Historical caesuras can usually only be recognized as such from a certain distance in time. The current exchange of blows between China and the EU, with mutual sanctions and accusations regarding the situation of the Muslim minority in Xinjiang, already has the potential to do so: Europe has sat up and sanctioned China for human rights violations for the first time since the Tiananmen massacre.
But for a turning point, it needs more. The decisive factor will be whether the West succeeds in maintaining its unified position vis-à-vis the People’s Republic. Or will Beijing once again resort to Niccolò Machiavelli’s idea of “divide et impera”: Using its economic influence to break ranks in Brussels and weaken Europe’s position?
Amelie Richter shows that the dispute is already entering the next round: Berlin, Brussels, and Paris have summoned the Chinese ambassadors for a report, while Beijing is being assured of Moscow’s solidarity at a meeting in Guilin in southern China. Will the current escalation even cause the investment agreement to fail?
Finn Mayer-Kuckuk, meanwhile, takes a look at the IPO of search engine operator and AI developer Baidu in Hong Kong. In addition to the current share values, he focuses on the phenomenon of Chinese corporations increasingly issuing securities on domestic stock exchanges – and what is actually behind this new attachment to their home country.
Gregor Koppenburg and Jörn Petring take you into the world of Chinese science fiction literature. The books by Liu Cixin, Chen Quifan, and Hao Jingfang are read millions of times at home and abroad. Even the central government in Beijing has discovered a soft spot for this genre. Because, as always in China, this field is also highly political.
I wish you many new insights while reading,
Following Beijing’s sanctions against politicians, organizations, and academics, the diplomatic consequences have reached several European capitals – including Berlin: “The Chinese ambassador, Wu Ken, was asked to meet urgently with State Secretary Miguel Berger today,” the Foreign Office said in response to a query from China.Table. In the conversation, Berger said he reflected the German government’s view that the punitive measures “represent an inappropriate escalation that unnecessarily strains EU-China relations.” The step was “incomprehensible in terms of content” and had to be reversed immediately.
Paris and Brussels went a step further, where the respective Chinese ambassadors were officially summoned. Cao Zhongming, China’s ambassador to Belgium, has been summoned to the foreign ministry over the sanctions against a member of Belgium’s Chamber of Deputies, Samuel Cogolati, the AFP news agency reported, citing government sources. Belgium’s Deputy Prime Minister and Foreign Minister Sophie Wilmès had already strongly condemned the sanctions against Cogolati on Monday and announced that she would “follow up” on the issue with other EU colleagues.
In the French capital, China’s ambassador Lu Shaye has been summoned to the Quai d’Orsay. On Tuesday morning, at the request of France’s chief diplomat Jean-Yves Le Drian, Lu was informed of all the “complaints” at hand, the daily La Depeche reported.
Paris and Beijing are currently seething not only over the sanctions, which also affect the French MEP and chairman of the EU Parliament’s human rights committee, Raphaël Glucksmann. Ambassador Lu and also the Twitter account of the Chinese embassy in France regularly lash out at critics. Most recently, the academic Antoine Bondaz, who works for the renowned think tank The Foundation for Strategic Research, was attacked on Twitter and called a “crazy hyena”, an “ideological troll”, and a “petty thug”.
According to the report, the Quai d’Orsay’s Asia director, Bertrand Lortholary, told Lu that the embassy’s methods and tone were “totally unacceptable” and that “generally accepted boundaries” had been crossed. Moreover, Lu had been informed of Beijing’s disapproval of the sanctions.
In return, Beijing summoned the EU ambassador to China, Nicolas Chapuis, state media reported. Chinese Deputy Foreign Minister Qin Gang denounced “the EU’s recent sanctions against China over so-called human rights issues in Xinjiang,” the party newspaper Global Times reported.
Meanwhile, fierce opposition to the investment agreement is forming in the European Parliament CAI. Green Group leaders German MEP Ska Keller and Belgian Philippe Lamberts said: “As long as the Chinese leadership sanctions are in place, we cannot even consider putting the investment agreement on the European Parliament’s agenda.”
It was a mistake of the EU Commission and the EU governments to rush the negotiations, and the Chinese leadership should not be trusted when it deliberately attacks MEPs, said the Green group leaders. The Socialist S&D group in the European Parliament also called for the lifting of sanctions against MEPs as a precondition for further talks on the CAI.
However, Iuliu Winkler, permanent rapporteur of the Trade Committee on China and member of the large EPP group in the European Parliament, stressed that there is still a lot of time before a possible ratification – currently, the CAI is not even on the table. “At the same time, the economic realities and the fundamental objectives for which CAI was negotiated have not changed,” Winkler said.
Winkler said the sanctions were not imposed in relation to the CAI negotiations or the content of the agreement. Rather, he said, they were “the result of a broader asymmetry in China’s perception of human rights and governance.” However, he acknowledged that the sanctions led to a decline in trust between the two actors. “The impact will be felt across the board, and the move is certainly not beneficial to a bilateral agenda based on cooperation,” Winkler said.
The spokeswoman of the European Commission’s Directorate-General for Trade, Miriam García Ferrer, also stressed that the sanctions were not helpful in building a constructive relationship with China – but that the CAI would nevertheless be maintained.
Search engine operator and AI developer Baidu has raised around €2.5 billion by issuing new share certificates. At the end of the first day of trading, the newly issued shares were exactly at the issue price on Tuesday morning. They were still worth HK$252.
The result is considered disappointing. In 2019, valuations of Hong Kong’s stock market newcomers had risen an average of 48 percent on their first days of trading, compared with 19 percent in 2020. However, the homecoming IPO of restaurant operator Yum China (Pizza Hut, KFC) in September already produced a weak result. The two other “homecomings” of 2021 at least found themselves in positive territory on the first day of trading, with JD.com up 3.5 percent. Netease was up nearly six percent. The share price of Baidu, on the other hand, now simply ran sideways.
Yet Baidu had officially tied its homecoming to hopes of increased revenue. “The return to Hong Kong for a second listing is a new start for us,” said company CEO Robin Li in an interview with Bloomberg. He said it’s paying off that Baidu has invested heavily in artificial intelligence. Investors see a future business here. “Our heavy investment will pay off,” Li hoped.
Baidu has been listed on the US tech exchange Nasdaq in New York since 2007. It has long been common for Chinese companies to raise capital overseas. An IPO in America was also considered more prestigious. Alibaba also went public in 2014 while still in New York. Hong Kong was under discussion as an alternative, but Jack Ma wanted to go to New York.
Meanwhile, both the mood and the practical conditions have changed. Sanctions against USA-listed companies are turning the dream of US capital into a nightmare in some cases. The US government has blacklisted the shares of several companies. Among them are the communications company China Mobile, the oil producer CNOOC as well as the semiconductor manufacturer SMIC. The government in Washington accuses them of having links to the military. As a result, security rules are coming into force that prohibit their financing in the USA. This makes stock market trading in America seem less attractive for Chinese companies.
Political trends and the mood in China also speak against financing abroad. Unlike in past decades, Chinese patriotism is so strong that even financing abroad is met with disapproval: A connection to America or Europe used to be a sign of having made it. Today it raises the question of whether it is even necessary in the face of a stronger China.
Indeed, China’s capital markets now have the breadth and depth to drive even big-name IPOs. The Hong Kong trading venue is benefiting. Last year, it saw $17 billion of new issuance from home listings.
However, the name “homecoming” for the trend is also misleading. It’s not as if companies are dumping their American shares. Rather, they are issuing additional share certificates in Hong Kong. Ultimately, then, it is a capital increase, not a move back home. The term can therefore also be seen as a patriotic marketing ploy for the placement of additional shares.
The rights of existing shareholders partly explain the mixed popularity of homecoming stocks. Baidu, JD, and Yum are good names. But they already belong to the initial investors – or at least they thought they did. Since these are new IPOs in new locations, the new issue is not formally a dilution. But there are definitely limited resources to be shared by all shareholders. In any case, the ability to pay dividends does not increase if investors in additional stock exchanges also have to be considered. Rather, the old and the new shareholders have to share the existing profits. Moreover, technology shares are currently regarded as highly valued anyway.
All this also affects the next “homecomer”: the video site Bilibili. It specializes in Asian cartoon videos and recently benefited from the fact that many children and young people had to stay at home because of COVID-19. The operator is already listed in the US and is now also planning a secondary listing in Hong Kong. The stock is scheduled to start trading on March 29th.
For Anika Laudien, how Europe deals with China’s rise as a world power is one of the central challenges of our time. “There is a lot at stake in this systemic competition,” she says, “especially for the younger generation.” The 34-year-old from Hamburg works as a project manager in the Bertelsmann Stiftung’s Germany and Asia program, focusing primarily on China. In the seven-person team, Laudien designs studies, oversees networks, organizes conferences, and tries to “manage the debate with and about China”.
The Bertelsmann Stiftung’s Asia Program sees itself as a platform that attempts to break down filter bubbles. It does so by bringing together people from politics, business, academia, and think tanks. The idea is to prevent exchanges on the China challenge from taking place in thematic pillars. “We don’t want to pit politics against business, but try to find common agendas through a participatory approach,” says Laudien.
After graduating from high school, Laudien studied business sinology in Bremen and Shanghai and has a master’s degree in European studies. She has been fascinated by China ever since they dealt with the empire in history lessons at school: “That triggered a desire in me to get to know something completely different, foreign, and to expand my horizons far beyond Europe.”
Currently, the focus of her work is to analyze what common interests and differences exist between the US and the EU in dealing with the People’s Republic. “The central question at the moment is how we can create a transatlantic China policy worthy of the name,” she says. Here one hopes for a new dynamic from US President Joe Biden. Europe should not be guided by false idealism but should seriously ask itself what its real interests are. In order to act sovereignly vis-à-vis China, European solidarity would be central. “Under no circumstances should we allow ourselves to be divided by China. “
China’s rise to global power impresses Laudien: “It is challenging the world in a way never seen before, and on all levels.” Germany, in particular, has not yet gotten used to the fact that China is not just a partner and competitor but also a rival. “There is a lot of talk about this new triad, but there is a lack of strategic clarity on how to deal with it in concrete terms.” Being involved in these developments is therefore extremely exciting for her: “I want to make a contribution so that we find a better way of dealing with China.” Adrian Meyer
Historical caesuras can usually only be recognized as such from a certain distance in time. The current exchange of blows between China and the EU, with mutual sanctions and accusations regarding the situation of the Muslim minority in Xinjiang, already has the potential to do so: Europe has sat up and sanctioned China for human rights violations for the first time since the Tiananmen massacre.
But for a turning point, it needs more. The decisive factor will be whether the West succeeds in maintaining its unified position vis-à-vis the People’s Republic. Or will Beijing once again resort to Niccolò Machiavelli’s idea of “divide et impera”: Using its economic influence to break ranks in Brussels and weaken Europe’s position?
Amelie Richter shows that the dispute is already entering the next round: Berlin, Brussels, and Paris have summoned the Chinese ambassadors for a report, while Beijing is being assured of Moscow’s solidarity at a meeting in Guilin in southern China. Will the current escalation even cause the investment agreement to fail?
Finn Mayer-Kuckuk, meanwhile, takes a look at the IPO of search engine operator and AI developer Baidu in Hong Kong. In addition to the current share values, he focuses on the phenomenon of Chinese corporations increasingly issuing securities on domestic stock exchanges – and what is actually behind this new attachment to their home country.
Gregor Koppenburg and Jörn Petring take you into the world of Chinese science fiction literature. The books by Liu Cixin, Chen Quifan, and Hao Jingfang are read millions of times at home and abroad. Even the central government in Beijing has discovered a soft spot for this genre. Because, as always in China, this field is also highly political.
I wish you many new insights while reading,
Following Beijing’s sanctions against politicians, organizations, and academics, the diplomatic consequences have reached several European capitals – including Berlin: “The Chinese ambassador, Wu Ken, was asked to meet urgently with State Secretary Miguel Berger today,” the Foreign Office said in response to a query from China.Table. In the conversation, Berger said he reflected the German government’s view that the punitive measures “represent an inappropriate escalation that unnecessarily strains EU-China relations.” The step was “incomprehensible in terms of content” and had to be reversed immediately.
Paris and Brussels went a step further, where the respective Chinese ambassadors were officially summoned. Cao Zhongming, China’s ambassador to Belgium, has been summoned to the foreign ministry over the sanctions against a member of Belgium’s Chamber of Deputies, Samuel Cogolati, the AFP news agency reported, citing government sources. Belgium’s Deputy Prime Minister and Foreign Minister Sophie Wilmès had already strongly condemned the sanctions against Cogolati on Monday and announced that she would “follow up” on the issue with other EU colleagues.
In the French capital, China’s ambassador Lu Shaye has been summoned to the Quai d’Orsay. On Tuesday morning, at the request of France’s chief diplomat Jean-Yves Le Drian, Lu was informed of all the “complaints” at hand, the daily La Depeche reported.
Paris and Beijing are currently seething not only over the sanctions, which also affect the French MEP and chairman of the EU Parliament’s human rights committee, Raphaël Glucksmann. Ambassador Lu and also the Twitter account of the Chinese embassy in France regularly lash out at critics. Most recently, the academic Antoine Bondaz, who works for the renowned think tank The Foundation for Strategic Research, was attacked on Twitter and called a “crazy hyena”, an “ideological troll”, and a “petty thug”.
According to the report, the Quai d’Orsay’s Asia director, Bertrand Lortholary, told Lu that the embassy’s methods and tone were “totally unacceptable” and that “generally accepted boundaries” had been crossed. Moreover, Lu had been informed of Beijing’s disapproval of the sanctions.
In return, Beijing summoned the EU ambassador to China, Nicolas Chapuis, state media reported. Chinese Deputy Foreign Minister Qin Gang denounced “the EU’s recent sanctions against China over so-called human rights issues in Xinjiang,” the party newspaper Global Times reported.
Meanwhile, fierce opposition to the investment agreement is forming in the European Parliament CAI. Green Group leaders German MEP Ska Keller and Belgian Philippe Lamberts said: “As long as the Chinese leadership sanctions are in place, we cannot even consider putting the investment agreement on the European Parliament’s agenda.”
It was a mistake of the EU Commission and the EU governments to rush the negotiations, and the Chinese leadership should not be trusted when it deliberately attacks MEPs, said the Green group leaders. The Socialist S&D group in the European Parliament also called for the lifting of sanctions against MEPs as a precondition for further talks on the CAI.
However, Iuliu Winkler, permanent rapporteur of the Trade Committee on China and member of the large EPP group in the European Parliament, stressed that there is still a lot of time before a possible ratification – currently, the CAI is not even on the table. “At the same time, the economic realities and the fundamental objectives for which CAI was negotiated have not changed,” Winkler said.
Winkler said the sanctions were not imposed in relation to the CAI negotiations or the content of the agreement. Rather, he said, they were “the result of a broader asymmetry in China’s perception of human rights and governance.” However, he acknowledged that the sanctions led to a decline in trust between the two actors. “The impact will be felt across the board, and the move is certainly not beneficial to a bilateral agenda based on cooperation,” Winkler said.
The spokeswoman of the European Commission’s Directorate-General for Trade, Miriam García Ferrer, also stressed that the sanctions were not helpful in building a constructive relationship with China – but that the CAI would nevertheless be maintained.
Search engine operator and AI developer Baidu has raised around €2.5 billion by issuing new share certificates. At the end of the first day of trading, the newly issued shares were exactly at the issue price on Tuesday morning. They were still worth HK$252.
The result is considered disappointing. In 2019, valuations of Hong Kong’s stock market newcomers had risen an average of 48 percent on their first days of trading, compared with 19 percent in 2020. However, the homecoming IPO of restaurant operator Yum China (Pizza Hut, KFC) in September already produced a weak result. The two other “homecomings” of 2021 at least found themselves in positive territory on the first day of trading, with JD.com up 3.5 percent. Netease was up nearly six percent. The share price of Baidu, on the other hand, now simply ran sideways.
Yet Baidu had officially tied its homecoming to hopes of increased revenue. “The return to Hong Kong for a second listing is a new start for us,” said company CEO Robin Li in an interview with Bloomberg. He said it’s paying off that Baidu has invested heavily in artificial intelligence. Investors see a future business here. “Our heavy investment will pay off,” Li hoped.
Baidu has been listed on the US tech exchange Nasdaq in New York since 2007. It has long been common for Chinese companies to raise capital overseas. An IPO in America was also considered more prestigious. Alibaba also went public in 2014 while still in New York. Hong Kong was under discussion as an alternative, but Jack Ma wanted to go to New York.
Meanwhile, both the mood and the practical conditions have changed. Sanctions against USA-listed companies are turning the dream of US capital into a nightmare in some cases. The US government has blacklisted the shares of several companies. Among them are the communications company China Mobile, the oil producer CNOOC as well as the semiconductor manufacturer SMIC. The government in Washington accuses them of having links to the military. As a result, security rules are coming into force that prohibit their financing in the USA. This makes stock market trading in America seem less attractive for Chinese companies.
Political trends and the mood in China also speak against financing abroad. Unlike in past decades, Chinese patriotism is so strong that even financing abroad is met with disapproval: A connection to America or Europe used to be a sign of having made it. Today it raises the question of whether it is even necessary in the face of a stronger China.
Indeed, China’s capital markets now have the breadth and depth to drive even big-name IPOs. The Hong Kong trading venue is benefiting. Last year, it saw $17 billion of new issuance from home listings.
However, the name “homecoming” for the trend is also misleading. It’s not as if companies are dumping their American shares. Rather, they are issuing additional share certificates in Hong Kong. Ultimately, then, it is a capital increase, not a move back home. The term can therefore also be seen as a patriotic marketing ploy for the placement of additional shares.
The rights of existing shareholders partly explain the mixed popularity of homecoming stocks. Baidu, JD, and Yum are good names. But they already belong to the initial investors – or at least they thought they did. Since these are new IPOs in new locations, the new issue is not formally a dilution. But there are definitely limited resources to be shared by all shareholders. In any case, the ability to pay dividends does not increase if investors in additional stock exchanges also have to be considered. Rather, the old and the new shareholders have to share the existing profits. Moreover, technology shares are currently regarded as highly valued anyway.
All this also affects the next “homecomer”: the video site Bilibili. It specializes in Asian cartoon videos and recently benefited from the fact that many children and young people had to stay at home because of COVID-19. The operator is already listed in the US and is now also planning a secondary listing in Hong Kong. The stock is scheduled to start trading on March 29th.
For Anika Laudien, how Europe deals with China’s rise as a world power is one of the central challenges of our time. “There is a lot at stake in this systemic competition,” she says, “especially for the younger generation.” The 34-year-old from Hamburg works as a project manager in the Bertelsmann Stiftung’s Germany and Asia program, focusing primarily on China. In the seven-person team, Laudien designs studies, oversees networks, organizes conferences, and tries to “manage the debate with and about China”.
The Bertelsmann Stiftung’s Asia Program sees itself as a platform that attempts to break down filter bubbles. It does so by bringing together people from politics, business, academia, and think tanks. The idea is to prevent exchanges on the China challenge from taking place in thematic pillars. “We don’t want to pit politics against business, but try to find common agendas through a participatory approach,” says Laudien.
After graduating from high school, Laudien studied business sinology in Bremen and Shanghai and has a master’s degree in European studies. She has been fascinated by China ever since they dealt with the empire in history lessons at school: “That triggered a desire in me to get to know something completely different, foreign, and to expand my horizons far beyond Europe.”
Currently, the focus of her work is to analyze what common interests and differences exist between the US and the EU in dealing with the People’s Republic. “The central question at the moment is how we can create a transatlantic China policy worthy of the name,” she says. Here one hopes for a new dynamic from US President Joe Biden. Europe should not be guided by false idealism but should seriously ask itself what its real interests are. In order to act sovereignly vis-à-vis China, European solidarity would be central. “Under no circumstances should we allow ourselves to be divided by China. “
China’s rise to global power impresses Laudien: “It is challenging the world in a way never seen before, and on all levels.” Germany, in particular, has not yet gotten used to the fact that China is not just a partner and competitor but also a rival. “There is a lot of talk about this new triad, but there is a lack of strategic clarity on how to deal with it in concrete terms.” Being involved in these developments is therefore extremely exciting for her: “I want to make a contribution so that we find a better way of dealing with China.” Adrian Meyer
