聊死 bǎ tiān liáosǐ). China now boasts a veritable “ga culture” (尬文化 gà wénhuà). It encompasses a whole slew of terms for embarrassing social interactions.
What few people know, this culture actually comes from the Taiwanese street dance scene and initially had nothing whatsoever to do with awkward situations. The island’s street dance subculture coined the term 較舞 (in short 较舞 jiàowǔ – literally “comparison dance”) several years ago to describe a dance battle. The word then slowly spilled over into mainstream culture and found its way to Mainland China. There, the original character 較 jiào, which sounds similar to the High Chinese “gà” in the Taiwanese dialect, was then replaced by 尬 gà. This paved the way for the change in meaning.
Today, an entire vocabulary has grown around the “awkward” character. For example, if you don’t know what to do or say during a WeChat conversation, sending an “awkward picture” (尬图 gàtú) is often the final straw. And all attempts to save the tense mood at a business banquet with an embarrassing show of strength involving strong liquor are called 尬酒 gàjiǔ – “awkward liquor” – by the youth.
But don’t worry: The next time you feel like dying of shame, simply counter all the embarrassments of the world with a “Gaga” counterattack. Freely adapted from the following wisdom from the vastness of the Chinese web, which has long since become a catchphrase in Chinese ga debates: 只要你不尴尬，尴尬的就是别人 Zhǐyào nǐ bù gān’gà, gān’gà de jiù shì biérén – “As long as you are not embarrassed, it is the others who are embarrassed. ” Exactly.
Verena Menzel runs the online language school New Chinese in Beijing.
The annual National People’s Congress (NPC) has begun. With 3,000 delegates, it is theoretically the largest legislative assembly in the world. But in reality, they do not have much to say. They rubber-stamp what the party leadership hands them. The new personnel tableau after the departure of the previous Premier Li Keqiang and the experienced economist Liu He has also already been decided.
And yet: Things are not as seamless behind the scenes – and we pay attention to the details. Li Keqiang leaves office with one of the worst economic years ever. He is now presenting a program to revive the economy, writes Frank Sieren in his analysis of the government declaration. But his successor will have a hard time implementing it. The economic policy has built up far too many contradictions for that.
Another tradition at the start of the NPC is for the leadership to announce the defense budget. For 2023, it will be higher than ever before. But as our author Joern Petring analyses, it is not an excessive increase. In recent years, defense spending has already grown faster than the economy. The reason for this is the tensions with its neighbors. However, China has to a large extent entangled itself in them.
Another central issue of the government’s statement is China’s elaborate technological rise. The US is currently blocking it with sanctions on semiconductor products. But the chances are good that China will be able to acquire all the necessary capabilities to produce modern chips, says Doris Fischer, a China economist from Wuerzburg, in an interview with Finn Mayer-Kuckuk.
As you can see, we provide you with plenty of analytical reading material on this year’s People’s Congress.
Premier Li Keqiang delivered his work report on Sunday at the start of the annual session of the National People’s Congress. It was his last. Li will step down at the end of the session, and his successor (probably Li Qiang) is expected to be elected early next week.
As always, the government report focused on the economy and development. These are the most important points:
The most important nuance came at the end of his speech: Li was a little more relaxed about Taiwan. Although he no longer explicitly spoke of a military option in his speech last year, he still said the following: “We firmly oppose any separatist activities seeking ‘Taiwan independence’ and firmly oppose foreign interference”.
Instead, the tone in 2023 is now softer: While resolute steps to oppose Taiwan’s independence are being taken, Li stressed “as we Chinese on both sides of the Taiwan Strait are one family bound by blood, we should advance economic and cultural exchanges and cooperation across the Taiwan Strait.” The emphasis on blood relations tends to raise the bar for military intervention. This does not mean that the all-clear has been given, but it may well be the beginning of a trend.
On foreign policy, Li said, “China is ready, together with the world community, to implement the Global Development Initiative and the Global Security Initiative.” These are formulations that correspond to current foreign policy programs. A change in stance toward Russia and Ukraine cannot be derived from this.
Otherwise, Li’s speech mainly revolved around China’s national economy. No one wants to leave office with one of the worst economic years. But that is exactly what is happening to Premier Li. In 2022, he had the second worst growth since the reform and reopening policy of the early 1980s, at three percent. Only in the first Covid year of 2020 was worse with at 2.2 percent.
Unsurprisingly, his annual work report was dominated by the question of how quickly things will start to pick up again. The decisive factor here is that consumers and investors have mainly postponed major spending during the crises. Household savings have increased, and foreign exchange reserves are stable. Inflation is low at two percent.
So Li now wants to get people to spend their money. However, under point 1 of his economic program for 2023, the state will not merely promote domestic consumption, but rather the “vitality of private investment”. So the official goal is still to strike a balance between the public and private sectors.
The five percent target can be seen as a compromise between a promise of recovery and an attempt to avoid last year’s mistake. The target was 5.5 percent in 2022 and was missed by a wide margin. The government is now refraining from excessive optimism. Instead, it prefers to exceed its own target at the end of the year.
Point 2 calls for the digitalization of traditional industries, especially “small and medium-sized enterprises,” to become more “high-end, smarter, and environmentally friendly.” In addition, the government wants to “accelerate the research and development of cutting-edge technologies and promote their application.”
According to Li, China’s research spending has risen from 2.1 percent of the gross domestic product to 2.5 percent in the past five years. The Ministry of Finance’s draft budget published on Sunday shows that the central government plans to spend 328 billion yuan on research funding, an increase of almost ten billion yuan compared to the previous year. This figure does not include provincial, municipal and corporate spending.
Point 3 is about improving the market-economy competitiveness of private and state-owned enterprises. Li describes this with the term “double unwavering.” Private companies are to be better “encouraged and supported.” This applies especially to small and medium-sized enterprises. The relationship between the government and business people should be characterized by “friendliness and integrity,” with the goal of “increasing the confidence of the market.”
Point 4: Attracting more foreign capital. To this end, the government wants to “further relax market access,”, especially in the modern services sector. In the report, China commits itself to international trade. In addition, Li wants to “offer companies from all over the world more opportunities for their development in China.”
Only then does point 5 deal with “serious risks in the economic and financial sectors,” which then obviously exist. Particularly mentioned are large real estate companies, whose risk Li wants to “eliminate effectively.” He wants to “prevent disproportionate expansions,” and force companies to “reduce their debts and limit new borrowing.”
Point 6 focuses on agriculture: the government wants to stabilize grain production and prices for agricultural goods, increase farmers’ incomes, and thus “prevent a large-scale relapse into poverty.”
Point 7 deals with the “green transformation”. The goal here is to “strengthen” the development and expansion of environment-related infrastructure in cities and rural areas and to “protect and restore ecosystems”.
More interesting is the order of the following two sentences: “Our country will promote the clean and highly efficient use of coal and research and develop relevant technologies. The pace of building an alternative energy system will also be increased.” Coal-fired power generation is apparently experiencing a renaissance out of concern over too much international dependence.
And the last point is about social issues: more social housing, better schooling, vocational training, and higher education. It concerns the “legitimate rights and interests” of women, children, seniors, and people with physical or mental disabilities.
Things do not look like they will relax when it comes to religion. Li wants to stick to the “basic orientation of sinicising religions in our country and actively guide their adaptation to socialist society”.
Three slogans now apply to Hong Kong. “One country, two systems,” “Hong Kong people administering Hong Kong,” and “Patriots administering Hong Kong.” Li seems to see no contradiction between them.
China’s military can look forward to significantly more money this year. The draft budget presented on Sunday at the start of the People’s Congress provides for a 7.2 percent increase in defense spending to 1.5537 trillion yuan (the equivalent of 211 billion euros).
Although the increase is considerable, it is unlikely that it has to do with the current world situation. After all, Chinese military spending has been growing faster than the economy for years. An increase of 7.5 percent in 2019 was followed by increases of 6.6 percent, 6.8 percent, and most recently 7.1 percent. The now-planned budget, to be approved at the end of the People’s Congress, is thus not an upward outlier.
This sets China apart from the US, whose defense spending is growing disproportionately. In December, the Congress in Washington approved a sharp increase of eight percent to $858 billion in military spending. The generous package was justified, among other things, by necessary support measures for Ukraine and Taiwan, as the New York Times reported at the time. Soldiers also had to be granted a hefty pay raise due to the high inflation in the United States.
Unsurprisingly, China avoided mentioning the war in Ukraine at the start of the People’s Congress on Sunday. It is possible, however, that China will comment on the matter on Tuesday. The new Foreign Minister Qin Gang will give an eagerly awaited press conference on the sidelines of the People’s Congress.
In general, there was talk of “troubled waters” regarding the global situation. The terms “peaceful” or “peace” appeared twelve times in Li Keqiang’s speech – up from eight times in the previous year.
Instead, Li justified the increase in military spending with the need to further modernize the armed forces. Specifically, Li cited 2027, when the People’s Liberation Army will celebrate its 100th anniversary. Li said, until then, work must be done on “conducting military operations, improving combat readiness and enhancing military capabilities.”
The military anniversary is only one of several milestones China has set for itself. More important is the year 2035, when the modernization of the armed forces is to be “largely completed.” By 2050, the country is then supposed to have a “world-class military.” This means that further sharp increases in military spending are certain in the years to come.
How acutely are the US chip sanctions impacting the Chinese economy?
At present, Chinese companies still have many options to cushion the consequences. In some cases, they have built up chip stocks, of which they have still some left. But yes, of course, the consequences are already being felt. But that only applies to high-tech chips. The US trade restrictions do not apply to all chips but only to highly developed product classes at the limits of what is technically feasible. China cannot yet manufacture this product group.
The restrictions concern two areas: the supply of chips and equipment for their manufacturing. Which weighs more heavily?
In the short term, the restrictions on the products weigh more heavily, and, in the long term, those on the equipment. The alternative would be manufacturing the chips by buying the necessary machines abroad. This could be achieved in the short term. But the development of production machines from scratch takes much longer. These are very complex products. We are currently experiencing this in Germany as well. We are considering the production of solar panels again. That takes time.
In the solar sector, China is planning export restrictions for the EU. An exchange of blows between the national economies with ever more far-reaching sanctions is unfolding.
Do you know what the sad thing about this whole development is?
What?
That the people in China who have always said that the Americans want to keep them down are being emboldened. For a long time, this was the opinion of a minority in China and has only become a majority under Xi Jinping. The West will never accept our rise, is the tenor.
That is true at the moment.
Yes, but this has only built up over the past few years. Both Donald Trump and Xi Jinping have contributed to this, and now Joe Biden is continuing this line.
Conversely, how can China prevent chip sanctions from slowing tech advancement in the long run?
The Chinese government will do everything to ensure that its own suppliers acquire these capabilities and that dependency disappears. There have been investment programs in the relevant industries for a long time, and despite all the setbacks, it can be assumed that they will make it at some point in the future.
Japan and the Netherlands are now apparently also joining the chip sanctions. Why was it so important to the US that these two countries also restrict exports to China?
Because they are important suppliers of machines for the production of chips or sub-processes in the production of chips. Otherwise, the Chinese strategy could have been to circumvent the sanctions by purchasing these machines. But the Americans are also concerned about something else.
About what?
In fact, the concern in the US was also about dependence on Chinese supply. If they had simply allowed development to continue in the market, then chips would have continued to be designed in the US but increasingly manufactured in China or with Chinese subcontracting. But this is cutting-edge technology that is also militarily relevant, at least in part. And that is why the US would prefer to have the entire value chain on the continent.
You just mentioned it: Chips are also weapons. A generation of AI weapons like swarm drones and killer robots that require massive computing power is likely to be next on the battlefields. Is China still dependent here?
I am not a weapons expert. But China is likely working hard to create its own production capacity for the necessary semiconductor elements. This looks no different than it does for civilian applications. The complex of state and private players is working very skillfully and effectively in innovation to some extent.
Politicians in the West seem shocked at the success of China’s industrial policy and now want to get their share.
That, of course, is the irony of it all. I have argued in my research for over 20 years that perhaps industrial policy can sometimes work. For a long time, that was hardly acknowledged. In Germany, in particular, industrial policy was a no-go for a long time; it was considered improper to even use the word. Now we are seeing a complete turnaround under the influence of China. But policymakers should not forget that efficiency is falling by the wayside in the process.
Why is that?
Industrial policy requires subsidies, it is expensive. And things don’t always work out. China has a high tolerance for such failed attempts and writes off the investments as an attempted step toward higher-level goals. Our research has concluded that the Chinese government under Xi Jinping is significantly willing to accept high costs for politically motivated ventures.
The same applies to Europe and Germany in the chip industry. We are also subsidizing a semiconductor industry.
That’s why we have the same problem with rising costs compared to a division of labor in global trade. Of course, we can say: Okay, we’re no longer just looking at efficiency for – quote-unquote – higher goals. We’ll have to see whether that works out.
Doesn’t that make everything more expensive for everyone?
If we try to make everything ourselves and spend an insane amount of money on it, then things are no longer as cost-effective. China achieves enormous economies of scale in mass production.
Is there an end to these sanctions in sight?
At present, it tends to be action and reaction. The Americans are demanding an end to market-distorting subsidies as a prerequisite for rapprochement. But at the same time, they see the very existence of state-owned enterprises as a subsidy. That would mean China would have to completely turn its economic system upside down. It’s really difficult to imagine what steps can be taken to stop that. Talks with each other would be helpful. But because of the balloon story, there is rather a radio silence.
Doris Fischer is a Professor of China Business and Economics at the University of Wuerzburg. She has a background in sinology and business administration and is currently researching the role and design of industrial policy for the energy transition under the leadership of Xi Jinping.
China and Russia want a different world order, says Roderick Kefferpütz of Merics. The difference between the two unequal partners lies in the division of roles. Russia is responsible for the rough actions and is destroying the world order; the war against Ukraine is the best example. While China is using this chaos to offer its own alternative structures. “In that sense, the two complement each other very well,” Kefferpuetz explains.
In this analysis of the two authoritarian actors, Kefferpuetz looks back on seven years in the European Parliament. While others were still feeding off the China optimism of the noughties, Kefferpuetz, as Reinhard Bütikofer’s office manager, noticed how difficult dealing with China had become. “I’ve seen China use economics as a weapon, and I’ve seen that as very aggressive.” That is why the political consultant still warns against being lulled by China’s charm offensives, such as the new peace initiative.
In doing so, he says, it is important for him to always generate added value from the wealth of publications on Russia or China. To do this, he draws on data, speeches, and treaties, which he meticulously analyzes for patterns and trends. In addition, there is personal contact: “If you really want to understand what’s happening, you have to be in exchange with the people who come into contact with China.” No sooner said than done: In a large-scale study, Kefferpuetz asked numerous members of the Bundestag how they inform themselves about China.
He realized: knowledge of China comes from outside the Bundestag. That’s not a problem at first, Kefferpuetz explains, but not every member of parliament has good contacts in the think tank world. And there is the danger that inexperienced members of parliament will become victims of disinformation from China. In England or Australia, China scholars are now being hired for parliament; this could also be an idea for the Bundestag, Kefferpuetz suggests. After all, only with the right information is navigating through the shades of international politics possible.
Kefferpuetz’s path to international politics also required navigational skills: After graduating from high school in Canada, Kefferpuetz and 25 classmates sailed around the world on a college ship. Starting in Europe, they went across the Atlantic through the Panama Canal and up to the Cape of Good Hope. “The rule was always: If you’re on the water, you do classes,” he recalls. Back on land, the world wouldn’t let him go, and Kefferpuetz went to Paris and Oxford to study international relations with a focus on Russia.
He became a China expert in the office of Reinhard Bütikofer, who, just like Kefferpuetz’s current employer Merics, is under Chinese sanctions. When asked how Germany should deal with the challenging alliance between Moscow and Beijing, Kefferpuetz is certain: the so-called “Kissinger somersault” – tying China to the West to put Russia in its place – holds little promise. “We need to realize that Russia and China are pulling together,” Kefferpuetz stresses. “And then answer the question of how we deal with it.” Jonathan Lehrer
The weather, world events, the weekend TV program – these are three popular lifelines that we like to cling to when a conversation is about to turn awkward. In China, too, we are familiar with such small-talk dilemmas, in which participants try their hardest to wring the last remaining topics out of their brains to keep the conversation going. In Mandarin, such scenarios have recently been given their own linguistic label, namely 尬聊 gàliáo.
This neologism is a combination of the words 尴尬 gān’gà “awkward, uncomfortable, embarrassed” and 聊天 liáotiān “to talk, to chat”. “Ga-talk” does not describe casual small talk – in Chinese, this is called 闲聊xiánliáo, literally “idle talk” – but unpleasant “award talk”, in other words, chit-chat where embarrassing silence lurks after every sentence. So beware word dilettantes who “cannot converse” (不会聊天 bú huì liáotiān) and who repeatedly maneuver every conversation into a dead end. In Chinese, this is called “talking the sky to death” (把天聊死 bǎ tiān liáosǐ). China now boasts a veritable “ga culture” (尬文化 gà wénhuà). It encompasses a whole slew of terms for embarrassing social interactions.
What few people know, this culture actually comes from the Taiwanese street dance scene and initially had nothing whatsoever to do with awkward situations. The island’s street dance subculture coined the term 較舞 (in short 较舞 jiàowǔ – literally “comparison dance”) several years ago to describe a dance battle. The word then slowly spilled over into mainstream culture and found its way to Mainland China. There, the original character 較 jiào, which sounds similar to the High Chinese “gà” in the Taiwanese dialect, was then replaced by 尬 gà. This paved the way for the change in meaning.
Today, an entire vocabulary has grown around the “awkward” character. For example, if you don’t know what to do or say during a WeChat conversation, sending an “awkward picture” (尬图 gàtú) is often the final straw. And all attempts to save the tense mood at a business banquet with an embarrassing show of strength involving strong liquor are called 尬酒 gàjiǔ – “awkward liquor” – by the youth.
But don’t worry: The next time you feel like dying of shame, simply counter all the embarrassments of the world with a “Gaga” counterattack. Freely adapted from the following wisdom from the vastness of the Chinese web, which has long since become a catchphrase in Chinese ga debates: 只要你不尴尬，尴尬的就是别人 Zhǐyào nǐ bù gān’gà, gān’gà de jiù shì biérén – “As long as you are not embarrassed, it is the others who are embarrassed. ” Exactly.
Verena Menzel runs the online language school New Chinese in Beijing.
