Table.Briefing: China

Sanctions + Genocide study + Banks + Korvig + Russia + Marina Rudyak + Frank Haugwitz

  • Sanctions from Beijing cause CAI to waver
  • Researchers fear consequences for collaboration on genocide study
  • Foreign banks expand China exposure
  • Korvig trial behind closed doors
  • Sanctions: Russia beguiles Beijing
  • Fanuc invests in robot production
  • Marina Rudyak: the new struggle for discourse sovereignty
  • Profile: Frank Haugwitz
Dear reader,

The tone is set. More than thirty years after the Tiananmen Square massacre, the EU is for the first time sanctioning those responsible in China for human rights violations – against the Uighur minority in Xinjiang – together with the United States, Canada, and the United Kingdom. It is a clear commitment by the Western world to humanity and freedom – and a clearly audible signal to Beijing: These values are not negotiable.

The Europeans will have anticipated that Beijing resorted to counter-sanctions only a few minutes after the EU foreign ministers’ decision. Anything else would be naïve after China made it very clear as recently as Friday in Alaska that it regards any criticism of Xinjiang as interference in internal affairs. Amelie Richter has the events of this diplomatically explosive Monday and takes a first look at possible consequences. Because one thing is clear: The tone of this day will also have an impact on economic relations between Europe and China.

I would particularly like to recommend the results of Marcel Grzanna’s research, who found answers to the question of why only just over half of the sixty scientists involved in the study “The Uyghur Genocide” by the Newlines Institute were prepared to put their names to the paper.

Your
Antje Sirleschtov
Image of Antje  Sirleschtov

Feature

Sanctions from Beijing cause CAI to waver

Visibly annoyed, EU chief diplomat Josep Borrell took the podium yesterday for his press conference after the EU foreign ministers’ meeting. Within just a few hours, relations between the European Union and China had turned pitch black: After the announcement of the already expected EU sanctions against four Chinese officials and one organization, the – no less expected – response came from Beijing. But no one in Brussels had expected the scale of the response – China launched a round of sanctions against all the European voices that had long been a thorn in Beijing’s side.

The punitive measures are aimed at European politicians, academics, and organizations, including German MEPs Reinhard Buetikofer (Greens) and Michael Gahler (CDU), anthropologist Adrian Zenz, and Germany’s leading China think-tank, the Merics Institute. A total of ten people and four “entities” are on the sanctions list from Zhongnanhai, which represents an unprecedented diplomatic escalation between the EU and China.

Borrell questions previous approach

This could now also have consequences for Brussels’ general approach towards the People’s Republic. China’s actions are “unacceptable”, said EU chief diplomat Borrell, who will present a progress report on the China strategy at this week’s summit of EU leaders. “I don’t want to say that recent events make this approach obsolete,” Borrell said. “But it’s fair to say the approach is out of date.” Borrell’s expected report is a continuation of the 2019 EU-China strategy, most notable for its first mention of “systematic rivalry.” China’s sanctions have now created “a new atmosphere, a new situation” that will definitely be discussed at the EU summit, Borrell said.

In addition to German MEPs Buetikofer and Gahler, China is also imposing sanctions on the chairman of the EU Parliament’s Human Rights Committee, Raphaël Glucksmann, Bulgarian MEP Ilhan Kyuchyuk, and Slovakian MEP Miriam Lexmann. The European Parliament’s Human Rights Committee and the EU’s Political and Security Committee (PSC), a body of diplomats with ambassadorial rank working in the field of foreign and security policy, are also on the list. Beijing left open whether the sanctions would affect all the respective members or the bodies as a whole.

CAI meeting canceled due to sanctions

David Sassoli, president of the European Parliament, said the move would have consequences. The direct blow against MEPs could now jeopardize the already controversial CAI investment agreement – because the European Parliament has to approve it. A meeting of the Trade Committee’s monitoring group, which was scheduled for today to discuss the CAI, was canceled without further ado, according to EU sources.

Members of national parliaments from EU countries are also affected by China’s sanctions: Dutchman Sjoerd Wiemer Sjoerdsma, Belgian Samuel Cogolati, and Lithuanian politician Dovilė Šakalienė. In the three parliaments, there have recently been majorities for resolutions against China’s actions in Xinjiang. The renowned China researcher Björn Jerdén, director of the Swedish National China Centre, is on the sanctions list, as is the Danish non-governmental organization Alliance of Democracies Foundation.

“Those affected and their families are banned from entering mainland China, Hong Kong, and Macau,” the Chinese Foreign Ministry said. In addition, companies and institutions linked to them are not allowed to do business with China. Beijing strongly condemned the European sanctions. These were based on “nothing but lies and disinformation”. The EU was thus grossly interfering in China’s internal affairs and violating international law. Beijing accused Brussels of a “hypocritical practice of double standards” and demanded a withdrawal of the punitive measures.

Federal Foreign Minister Heiko Maas condemned China’s sanctions. The fact that they hit parliamentarians and academics was “completely incomprehensible” and “unacceptable”, Maas said. The EU had sanctioned people who had violated human rights, Maas said in Brussels. China, in turn, had targeted parliamentarians and organizations. Maas added, however, that he was not aware of any EU countries now calling the CAI into question because of Beijing’s conduct.

Zenz: EU Commission was too naive

He has been “the main target of the Chinese government for quite some time”, Adrian Zenz told China.Table after the sanctions against him became known. Until now, he had been “slandered as a stooge of the US government”. The fact that he is now being subjected to punitive measures in connection with the EU sanctions comes as a surprise to him, said Zenz, who says he has already been unable to work in China since 2019 for security reasons. The EU sanctions against China are “good and necessary” – the counter-sanctions from Beijing are now “a purely symbolic act”, the anthropologist said.

It was “naïve” of the EU Commission to want to separate economic issues of the CAI from human rights issues. Now it is clear that this does not work, says Zenz. The EU must make it clear that such an agreement can only be reached “if Beijing commits to upholding human rights and does not allow any form of forced labor”.

Buetikofer: ‘This will backfire’

MEP Michael Gahler, who is affected by the sanctions and is also the foreign policy spokesman for the EPP Group, regretted that the EU Parliament’s Human Rights Committee is listed. “This naturally makes dialogue with representatives of the People’s Republic more difficult and burdensome,” Gahler told China.Table. The fact that the Merics Institute is also on the sanctions list “should give pause for thought to all the universities and think tanks that allow themselves to be co-financed by the Chinese state through Confucius Institutes or Chinese companies,” the CDU politician said.

“The Chinese leadership is apparently no longer satisfied with suppressing freedom of expression only in the People’s Republic, including Hong Kong, but they now want to use intimidation to stop people in Europe from openly criticizing the brutal human rights crimes in China,” said Reinhard Buetikofer, a Green MEP and chairman of the EU Parliament’s China delegation. “But this will backfire.”

On Twitter, several MEPs, including EPP group leader Manfred Weber and the chairman of the trade committee, Bernd Lange, declared their solidarity with their parliamentary colleagues. Merics rejected the accusations from Beijing and regretted the decision. “As an independent research institute, we want to contribute to a better and more differentiated understanding of China,” the Berlin-based institute said in a statement.

Who is on the EU sanctions list?

The EU had already agreed last week on sanctions against four individuals and one organization in connection with human rights violations in Xinjiang. The list was approved yesterday morning at the meeting of EU foreign ministers: they will meet Zhu Hailun, the former vice-chairman of the Chinese Communist Party in Xinjiang, and Wang Junzheng, party secretary of the Xinjiang Production and Construction Corps (XPCC), an economic and paramilitary organizational unit in Xinjiang that reports to the central government in Beijing. According to the EU, it is also responsible for the administration of detention centers.

The EU sanctions also target Wang Mingshan, a member of the Xinjiang Standing Committee of the Communist Party of China, and Chen Mingguo, director of the Xinjiang Public Security Bureau (PSB), the regional security agency in the province. All individuals were responsible for serious human rights violations by helping to shape and implement the repressive apparatus in Xinjiang, the EU statement said.

EU speaks of systematic forced labor

The PSB, which is part of the XPCC, was also added separately to the sanctions list as an organization. It is “responsible for serious human rights violations in China, in particular for widespread arbitrary detention and degrading treatment of Uighurs and people from other Muslim ethnic minorities”, the statement said.

The PSB was also responsible for violations of freedom of religion or belief and the implementation of “a comprehensive surveillance, detention and indoctrination program”. Uighurs and people from other Muslim ethnic minorities were systematically used as forced labor, especially in cotton fields.

Those concerned will be banned from entering the EU, and their assets will be frozen. In addition, they are not allowed to receive any financial resources or economic support from the European Union from organizations or individuals. The PSB, Zhu Hailun and Wang Mingshan were already subject to punitive measures by the US government last July. The US sanctions list also includes Chen Quanguo, head of the Chinese Communist Party in Xinjiang – the EU list does not include Chen Quanguo, which observers say should have avoided an escalation of sanctions with Beijing.

These are the first sanctions against China for human rights violations since the violent crackdown on protests in Beijing’s Tiananmen Square in 1989 when an arms embargo was imposed. In July last year, the EU had imposed sanctions for cyber-attacks, affecting two Chinese and a Chinese company.

USA, UK, and Canada follow suit

Just hours after the EU sanctions list was announced, the USA, Canada, and the UK followed suit in a concerted move: Washington again imposed sanctions on China – this time on Wang Junzheng and Chen Mingguo, both of whom are also on the European list. Almost simultaneously, the UK also announced punitive measures. London sanctioned the same four individuals and one organization as the EU, and Ottawa announced the same decision. US Secretary of State Antony Blinken is expected in Brussels this week to meet EU Commission President Ursula Von der Leyen.

  • Sanctions

Researchers fear consequences for cooperation on genocide study

Topics with extraordinary explosive power require an extraordinary handle from scientists. A few weeks before the publication of “The Uyghur Genocide,” a study by the Newlines Institute in Washington, its initiator, Azeem Ibrahim, contrary to his habit, picked up the phone dozens of times to contact his fellow researchers. The explosive paper deals with human rights crimes against the minority Uyghurs in the Xinjiang autonomous region by the Chinese government. Ibrahim called some 60 colleagues whose work and names had contributed to the paper’s creation. He asked all of them the same question, “Will you sign?”

Ibrahim knew the explosive nature of the report, which assesses deaths, torture, and birth control in Xinjiang in accordance with the 1948 UN Convention and concluding that yes, it is genocide. And indeed, numerous scholars withdrew their names. Some apparently because they had taken on new jobs over the eight months that the work consumed, and their new roles threatened conflicts of interest. Two Europeans, according to Ibrahim, had already been pressured by Chinese embassies in their home countries before publication, so they decided against signing. It is said that this also happened out of fear of politically motivated departures of wealthy Chinese expatriates from their educational institutions.

“Reassuring myself so intensively is something I’ve never done in other work. But the situation is special. China wields a lot of power in the world, and we see what Beijing is capable of,” Ibrahim tells China.Table. The 45-year-old is director of special initiatives at the Newlines Institute, a Washington-based think tank founded in 2019, and as such has been tested with fierce backlash against studies critical of China. Newlines had published a paper by German scholar Adrian Zenz in late December that presented extensive and strong circumstantial evidence of forced labor in Xinjiang.

Sued for Xinjiang research by Chinese company

Zenz also worked on the new paper. His meticulous work in the past ensured that Beijing could no longer deny the existence of camps for the re-education of Uyghurs. Lawsuits are underway against Zenz by Chinese companies for allegedly “lying” to damage their businesses. Nevertheless, his name is under the paper, as is that of another German researcher.

Rainer Schulze is Professor of Modern European History with a focus on human rights at the University of Essex. So far, the researcher has “not heard anything” that he has been “approached” in any way by the Chinese side. But he is not looking for it either, he told China.Table in a written statement. “However, I was and am aware that by signing, I better drop any travel plans for China that I might have at some point – but that’s just the way it is.” He said, for him, his signature was an honor and a matter of course.

A total of 33 names remained under the study. All the others Ibrahim has shared only with the US television channel CNN, but on condition of secrecy. All signatories, meanwhile, must assume that they will be declared undesirables in the People’s Republic by now at the latest. China’s state media is also trying to discredit the credibility of the Newlines Institute by trying to prove bias. They also consider Zenz’s participation as an indication that the study only serves to defame China. Yet Zenz is one of those who even consider the evidence to be thin when it comes to the term “genocide”, as he made clear in an interview with the NZZ on Friday.

Amnesty staff face accusations

At the end of last week, meanwhile, Amnesty International drew attention to the situation in Xinjiang with a report called “Hearts and Lives broken – The Nightmare of Uyghur Families Separated by Repression”. to draw attention to the situation in Xinjiang. For the report, the organization spoke with Uyghur parents who fled Xinjiang and had to leave their children behind in China.

Amnesty staff are also familiar with the Chinese government’s tactics when it comes to countering accusations from abroad. “Amnesty International is repeatedly confronted with accusations of bias, especially from repressive governments. Our response is to document violations of internationally recognized human rights on the basis of facts,” says Theresa Bergmann, Asia desk officer at Amnesty Germany. Meanwhile, the organization is not allowed to operate in the People’s Republic. Instead, it has an office in Hong Kong. Its staff have been summoned by the authorities several times in the past and criticised for their work.

According to Bergmann, the Chinese are not ready for a dialogue. “The Chinese side is becoming increasingly aggressive, and we are seeing a hardening of the fronts. Beijing no longer makes any effort to refute the accusations but only reacts with counter-accusations. The opportunities to talk to each other are becoming fewer and fewer.”

Initiator Ibrahim was prepared for attacks from the Chinese. He very deliberately brought high-ranking academics and researchers from all over the world on board to prevent the Chinese government from denouncing the paper as a Western smear. In addition to North Americans, Australians, and Europeans, experts from Africa and Asia also participated, for example, Adejoké Babington-Ashaye, a human rights lawyer from Nigeria, Chief Charles A. Taku from Cameroon, a lawyer at the International Criminal Court ICC in The Hague, Djaouida Siaci from Algeria, a lawyer specializing in the Middle East, and Kim Beng Phar, founder of the Strategic Pan Indo-Pacific Arena forum from Malaysia, whose name has been deleted from a second version of the paper. Meanwhile, a Pakistani researcher is not mentioned by name at her own request, according to Ibrahim.

Other names of high-ranking supporters include David Scheffer, who served as Ambassador-at-large for Global Criminal Justice under former US President Bill Clinton, as well as Allan Rock, once Canada’s UN Ambassador, and Scottish Crown Counsel (QC) Baroness Helena Ann Kennedy, also a Labour MP in the British House of Lords, or former Canadian Justice Minister Irwin Cotler.

Ibrahim refrained from asking for specific reasons if anyone decided not to sign, let alone convincing anyone otherwise. “Some,” he says, “simply realized that the impact of this study could be much greater than we had anticipated. They were unwilling to subject themselves to the pressures we expected.”

Connection to the Guelen movement

The starting point for his choice of contributors was Ibrahim’s network, knitted through his research into the persecution of the Rohingyas in Myanmar. He himself is a Muslim, born and raised in Scotland to a Pakistani couple. Today he holds both British and US citizenship. His personal motivation, he said, was to finally make a contribution, whether or not the crimes in Xinjiang lived up to the label of genocide. “There is so much time wasted in the world on having this debate instead of finally doing something about what is going on in Xinjiang,” Ibrahim says. Still, he says, in many ways, it’s irrelevant whether it’s genocide or not because “there are probably few voices outside of China that would fundamentally deny that the crimes are still happening.” With the study, he hopes to create new momentum for faster decisions by policymakers.

Newlines Institute was founded in 2019 by Ahmed Alwani. On the website, Alwani introduces himself as a businessman living in northern Virginia who has invested “in poultry, real estate, and the education/training sector”. He serves on boards of several non-profit organizations. In 2018, he became vice president of the Institute of Islamic Ideas in Virginia, which advocates for better educational opportunities in Muslim societies. He graduated with an engineering degree from George Washington University back in 1990. The Newlines Institute is “nonpartisan,” asserts Alwani, who is also president of Fairfax University of America (FXUA). The private institution was still called Virginia International University (VIU) in 2019 and was considered to be linked to the Guelen movement around the Turk Fethullah Guelen, who lives in exile in USA.

Foreign banks expand China exposure

Despite a pandemic and a tense political climate between the US and China, the five largest US banks pumped billions of dollars into China last year. After the world’s second-largest economy further opened up its $50 trillion financial market, which includes asset managers and insurers, Goldman Sachs, Citigroup, JP Morgan, Bank of America, and Morgan Stanley invested a combined about $78 billion in China in 2020 – a 10 percent increase over 2019. That’s more than ever before.

Back in the spring of 2020, at the height of the COVID crisis, China’s stock market regulator lifted restrictions on foreign ownership in banking, securities, futures, and fund management. Before that, foreign banks had been allowed to take a maximum 20 percent stake in a Chinese institution individually – the limit for consortia was 25 percent. Restrictions on shareholder qualifications – such as asset size and length of operation – were reduced.

Cash boost from the West

Goldman Sachs subsequently increased its China operations by 33 percent to $17.5 billion last year. The company also announced plans to double its China workforce to 600 employees over the next five years. JP Morgan’s total exposure rose 10.4 percent to $21.2 billion in December 2020. JP Morgan had managed to increase its stake in its Chinese securities joint venture to 71 percent late last year, making it the first foreign bank in the history of the People’s Republic to control its joint venture.

In addition, the US bank has said it will acquire a 10 percent stake in China Merchants Bank’s wealth subsidiary for $410 million.

Citigroup’s total exposure to China rose 16.6 percent to $21.8 billion from the fourth quarter of 2020. Yet China accounts for only 1.3 percent of Citi’s global exposure.

Meanwhile, Morgan Stanley’s net exposure to China fell nearly five percent year-on-year to $3.9 billion at the end of December 2020 as it made fewer loans and recorded fewer loan commitments. Morgan Stanley holds a 51 percent stake in its joint venture in China, while partner Huaxin Securities holds the remaining 49 percent. Also scaling back was Bank of America, whose net exposure to China fell 13.9 percent to $13.4 billion in December 2020. Still, the Americans have a greater overall presence than ever before. Vanguard, the world’s second-largest asset management company after Blackrock, decided to move its Asia headquarters to Shanghai. It’s a clear sign of the company, which manages a total of $7.2 trillion from 30 million investors. In China, Vanguard works closely with Alibaba’s Alipay app, and the business is doing so well that they recently decided not to apply for their own Fund Management License application.

European banks are also playing a bigger role in China. HSBC Holdings PLC, headquartered in London, has said it will focus more on Asia in the future and invest at least six billion US dollars in the region, including China. The major British bank has already been given the green light to take full control of its Chinese life insurance division. Switzerland’s UBS Group AG, in turn, aims to double its presence in China in three to five years, while Credit Suisse also recently announced plans to massively expand its own China exposure.

Too big to be ignored

China’s bond and equity markets have long been too big to ignore, and banks are “drawn to China’s strong economic performance like moths to a flame”, says Brock Silvers, chief investment officer at Kaiyuan Capital. Foreign players are also particularly targeting the growing middle class. According to the consulting firm Oliver Wyman, the investable assets of Chinese private clients are expected to rise from the current $24 billion to $41 billion by 2023.

In turn, Beijing wants to reduce the demand for credit from its own banks by opening up. In recent decades, favorable loans, particularly from state-owned banks, have helped to boost the economy. At the same time, the debt burden increased. During the COVID crisis, the government once again instructed banks to approve more loans in order to revive the economy after the standstill.

Beijing also benefited from the higher presence of foreigners. In October, the South China Morning Post wrote: “While the Federal Reserve and other major central banks are printing money on a large scale to support the economy and the labor market, China is registering a steady inflow of funds into bond and stock markets and into investment projects.” This allows the central bank to pursue a conservative monetary policy and keep its key interest rates relatively high – which in turn attracts even more money and helps cushion the negative impact of the US government’s economic decoupling attempts. For foreign banks, the rapid recovery of the Chinese economy, in turn, attracted attractive return prospects on the stock market.

The opening of the financial markets also creates the conditions for building the national currency, the renminbi, into a globally accepted trade and reserve currency. And Beijing also knows, of course, that the more closely the two financial markets are intertwined, the more difficult it will be to enforce US sanctions in the future. By opening its markets, Beijing is turning Wall Street into a lobbyist for Chinese interests in Washington.

Control remains in place

The Chinese authorities are opening the markets in a controlled and gradual manner. However, the regulatory environment remains strict and also somewhat unpredictable. This is one reason why many foreign banks are still refraining from taking over the majority of their joint ventures in China: Their Chinese partners are often better and faster at interpreting market developments and the government’s reaction – especially the political ones.

The state’s intervention in the event of an emergency was recently demonstrated by the IPO of Alibaba’s financial arm Ant Financial, which was canceled at short notice. With a restructuring plan, the Hangzhou-based company is now to be converted into a financial holding company, making it subject to capital requirements similar to those of Chinese banks. The nation remains vigilant to ensure that China maintains its “financial sovereignty”, said State and Party leader Xi Jinping. China will not leave control of the country’s economy entirely to market forces, let alone international ones.

  • Finance
  • Investments
  • JP Morgan

News

Michael Kovrig trial behind closed doors

Michael Kovrig went on trial Monday on espionage charges in Beijing. The former Canadian diplomat Kovrig has been imprisoned in China for more than two years, a fate he shares with Michael Spavor, also a Canadian.

Both were charged with espionage last summer. As with Spavor, the public was excluded from Kovrig’s trial on the grounds that it was a so-called “national security case”. Spavor stood trial last Friday in the northeastern Chinese city of Dandong, his trial ending after two hours without a verdict. No verdict was reached in the Kovrig case on Monday either.

“He was arbitrarily detained,” Jim Nickel, the deputy envoy of the Canadian embassy in Beijing, said Monday about the trial of Michael Kovrig. Diplomats from 26 countries, including Germany, as well as journalists, tried in vain to gain access to the courthouse. Nickel criticized that the court proceedings against Kovrig were not transparent and that the embassy was very concerned about this. Canada demands the “immediate release” of its two citizens.

China had detained Kovrig and Spavor on December 10, 2018, after Meng Wanzhou, the telecom equipment maker Huawei’s chief financial officer, had been arrested during a stopover in Vancouver at the request of the US nine days earlier. The US accuses Meng, the daughter of Huawei founder Ren Zhengfei, of violating Iran sanctions and is demanding her extradition. Since then, Meng has been under house arrest in Vancouver. She faces a long prison sentence if convicted in the USA.

The two Canadians could also face long imprisonment in China. Canada’s Prime Minister Justin Trudeau speaks of “hostage diplomacy” and sees the arrests of Kovrig and Spavor as a retaliatory action by the Chinese.

Guy Saint-Jacques, former Canadian ambassador to China, told Canadian television station CTV of the trials, “It’s all a set-up. It’s a sham.” He said he expected a guilty verdict. niw

  • Beijing
  • Geopolitics
  • Security

Sanctions: Russia beguiles China

Russia’s Foreign Minister Sergei Lavrov proposed greater cooperation with China to resist US sanctions. The two countries should cooperate in the fields of science and technology to strengthen their self-reliance, Lavrov said in an interview with Chinese state television shortly before a two-day exchange with China’s Foreign Minister Wang Yi. Lavrov further suggested reducing dependence on the US dollar in international trade and becoming less dependent on “Western-controlled payment systems”, according to the South China Morning Post.

A spokeswoman for the Chinese Foreign Ministry said yesterday that China and Russia “firmly support each other on issues that affect each other’s core interests”. She did not provide more details on the agenda of the meeting between Lavrov and Wang.

Russia has been under sanctions since 2014 over its annexation of Crimea. According to SCMP, the US Department of Commerce plans to further tighten sanctions on some exports to Russia over the poisoning of Kremlin critic Alexei Navalny. Earlier, the US State Department announced new sanctions against China over its overhaul of Hong Kong’s election system (China.Table reported). Yesterday, Monday, the EU also published its sanctions for human rights violations against Uyghurs in Xinjiang. nib

  • Geopolitics
  • Sanctions

Fanuc expands robot production in Shanghai

Japanese industrial robot manufacturer Fanuc plans to invest $240 million in its Shanghai plant. The investment is to come about through a joint venture with Shanghai Electric Group. Fanuc’s site in Shanghai is set to grow fivefold from 340,000 square meters, and the new facilities are scheduled to go into operation in 2023.

According to Chinese research firm MIR, Fanuc is already the largest supplier in China, with a 12 percent share of the industrial robot market as of 2019. With the announced investment, Fanuc seeks to defend this position and widen its gap with competitors such as ABB (eleven percent) and Yaskawa Electric (eight percent), according to business portal Caixin.

Swiss technology group ABB plans to open a production plant in Shanghai this year, investing $150 million. Meanwhile, Yaskawa, a Japanese technology supplier in the field of robotics, drive, and control technology, is building a new plant next to an existing one in Jiangsu province, which will cost around $50 million and where production is due to start in the coming financial year.

As of 2019, the People’s Republic has the most units in use worldwide, with more than 780,000 industrial robots, data from the International Federation of Robotics show. Beijing aims to increase the domestic market share of its robot makers to 70 percent by 2025 from the current 30-40 percent. niw

  • Fanuc

Opinion

The new struggle for discourse sovereignty

By Marina Rudyak
Marina Rudyak is a sinologist at the Institute of Sinology at Heidelberg University. Her research focuses on Chinese development policy and coded communication in Chinese politics.

A question of discourse: What does China’s President and General Secretary of the Communist Party of China (CCP) Xi Jinping mean when he talks about the rule of law? How does the Chinese leadership define multilateralism? Did you know that China’s core socialist values include democracy and freedom? What is Document No. 9, and why does it reject universal values? And what is meant by “a community of humanity’s destiny”?

The Decoding China Dictionary, published in the run-up to the National People’s Congress, answers these questions. Compiled by a group of renowned China experts, it explains key terms in international relations and development cooperation that are interpreted very differently in China and Europe. Aimed at policy-makers and institutions in Europe engaged in dialogue and exchange with China, as well as all those interested in China, it is intended to facilitate a more informed and substantiated engagement with China.

Beijing exerts influence at international level

China’s rise as a global power is shifting global balances. Under Xi Jinping’s leadership, Beijing has abandoned the maxim of restrained foreign policy that has prevailed since Deng Xiaoping. China now actively appears on global stages and increasingly exerts influence on the shaping of international rules of the game.

Chinese ideas are increasingly finding their way into UN documents, in which international norms and principles such as the rule of law, human rights, or democracy are given new meaning and “Chinese characteristics”. When human rights concerns are raised, China accuses the critics of “politicization” and an “imperialist” or “Cold War” mentality. Instead, it calls for “democracy” in international relations and mutually beneficial cooperation based on “common interests”. It opposes universal human rights to a hierarchy of rights, at the top of which is the “right to development“.

Discourse system and discourse power

Such conceptual framings are no coincidence but the result of coordinated initiatives by the Chinese leadership to develop its own Chinese discourse system and expand its discursive power. Abroad, Chinese diplomats often complain that the West misunderstands China. Xi himself repeatedly emphasizes that China’s story must be “told well” and China’s discursive power must be strengthened in order to create a favorable climate of international public opinion.

The Chinese leadership is making considerable efforts internationally to promote a “correct understanding” of China, i.e., one that is consistent with the priorities of the Chinese party-state. The latter has always considered propaganda an important tool. In this, “correct phrases”, or “tifa” 提法 in Chinese, play a central role, for by forbidding certain phrases and prescribing others, the Party regulates what is said and written – and thus what is done. To outsiders, “tifa” may seem like empty words: Even in mainland China, hardly anyone knows what lies behind a phrase like “the community of humanity’s destiny”. Nevertheless, the tactic is working, as Western actors are beginning to adopt the phrases – without knowing what lies behind them.

Terms with Chinese characteristics

World Economic Forum founder Klaus Schwab thanked Xi Jinping at this year’s forum for his reminder that “we are all part of a community of destiny“. Xi had said in his speech that “adhering to multilateralism and pushing forward the building of a community of humanity’s destiny” was the only way to solve today’s complex problems. Xi speaks of multilateralism very often in general, and China’s state media refer to the country as the “champion of multilateralism”.

But the analysis of the party discourse shows that Beijing’s perspective on multilateralism differs from that of the West. While multilateralism actually stands for universally binding norms and standards, Beijing considers the existing rules-based multilateral system not “fair and just” but “serving the narrow interests of a small group (of Western states).” In his report to the 19th CPC Party Congress, Xi described his vision of multilateralism as “dialogue without confrontation, partnership without alliances”, international cooperation without generally binding rules but based on bilateral consultations. The multilateralism often invoked by Xi is, in reality, a multi-bilateralism. This is precisely what is hidden behind the “community of destiny” for which Schwab praised Xi.

Europe must learn to decode China

China’s rise as a global power in a multipolar world means increasing competition over international values and norms. The rules-based world order and multilateralism are based on a global consensus on the definition of the norms that underpin the international system.

When the meaning of concepts such as the rule of law, human rights, democracy, and sovereignty becomes blurred, international norms are undermined. An informed engagement with China, therefore, requires that European actors are able to understand the official Chinese meanings of the core terms and concepts of international relations. The Decoding China Dictionary is intended to serve as a reference for strategy development and communication with Chinese partners.

  • Chinese Communist Party
  • EU
  • Marina Rudyak

Profile

Frank Haugwitz

Senior Advisor at the consulting agency Apricum

Frank Haugwitz has been commuting through Southeast Asia for over a year – involuntarily, because he was surprised by the COVID-19 virus during a business trip in November 2019. He is currently in Singapore, before that a few months in Thailand. In fact, the 55-year-old lives and works in Beijing. But since the beginning of the pandemic, China has been very strict about foreigners entering the country.

Haugwitz has been working in China for 20 years and is now a senior consultant at Apricum, a global consulting agency that specializes in supporting companies with projects in the field of renewable energy. Despite his current situation, Haugwitz seems very relaxed: “I’m virtually sitting in a mobile home office. That’s the nice thing about my job, that I don’t necessarily have to be physically present on-site in the current situation. It can be managed quite well that way.” Besides, he said, he is not the only expat who is in the situation of not being able to come back to China right now.

It certainly helps that Haugwitz is used to traveling a lot anyway because of his work: “The market for renewables is not just limited to China, but affects the entire region. That’s why, even before COVID, I spent between seven and eight months a year on the road for work.” Haugwitz is a trained mechanical engineer. After backpacking through Asia in his mid-twenties (he skipped China, by the way), he decided to study business languages and management as a second-chance education.

The linguistic focus on Sinology was more a coincidence than a conscious decision. As for the business side, Haugwitz already focused on the environment and energy during his studies, and the first stay in China at the German Chamber of Commerce’s Environment and Energy Department followed. “After graduating in 2002, I then left Germany directly to consult Chinese government institutions on solar energy in Beijing.” He later switched to management consulting.

In between, he worked as an EU manager for renewable energy, advising European companies and institutions on cooperation with Chinese partners. That was a good ten years ago. Since then, he has often given lectures in Germany on the Chinese market for renewables. In Germany, China was long considered exotic, and the booming solar industry, in particular, saw no need to take the risk of investing in China. A mistake, thinks Haugwitz, who had witnessed the rapid development and also the chances of technology in China since the beginning: “At the beginning, photovoltaics was only an issue when it came to decentralized power supply. So especially in rural western China.”

In the meantime, the Chinese have definitely caught up in terms of technology. This was also due to the fact that the National Development and Reform Commission gave the industrial sector a proper boost, while the market was left to work in Germany and Europe. This race makes the industry still attractive for Haugwitz even after twenty years: “The solar industry is an exciting story. Boring? Never!David Renke

  • Renewable energies
  • Solar

Dessert

The portal visualcapitalist has illustrated the population size of China.

China.Table Editors

CHINA.TABLE EDITORIAL OFFICE

Licenses:
    • Sanctions from Beijing cause CAI to waver
    • Researchers fear consequences for collaboration on genocide study
    • Foreign banks expand China exposure
    • Korvig trial behind closed doors
    • Sanctions: Russia beguiles Beijing
    • Fanuc invests in robot production
    • Marina Rudyak: the new struggle for discourse sovereignty
    • Profile: Frank Haugwitz
    Dear reader,

    The tone is set. More than thirty years after the Tiananmen Square massacre, the EU is for the first time sanctioning those responsible in China for human rights violations – against the Uighur minority in Xinjiang – together with the United States, Canada, and the United Kingdom. It is a clear commitment by the Western world to humanity and freedom – and a clearly audible signal to Beijing: These values are not negotiable.

    The Europeans will have anticipated that Beijing resorted to counter-sanctions only a few minutes after the EU foreign ministers’ decision. Anything else would be naïve after China made it very clear as recently as Friday in Alaska that it regards any criticism of Xinjiang as interference in internal affairs. Amelie Richter has the events of this diplomatically explosive Monday and takes a first look at possible consequences. Because one thing is clear: The tone of this day will also have an impact on economic relations between Europe and China.

    I would particularly like to recommend the results of Marcel Grzanna’s research, who found answers to the question of why only just over half of the sixty scientists involved in the study “The Uyghur Genocide” by the Newlines Institute were prepared to put their names to the paper.

    Your
    Antje Sirleschtov
    Image of Antje  Sirleschtov

    Feature

    Sanctions from Beijing cause CAI to waver

    Visibly annoyed, EU chief diplomat Josep Borrell took the podium yesterday for his press conference after the EU foreign ministers’ meeting. Within just a few hours, relations between the European Union and China had turned pitch black: After the announcement of the already expected EU sanctions against four Chinese officials and one organization, the – no less expected – response came from Beijing. But no one in Brussels had expected the scale of the response – China launched a round of sanctions against all the European voices that had long been a thorn in Beijing’s side.

    The punitive measures are aimed at European politicians, academics, and organizations, including German MEPs Reinhard Buetikofer (Greens) and Michael Gahler (CDU), anthropologist Adrian Zenz, and Germany’s leading China think-tank, the Merics Institute. A total of ten people and four “entities” are on the sanctions list from Zhongnanhai, which represents an unprecedented diplomatic escalation between the EU and China.

    Borrell questions previous approach

    This could now also have consequences for Brussels’ general approach towards the People’s Republic. China’s actions are “unacceptable”, said EU chief diplomat Borrell, who will present a progress report on the China strategy at this week’s summit of EU leaders. “I don’t want to say that recent events make this approach obsolete,” Borrell said. “But it’s fair to say the approach is out of date.” Borrell’s expected report is a continuation of the 2019 EU-China strategy, most notable for its first mention of “systematic rivalry.” China’s sanctions have now created “a new atmosphere, a new situation” that will definitely be discussed at the EU summit, Borrell said.

    In addition to German MEPs Buetikofer and Gahler, China is also imposing sanctions on the chairman of the EU Parliament’s Human Rights Committee, Raphaël Glucksmann, Bulgarian MEP Ilhan Kyuchyuk, and Slovakian MEP Miriam Lexmann. The European Parliament’s Human Rights Committee and the EU’s Political and Security Committee (PSC), a body of diplomats with ambassadorial rank working in the field of foreign and security policy, are also on the list. Beijing left open whether the sanctions would affect all the respective members or the bodies as a whole.

    CAI meeting canceled due to sanctions

    David Sassoli, president of the European Parliament, said the move would have consequences. The direct blow against MEPs could now jeopardize the already controversial CAI investment agreement – because the European Parliament has to approve it. A meeting of the Trade Committee’s monitoring group, which was scheduled for today to discuss the CAI, was canceled without further ado, according to EU sources.

    Members of national parliaments from EU countries are also affected by China’s sanctions: Dutchman Sjoerd Wiemer Sjoerdsma, Belgian Samuel Cogolati, and Lithuanian politician Dovilė Šakalienė. In the three parliaments, there have recently been majorities for resolutions against China’s actions in Xinjiang. The renowned China researcher Björn Jerdén, director of the Swedish National China Centre, is on the sanctions list, as is the Danish non-governmental organization Alliance of Democracies Foundation.

    “Those affected and their families are banned from entering mainland China, Hong Kong, and Macau,” the Chinese Foreign Ministry said. In addition, companies and institutions linked to them are not allowed to do business with China. Beijing strongly condemned the European sanctions. These were based on “nothing but lies and disinformation”. The EU was thus grossly interfering in China’s internal affairs and violating international law. Beijing accused Brussels of a “hypocritical practice of double standards” and demanded a withdrawal of the punitive measures.

    Federal Foreign Minister Heiko Maas condemned China’s sanctions. The fact that they hit parliamentarians and academics was “completely incomprehensible” and “unacceptable”, Maas said. The EU had sanctioned people who had violated human rights, Maas said in Brussels. China, in turn, had targeted parliamentarians and organizations. Maas added, however, that he was not aware of any EU countries now calling the CAI into question because of Beijing’s conduct.

    Zenz: EU Commission was too naive

    He has been “the main target of the Chinese government for quite some time”, Adrian Zenz told China.Table after the sanctions against him became known. Until now, he had been “slandered as a stooge of the US government”. The fact that he is now being subjected to punitive measures in connection with the EU sanctions comes as a surprise to him, said Zenz, who says he has already been unable to work in China since 2019 for security reasons. The EU sanctions against China are “good and necessary” – the counter-sanctions from Beijing are now “a purely symbolic act”, the anthropologist said.

    It was “naïve” of the EU Commission to want to separate economic issues of the CAI from human rights issues. Now it is clear that this does not work, says Zenz. The EU must make it clear that such an agreement can only be reached “if Beijing commits to upholding human rights and does not allow any form of forced labor”.

    Buetikofer: ‘This will backfire’

    MEP Michael Gahler, who is affected by the sanctions and is also the foreign policy spokesman for the EPP Group, regretted that the EU Parliament’s Human Rights Committee is listed. “This naturally makes dialogue with representatives of the People’s Republic more difficult and burdensome,” Gahler told China.Table. The fact that the Merics Institute is also on the sanctions list “should give pause for thought to all the universities and think tanks that allow themselves to be co-financed by the Chinese state through Confucius Institutes or Chinese companies,” the CDU politician said.

    “The Chinese leadership is apparently no longer satisfied with suppressing freedom of expression only in the People’s Republic, including Hong Kong, but they now want to use intimidation to stop people in Europe from openly criticizing the brutal human rights crimes in China,” said Reinhard Buetikofer, a Green MEP and chairman of the EU Parliament’s China delegation. “But this will backfire.”

    On Twitter, several MEPs, including EPP group leader Manfred Weber and the chairman of the trade committee, Bernd Lange, declared their solidarity with their parliamentary colleagues. Merics rejected the accusations from Beijing and regretted the decision. “As an independent research institute, we want to contribute to a better and more differentiated understanding of China,” the Berlin-based institute said in a statement.

    Who is on the EU sanctions list?

    The EU had already agreed last week on sanctions against four individuals and one organization in connection with human rights violations in Xinjiang. The list was approved yesterday morning at the meeting of EU foreign ministers: they will meet Zhu Hailun, the former vice-chairman of the Chinese Communist Party in Xinjiang, and Wang Junzheng, party secretary of the Xinjiang Production and Construction Corps (XPCC), an economic and paramilitary organizational unit in Xinjiang that reports to the central government in Beijing. According to the EU, it is also responsible for the administration of detention centers.

    The EU sanctions also target Wang Mingshan, a member of the Xinjiang Standing Committee of the Communist Party of China, and Chen Mingguo, director of the Xinjiang Public Security Bureau (PSB), the regional security agency in the province. All individuals were responsible for serious human rights violations by helping to shape and implement the repressive apparatus in Xinjiang, the EU statement said.

    EU speaks of systematic forced labor

    The PSB, which is part of the XPCC, was also added separately to the sanctions list as an organization. It is “responsible for serious human rights violations in China, in particular for widespread arbitrary detention and degrading treatment of Uighurs and people from other Muslim ethnic minorities”, the statement said.

    The PSB was also responsible for violations of freedom of religion or belief and the implementation of “a comprehensive surveillance, detention and indoctrination program”. Uighurs and people from other Muslim ethnic minorities were systematically used as forced labor, especially in cotton fields.

    Those concerned will be banned from entering the EU, and their assets will be frozen. In addition, they are not allowed to receive any financial resources or economic support from the European Union from organizations or individuals. The PSB, Zhu Hailun and Wang Mingshan were already subject to punitive measures by the US government last July. The US sanctions list also includes Chen Quanguo, head of the Chinese Communist Party in Xinjiang – the EU list does not include Chen Quanguo, which observers say should have avoided an escalation of sanctions with Beijing.

    These are the first sanctions against China for human rights violations since the violent crackdown on protests in Beijing’s Tiananmen Square in 1989 when an arms embargo was imposed. In July last year, the EU had imposed sanctions for cyber-attacks, affecting two Chinese and a Chinese company.

    USA, UK, and Canada follow suit

    Just hours after the EU sanctions list was announced, the USA, Canada, and the UK followed suit in a concerted move: Washington again imposed sanctions on China – this time on Wang Junzheng and Chen Mingguo, both of whom are also on the European list. Almost simultaneously, the UK also announced punitive measures. London sanctioned the same four individuals and one organization as the EU, and Ottawa announced the same decision. US Secretary of State Antony Blinken is expected in Brussels this week to meet EU Commission President Ursula Von der Leyen.

    • Sanctions

    Researchers fear consequences for cooperation on genocide study

    Topics with extraordinary explosive power require an extraordinary handle from scientists. A few weeks before the publication of “The Uyghur Genocide,” a study by the Newlines Institute in Washington, its initiator, Azeem Ibrahim, contrary to his habit, picked up the phone dozens of times to contact his fellow researchers. The explosive paper deals with human rights crimes against the minority Uyghurs in the Xinjiang autonomous region by the Chinese government. Ibrahim called some 60 colleagues whose work and names had contributed to the paper’s creation. He asked all of them the same question, “Will you sign?”

    Ibrahim knew the explosive nature of the report, which assesses deaths, torture, and birth control in Xinjiang in accordance with the 1948 UN Convention and concluding that yes, it is genocide. And indeed, numerous scholars withdrew their names. Some apparently because they had taken on new jobs over the eight months that the work consumed, and their new roles threatened conflicts of interest. Two Europeans, according to Ibrahim, had already been pressured by Chinese embassies in their home countries before publication, so they decided against signing. It is said that this also happened out of fear of politically motivated departures of wealthy Chinese expatriates from their educational institutions.

    “Reassuring myself so intensively is something I’ve never done in other work. But the situation is special. China wields a lot of power in the world, and we see what Beijing is capable of,” Ibrahim tells China.Table. The 45-year-old is director of special initiatives at the Newlines Institute, a Washington-based think tank founded in 2019, and as such has been tested with fierce backlash against studies critical of China. Newlines had published a paper by German scholar Adrian Zenz in late December that presented extensive and strong circumstantial evidence of forced labor in Xinjiang.

    Sued for Xinjiang research by Chinese company

    Zenz also worked on the new paper. His meticulous work in the past ensured that Beijing could no longer deny the existence of camps for the re-education of Uyghurs. Lawsuits are underway against Zenz by Chinese companies for allegedly “lying” to damage their businesses. Nevertheless, his name is under the paper, as is that of another German researcher.

    Rainer Schulze is Professor of Modern European History with a focus on human rights at the University of Essex. So far, the researcher has “not heard anything” that he has been “approached” in any way by the Chinese side. But he is not looking for it either, he told China.Table in a written statement. “However, I was and am aware that by signing, I better drop any travel plans for China that I might have at some point – but that’s just the way it is.” He said, for him, his signature was an honor and a matter of course.

    A total of 33 names remained under the study. All the others Ibrahim has shared only with the US television channel CNN, but on condition of secrecy. All signatories, meanwhile, must assume that they will be declared undesirables in the People’s Republic by now at the latest. China’s state media is also trying to discredit the credibility of the Newlines Institute by trying to prove bias. They also consider Zenz’s participation as an indication that the study only serves to defame China. Yet Zenz is one of those who even consider the evidence to be thin when it comes to the term “genocide”, as he made clear in an interview with the NZZ on Friday.

    Amnesty staff face accusations

    At the end of last week, meanwhile, Amnesty International drew attention to the situation in Xinjiang with a report called “Hearts and Lives broken – The Nightmare of Uyghur Families Separated by Repression”. to draw attention to the situation in Xinjiang. For the report, the organization spoke with Uyghur parents who fled Xinjiang and had to leave their children behind in China.

    Amnesty staff are also familiar with the Chinese government’s tactics when it comes to countering accusations from abroad. “Amnesty International is repeatedly confronted with accusations of bias, especially from repressive governments. Our response is to document violations of internationally recognized human rights on the basis of facts,” says Theresa Bergmann, Asia desk officer at Amnesty Germany. Meanwhile, the organization is not allowed to operate in the People’s Republic. Instead, it has an office in Hong Kong. Its staff have been summoned by the authorities several times in the past and criticised for their work.

    According to Bergmann, the Chinese are not ready for a dialogue. “The Chinese side is becoming increasingly aggressive, and we are seeing a hardening of the fronts. Beijing no longer makes any effort to refute the accusations but only reacts with counter-accusations. The opportunities to talk to each other are becoming fewer and fewer.”

    Initiator Ibrahim was prepared for attacks from the Chinese. He very deliberately brought high-ranking academics and researchers from all over the world on board to prevent the Chinese government from denouncing the paper as a Western smear. In addition to North Americans, Australians, and Europeans, experts from Africa and Asia also participated, for example, Adejoké Babington-Ashaye, a human rights lawyer from Nigeria, Chief Charles A. Taku from Cameroon, a lawyer at the International Criminal Court ICC in The Hague, Djaouida Siaci from Algeria, a lawyer specializing in the Middle East, and Kim Beng Phar, founder of the Strategic Pan Indo-Pacific Arena forum from Malaysia, whose name has been deleted from a second version of the paper. Meanwhile, a Pakistani researcher is not mentioned by name at her own request, according to Ibrahim.

    Other names of high-ranking supporters include David Scheffer, who served as Ambassador-at-large for Global Criminal Justice under former US President Bill Clinton, as well as Allan Rock, once Canada’s UN Ambassador, and Scottish Crown Counsel (QC) Baroness Helena Ann Kennedy, also a Labour MP in the British House of Lords, or former Canadian Justice Minister Irwin Cotler.

    Ibrahim refrained from asking for specific reasons if anyone decided not to sign, let alone convincing anyone otherwise. “Some,” he says, “simply realized that the impact of this study could be much greater than we had anticipated. They were unwilling to subject themselves to the pressures we expected.”

    Connection to the Guelen movement

    The starting point for his choice of contributors was Ibrahim’s network, knitted through his research into the persecution of the Rohingyas in Myanmar. He himself is a Muslim, born and raised in Scotland to a Pakistani couple. Today he holds both British and US citizenship. His personal motivation, he said, was to finally make a contribution, whether or not the crimes in Xinjiang lived up to the label of genocide. “There is so much time wasted in the world on having this debate instead of finally doing something about what is going on in Xinjiang,” Ibrahim says. Still, he says, in many ways, it’s irrelevant whether it’s genocide or not because “there are probably few voices outside of China that would fundamentally deny that the crimes are still happening.” With the study, he hopes to create new momentum for faster decisions by policymakers.

    Newlines Institute was founded in 2019 by Ahmed Alwani. On the website, Alwani introduces himself as a businessman living in northern Virginia who has invested “in poultry, real estate, and the education/training sector”. He serves on boards of several non-profit organizations. In 2018, he became vice president of the Institute of Islamic Ideas in Virginia, which advocates for better educational opportunities in Muslim societies. He graduated with an engineering degree from George Washington University back in 1990. The Newlines Institute is “nonpartisan,” asserts Alwani, who is also president of Fairfax University of America (FXUA). The private institution was still called Virginia International University (VIU) in 2019 and was considered to be linked to the Guelen movement around the Turk Fethullah Guelen, who lives in exile in USA.

    Foreign banks expand China exposure

    Despite a pandemic and a tense political climate between the US and China, the five largest US banks pumped billions of dollars into China last year. After the world’s second-largest economy further opened up its $50 trillion financial market, which includes asset managers and insurers, Goldman Sachs, Citigroup, JP Morgan, Bank of America, and Morgan Stanley invested a combined about $78 billion in China in 2020 – a 10 percent increase over 2019. That’s more than ever before.

    Back in the spring of 2020, at the height of the COVID crisis, China’s stock market regulator lifted restrictions on foreign ownership in banking, securities, futures, and fund management. Before that, foreign banks had been allowed to take a maximum 20 percent stake in a Chinese institution individually – the limit for consortia was 25 percent. Restrictions on shareholder qualifications – such as asset size and length of operation – were reduced.

    Cash boost from the West

    Goldman Sachs subsequently increased its China operations by 33 percent to $17.5 billion last year. The company also announced plans to double its China workforce to 600 employees over the next five years. JP Morgan’s total exposure rose 10.4 percent to $21.2 billion in December 2020. JP Morgan had managed to increase its stake in its Chinese securities joint venture to 71 percent late last year, making it the first foreign bank in the history of the People’s Republic to control its joint venture.

    In addition, the US bank has said it will acquire a 10 percent stake in China Merchants Bank’s wealth subsidiary for $410 million.

    Citigroup’s total exposure to China rose 16.6 percent to $21.8 billion from the fourth quarter of 2020. Yet China accounts for only 1.3 percent of Citi’s global exposure.

    Meanwhile, Morgan Stanley’s net exposure to China fell nearly five percent year-on-year to $3.9 billion at the end of December 2020 as it made fewer loans and recorded fewer loan commitments. Morgan Stanley holds a 51 percent stake in its joint venture in China, while partner Huaxin Securities holds the remaining 49 percent. Also scaling back was Bank of America, whose net exposure to China fell 13.9 percent to $13.4 billion in December 2020. Still, the Americans have a greater overall presence than ever before. Vanguard, the world’s second-largest asset management company after Blackrock, decided to move its Asia headquarters to Shanghai. It’s a clear sign of the company, which manages a total of $7.2 trillion from 30 million investors. In China, Vanguard works closely with Alibaba’s Alipay app, and the business is doing so well that they recently decided not to apply for their own Fund Management License application.

    European banks are also playing a bigger role in China. HSBC Holdings PLC, headquartered in London, has said it will focus more on Asia in the future and invest at least six billion US dollars in the region, including China. The major British bank has already been given the green light to take full control of its Chinese life insurance division. Switzerland’s UBS Group AG, in turn, aims to double its presence in China in three to five years, while Credit Suisse also recently announced plans to massively expand its own China exposure.

    Too big to be ignored

    China’s bond and equity markets have long been too big to ignore, and banks are “drawn to China’s strong economic performance like moths to a flame”, says Brock Silvers, chief investment officer at Kaiyuan Capital. Foreign players are also particularly targeting the growing middle class. According to the consulting firm Oliver Wyman, the investable assets of Chinese private clients are expected to rise from the current $24 billion to $41 billion by 2023.

    In turn, Beijing wants to reduce the demand for credit from its own banks by opening up. In recent decades, favorable loans, particularly from state-owned banks, have helped to boost the economy. At the same time, the debt burden increased. During the COVID crisis, the government once again instructed banks to approve more loans in order to revive the economy after the standstill.

    Beijing also benefited from the higher presence of foreigners. In October, the South China Morning Post wrote: “While the Federal Reserve and other major central banks are printing money on a large scale to support the economy and the labor market, China is registering a steady inflow of funds into bond and stock markets and into investment projects.” This allows the central bank to pursue a conservative monetary policy and keep its key interest rates relatively high – which in turn attracts even more money and helps cushion the negative impact of the US government’s economic decoupling attempts. For foreign banks, the rapid recovery of the Chinese economy, in turn, attracted attractive return prospects on the stock market.

    The opening of the financial markets also creates the conditions for building the national currency, the renminbi, into a globally accepted trade and reserve currency. And Beijing also knows, of course, that the more closely the two financial markets are intertwined, the more difficult it will be to enforce US sanctions in the future. By opening its markets, Beijing is turning Wall Street into a lobbyist for Chinese interests in Washington.

    Control remains in place

    The Chinese authorities are opening the markets in a controlled and gradual manner. However, the regulatory environment remains strict and also somewhat unpredictable. This is one reason why many foreign banks are still refraining from taking over the majority of their joint ventures in China: Their Chinese partners are often better and faster at interpreting market developments and the government’s reaction – especially the political ones.

    The state’s intervention in the event of an emergency was recently demonstrated by the IPO of Alibaba’s financial arm Ant Financial, which was canceled at short notice. With a restructuring plan, the Hangzhou-based company is now to be converted into a financial holding company, making it subject to capital requirements similar to those of Chinese banks. The nation remains vigilant to ensure that China maintains its “financial sovereignty”, said State and Party leader Xi Jinping. China will not leave control of the country’s economy entirely to market forces, let alone international ones.

    • Finance
    • Investments
    • JP Morgan

    News

    Michael Kovrig trial behind closed doors

    Michael Kovrig went on trial Monday on espionage charges in Beijing. The former Canadian diplomat Kovrig has been imprisoned in China for more than two years, a fate he shares with Michael Spavor, also a Canadian.

    Both were charged with espionage last summer. As with Spavor, the public was excluded from Kovrig’s trial on the grounds that it was a so-called “national security case”. Spavor stood trial last Friday in the northeastern Chinese city of Dandong, his trial ending after two hours without a verdict. No verdict was reached in the Kovrig case on Monday either.

    “He was arbitrarily detained,” Jim Nickel, the deputy envoy of the Canadian embassy in Beijing, said Monday about the trial of Michael Kovrig. Diplomats from 26 countries, including Germany, as well as journalists, tried in vain to gain access to the courthouse. Nickel criticized that the court proceedings against Kovrig were not transparent and that the embassy was very concerned about this. Canada demands the “immediate release” of its two citizens.

    China had detained Kovrig and Spavor on December 10, 2018, after Meng Wanzhou, the telecom equipment maker Huawei’s chief financial officer, had been arrested during a stopover in Vancouver at the request of the US nine days earlier. The US accuses Meng, the daughter of Huawei founder Ren Zhengfei, of violating Iran sanctions and is demanding her extradition. Since then, Meng has been under house arrest in Vancouver. She faces a long prison sentence if convicted in the USA.

    The two Canadians could also face long imprisonment in China. Canada’s Prime Minister Justin Trudeau speaks of “hostage diplomacy” and sees the arrests of Kovrig and Spavor as a retaliatory action by the Chinese.

    Guy Saint-Jacques, former Canadian ambassador to China, told Canadian television station CTV of the trials, “It’s all a set-up. It’s a sham.” He said he expected a guilty verdict. niw

    • Beijing
    • Geopolitics
    • Security

    Sanctions: Russia beguiles China

    Russia’s Foreign Minister Sergei Lavrov proposed greater cooperation with China to resist US sanctions. The two countries should cooperate in the fields of science and technology to strengthen their self-reliance, Lavrov said in an interview with Chinese state television shortly before a two-day exchange with China’s Foreign Minister Wang Yi. Lavrov further suggested reducing dependence on the US dollar in international trade and becoming less dependent on “Western-controlled payment systems”, according to the South China Morning Post.

    A spokeswoman for the Chinese Foreign Ministry said yesterday that China and Russia “firmly support each other on issues that affect each other’s core interests”. She did not provide more details on the agenda of the meeting between Lavrov and Wang.

    Russia has been under sanctions since 2014 over its annexation of Crimea. According to SCMP, the US Department of Commerce plans to further tighten sanctions on some exports to Russia over the poisoning of Kremlin critic Alexei Navalny. Earlier, the US State Department announced new sanctions against China over its overhaul of Hong Kong’s election system (China.Table reported). Yesterday, Monday, the EU also published its sanctions for human rights violations against Uyghurs in Xinjiang. nib

    • Geopolitics
    • Sanctions

    Fanuc expands robot production in Shanghai

    Japanese industrial robot manufacturer Fanuc plans to invest $240 million in its Shanghai plant. The investment is to come about through a joint venture with Shanghai Electric Group. Fanuc’s site in Shanghai is set to grow fivefold from 340,000 square meters, and the new facilities are scheduled to go into operation in 2023.

    According to Chinese research firm MIR, Fanuc is already the largest supplier in China, with a 12 percent share of the industrial robot market as of 2019. With the announced investment, Fanuc seeks to defend this position and widen its gap with competitors such as ABB (eleven percent) and Yaskawa Electric (eight percent), according to business portal Caixin.

    Swiss technology group ABB plans to open a production plant in Shanghai this year, investing $150 million. Meanwhile, Yaskawa, a Japanese technology supplier in the field of robotics, drive, and control technology, is building a new plant next to an existing one in Jiangsu province, which will cost around $50 million and where production is due to start in the coming financial year.

    As of 2019, the People’s Republic has the most units in use worldwide, with more than 780,000 industrial robots, data from the International Federation of Robotics show. Beijing aims to increase the domestic market share of its robot makers to 70 percent by 2025 from the current 30-40 percent. niw

    • Fanuc

    Opinion

    The new struggle for discourse sovereignty

    By Marina Rudyak
    Marina Rudyak is a sinologist at the Institute of Sinology at Heidelberg University. Her research focuses on Chinese development policy and coded communication in Chinese politics.

    A question of discourse: What does China’s President and General Secretary of the Communist Party of China (CCP) Xi Jinping mean when he talks about the rule of law? How does the Chinese leadership define multilateralism? Did you know that China’s core socialist values include democracy and freedom? What is Document No. 9, and why does it reject universal values? And what is meant by “a community of humanity’s destiny”?

    The Decoding China Dictionary, published in the run-up to the National People’s Congress, answers these questions. Compiled by a group of renowned China experts, it explains key terms in international relations and development cooperation that are interpreted very differently in China and Europe. Aimed at policy-makers and institutions in Europe engaged in dialogue and exchange with China, as well as all those interested in China, it is intended to facilitate a more informed and substantiated engagement with China.

    Beijing exerts influence at international level

    China’s rise as a global power is shifting global balances. Under Xi Jinping’s leadership, Beijing has abandoned the maxim of restrained foreign policy that has prevailed since Deng Xiaoping. China now actively appears on global stages and increasingly exerts influence on the shaping of international rules of the game.

    Chinese ideas are increasingly finding their way into UN documents, in which international norms and principles such as the rule of law, human rights, or democracy are given new meaning and “Chinese characteristics”. When human rights concerns are raised, China accuses the critics of “politicization” and an “imperialist” or “Cold War” mentality. Instead, it calls for “democracy” in international relations and mutually beneficial cooperation based on “common interests”. It opposes universal human rights to a hierarchy of rights, at the top of which is the “right to development“.

    Discourse system and discourse power

    Such conceptual framings are no coincidence but the result of coordinated initiatives by the Chinese leadership to develop its own Chinese discourse system and expand its discursive power. Abroad, Chinese diplomats often complain that the West misunderstands China. Xi himself repeatedly emphasizes that China’s story must be “told well” and China’s discursive power must be strengthened in order to create a favorable climate of international public opinion.

    The Chinese leadership is making considerable efforts internationally to promote a “correct understanding” of China, i.e., one that is consistent with the priorities of the Chinese party-state. The latter has always considered propaganda an important tool. In this, “correct phrases”, or “tifa” 提法 in Chinese, play a central role, for by forbidding certain phrases and prescribing others, the Party regulates what is said and written – and thus what is done. To outsiders, “tifa” may seem like empty words: Even in mainland China, hardly anyone knows what lies behind a phrase like “the community of humanity’s destiny”. Nevertheless, the tactic is working, as Western actors are beginning to adopt the phrases – without knowing what lies behind them.

    Terms with Chinese characteristics

    World Economic Forum founder Klaus Schwab thanked Xi Jinping at this year’s forum for his reminder that “we are all part of a community of destiny“. Xi had said in his speech that “adhering to multilateralism and pushing forward the building of a community of humanity’s destiny” was the only way to solve today’s complex problems. Xi speaks of multilateralism very often in general, and China’s state media refer to the country as the “champion of multilateralism”.

    But the analysis of the party discourse shows that Beijing’s perspective on multilateralism differs from that of the West. While multilateralism actually stands for universally binding norms and standards, Beijing considers the existing rules-based multilateral system not “fair and just” but “serving the narrow interests of a small group (of Western states).” In his report to the 19th CPC Party Congress, Xi described his vision of multilateralism as “dialogue without confrontation, partnership without alliances”, international cooperation without generally binding rules but based on bilateral consultations. The multilateralism often invoked by Xi is, in reality, a multi-bilateralism. This is precisely what is hidden behind the “community of destiny” for which Schwab praised Xi.

    Europe must learn to decode China

    China’s rise as a global power in a multipolar world means increasing competition over international values and norms. The rules-based world order and multilateralism are based on a global consensus on the definition of the norms that underpin the international system.

    When the meaning of concepts such as the rule of law, human rights, democracy, and sovereignty becomes blurred, international norms are undermined. An informed engagement with China, therefore, requires that European actors are able to understand the official Chinese meanings of the core terms and concepts of international relations. The Decoding China Dictionary is intended to serve as a reference for strategy development and communication with Chinese partners.

    • Chinese Communist Party
    • EU
    • Marina Rudyak

    Profile

    Frank Haugwitz

    Senior Advisor at the consulting agency Apricum

    Frank Haugwitz has been commuting through Southeast Asia for over a year – involuntarily, because he was surprised by the COVID-19 virus during a business trip in November 2019. He is currently in Singapore, before that a few months in Thailand. In fact, the 55-year-old lives and works in Beijing. But since the beginning of the pandemic, China has been very strict about foreigners entering the country.

    Haugwitz has been working in China for 20 years and is now a senior consultant at Apricum, a global consulting agency that specializes in supporting companies with projects in the field of renewable energy. Despite his current situation, Haugwitz seems very relaxed: “I’m virtually sitting in a mobile home office. That’s the nice thing about my job, that I don’t necessarily have to be physically present on-site in the current situation. It can be managed quite well that way.” Besides, he said, he is not the only expat who is in the situation of not being able to come back to China right now.

    It certainly helps that Haugwitz is used to traveling a lot anyway because of his work: “The market for renewables is not just limited to China, but affects the entire region. That’s why, even before COVID, I spent between seven and eight months a year on the road for work.” Haugwitz is a trained mechanical engineer. After backpacking through Asia in his mid-twenties (he skipped China, by the way), he decided to study business languages and management as a second-chance education.

    The linguistic focus on Sinology was more a coincidence than a conscious decision. As for the business side, Haugwitz already focused on the environment and energy during his studies, and the first stay in China at the German Chamber of Commerce’s Environment and Energy Department followed. “After graduating in 2002, I then left Germany directly to consult Chinese government institutions on solar energy in Beijing.” He later switched to management consulting.

    In between, he worked as an EU manager for renewable energy, advising European companies and institutions on cooperation with Chinese partners. That was a good ten years ago. Since then, he has often given lectures in Germany on the Chinese market for renewables. In Germany, China was long considered exotic, and the booming solar industry, in particular, saw no need to take the risk of investing in China. A mistake, thinks Haugwitz, who had witnessed the rapid development and also the chances of technology in China since the beginning: “At the beginning, photovoltaics was only an issue when it came to decentralized power supply. So especially in rural western China.”

    In the meantime, the Chinese have definitely caught up in terms of technology. This was also due to the fact that the National Development and Reform Commission gave the industrial sector a proper boost, while the market was left to work in Germany and Europe. This race makes the industry still attractive for Haugwitz even after twenty years: “The solar industry is an exciting story. Boring? Never!David Renke

    • Renewable energies
    • Solar

    Dessert

    The portal visualcapitalist has illustrated the population size of China.

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