German Chancellor Olaf Scholz’s visit to Beijing encapsulates Germany’s whole China dilemma in one trip. Business leaders are there because they want to invest more and expand local production. His first appointment on Sunday was therefore devoted to promoting German green technology, writes Christiane Kuehl.
In parallel, the Chancellor wants to call for balanced trade, meaning reducing production capacities in China. So he comes as a supplicant. And he also has to admonish ruler Xi Jinping for his support for Russia. The US has presented new information on this, which Michael Radunski summarizes.
It would be all too understandable if Xi were to point out the contradictions to his guest and send him home empty-handed. Does the Chancellor now want more or less production in China? If Scholz wants China’s cooperation on the Russia issue, what can he offer in return that Xi would be interested in? It has long been clear that China does not share our ideas of a value-based world order.
In today’s Table.Briefings interview, a person who knows the backgrounds highlights the unclear objectives of the Chancellor’s trip: Markus Kerber was CEO of the Federation of German Industries (BDI) until 2017 and subsequently State Secretary in the Ministry of the Interior. He already pointed out in 2015 that China is changing and could cause problems for the German industry.
But the DAX captains didn’t listen to him and accused him of only spoiling the mood. “They didn’t want to admit it,” says Kerber. “Unfortunately, that’s exactly what happened.”
The number of German entrepreneurs joining the Chancellor’s trip to China was higher than ever. Yet the Federation of German Industries (BDI) is again not participating. As the former managing director of Germany’s most important industry association, what do you make of this?
I can’t say much about the current invitation policy of the Chancellery. The BDI President was at least always present on previous trips. The current reasons may be quite trivial; for example, if there are enough members of the Executive Committee in the business delegation, it has been internally agreed that this is enough. In general, however, it seems to me that the focus of the Chancellor’s trip to China – and the associated interests of German industry – is not entirely clearly defined.
Was it different during your time as BDI President?
We, as business representatives, always coordinated with the Chancellery before such trips. We were not always able to stick to a uniform agenda because Mrs. Merkel sometimes took positions toward the Chinese Premier that were not just economic in nature. For example, human rights, personal freedoms, and commitment to global rules-not every member of the delegation liked that. But we ensured that we presented a united front when it came to economic matters.
Scholz also did not take the BDI on his short trip in late 2022, allegedly because the Chinese side did not want them there. It was the first time that a BDI representative did not take part in a chancellor’s visit to China despite an explicit wish to do so. How much did you hear about it?
I don’t know the exact reasons. But if it is true that the People’s Republic of China insisted that the BDI not be involved, I think that would be a grave strategic mistake on the Chinese side. As Europe’s largest industrial association, the BDI determines the fundamental economic and industrial policy directives not only in Germany but across Europe. The BDI now has a representative office in Beijing. And as far as I know, it still maintains direct contact with the Chinese leadership.
One possible reason for the rejection was that the BDI had become increasingly critical of China with two strategy papers it published in previous years. You wrote one of these papers.
Yes, we first started to address the deteriorating developments in China in 2015. Germans living in China clearly felt that the climate was changing. And I was also there regularly at the time and realized that the atmosphere in discussions with ministries was much more aggressive. There was a clear attitude of “Make China Great Again” – and the others have to dance to our tune. At the same time, there were efforts to subject not only NGOs and foundations but also associations, such as the BDI, to the rigorous control of state security. Parts of the German industry did not like that we were making a thing of all this. However, based on the knowledge we gathered in China, we concluded that If Xi continues his policies, there will be tangible conflicts between the interests of German industry and China. After we published our paper, the Chinese ambassador at the time invited me to have a “tea.”
Those who know China know it wasn’t an invitation to a nice chat.
Indeed, it wasn’t. But I then patiently explained to him that we have no intention of interfering in Chinese politics. However, we must, of course, fulfill our role in Germany as an independent industry association and represent our position on China in Germany. That was also the line that was accepted. If you communicate openly and honestly with each other as equals and still always try not to let the other person lose face, you can also talk to a systemic rival like China. That was my experience.
Still, as you have just said, some German companies were not happy that the BDI adopted this skeptical tone.
Yes, but we felt obliged to give our members an assessment of the changing global situation. The whole thing started in the spring of 2015 with an executive letter from the then-BDI President, Ulrich Grillo. This letter stated that Germany was a winner of globalization. However, we also warned that this winning strategy can quickly turn into a losing strategy if things like multilateralism or the rules-based order of globalization are called into question. This was primarily a reaction to the Russian occupation of Crimea the year before – but also to our observations in China. And the rise of right-wing populism in the US, confirmed two years later by Trump’s election, was also on the horizon.
And how did your members react?
The reaction from the DAX companies was clear: What’s with this Cassandra mentality? Please don’t spoil the mood here. They didn’t want to admit it. Unfortunately, that’s precisely what happened. Russia as a reliable supplier of our energy supply, China as a reliable trading partner that abides by WTO rules, and the US as NATO’s paymaster and the biggest defender of rules-based globalization – all three assumptions have crumbled. I believe the German economy is more exposed today than it has been since the end of the Second World War.
Why do you think companies were so dismissive?
I believe that the skepticism in the German economy is mainly because, after 1990, we were dealing with a generation of company executives and managers who are entirely apolitical. They have only read one geopolitical book, if at all, and that was “The End of History” by Francis Fukuyama. And then they probably didn’t understand it correctly. Fukuyama did not say that the game is over and the West has won forever. Instead, he spoke of a tendency and a hope. But this hope was taken at face value in wide circles of German industry. With a certain arrogance and ignorance of history, they believed we no longer have to worry about political risks. Now, this short-sightedness is coming back to haunt us.
What do you mean?
When dealing with China, I was amazed at how many business leaders with great exposure in the People’s Republic only ever talked about China as a developing country – as if there had never been a Chinese empire before 1949. Yet China is a player that has always influenced world history for thousands of years. That is why I understand why it is very easy for a Chinese leadership to spread the narrative today: The West is arrogant, it doesn’t understand us and they have to learn to respect us first. We are now paying a high price for this.
With this paper, you practically sparked the debate on a new China strategy, which the German government finally adopted last summer. Did you have any idea what you would start at the time?
Back then, we were not the only ones to see the emerging risks in Sino-German relations and warn about them. It was an interplay between the German ambassador at the time, our BDI representative in Beijing and the President of the EU Chamber of Commerce. When the second BDI paper was published in 2019, all companies operating in China were already aware that the mood had changed.
Not least since Russia’s war of aggression against Ukraine, Germans are alarmed about dependencies on authoritarian states – but apparently not the big DAX companies. BASF and VW prefer to invest even more in China.
Every company has to decide for itself how much risk it wants to take. If you ask me, I would at least not expand business in China right now. China faces huge problems with its demographic development. The growth we have been used to so far will no longer be the case. As a young, dynamic growth market, China will increasingly be characterized by aging and weak growth. However, I also understand that German companies cannot simply withdraw from the Chinese market overnight and switch to other markets. And what is happening technologically in China will continue to be relevant for us in the future. We have to be able to keep up. I think de-risking is a cliché.
What do you propose?
I am an operationally-minded person. I would have preferred the China strategy to include very practical things, such as strengthening China research at our universities. We don’t train enough sinologists. We should network all these German university courses and do much more to establish contacts with and to Chinese universities. German companies employ hundreds of thousands of people in China. We need to draw much greater insights from the everyday lives of these Chinese employees in order to maximize our knowledge pool and, thus, our options for our future approach to China. Instead of isolating ourselves, our motto must now be to deepen our capillaries into Chinese society.
Markus Kerber was CEO of the Federation of German Industries (BDI) from 2011 to 2017, previously Head of the Policy Department at the Federal Ministry of Finance and State Secretary at the Federal Ministry of the Interior between 2018 and 2021. Kerber sparked the debate about a new China strategy in Germany.
The US has publicly accused China of supporting Russia’s war machine. Senior US officials said on Friday that China had been building up its aid to Russia for over two years in areas that specifically supported the Russian military and, thus, the war of aggression against Ukraine. Chinese shipments have been the key factor in revitalizing the Russian military, which would otherwise have suffered “significant setbacks” since the start of the invasion of Ukraine. “Russia would struggle to sustain its war effort without PRC inputs.”
The Chinese embassy in the US told Reuters that China has not provided weapons to any party, adding that it is “not a producer of or party involved in the Ukraine crisis.”
Content and timing are two decisive factors in international foreign policy. And the US has made good use of both with the recent publication of intelligence information.
According to US findings, Chinese shipments include:
According to US officials, the American findings showed that “more than 70 percent of Russian imports of machine tools came from China” in the last three months of last year. The US claims this is the only way Moscow has been able to increase its production of ballistic missiles. Overall, around 90 percent of Russian microelectronics imports used to manufacture missiles, tanks and aircraft in 2023 are also assumed to have come from China.
The officials added that China was also helping Russia improve its satellites and other space-based capabilities to advance its war in Ukraine. Furthermore, Beijing allegedly also provides satellite imagery.
But that’s not all. The US officials specifically named several Chinese companies that are said to be responsible for these exports. Among them:
“These supplies are really helping Russia to rebuild and improve its war machine to destroy Ukraine,” Alexander Gabuev told Table.Briefings. The director of the Carnegie Russia Eurasia Centre says: “This is not normal trade for civilian purposes, such as the purchase of Russian oil, which is grudgingly tolerated. This is military aid.”
The public accusation against the Chinese leadership is also likely to have a US domestic background: A fierce dispute is raging in the US over more aid money to Ukraine. Furthermore, there is the threat of Donald Trump’s possible re-election. And so it seems that one of the most important measures to support Ukraine is to convince China to stop supporting Russia militarily. Without international help – from the largest possible international group – this will not succeed. At any rate, Olaf Scholzhas has an appointment with Xi Jinping tomorrow, Tuesday.
During his flight from Berlin to Chongqing, Chancellor Scholz is informed of Iran’s attacks against Israel. Nevertheless, he continues with his plan to visit the Yangtze metropolis after briefly commenting on the situation. The first stop on the Chancellor’s three-day visit to China is Bosch Hydrogen Powertrain Systems (Chongqing), a joint venture of the automotive supplier that manufactures hydrogen drives for commercial vehicles. Initially, there were no details of the visit. However, the tour of the Bosch plant was carefully chosen as it exemplifies the opportunities that German companies still have in the cleantech sector in the People’s Republic, especially if they have cutting-edge technologies. At the same time, it shows the hosts what Germany still has to offer when it comes to future technology.
Bosch only began series production of its fuel cell drive system in Germany as recently as July 2023 and practically ramped up production in Chongqing in parallel. The necessary components – fuel cell stack, air compressor with power electronics and a control unit with sensors – come from a plant in Wuxi in eastern China. “Bosch is the first company to produce these systems in both China and Germany,” said Stefan Hartung, Chairman of the board of management of Robert Bosch GmbH at the time.
The hydrogen industry is still in its infancy worldwide – and its success in both heavy industry and parts of the transport sector, from aircraft to lorries, is crucial for a successful energy transition. China, which is entering the sector at a rapid pace, is also aware of this.
While foreign companies such as Bosch are very active in the application of hydrogen and fuel cell technology – and in some cases also have access to project-related local funding – the production of the required hydrogen is in China’s hands. The key technology of the future hydrogen economy is electrolysis, which uses electricity to split water into its individual components, hydrogen and oxygen. And after renewable energies and electric cars, electrolysis is another cleantech sector in which China is currently overtaking the West.
According to a white paper published by the German Association for Electrical, Electronic & Information Technologies (VDE), “China currently leads in electrolysis.” At 610 megawatts (MW), more than half of the globally installed capacity is located in the People’s Republic. “With the rapid expansion of production capacities, Chinese manufacturers are creating cost advantages for the dynamically growing market,” the VDE study concludes.
Because whoever gets big first is the first to reduce unit costs – giving them an advantage over their slower competitors. According to the VDE, global electrolysis capacity will increase 300-fold from around one gigawatt (GW) today to 305 GW by 2030. The International Energy Agency (IEA) even expects 3,500 GW by 2050.
This is rapid growth, but the energy transition requires the electricity needed for electrolysis to be generated from renewable energy sources in the medium term – only then will the so-called green hydrogen be available, which is the actual goal. However, during the transition period, most hydrogen worldwide will still be produced using coal-fired electricity or electricity from natural gas – including in China. In a recent study, the Fraunhofer ISI expects that the People’s Republic, like the US, will be able to cover its demand for green hydrogen itself. This is thanks to the rapid expansion of huge renewable capacities.
In 2019, Germany and China signed an energy partnership that, according to the Federal Ministry for Economic Affairs and Climate Action (BMWK), includes green hydrogen as part of the bilateral dialogue. The focus here is “on the exchange on regulatory framework conditions and standards.” Germany has already set itself ambitious goals with its National Hydrogen Strategy, including market leadership in this emerging market.
However, the regulations in China are still in the works. In March 2022, Beijing issued a long-term plan to develop a hydrogen industry by 2035. In August 2023, China issued the first guideline on standards of the hydrogen energy industry for producing, storing, transporting and using hydrogen.
Experts believe that the ambition to decarbonize electrolysis – i.e., to make hydrogen green – has so far been lower at the national level in China than in industrialized nations. The plans of individual regions are much more ambitious in some cases. According to a study by the state-owned Germany Trade & Invest (GTAI), Xinjiang, Inner Mongolia and China’s north-east (Dongbei) are the regional development hubs for producing green hydrogen from wind and solar energy. These regions already have colossal wind and solar parks. Inner Mongolia is leading the way, with plans to produce 480,000 tons of green hydrogen annually by 2025.
However, a study by the Research Institute for Sustainability at the Helmholtz Centre in Potsdam found that sustainable hydrogen production is not a priority for the central government for the time being. “China’s ambitions to promote hydrogen storage and transport remain at a relatively early stage of development with an important emphasis on the promotion of innovation and acquisition of technological know-how.” As in other cleantech sectors, Beijing’s short-term priority is clearly to build a thriving industry – which will later also benefit the climate. This offers at least selective opportunities for companies such as Bosch in terms of application.
However, the expensive hydrogen production is often in the hands of large state-owned companies. According to GTAI, many wind and solar parks are operated by China’s state-controlled energy giants, some of which have now also become the leading manufacturers of electrolyzers.
One example is the state-owned company Sinopec, which commissioned what it claims is the world’s largest green hydrogen production plant in Xinjiang in the summer of 2023. The Xinjiang Kuqa Green Hydrogen Pilot Project uses its own photovoltaic systems the size of 900 football fields to produce 20,000 tons of green hydrogen annually through the electrolysis of water using solar energy, Sinopec announced. Sinopec, which is actually an oil company, intends to use the plant to supply the hydrogen produced to a nearby refinery of its subsidiary Sinopec Tahe Petrochemical and replace the natural gas used there, according to reports.
The Magpie Bridge 2 (鹊桥二号) has been unloaded. This relay satellite of the National Space Administration of China was launched to the moon on March 20 together with the technology testing satellites Tiandu 1 and Tiandu 2 by a Long March 8 carrier rocket. The news agency Xinhua has now published a photo of it.
The satellite is intended to enable communication with the components of the International Lunar Research Station operating on the far side of the moon. Magpie Bridge 2 is the second satellite in the Magpie constellation (鹊桥通导遥综合星座).
German Chancellor Olaf Scholz’s visit to Beijing encapsulates Germany’s whole China dilemma in one trip. Business leaders are there because they want to invest more and expand local production. His first appointment on Sunday was therefore devoted to promoting German green technology, writes Christiane Kuehl.
In parallel, the Chancellor wants to call for balanced trade, meaning reducing production capacities in China. So he comes as a supplicant. And he also has to admonish ruler Xi Jinping for his support for Russia. The US has presented new information on this, which Michael Radunski summarizes.
It would be all too understandable if Xi were to point out the contradictions to his guest and send him home empty-handed. Does the Chancellor now want more or less production in China? If Scholz wants China’s cooperation on the Russia issue, what can he offer in return that Xi would be interested in? It has long been clear that China does not share our ideas of a value-based world order.
In today’s Table.Briefings interview, a person who knows the backgrounds highlights the unclear objectives of the Chancellor’s trip: Markus Kerber was CEO of the Federation of German Industries (BDI) until 2017 and subsequently State Secretary in the Ministry of the Interior. He already pointed out in 2015 that China is changing and could cause problems for the German industry.
But the DAX captains didn’t listen to him and accused him of only spoiling the mood. “They didn’t want to admit it,” says Kerber. “Unfortunately, that’s exactly what happened.”
The number of German entrepreneurs joining the Chancellor’s trip to China was higher than ever. Yet the Federation of German Industries (BDI) is again not participating. As the former managing director of Germany’s most important industry association, what do you make of this?
I can’t say much about the current invitation policy of the Chancellery. The BDI President was at least always present on previous trips. The current reasons may be quite trivial; for example, if there are enough members of the Executive Committee in the business delegation, it has been internally agreed that this is enough. In general, however, it seems to me that the focus of the Chancellor’s trip to China – and the associated interests of German industry – is not entirely clearly defined.
Was it different during your time as BDI President?
We, as business representatives, always coordinated with the Chancellery before such trips. We were not always able to stick to a uniform agenda because Mrs. Merkel sometimes took positions toward the Chinese Premier that were not just economic in nature. For example, human rights, personal freedoms, and commitment to global rules-not every member of the delegation liked that. But we ensured that we presented a united front when it came to economic matters.
Scholz also did not take the BDI on his short trip in late 2022, allegedly because the Chinese side did not want them there. It was the first time that a BDI representative did not take part in a chancellor’s visit to China despite an explicit wish to do so. How much did you hear about it?
I don’t know the exact reasons. But if it is true that the People’s Republic of China insisted that the BDI not be involved, I think that would be a grave strategic mistake on the Chinese side. As Europe’s largest industrial association, the BDI determines the fundamental economic and industrial policy directives not only in Germany but across Europe. The BDI now has a representative office in Beijing. And as far as I know, it still maintains direct contact with the Chinese leadership.
One possible reason for the rejection was that the BDI had become increasingly critical of China with two strategy papers it published in previous years. You wrote one of these papers.
Yes, we first started to address the deteriorating developments in China in 2015. Germans living in China clearly felt that the climate was changing. And I was also there regularly at the time and realized that the atmosphere in discussions with ministries was much more aggressive. There was a clear attitude of “Make China Great Again” – and the others have to dance to our tune. At the same time, there were efforts to subject not only NGOs and foundations but also associations, such as the BDI, to the rigorous control of state security. Parts of the German industry did not like that we were making a thing of all this. However, based on the knowledge we gathered in China, we concluded that If Xi continues his policies, there will be tangible conflicts between the interests of German industry and China. After we published our paper, the Chinese ambassador at the time invited me to have a “tea.”
Those who know China know it wasn’t an invitation to a nice chat.
Indeed, it wasn’t. But I then patiently explained to him that we have no intention of interfering in Chinese politics. However, we must, of course, fulfill our role in Germany as an independent industry association and represent our position on China in Germany. That was also the line that was accepted. If you communicate openly and honestly with each other as equals and still always try not to let the other person lose face, you can also talk to a systemic rival like China. That was my experience.
Still, as you have just said, some German companies were not happy that the BDI adopted this skeptical tone.
Yes, but we felt obliged to give our members an assessment of the changing global situation. The whole thing started in the spring of 2015 with an executive letter from the then-BDI President, Ulrich Grillo. This letter stated that Germany was a winner of globalization. However, we also warned that this winning strategy can quickly turn into a losing strategy if things like multilateralism or the rules-based order of globalization are called into question. This was primarily a reaction to the Russian occupation of Crimea the year before – but also to our observations in China. And the rise of right-wing populism in the US, confirmed two years later by Trump’s election, was also on the horizon.
And how did your members react?
The reaction from the DAX companies was clear: What’s with this Cassandra mentality? Please don’t spoil the mood here. They didn’t want to admit it. Unfortunately, that’s precisely what happened. Russia as a reliable supplier of our energy supply, China as a reliable trading partner that abides by WTO rules, and the US as NATO’s paymaster and the biggest defender of rules-based globalization – all three assumptions have crumbled. I believe the German economy is more exposed today than it has been since the end of the Second World War.
Why do you think companies were so dismissive?
I believe that the skepticism in the German economy is mainly because, after 1990, we were dealing with a generation of company executives and managers who are entirely apolitical. They have only read one geopolitical book, if at all, and that was “The End of History” by Francis Fukuyama. And then they probably didn’t understand it correctly. Fukuyama did not say that the game is over and the West has won forever. Instead, he spoke of a tendency and a hope. But this hope was taken at face value in wide circles of German industry. With a certain arrogance and ignorance of history, they believed we no longer have to worry about political risks. Now, this short-sightedness is coming back to haunt us.
What do you mean?
When dealing with China, I was amazed at how many business leaders with great exposure in the People’s Republic only ever talked about China as a developing country – as if there had never been a Chinese empire before 1949. Yet China is a player that has always influenced world history for thousands of years. That is why I understand why it is very easy for a Chinese leadership to spread the narrative today: The West is arrogant, it doesn’t understand us and they have to learn to respect us first. We are now paying a high price for this.
With this paper, you practically sparked the debate on a new China strategy, which the German government finally adopted last summer. Did you have any idea what you would start at the time?
Back then, we were not the only ones to see the emerging risks in Sino-German relations and warn about them. It was an interplay between the German ambassador at the time, our BDI representative in Beijing and the President of the EU Chamber of Commerce. When the second BDI paper was published in 2019, all companies operating in China were already aware that the mood had changed.
Not least since Russia’s war of aggression against Ukraine, Germans are alarmed about dependencies on authoritarian states – but apparently not the big DAX companies. BASF and VW prefer to invest even more in China.
Every company has to decide for itself how much risk it wants to take. If you ask me, I would at least not expand business in China right now. China faces huge problems with its demographic development. The growth we have been used to so far will no longer be the case. As a young, dynamic growth market, China will increasingly be characterized by aging and weak growth. However, I also understand that German companies cannot simply withdraw from the Chinese market overnight and switch to other markets. And what is happening technologically in China will continue to be relevant for us in the future. We have to be able to keep up. I think de-risking is a cliché.
What do you propose?
I am an operationally-minded person. I would have preferred the China strategy to include very practical things, such as strengthening China research at our universities. We don’t train enough sinologists. We should network all these German university courses and do much more to establish contacts with and to Chinese universities. German companies employ hundreds of thousands of people in China. We need to draw much greater insights from the everyday lives of these Chinese employees in order to maximize our knowledge pool and, thus, our options for our future approach to China. Instead of isolating ourselves, our motto must now be to deepen our capillaries into Chinese society.
Markus Kerber was CEO of the Federation of German Industries (BDI) from 2011 to 2017, previously Head of the Policy Department at the Federal Ministry of Finance and State Secretary at the Federal Ministry of the Interior between 2018 and 2021. Kerber sparked the debate about a new China strategy in Germany.
The US has publicly accused China of supporting Russia’s war machine. Senior US officials said on Friday that China had been building up its aid to Russia for over two years in areas that specifically supported the Russian military and, thus, the war of aggression against Ukraine. Chinese shipments have been the key factor in revitalizing the Russian military, which would otherwise have suffered “significant setbacks” since the start of the invasion of Ukraine. “Russia would struggle to sustain its war effort without PRC inputs.”
The Chinese embassy in the US told Reuters that China has not provided weapons to any party, adding that it is “not a producer of or party involved in the Ukraine crisis.”
Content and timing are two decisive factors in international foreign policy. And the US has made good use of both with the recent publication of intelligence information.
According to US findings, Chinese shipments include:
According to US officials, the American findings showed that “more than 70 percent of Russian imports of machine tools came from China” in the last three months of last year. The US claims this is the only way Moscow has been able to increase its production of ballistic missiles. Overall, around 90 percent of Russian microelectronics imports used to manufacture missiles, tanks and aircraft in 2023 are also assumed to have come from China.
The officials added that China was also helping Russia improve its satellites and other space-based capabilities to advance its war in Ukraine. Furthermore, Beijing allegedly also provides satellite imagery.
But that’s not all. The US officials specifically named several Chinese companies that are said to be responsible for these exports. Among them:
“These supplies are really helping Russia to rebuild and improve its war machine to destroy Ukraine,” Alexander Gabuev told Table.Briefings. The director of the Carnegie Russia Eurasia Centre says: “This is not normal trade for civilian purposes, such as the purchase of Russian oil, which is grudgingly tolerated. This is military aid.”
The public accusation against the Chinese leadership is also likely to have a US domestic background: A fierce dispute is raging in the US over more aid money to Ukraine. Furthermore, there is the threat of Donald Trump’s possible re-election. And so it seems that one of the most important measures to support Ukraine is to convince China to stop supporting Russia militarily. Without international help – from the largest possible international group – this will not succeed. At any rate, Olaf Scholzhas has an appointment with Xi Jinping tomorrow, Tuesday.
During his flight from Berlin to Chongqing, Chancellor Scholz is informed of Iran’s attacks against Israel. Nevertheless, he continues with his plan to visit the Yangtze metropolis after briefly commenting on the situation. The first stop on the Chancellor’s three-day visit to China is Bosch Hydrogen Powertrain Systems (Chongqing), a joint venture of the automotive supplier that manufactures hydrogen drives for commercial vehicles. Initially, there were no details of the visit. However, the tour of the Bosch plant was carefully chosen as it exemplifies the opportunities that German companies still have in the cleantech sector in the People’s Republic, especially if they have cutting-edge technologies. At the same time, it shows the hosts what Germany still has to offer when it comes to future technology.
Bosch only began series production of its fuel cell drive system in Germany as recently as July 2023 and practically ramped up production in Chongqing in parallel. The necessary components – fuel cell stack, air compressor with power electronics and a control unit with sensors – come from a plant in Wuxi in eastern China. “Bosch is the first company to produce these systems in both China and Germany,” said Stefan Hartung, Chairman of the board of management of Robert Bosch GmbH at the time.
The hydrogen industry is still in its infancy worldwide – and its success in both heavy industry and parts of the transport sector, from aircraft to lorries, is crucial for a successful energy transition. China, which is entering the sector at a rapid pace, is also aware of this.
While foreign companies such as Bosch are very active in the application of hydrogen and fuel cell technology – and in some cases also have access to project-related local funding – the production of the required hydrogen is in China’s hands. The key technology of the future hydrogen economy is electrolysis, which uses electricity to split water into its individual components, hydrogen and oxygen. And after renewable energies and electric cars, electrolysis is another cleantech sector in which China is currently overtaking the West.
According to a white paper published by the German Association for Electrical, Electronic & Information Technologies (VDE), “China currently leads in electrolysis.” At 610 megawatts (MW), more than half of the globally installed capacity is located in the People’s Republic. “With the rapid expansion of production capacities, Chinese manufacturers are creating cost advantages for the dynamically growing market,” the VDE study concludes.
Because whoever gets big first is the first to reduce unit costs – giving them an advantage over their slower competitors. According to the VDE, global electrolysis capacity will increase 300-fold from around one gigawatt (GW) today to 305 GW by 2030. The International Energy Agency (IEA) even expects 3,500 GW by 2050.
This is rapid growth, but the energy transition requires the electricity needed for electrolysis to be generated from renewable energy sources in the medium term – only then will the so-called green hydrogen be available, which is the actual goal. However, during the transition period, most hydrogen worldwide will still be produced using coal-fired electricity or electricity from natural gas – including in China. In a recent study, the Fraunhofer ISI expects that the People’s Republic, like the US, will be able to cover its demand for green hydrogen itself. This is thanks to the rapid expansion of huge renewable capacities.
In 2019, Germany and China signed an energy partnership that, according to the Federal Ministry for Economic Affairs and Climate Action (BMWK), includes green hydrogen as part of the bilateral dialogue. The focus here is “on the exchange on regulatory framework conditions and standards.” Germany has already set itself ambitious goals with its National Hydrogen Strategy, including market leadership in this emerging market.
However, the regulations in China are still in the works. In March 2022, Beijing issued a long-term plan to develop a hydrogen industry by 2035. In August 2023, China issued the first guideline on standards of the hydrogen energy industry for producing, storing, transporting and using hydrogen.
Experts believe that the ambition to decarbonize electrolysis – i.e., to make hydrogen green – has so far been lower at the national level in China than in industrialized nations. The plans of individual regions are much more ambitious in some cases. According to a study by the state-owned Germany Trade & Invest (GTAI), Xinjiang, Inner Mongolia and China’s north-east (Dongbei) are the regional development hubs for producing green hydrogen from wind and solar energy. These regions already have colossal wind and solar parks. Inner Mongolia is leading the way, with plans to produce 480,000 tons of green hydrogen annually by 2025.
However, a study by the Research Institute for Sustainability at the Helmholtz Centre in Potsdam found that sustainable hydrogen production is not a priority for the central government for the time being. “China’s ambitions to promote hydrogen storage and transport remain at a relatively early stage of development with an important emphasis on the promotion of innovation and acquisition of technological know-how.” As in other cleantech sectors, Beijing’s short-term priority is clearly to build a thriving industry – which will later also benefit the climate. This offers at least selective opportunities for companies such as Bosch in terms of application.
However, the expensive hydrogen production is often in the hands of large state-owned companies. According to GTAI, many wind and solar parks are operated by China’s state-controlled energy giants, some of which have now also become the leading manufacturers of electrolyzers.
One example is the state-owned company Sinopec, which commissioned what it claims is the world’s largest green hydrogen production plant in Xinjiang in the summer of 2023. The Xinjiang Kuqa Green Hydrogen Pilot Project uses its own photovoltaic systems the size of 900 football fields to produce 20,000 tons of green hydrogen annually through the electrolysis of water using solar energy, Sinopec announced. Sinopec, which is actually an oil company, intends to use the plant to supply the hydrogen produced to a nearby refinery of its subsidiary Sinopec Tahe Petrochemical and replace the natural gas used there, according to reports.
The Magpie Bridge 2 (鹊桥二号) has been unloaded. This relay satellite of the National Space Administration of China was launched to the moon on March 20 together with the technology testing satellites Tiandu 1 and Tiandu 2 by a Long March 8 carrier rocket. The news agency Xinhua has now published a photo of it.
The satellite is intended to enable communication with the components of the International Lunar Research Station operating on the far side of the moon. Magpie Bridge 2 is the second satellite in the Magpie constellation (鹊桥通导遥综合星座).
