Pessimistic chamber outlook + Hong Kong’s wages too low

Dear reader,

After the end of zero-Covid, business representatives were hoping for a strong economic recovery in China. However, as the AHK’s Business Confidence Survey in the People’s Republic now shows, German companies believe that it will not materialize for the time being. Half of the companies surveyed expect the industry trend to remain the same or even worsen this year. Joern Petring has summarized the results of the survey for you.

Since last month, Hong Kong’s workers have been earning slightly more money again – an increase of 30 cents per hour. The minimum wage rose from 37.5 Hong Kong dollars (4.47 euros) to 40 Hong Kong dollars (4.77 euros): 6.7 percent more and the first wage rise in four years. The wages are following the autocratic calculation dictated by the headquarters in Beijing, writes Marcel Grzanna. According to the motto: Those who feel that the economy is on the upswing are less likely to complain about being stripped of their democratic civil rights.

In “China Perspective“, our author looks at the growing difficulty of assessing public opinion in the People’s Republic and predicting how it would react in various situations. Including the Taiwan issue.

Your
Amelie Richter

Slow recovery leaves German company disappointed

By

Jörn Petring

The high expectations of German companies for a strong economic recovery after the end of the strict pandemic measures in China have not been fulfilled. Jens Hildebrandt, Executive Member of the Board of the German Chamber of Commerce (AHK) in Beijing, left no doubt about this when he presented the results of the first Business Confidence Survey among Chamber members since the end of zero-Covid on Thursday. 288 companies participated.

Companies had hoped that a strong upswing would follow the Covid chaos. But economic data since January has been mixed at best, which is now reflected in business sentiment. Commenting on the survey results conducted between May 9-17, Hildebrandt said that the slow development of the market, as well as ongoing geopolitical tensions, have dampened hopes for a rapid improvement in the business environment. “The economic recovery is currently less dynamic than many had hoped,” confirms Hubertus Troska, Chairman of the Board of the German Chamber of Commerce in Beijing.

Negative outlook, but also hope

Two particularly negative aspects stood out in the survey.

More than half of the German companies expect economic development to remain the same or worsen this year, despite China’s departure from zero-Covid.
More companies also expect profits to decline. Last year, 22 percent of companies expected profits to fall by more than five percent in 2023. This year, it is 32 percent, an increase of 10 percentage points.

But it also shows that German companies refuse to give up despite the difficult situation – and in some cases, even want to invest more in China. So they have not lost hope.

For instance, 55 percent of the companies said they planned to increase their investments in China over the next two years. This is a four percent increase compared to the previous year, but less than before the pandemic.
If companies continue their investments, 62 percent of them will do so to remain competitive in the Chinese market. 48 percent expect to benefit from the market’s growth potential.
The main reasons for refraining from investing are low market growth expectations, ongoing geopolitical tensions and China’s pursuit of economic independence.

It is clear to the German business community that China needs to do more to kick-start the recovery. “Measures to stimulate consumer confidence and targeted support for businesses are needed,” was the conclusion on Thursday. Geopolitically, tensions between the USA and China continued to be regarded as the main risk. Meanwhile, companies do not expect a significant deterioration in relations between China and Germany. They hope for stability. “The better the traditionally good relations between China and Germany, the greater the probability that the framework conditions will also be good in the future,” says Troska.

Wishes for government consultations

In the run-up to the German-Chinese government consultations at the end of June, the Chamber drafted a “wish list.” It states that 45 percent of German companies call on the Chinese government for more legal certainty, while 60 percent hope for increased cooperation in decarbonization, smart production and mobility.

An urgent call for action was also voiced concerning visa issuance. It has been six months since China fully reopened its borders. However, according to the Chamber, companies still have problems when they want to travel.

But China is not to blame. While the Chinese seem to have done their homework, 80 percent of the companies surveyed complain about long processing times for business visas for Chinese employees who want to come to Germany. “Customer visits, trade fair visits and important staff training cannot be carried out, which leads to economic damage for German companies,” Hildebrandt warns. Companies are currently being “very adversely affected.”

Hong Kong: Low minimum wage threatens social stability

By

Marcel Grzanna

The not-so-new government in Hong Kong promised its citizens a better life upon taking office: affordable housing, greater educational opportunities, and more money. The bureaucrats want to maintain social stability in the city at all costs.

They follow the autocratic calculation laid down as a guideline from the headquarters in Beijing. There, too, the principle is: Those who feel that the economy is improving are less likely to complain about being stripped of their democratic civil rights.

Disposable income is a vital element of this strategy. Since last month, Hong Kong’s workers have been earning slightly more money – an extra 30 cents per hour. The minimum wage went up from 37.5 Hong Kong dollars (4.47 euros) to 40 Hong Kong dollars (4.77 euros) – an increase of 6.7 percent and the first wage rise in four years.

The government had previously assembled a minimum wage commission to seek a compromise that both the nearly 90,000 workers affected and the economy could – literally – live with. The workers, however, had hoped for significantly more money. Hong Kong is one of the most expensive cities in the world. In the global cost of living index, the city ranked fourth last year – behind New York, Singapore and Tel Aviv.

The average inflation rate since 2019 in Hong Kong is 5.4 percent. And the regular wage increase was suspended two years ago due to the pandemic. Workers were left empty-handed back then. But the commission argues that even with a minimum wage of 44 Hong Kong dollars, employers would have to cut up to 20,000 jobs to cover rising labor costs.

The NGO Oxfam criticizes the fact that wage levels are still below what a family with two children would receive from the city’s social security program. As a result, many could voluntarily leave the job market.

Hong Kong’s Secretary for Labour and Welfare, Chris Sun, however, sees no problem in this. You cannot compare welfare with work, he says. Work is important for the mind and health. That is why he feels confident that minimum-wage earners “would rather work than receive social welfare because they think it has more value in their lives.”

International standards not yet ratified

The International Labour Organisation (ILO) does not officially comment on local developments. Nevertheless, the UN organization considers the wage increase in Hong Kong a serious attempt to accommodate workers. “This does not automatically mean that the increase is appropriate. But given that Hong Kong was only willing to introduce a minimum wage in 2011, the 6.7 percent at least does not seem ridiculously low,” an ILO director told China.Table. Twelve years ago, the minimum was 28 Hong Kong dollars.

The ILO has been pushing for years to permit collective bargaining in Hong Kong. But the city has not ratified either Convention C131 or Recommendation R135 – these set international standards and recommendations for determining minimum wages.

There is hardly any noticeable public criticism in the city. Hong Kong has changed over the past few years. Months of mass protests against the growing influence of the Communist Party, radical curtailment of voting rights and tighter legislation were the precursors of a political purge initiated by Beijing that has silenced all dissenting voices.

‘Incentive to comply with legal requirements’

Former parliamentarian Ted Hui lives in exile in Australia. He sees the 2.5 Hong Kong dollar increase as a reflection of economic policies on Beijing’s behalf that serve the interests of the city’s business elite. “This increase is laughably low and more of a nominal nature, with no substantial improvement for the lives of grassroots workers,” Hui told China.Table.

After his election a year ago, Chief Executive John Lee announced plans to “enhance the city’s competitiveness” and assert its “strengths.” Prominent Hong Kong business leaders feared a resurgence of protests and expressed their wish for stability and an environment in which the lives of all Hongkongers would continue to improve.

Hong Kongers in the West also do not see the wage increase as a significant step in this direction. Aniessa Andresen of the association “Hongkonger in Deutschland” believes that the commission has not taken the cost of living and inflation into account. “Such small increases only incentivize employers to comply with the law and protect their profits without helping workers meet their basic needs,” says Andresen.

Plans for file-sharing restrictions

The government plans to restrict the exchange of data via Wi-Fi and Bluetooth between mobile devices near each other, supposedly for national security reasons. It is expected that Beijing targets file-sharing via Apple’s AirDrop and similar communication apps. The plans emerge from a draft published by China’s top internet regulator CAC on its website on Tuesday.

The file-sharing service AirDrop was used to share content critical of the government and circumvent the government’s strict internet censorship during last winter’s protests against China’s strict zero-Covid restrictions, and during the anti-government protests in Hong Kong in 2019.

The restrictions could also affect similar services such as Google Files and Fast Share on Google’s Android operating system. Chinese phone manufacturers Vivo, Xiaomi and Oppo also offer such file transfer services. cyb

No money for Nexperia – because of Chinese owner

The German Federal Ministry for Economic Affairs and Climate Action denies the semiconductor manufacturer Nexperia a subsidy that benefits many of its competitors – apparently because the company is under Chinese ownership. Nexperia is the only company left out of a group the ministry deemed eligible for funding in late 2021. The EU Commission has granted approvals for all other projects at the request of Berlin, as was heard from the ministry. Regarding Nexperia, Germany’s Economy Minister Robert Habeck has apparently changed his mind.

According to reports, the overturned plan involved aid for an existing plant in Hamburg. Nexperia was spun off from the large Dutch chip specialist NXP in 2016 and sold to the Chinese competitor Wingtech in 2017. At the time, there were no instruments against Chinese access to the semiconductor industry and hardly any public debate. Nexperia produces chips for the automotive industry, a particularly important sector for Germany. Wingtech itself is mainly a supplier to the mobile phone industry.

Nexperia had already encountered obstacles in the UK because of its Chinese owners when it attempted to acquire wafer manufacturer Newport. The fact that Nexperia appeared on the ministry’s EU funding application list had caused confusion since the Russian attack on Ukraine sparked a reassessment of economic policy risks. tho/fin

EU politicians: CAI not a bargaining chip

EU politicians and observers stress that the Comprehensive Agreement on Investment (CIA) must not be a bargaining chip for China’s peace efforts in the Ukraine war. “In order to even bring CAI back to the table, China must first lift sanctions against European MPs and civil society actors,” European SPD MEP René Repasi told Table.Media on Thursday. However, this does not automatically mean that the EU should lift its own sanctions, which were imposed because of human rights violations in Xinjiang, Repasi said.

Nor does it mean that the agreement will actually be approved in the end. The SPD politician criticized that the so-called peace plan presented by China “is a rhetorical step in the right direction” but “lacks the necessary seriousness in its implementation.”

In an interview with China.Table earlier this week, Chinese scholar Wang Zichen urged Europe to offer China something to motivate Beijing to step up its peace efforts. “But the US and Europe are only pressuring China. So far, they haven’t been able to come up with any incentives to get China on their side. Offering incentives would be a more pragmatic approach, especially for the Europeans,” Wang said.

Green Party European politician Reinhard Buetikofer considers the interview statement a strategic move by the Chinese academic: “Wang’s supposed clever idea is only intended to cause confusion,” said Buetikofer. He considers Wang’s take on the CAI, however, to be telling. ” So far, Beijing always claimed CAI was in the European interest, downright a great gift from China to the EU. Now it sounds different, and more realistic: CAI is mainly in Chinese interest; that’s why Beijing is pushing so hard.”

Merics EU expert Grzegorz Stec also urged caution about Wang’s proposal. “Agreeing that upholding the UN charter and international law in face of military aggression between states can be conditional on some quid pro quo, would create a dangerous precedence and would undermine the logic of a rules-based international order,” Stec told Table.Media. From Beijing’s perspective, finding partners to stand up to Washington is the most important task – and that makes Russia an important partner, Stec said. He doesn’t see much point in the EU changing its position: “Even if the EU were to decide to play along with the proposal, it is highly unlikely that Beijing deliver on meaningfully shifting its relationship with Moscow and thereby position on Russia‘s war.” ari

Armored vehicles for Russian military

According to reports, the Russian military received Chinese armored vehicles. The Polish-based Defense Blog reported that Chechen strongman Ramzan Kadyrov has confirmed that the Russian military has received the first delivery of Chinese Tiger 4×4 armored vehicles. According to the report, Kadyrov had released footage showing “new vehicles purchased for Chechen units participating in the ‘Special Military Operation.’” This is the term Moscow uses for the war in Ukraine; it can therefore be assumed that Kadyrov is referring to this war.

The vehicles are manufactured by China’s Shaanxi Baoji Special Vehicles Manufacturing and look like raised armored jeeps. While these armored vehicles are not weapons, their application is clearly military. The EU could see the delivery as a further escalation. Brussels repeatedly warned China against supplying Russia with weapons and ammunition. The German government also urged China not to provide Russia with weapons.

The dispute has so far been over so-called dual-use goods, i.e., civilian goods used for weapons production. However, due to their different applications, they are not proof of arms deliveries. The EU is currently working on a sanctions package that focuses on circumventing the previous punitive measures. This could also affect Chinese companies. ari

Financial supervision plans further opening

China remains committed to further opening its 60 trillion US dollar financial market to foreign banks and investment firms. “Opening up is China’s long-standing state policy, and the door for opening up the financial sector will only be wider,” Li Yunze, head of the National Financial Supervisory Commission, said Thursday at the Lujiazui Forum in Shanghai, according to a Bloomberg report. Li, a former vice governor of Sichuan province, was appointed head of the new financial regulator last month.

Growing tensions between China and the US worry investors around the world. While China has pledged to open up its financial markets further, authorities have recently severely curtailed access to a wide range of data. In parallel, the US is considering further investment restrictions.

Li’s remarks come at a time when global banks are reassessing their ambitions in China, lowering their earnings forecasts and cutting staff. Nevertheless, JPMorgan hosted a client meeting in Shanghai last month. At the meeting, bank CEO Jamie Dimon pledged to stay in the country in good times and bad. Citigroup Chief Executive Jane Fraser also traveled to Beijing this week. cyb

Taiwan activates air defense

Taiwan activated its defense systems on Thursday after 37 Chinese military aircraft entered the island’s air defense zone. Several of them subsequently headed into the western Pacific Ocean. China considers democratically ruled Taiwan its own territory. Over the past three years, the Chinese air force has regularly approached the island without encroaching on its airspace.

Taiwan’s Defense Ministry detected 37 Chinese Air Force aircraft, including J-11 and J-16 fighters and nuclear-capable H-6 bombers, in the southwest corner of its air defense identification zone (ADIZ) at 5 a.m. (11 p.m. CEST Wednesday). Taiwan subsequently dispatched aircraft and ships for surveillance and activated land-based missile systems. The Chinese Defense Ministry did not initially reply to a request for comment.

On Tuesday and Wednesday, joint Chinese and Russian air patrols over the Sea of Japan and the East China Sea had already raised national security concerns in Japan. rtr

Xi’s China remains unpredictable

Dealing with China is a gamble, be it investment or scenario planning about Taiwan. In this unpredictable world of ours, China is particularly unpredictable.

China under communist rule has never been transparent. But under Jiang Zemin (in power 1989-2002) and Hu Jintao (2002-2012), there were some little opportunities for observers to peep into the machinations of the central leadership as different factions would from time to time leak information out for various political purposes.

The strongman Xi, after establishing an absolute dictatorship, has plugged the loopholes. Nobody in the central leadership seems to dare feed outsiders any information anymore, which resulted in almost total opacity.

It’s also no less difficult to gauge public opinion and to predict how they would react to different situations.

On the most popular social media platforms, comments are predominantly pro-government. Those that are against the government are deleted or simply can’t get published. So it is never known how strong the dissenting voices are.

Questionable surveys

Some researchers affiliated with academic institutions outside of China have managed to conduct surveys on Chinese citizens’ political opinion and their evaluation of government policy and performance. But in a complicated country with a huge population – the majority of which would automatically censor themselves – the credibility of any such survey is highly questionable.

In an atmosphere that is increasingly hostile to the outside world, some data providers in China have recently started to limit access to their websites to visitors from overseas. They include Wind (万德), a major Chinese financial data service platform, and CNKI (知网), the leading database for Chinese academic journals and publications. A provincial agency went further: the statistics bureau of the wealthy Fujian Province has blocked any overseas visit to its website.

This trend, if intensified, will make understanding the country an even more difficult task.

For decades, the question “If and when the Chinese economy will crash?” has been going the rounds. With the economy slowing down in recent years, variants of the question re-emerged: How much more money is there to be made in and with China? How badly will the poorest be affected and when would they not tolerate it anymore and massively rise up against the communist government?

Taiwan as the big unknown

And then, Xi Jinping’s apparent obsession with Taiwan makes the situation even more complex. How realistic is the well-published guess that 2027 could be the year for invasion? If that does happen, how disastrous will it be for China’s domestic politics?

Few people could answer these questions with confidence.

In fact, one should probably also ask: are these the right questions to ask? And are there other questions to be asked?

When the economy collapses, people at the very grassroots could be the first to stand out. But there are many other variables that could put the regime to the test, even if the economy is not in dire threat.

Last year’s “white paper” demonstrations in major big cities and violent resistance of the lengthy lockdown in the city of Wuhan, which is much less known than the peaceful demonstrations, caught everybody by surprise.

Such actions had been considered by almost all as inconceivable as the whole society, particularly the cities, was already under very close surveillance as well as the threat of harsh punishment for any rebellious behavior.

But it just happened. And most of the fighters didn’t belong to the most underprivileged.

Many layers of Chinese society are simply beyond the sight of observers.

Back to Kremlinology

Falun Gong, the cult that underwent years of severe crackdown after its members startled top leaders in 1999 by surrounding the central government compound in Beijing, is believed to still exist in the country. How detrimental Falun Gong and other faith-based underground organizations can be is unknown.

Within the regime, the Party and Xi himself would definitely try their best to put the military and the policy under the strictest control. But just how well they are managing it is probably even beyond the knowledge even of the US military intelligence services.

Then there is the political leadership itself. For the moment, Xi seems as powerful as Chairman Mao and surrounded by staunch supporters. But when we try to recall a bit of Mao’s final years, we will remember it was exactly his handpicked successor, Lin Biao (林彪1907-1971) who harbored a coup plan. The plan, though failed, dealt Mao a big blow.

Xi doesn’t seem to be interested in selecting a successor, but that doesn’t mean somebody or a group of people like Lin Biao won’t develop.

Last October, the former CCP boss Hu Jintao’s dramatic escorted departure from the Party’s 20th Congress closing ceremony triggered a wave of desperate but futile efforts for interpretation. Journalists and observers had to pick up again the pathetic art of Kremlinology.

It seems unbelievable in the digital age, but it’s a sad reality. Diplomats, investors and scholars still need to try what they can to read China, but it becomes harder by the day.

And the stakes are very high.

With tourists returning to Hong Kong, retail sales are rising – and rents are following suit. The current post-Covid record is set by three floors in Hong Kong’s Tsim Sha Tsui shopping district at the tip of the Kowloon Peninsula. An as-yet-unnamed company pays seven million Hong Kong dollars (about 830,000 euros) per month for the space, according to a report in the Hong Kong Economic Times. The 80,000-square-meter space in the Silvercord shopping center previously housed Swedish textile chain Hennes & Mauritz.

CHINA.TABLE EDITORIAL OFFICE

Amelie
Richter

Marcel
Grzanna

Fabian
Peltsch

Julia
Fiedler

Angela
Köckritz

Jörn
Petring

Dear reader,

After the end of zero-Covid, business representatives were hoping for a strong economic recovery in China. However, as the AHK’s Business Confidence Survey in the People’s Republic now shows, German companies believe that it will not materialize for the time being. Half of the companies surveyed expect the industry trend to remain the same or even worsen this year. Joern Petring has summarized the results of the survey for you.

Since last month, Hong Kong’s workers have been earning slightly more money again – an increase of 30 cents per hour. The minimum wage rose from 37.5 Hong Kong dollars (4.47 euros) to 40 Hong Kong dollars (4.77 euros): 6.7 percent more and the first wage rise in four years. The wages are following the autocratic calculation dictated by the headquarters in Beijing, writes Marcel Grzanna. According to the motto: Those who feel that the economy is on the upswing are less likely to complain about being stripped of their democratic civil rights.

In “China Perspective“, our author looks at the growing difficulty of assessing public opinion in the People’s Republic and predicting how it would react in various situations. Including the Taiwan issue.

Your
Amelie Richter

Slow recovery leaves German company disappointed

By

Jörn Petring

The high expectations of German companies for a strong economic recovery after the end of the strict pandemic measures in China have not been fulfilled. Jens Hildebrandt, Executive Member of the Board of the German Chamber of Commerce (AHK) in Beijing, left no doubt about this when he presented the results of the first Business Confidence Survey among Chamber members since the end of zero-Covid on Thursday. 288 companies participated.

Companies had hoped that a strong upswing would follow the Covid chaos. But economic data since January has been mixed at best, which is now reflected in business sentiment. Commenting on the survey results conducted between May 9-17, Hildebrandt said that the slow development of the market, as well as ongoing geopolitical tensions, have dampened hopes for a rapid improvement in the business environment. “The economic recovery is currently less dynamic than many had hoped,” confirms Hubertus Troska, Chairman of the Board of the German Chamber of Commerce in Beijing.

Negative outlook, but also hope

Two particularly negative aspects stood out in the survey.

More than half of the German companies expect economic development to remain the same or worsen this year, despite China’s departure from zero-Covid.
More companies also expect profits to decline. Last year, 22 percent of companies expected profits to fall by more than five percent in 2023. This year, it is 32 percent, an increase of 10 percentage points.

But it also shows that German companies refuse to give up despite the difficult situation – and in some cases, even want to invest more in China. So they have not lost hope.

For instance, 55 percent of the companies said they planned to increase their investments in China over the next two years. This is a four percent increase compared to the previous year, but less than before the pandemic.
If companies continue their investments, 62 percent of them will do so to remain competitive in the Chinese market. 48 percent expect to benefit from the market’s growth potential.
The main reasons for refraining from investing are low market growth expectations, ongoing geopolitical tensions and China’s pursuit of economic independence.

It is clear to the German business community that China needs to do more to kick-start the recovery. “Measures to stimulate consumer confidence and targeted support for businesses are needed,” was the conclusion on Thursday. Geopolitically, tensions between the USA and China continued to be regarded as the main risk. Meanwhile, companies do not expect a significant deterioration in relations between China and Germany. They hope for stability. “The better the traditionally good relations between China and Germany, the greater the probability that the framework conditions will also be good in the future,” says Troska.

Wishes for government consultations

In the run-up to the German-Chinese government consultations at the end of June, the Chamber drafted a “wish list.” It states that 45 percent of German companies call on the Chinese government for more legal certainty, while 60 percent hope for increased cooperation in decarbonization, smart production and mobility.

An urgent call for action was also voiced concerning visa issuance. It has been six months since China fully reopened its borders. However, according to the Chamber, companies still have problems when they want to travel.

But China is not to blame. While the Chinese seem to have done their homework, 80 percent of the companies surveyed complain about long processing times for business visas for Chinese employees who want to come to Germany. “Customer visits, trade fair visits and important staff training cannot be carried out, which leads to economic damage for German companies,” Hildebrandt warns. Companies are currently being “very adversely affected.”

Hong Kong: Low minimum wage threatens social stability

By

Marcel Grzanna

The not-so-new government in Hong Kong promised its citizens a better life upon taking office: affordable housing, greater educational opportunities, and more money. The bureaucrats want to maintain social stability in the city at all costs.

They follow the autocratic calculation laid down as a guideline from the headquarters in Beijing. There, too, the principle is: Those who feel that the economy is improving are less likely to complain about being stripped of their democratic civil rights.

Disposable income is a vital element of this strategy. Since last month, Hong Kong’s workers have been earning slightly more money – an extra 30 cents per hour. The minimum wage went up from 37.5 Hong Kong dollars (4.47 euros) to 40 Hong Kong dollars (4.77 euros) – an increase of 6.7 percent and the first wage rise in four years.

The government had previously assembled a minimum wage commission to seek a compromise that both the nearly 90,000 workers affected and the economy could – literally – live with. The workers, however, had hoped for significantly more money. Hong Kong is one of the most expensive cities in the world. In the global cost of living index, the city ranked fourth last year – behind New York, Singapore and Tel Aviv.

The average inflation rate since 2019 in Hong Kong is 5.4 percent. And the regular wage increase was suspended two years ago due to the pandemic. Workers were left empty-handed back then. But the commission argues that even with a minimum wage of 44 Hong Kong dollars, employers would have to cut up to 20,000 jobs to cover rising labor costs.

The NGO Oxfam criticizes the fact that wage levels are still below what a family with two children would receive from the city’s social security program. As a result, many could voluntarily leave the job market.

Hong Kong’s Secretary for Labour and Welfare, Chris Sun, however, sees no problem in this. You cannot compare welfare with work, he says. Work is important for the mind and health. That is why he feels confident that minimum-wage earners “would rather work than receive social welfare because they think it has more value in their lives.”

International standards not yet ratified

The International Labour Organisation (ILO) does not officially comment on local developments. Nevertheless, the UN organization considers the wage increase in Hong Kong a serious attempt to accommodate workers. “This does not automatically mean that the increase is appropriate. But given that Hong Kong was only willing to introduce a minimum wage in 2011, the 6.7 percent at least does not seem ridiculously low,” an ILO director told China.Table. Twelve years ago, the minimum was 28 Hong Kong dollars.

The ILO has been pushing for years to permit collective bargaining in Hong Kong. But the city has not ratified either Convention C131 or Recommendation R135 – these set international standards and recommendations for determining minimum wages.

There is hardly any noticeable public criticism in the city. Hong Kong has changed over the past few years. Months of mass protests against the growing influence of the Communist Party, radical curtailment of voting rights and tighter legislation were the precursors of a political purge initiated by Beijing that has silenced all dissenting voices.

‘Incentive to comply with legal requirements’

Former parliamentarian Ted Hui lives in exile in Australia. He sees the 2.5 Hong Kong dollar increase as a reflection of economic policies on Beijing’s behalf that serve the interests of the city’s business elite. “This increase is laughably low and more of a nominal nature, with no substantial improvement for the lives of grassroots workers,” Hui told China.Table.

After his election a year ago, Chief Executive John Lee announced plans to “enhance the city’s competitiveness” and assert its “strengths.” Prominent Hong Kong business leaders feared a resurgence of protests and expressed their wish for stability and an environment in which the lives of all Hongkongers would continue to improve.

Hong Kongers in the West also do not see the wage increase as a significant step in this direction. Aniessa Andresen of the association “Hongkonger in Deutschland” believes that the commission has not taken the cost of living and inflation into account. “Such small increases only incentivize employers to comply with the law and protect their profits without helping workers meet their basic needs,” says Andresen.

Plans for file-sharing restrictions

The government plans to restrict the exchange of data via Wi-Fi and Bluetooth between mobile devices near each other, supposedly for national security reasons. It is expected that Beijing targets file-sharing via Apple’s AirDrop and similar communication apps. The plans emerge from a draft published by China’s top internet regulator CAC on its website on Tuesday.

The file-sharing service AirDrop was used to share content critical of the government and circumvent the government’s strict internet censorship during last winter’s protests against China’s strict zero-Covid restrictions, and during the anti-government protests in Hong Kong in 2019.

The restrictions could also affect similar services such as Google Files and Fast Share on Google’s Android operating system. Chinese phone manufacturers Vivo, Xiaomi and Oppo also offer such file transfer services. cyb

No money for Nexperia – because of Chinese owner

The German Federal Ministry for Economic Affairs and Climate Action denies the semiconductor manufacturer Nexperia a subsidy that benefits many of its competitors – apparently because the company is under Chinese ownership. Nexperia is the only company left out of a group the ministry deemed eligible for funding in late 2021. The EU Commission has granted approvals for all other projects at the request of Berlin, as was heard from the ministry. Regarding Nexperia, Germany’s Economy Minister Robert Habeck has apparently changed his mind.

According to reports, the overturned plan involved aid for an existing plant in Hamburg. Nexperia was spun off from the large Dutch chip specialist NXP in 2016 and sold to the Chinese competitor Wingtech in 2017. At the time, there were no instruments against Chinese access to the semiconductor industry and hardly any public debate. Nexperia produces chips for the automotive industry, a particularly important sector for Germany. Wingtech itself is mainly a supplier to the mobile phone industry.

Nexperia had already encountered obstacles in the UK because of its Chinese owners when it attempted to acquire wafer manufacturer Newport. The fact that Nexperia appeared on the ministry’s EU funding application list had caused confusion since the Russian attack on Ukraine sparked a reassessment of economic policy risks. tho/fin

EU politicians: CAI not a bargaining chip

EU politicians and observers stress that the Comprehensive Agreement on Investment (CIA) must not be a bargaining chip for China’s peace efforts in the Ukraine war. “In order to even bring CAI back to the table, China must first lift sanctions against European MPs and civil society actors,” European SPD MEP René Repasi told Table.Media on Thursday. However, this does not automatically mean that the EU should lift its own sanctions, which were imposed because of human rights violations in Xinjiang, Repasi said.

Nor does it mean that the agreement will actually be approved in the end. The SPD politician criticized that the so-called peace plan presented by China “is a rhetorical step in the right direction” but “lacks the necessary seriousness in its implementation.”

In an interview with China.Table earlier this week, Chinese scholar Wang Zichen urged Europe to offer China something to motivate Beijing to step up its peace efforts. “But the US and Europe are only pressuring China. So far, they haven’t been able to come up with any incentives to get China on their side. Offering incentives would be a more pragmatic approach, especially for the Europeans,” Wang said.

Green Party European politician Reinhard Buetikofer considers the interview statement a strategic move by the Chinese academic: “Wang’s supposed clever idea is only intended to cause confusion,” said Buetikofer. He considers Wang’s take on the CAI, however, to be telling. ” So far, Beijing always claimed CAI was in the European interest, downright a great gift from China to the EU. Now it sounds different, and more realistic: CAI is mainly in Chinese interest; that’s why Beijing is pushing so hard.”

Merics EU expert Grzegorz Stec also urged caution about Wang’s proposal. “Agreeing that upholding the UN charter and international law in face of military aggression between states can be conditional on some quid pro quo, would create a dangerous precedence and would undermine the logic of a rules-based international order,” Stec told Table.Media. From Beijing’s perspective, finding partners to stand up to Washington is the most important task – and that makes Russia an important partner, Stec said. He doesn’t see much point in the EU changing its position: “Even if the EU were to decide to play along with the proposal, it is highly unlikely that Beijing deliver on meaningfully shifting its relationship with Moscow and thereby position on Russia‘s war.” ari

Armored vehicles for Russian military

According to reports, the Russian military received Chinese armored vehicles. The Polish-based Defense Blog reported that Chechen strongman Ramzan Kadyrov has confirmed that the Russian military has received the first delivery of Chinese Tiger 4×4 armored vehicles. According to the report, Kadyrov had released footage showing “new vehicles purchased for Chechen units participating in the ‘Special Military Operation.’” This is the term Moscow uses for the war in Ukraine; it can therefore be assumed that Kadyrov is referring to this war.

The vehicles are manufactured by China’s Shaanxi Baoji Special Vehicles Manufacturing and look like raised armored jeeps. While these armored vehicles are not weapons, their application is clearly military. The EU could see the delivery as a further escalation. Brussels repeatedly warned China against supplying Russia with weapons and ammunition. The German government also urged China not to provide Russia with weapons.

The dispute has so far been over so-called dual-use goods, i.e., civilian goods used for weapons production. However, due to their different applications, they are not proof of arms deliveries. The EU is currently working on a sanctions package that focuses on circumventing the previous punitive measures. This could also affect Chinese companies. ari

Financial supervision plans further opening

China remains committed to further opening its 60 trillion US dollar financial market to foreign banks and investment firms. “Opening up is China’s long-standing state policy, and the door for opening up the financial sector will only be wider,” Li Yunze, head of the National Financial Supervisory Commission, said Thursday at the Lujiazui Forum in Shanghai, according to a Bloomberg report. Li, a former vice governor of Sichuan province, was appointed head of the new financial regulator last month.

Growing tensions between China and the US worry investors around the world. While China has pledged to open up its financial markets further, authorities have recently severely curtailed access to a wide range of data. In parallel, the US is considering further investment restrictions.

Li’s remarks come at a time when global banks are reassessing their ambitions in China, lowering their earnings forecasts and cutting staff. Nevertheless, JPMorgan hosted a client meeting in Shanghai last month. At the meeting, bank CEO Jamie Dimon pledged to stay in the country in good times and bad. Citigroup Chief Executive Jane Fraser also traveled to Beijing this week. cyb

Taiwan activates air defense

Taiwan activated its defense systems on Thursday after 37 Chinese military aircraft entered the island’s air defense zone. Several of them subsequently headed into the western Pacific Ocean. China considers democratically ruled Taiwan its own territory. Over the past three years, the Chinese air force has regularly approached the island without encroaching on its airspace.

Taiwan’s Defense Ministry detected 37 Chinese Air Force aircraft, including J-11 and J-16 fighters and nuclear-capable H-6 bombers, in the southwest corner of its air defense identification zone (ADIZ) at 5 a.m. (11 p.m. CEST Wednesday). Taiwan subsequently dispatched aircraft and ships for surveillance and activated land-based missile systems. The Chinese Defense Ministry did not initially reply to a request for comment.

On Tuesday and Wednesday, joint Chinese and Russian air patrols over the Sea of Japan and the East China Sea had already raised national security concerns in Japan. rtr

Xi’s China remains unpredictable

Dealing with China is a gamble, be it investment or scenario planning about Taiwan. In this unpredictable world of ours, China is particularly unpredictable.

China under communist rule has never been transparent. But under Jiang Zemin (in power 1989-2002) and Hu Jintao (2002-2012), there were some little opportunities for observers to peep into the machinations of the central leadership as different factions would from time to time leak information out for various political purposes.

The strongman Xi, after establishing an absolute dictatorship, has plugged the loopholes. Nobody in the central leadership seems to dare feed outsiders any information anymore, which resulted in almost total opacity.

It’s also no less difficult to gauge public opinion and to predict how they would react to different situations.

On the most popular social media platforms, comments are predominantly pro-government. Those that are against the government are deleted or simply can’t get published. So it is never known how strong the dissenting voices are.

Questionable surveys

Some researchers affiliated with academic institutions outside of China have managed to conduct surveys on Chinese citizens’ political opinion and their evaluation of government policy and performance. But in a complicated country with a huge population – the majority of which would automatically censor themselves – the credibility of any such survey is highly questionable.

In an atmosphere that is increasingly hostile to the outside world, some data providers in China have recently started to limit access to their websites to visitors from overseas. They include Wind (万德), a major Chinese financial data service platform, and CNKI (知网), the leading database for Chinese academic journals and publications. A provincial agency went further: the statistics bureau of the wealthy Fujian Province has blocked any overseas visit to its website.

This trend, if intensified, will make understanding the country an even more difficult task.

For decades, the question “If and when the Chinese economy will crash?” has been going the rounds. With the economy slowing down in recent years, variants of the question re-emerged: How much more money is there to be made in and with China? How badly will the poorest be affected and when would they not tolerate it anymore and massively rise up against the communist government?

Taiwan as the big unknown

And then, Xi Jinping’s apparent obsession with Taiwan makes the situation even more complex. How realistic is the well-published guess that 2027 could be the year for invasion? If that does happen, how disastrous will it be for China’s domestic politics?

Few people could answer these questions with confidence.

In fact, one should probably also ask: are these the right questions to ask? And are there other questions to be asked?

When the economy collapses, people at the very grassroots could be the first to stand out. But there are many other variables that could put the regime to the test, even if the economy is not in dire threat.

Last year’s “white paper” demonstrations in major big cities and violent resistance of the lengthy lockdown in the city of Wuhan, which is much less known than the peaceful demonstrations, caught everybody by surprise.

Such actions had been considered by almost all as inconceivable as the whole society, particularly the cities, was already under very close surveillance as well as the threat of harsh punishment for any rebellious behavior.

But it just happened. And most of the fighters didn’t belong to the most underprivileged.

Many layers of Chinese society are simply beyond the sight of observers.

Back to Kremlinology

Falun Gong, the cult that underwent years of severe crackdown after its members startled top leaders in 1999 by surrounding the central government compound in Beijing, is believed to still exist in the country. How detrimental Falun Gong and other faith-based underground organizations can be is unknown.

Within the regime, the Party and Xi himself would definitely try their best to put the military and the policy under the strictest control. But just how well they are managing it is probably even beyond the knowledge even of the US military intelligence services.

Then there is the political leadership itself. For the moment, Xi seems as powerful as Chairman Mao and surrounded by staunch supporters. But when we try to recall a bit of Mao’s final years, we will remember it was exactly his handpicked successor, Lin Biao (林彪1907-1971) who harbored a coup plan. The plan, though failed, dealt Mao a big blow.

Xi doesn’t seem to be interested in selecting a successor, but that doesn’t mean somebody or a group of people like Lin Biao won’t develop.

Last October, the former CCP boss Hu Jintao’s dramatic escorted departure from the Party’s 20th Congress closing ceremony triggered a wave of desperate but futile efforts for interpretation. Journalists and observers had to pick up again the pathetic art of Kremlinology.

It seems unbelievable in the digital age, but it’s a sad reality. Diplomats, investors and scholars still need to try what they can to read China, but it becomes harder by the day.

And the stakes are very high.

With tourists returning to Hong Kong, retail sales are rising – and rents are following suit. The current post-Covid record is set by three floors in Hong Kong’s Tsim Sha Tsui shopping district at the tip of the Kowloon Peninsula. An as-yet-unnamed company pays seven million Hong Kong dollars (about 830,000 euros) per month for the space, according to a report in the Hong Kong Economic Times. The 80,000-square-meter space in the Silvercord shopping center previously housed Swedish textile chain Hennes & Mauritz.

CHINA.TABLE EDITORIAL OFFICE

Amelie
Richter

Marcel
Grzanna

Fabian
Peltsch

Julia
Fiedler

Angela
Köckritz

Jörn
Petring

Pessimistic chamber outlook + Hong Kong&#8217;s wages too low

Feature

Slow recovery leaves German company disappointed

Negative outlook, but also hope

Wishes for government consultations

Hong Kong: Low minimum wage threatens social stability

Social welfare higher than wages

International standards not yet ratified

‘Incentive to comply with legal requirements’

Events

News

Plans for file-sharing restrictions

No money for Nexperia – because of Chinese owner

EU politicians: CAI not a bargaining chip

Armored vehicles for Russian military

Financial supervision plans further opening

Taiwan activates air defense

China Perspective

Xi’s China remains unpredictable

Questionable surveys

Taiwan as the big unknown

Back to Kremlinology

Executive Moves

Dessert

China.Table editorial office

CHINA.TABLE EDITORIAL OFFICE

Feature

Slow recovery leaves German company disappointed

Negative outlook, but also hope

Wishes for government consultations

Hong Kong: Low minimum wage threatens social stability

Social welfare higher than wages

International standards not yet ratified

‘Incentive to comply with legal requirements’

Events

News

Plans for file-sharing restrictions

No money for Nexperia – because of Chinese owner

EU politicians: CAI not a bargaining chip

Armored vehicles for Russian military

Financial supervision plans further opening

Taiwan activates air defense

China Perspective

Xi’s China remains unpredictable

Questionable surveys

Taiwan as the big unknown

Back to Kremlinology

Executive Moves

Dessert

China.Table editorial office

CHINA.TABLE EDITORIAL OFFICE

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