Table.Briefing: China

Stellantis and Leapmotor + Third Plenum

Dear reader,

Leapmotor is still largely unknown in Europe, but the car company is now set to serve as a strong shoulder for the Stellantis Group. After Volkswagen, which will cooperate with XPeng in China, Stellantis is also joining forces with a Chinese car manufacturer. At a press conference immediately after the announcement, Stellantis CEO Carlos Tavares made it clear that he does not think much of the EU’s subsidy investigations.

The deal with Leapmotor also entails dealing with a moral dilemma. Zhu Jiangming, the car manufacturer’s founder, earned his fortune with the surveillance company Dahua Technology, which develops cameras with facial recognition software. The software can also distinguish between Uyghurs and Han Chinese, reports Fabian Kretschmer.

Companies in China and overseas eagerly await the most important Party meeting in years, the Third Plenum. They hope for answers on China’s long-term economic policy direction. Although the date is unknown, the conference is usually held at the end of October or in the first half of November.

The Third Plenum is likely to offer the clearest indication yet of the economic reforms that China will embark on under President Xi and the new leadership,” predicts Zhouchen Mao, chief analyst at think tank Asia House. Depending on the outcome, the summit could spread a sense of optimism and regain lost trust. In the past, the Third Plenum has triggered major upheavals – five years ago, however, it disappointed. Joern Petring gives an insight into this Chinese political institution.

Your
Julia Fiedler
Image of Julia  Fiedler

Feature

Stellantis makes a U-turn

Visitors at the Leapmotor booth at this year’s IAA.

On Thursday, the Portuguese car executive Carlos Tavares made a spectacular U-turn. Just last year, Stellantis’ boss warned of the dangers posed by China’s industrial policy and gradually withdrew from this market. Now, however, the 65-year-old unveiled a 1.5 billion euro deal: The multinational automotive manufacturing company acquires a 21 percent stake in the Chinese EV manufacturer Leapmotor and launches a joint venture. “the Chinese offensive has already started, and we do not want to be a victim, but a leader,” the French daily Le Figaro quoted Tavares.

A fundamental paradigm shift is taking place in the car market lately: Chinese brands, which have always played a minor role in the combustion engine car market, have taken pole position in the electric segment – partly thanks to the Chinese government’s consistent industrial policy. One in two EVs is already on Chinese roads, and the dominance of BYD, NIO and Li Auto in the domestic market is overwhelming. And these companies are also likely to start their triumphant march in Europe in the future.

Competitive edge also thanks to subsidies

However, Germany’s top dogs are already catching up. After initially suffering painful setbacks, they had to realize that they could not succeed alone: Just like Stellantis, Volkswagen already acquired a stake in the Chinese competition in July. For around 700 million dollars, the Wolfsburg-based company gained just under five percent of Xpeng. The industry interpreted the deal as a kind of “Sputnik moment”: The former market leader in China now risks being sidelined.

On Thursday, Volkswagen’s German CFO Arno Antlitz predicted more difficult years in the Chinese market. Volkswagen remains the market leader for combustion cars in China, but in the meantime, Chinese manufacturers such as BYD have overtaken the Germans in the EV segment. Volkswagen’s EV market share is expected to continue to shrink in the next one to two years. After that, Antlitz hopes the situation will improve thanks to the cooperation with Xpeng: “Then we will catch up from 2026 onwards with full competitiveness,” Antlitz said.

Competition in the EV market is fierce; Chinese manufacturers have higher-quality entertainment systems and more powerful electric batteries at lower prices. However, the competitive advantages are also built on market-distorting state subsidies. In September, EU Commission President Ursula von der Leyen announced an “anti-subsidy investigation” that could possibly result in punitive tariffs against Chinese car brands. As justification, von der Leyen also cited the solar industry as an example – an industry that European companies initially dominated before Chinese state-owned enterprises drove out the competition through illegal price dumping.

Manufacturers fear Beijing’s retaliation

The criticism may be justified at its core. But German carmakers are by no means welcoming Brussels’ rhetoric. They already fear the retaliatory measures of the Chinese government. According to Volkswagen, Daimler and BMW, the problems could better be solved in a face-saving and subtle way instead of going for an open confrontation. They are too dependent on the Chinese market to alienate Beijing.

Stellantis’ deal with Leapmotor also bluntly reveals that moral dilemmas often accompany business in the Far East. Zhu Jiangming, Leapmotor’s founder, made his fortune with the surveillance company Dahua Technology. The United States blacklisted the company because of its role in helping the Chinese state repress the Uyghurs in Xinjiang. Among other things, Dahua has developed cameras with facial recognition software that can identify people by ethnicity – and specifically filter Uyghurs and Tibetans from Han Chinese. Fabian Kretschmer

  • Stellantis
  • Volkswagen
  • Xpeng

Tension rises in the CCP ahead of the Third Plenum

The Third Plenum is just around the corner – the key meeting of the party leadership, held only every five years, where the economic course is discussed above all. Most observers expect it to take place this year in late October or, at the latest, in the first half of November. This has usually been the case in the past.

Both Chinese and foreign companies eagerly anticipate the date. Recently, many economic indicators pointed to a stabilization of the Chinese economy after a weaker-than-expected first half of the year.

Nevertheless, many decision-makers remain hesitant. In the best case, the leadership’s decisions at the symbolic plenary session could spread a spirit of optimism and win back lost trust. The recovery could then gain further momentum towards the end of the year. Above all, however, answers concerning China’s long-term economic policy must be provided.

Important course changes

The Third Plenary Session of the Central Committee of the Party refers to the third meeting of the Central Committee held after a Party Congress. These meetings have often marked important policy shifts in CCP history.

Historically, the best known is the 3rd Plenary Session of the 11th Central Committee in 1978, where far-reaching reforms were introduced under the leadership of Deng Xiaoping, which are considered the beginning of China’s reform and opening-up policy. These reforms introduced elements of a market economy and opened the country to foreign investment.

These were the key decisions of the Third Plenary Session of the 18th Central Committee in 2013, the first Third Plenum under Xi Jinping:

  • The market has been given a “decisive role.”
  • Unprofitable state-owned enterprises were to become more efficient.
  • The plan to fight corruption in the government and the party and to achieve a more transparent judiciary and state apparatus.

Disillusionment after previous meetings

But five years later, disillusionment set in at the next Third Plenum in 2018. The meeting was held earlier than usual, not in the fall but in spring. And the main news had nothing to do with the economy. The head of state and party, now firmly in the saddle, used the meeting to consolidate his power further.

The plenary paved the way for lifting presidential term limits, for example. “It has been a decade since a comprehensive economic reform programme was presented,” writes Professor Bert Hofman, former World Bank Country Director for China, in an analysis for Asia Society.

The upcoming plenum is, therefore, “an opportunity to present a program of structural reforms that could address some of the country’s economic challenges,” Hofman continues. The plenum is also the first opportunity for Xi’s new economic team to present an integrated vision for the Chinese economy.

Opportunity for reform

Other analysts also expect an economically oriented program. “The Third Plenum is likely to offer the clearest indication yet of the economic reforms that China will embark on under President Xi and the new leadership,” says Zhouchen Mao, chief analyst at think tank Asia House.

Mao believes that the “New Development Pattern,” in particular, first mentioned by Xi in 2020, will play a prominent role in the plenum’s communiqué. The goal is to lead China to the top of the world in scientific and technological innovation.

Competition with the US as driver for resolutions

This is not least a consequence of the growing tensions with the US over the years. For Xi, independence from foreign technologies is a matter of national security. “Decisions made at the Third Plenum should provide further insights into how Beijing intends to achieve this,” writes Mao.

A balancing act is emerging: On the one hand, Beijing is likely to be keen to raise the depressed economic mood in the short term. On the other hand, it is expected to emphasize that the economy should be driven by sectors that are in line with national strategic goals. This includes, above all, the high-tech sector. Beijing no longer seeks growth at all costs.

  • Xi Jinping

Events

Oct. 30, 2023; 10 a.m. (EDT)
Center for Strategic and International Studies/Book Event Party of One: The Rise of Xi Jinping and China’s Superpower Future More

Oct. 30, 2023; 4 p.m. (GMT-4) – Harvard
Fairbanks Center for Chinese Studies/Webinar: Environment in Asia Series featuring Scott Moore – The Climate Risk to China’s Rise: Political, Economic, and Ecological Implications of Extreme Weather in China. More

Oct. 30, 2023; 5 p.m. (GMT+1)
SOAS University of London /Webinar: Professor Chenggang Xu: Institutional Genes – Totalitarianism in China More

Oct. 30, 2023; 3:30 p.m. (GMT+8) – Guangzhou
AHK Greater China: Office Open Day More

Oct. 31, 2023; 10 a.m. (EDT)
Center for Strategic and International Studies/Webinar: Unpacking Recent Developments in the Chinese Military: What’s Happening within the PLA? More

Oct. 31, 2023; 8:30 a.m. (GMT-4) – Harvard
Fairbanks Center for Chinese Studies/Webinar: Urban China Series Featuring Yang Yuzhen – The Production of Public Space and Collective Memory: A Chinese Inland City Across Time More

Nov. 1, 2023; 12 p.m. (GMT-4) – Harvard
Fairbanks Center for Chinese Studies/Webinar: Critical Issues Confronting China Series featuring Kenneth Juster – How China is Reshaping U.S.-India Relations and the Quad More

Nov. 2, 2023; 9 a.m. (CEST) – Berlin
MERICS/closed-door conversation: What kind of relationship does China want to have with foreign enterprises? A conversation with EUCCC president Jens Eskelund More

News

EU: President of the African Union calls for more industrial partnerships

The President of the African Union, Azali Assoumani, has called for more partnerships between European and African economies. These could make an important contribution to the continent’s socio-economic development, Assoumani said on Thursday at the closing event of the Global Gateway Forum in Brussels. The EU infrastructure initiative is intended as an alternative to China’s New Silk Road. The Global Gateway framework is complex, involving national banks and the private sector alongside EU agencies and lending institutions.

Assoumani praised the “renewed will to accompany Africa in its new quest for sustainable economic growth” and to face the “very important challenge” of being able to manage the financing of infrastructure. He also highlighted the digital divide in Africa: “More than half of the African population has no access to the internet.”

The EU Commission announced dozens of project proposals at the Forum. After a difficult start to the initiative, the EU must now show its credible will in implementing the projects. There is a “battle of offers,” said EU External Relations Commissioner Josep Borrell. “Not only the nicest stories, but the best actions,” he added. According to the EU Commissioner for International Partnerships, Jutta Urpilainen, some 90 high-level state representatives were present at the two-day Forum in Brussels.

On the closing day, representatives from member states, including the prime ministers of Portugal, Belgium and Luxembourg, spoke alongside EU officials. Foreign Minister and Deputy Prime Minister Antonio Tajani spoke on behalf of Italy, the only EU state still officially part of the New Silk Road. By the end of the year, Italy must decide whether it wants to extend the contract with China. All signs point to Italy leaving the BRI, but it must be officially confirmed in parliament. ari

Beijing rejects US interference after boat collision

Following an incident in the South China Sea on Sunday in which a Chinese ship collided with a Philippine boat, China opposes US interference. “The US is not a party to the South China Sea issue and has no right to interfere in the issue between China and the Philippines,” said Mao Ning, spokeswoman for China’s foreign ministry. “The US defense commitment to the Philippines should not undermine China’s sovereignty and maritime rights and interests in South China Sea, nor should it support the illegal claims of the Philippines,” Mao continued.

Manila strongly condemned the “dangerous blocking maneuvers” by the Chinese vessel. US President Joe Biden said at the White House on Wednesday that America’s commitment to the defense of the Philippines remained “ironclad” and accused China of acting “dangerously and not lawfully” in the South China Sea. The United States and the Philippines recently amended their 1951 mutual defense treaty. It now explicitly states that the obligation to provide assistance is triggered if there is an armed attack on either country “anywhere in the South China Sea.”

Meanwhile, Bloomberg reports that the Chinese military has released video footage it claims shows “provocative” actions by a US warship in the South China Sea. The clip reportedly shows the US destroyer USS Ralph Johnson harassing a People’s Liberation Army (PLA) task force during a routine training exercise in the South China Sea on 19 August. There have been several confrontations between China and the Philippines in the South China Sea in recent months, especially in the disputed waters of the Spratly Islands. jul/rtr

China sends humanitarian aid to Gaza

On Tuesday, the China International Development Cooperation Agency announced that China will provide humanitarian aid worth 15 million yuan (just under two million euros) to the people of the Gaza Strip, including food and medicine.

In parallel, Israel’s envoy in Taipei, Maya Yaron, called China’s response to the attack by Hamas militants “disturbing.” In contrast, she described Taiwan as a “good friend” whose support Israel appreciates. Like most countries, Israel maintains no official diplomatic relations with Taiwan. Taipei immediately condemned the attack by Palestinian Hamas militants on 7 October and assured Israel of Taiwan’s full support and sympathy.

Yaron reiterated her government’s disappointment with China for not condemning Hamas’ attacks on civilians. Although China condemned the violence and attacks on civilians in the conflict, Chinese Foreign Minister Wang Yi stated that Israel’s actions in Gaza were “beyond the scope of self-defense.” However, he made no mention of Hamas.

On Wednesday, Russia and China vetoed a US motion in the United Nations Security Council. The move aimed to push for a ceasefire in the conflict between Israel and Hamas to allow access to humanitarian aid, protect civilians and stop Hamas and other militant groups from arming themselves in the Gaza Strip. cyb/rtr

Huawei snatches market share from Apple

Huawei strongly increased its smartphone sales in the People’s Republic in the third quarter and snatched market share from Apple. According to a study by the market research company Counterpoint, Huawei improved its market share from 9 percent year-on-year to 13 percent. Huawei’s smartphone sales surged by 37 percent thanks to the launch of the new Mate 60. On the other hand, Apple’s sales fell by six percent despite the launch of the new iPhone 15 on 22 September, Canalys experts noted.

Counterpoint reports an overall decline of three percent in smartphone sales in China. Huawei’s smartphone business was hit hard by the US sanctions imposed in 2019. Now, the Shenzhen-based company is celebrating a comeback. The competition, on the other hand, felt the impact of China’s slowing economy. The iPhone 15 sold worse than its predecessor, the iPhone 14, shortly after its market launch.

The market leader in China is Honor, with a share of 18 percent, while Oppo and Apple are tied in second place, both with a market share of 16 percent each. rtr

  • Smartphones

Opinion

Beijing’s Zeitenwende

By Johnny Erling
Johnny Erling schreibt die Kolumne für die China.Table Professional Briefings

After four years of absence, Beijing celebrated its participation in this year’s Frankfurt Book Fair with a special brochure displayed in every exhibition hall. It proclaimed: “China’s publishers return to Frankfurt.” Covid-19 was in the past. Although the pandemic had been particularly hard on the book trade in 2022, the downturn had slowed.

But there are other reasons for the slow demand. The highly politicized culture industry has become increasingly unattractive, and China’s book supply has to be careful of the party’s ubiquitous censorship. In October, it hit the reprint of a sold-out 2016 dynasty history by renowned historian Chen Wutong about the last Ming emperor Chongzhen (崇祯), who hanged himself in 1644 after he brought ruin to his dynasty. The new edition would have been a bestseller, but Beijing’s ideology watchdogs emptied the shelves and deleted all online advertising along with it.

They took offense at the book’s new cover: On it, the emperor’s name character “Chong” dangles from a noose. The book’s sleeve advertises, “Chong Zhen: With an overzealous rule, he brought down the empire.” (崇祯:勤政的亡国君) The regent ruled for 16 years and had high officials prosecuted whom he accused of not loyally serving him. He kept the nation on edge with haphazard actions, which led to the fall of his Ming Empire. Politically astute readers immediately thought of the omnipotent party leader Xi Jinping.

The cover of the history book about the fate of the last Ming emperor censored in September.

China’s exhibitors claimed they had never heard of the book, which was hotly debated in online chats. Yet they were represented by “around 100 participating publishers,” the state broadcaster CRI reported, praising how the fair was being enriched: “Chinese publishing institutions bring vitality to Frankfurt Book Fair.”

There was little evidence of this at China’s book booths. In dull simplicity, they mainly exhibited speeches, writings, monographs or selected works by Xi, sometimes as a wall of books, sometimes set up in a circle.

When Xi presented Merkel with books by Jiang Zemin

I couldn’t help but think back to 2009. Frankfurt’s Book Fair had chosen China as its international partner country. Although the German public hotly debated their decision because of Beijing’s censorship, suppression of minorities and human rights, it also raised hopes for literary diversity. It was a time when China’s then Vice-President Xi Jinping still kept a low profile, although his reputation as crown prince designate and successor to the party and state leader Hu Jintao, who remained in office until 2012, already preceded him.

As head of the delegation, Xi opened the book fair together with German Chancellor Angela Merkel. He even modestly played the letter carrier for state and party leader Jiang Zemin, who retired in 2002. Upon meeting Chancellor Merkel, Xi handed over two non-fiction books on information technology and energy, signed by Jiang and translated into English, as a courtesy gift (论中国信息技术产业发展 and 中国能源问题研究).

What no one knew at the time was that Xi was flattering the old politician Jiang, who was still pulling all the strings in the background and who supported Xi’s election as party leader in late 2012 and as president in March 2013. Since then, Xi never gave away any books other than his own.

China’s publishers brought 5,000 titles to the book fair – many hundreds, including books by State and Party leader Xi Jinping or about him.

As head of state and party leader, Xi was a different man from the very first moment. His agenda was to bring about a new era for China – ideologically on the inside and globally on the outside. The New York Times noticed that Xi visited Vladimir Putin only eight days after being elected head of state. The latter turned it into a show, seated Xi next to him in one of the two gold-framed chairs in the Kremlin, and had tea served. In 2013, Xi met Putin two more times and even celebrated his 61st birthday.

So much pomp and protocol did not hide the fact that both autocrats had a hard time building a special relationship. Their glue consisted primarily of a shared desire to replace Western domination, especially that of the United States.

Xi’s long-planned Zeitenwende

Ten years later, in these days of October, Xi returned the favor. He let himself and the tenth anniversary of China’s now global “Belt and Road” infrastructure network be celebrated. In 2013, he proposed it as his global Silk Road initiative. When the gold-colored double doors opened in October for the opening ceremony in the Great Hall of the People, Xi stepped in shoulder to shoulder with Putin.

He publicly proclaimed that he had met “my old friend” Putin 42 times since their first meeting in March 2013. Putin, who is wanted on an international arrest warrant for alleged war crimes, had to look up to Xi.

The glue for the paradigm shift has now hardened for China; the Zeitenwende that began ten years ago is real, while foreign countries continue to debate their Zeitenwende in relations with China. Only by looking back does it become clear how purposefully Xi acted. In the starting year of 2013, he slammed the reverse brake on the domestic front and stepped on the gas for a radical international expansion. It started with his proposal to always link China’s enterprises strictly bilaterally with dozens of countries (later more than 100), first along the Central Asian Silk Road and economic corridors. Then, they were allowed to expand infrastructure-wise via port, rail, and pipeline construction, technology, and foreign trade in all global directions. Simultaneously, Xi ordered the build-up of China’s army and navy into a military power capable of waging war and secretly had artificial islands filled up in the South China Sea to underpin Beijing’s claim over the sea.

Ties through individual agreements and conferences

One of the reasons Beijing got away with this development and expansion strategy so smoothly is China’s clever combination of major international conferences and summits in which it participated, as well as each strictly bilateral agreement, treaty and cooperation project it signed. By 2014, China had signed agreements with 58 countries; today, it is twice as many.

China’s publishing industry returned to the Frankfurt Book Fair with around 100 publishers after the end of the Covid pandemic and a four-year absence. Chinese promotional brochures trumpeted: “China’s publishers are returning to Frankfurt.”

During the Beijing BRI Anniversary Conference in October and at the tenth anniversary China-Asia neighborhood conference this week, dozens of new and expanded bilateral cooperation agreements were signed with attending heads of state.

Xi chaired each meeting personally. The texts of the joint statements are available online in the Foreign Ministry’s archive. They document how meticulously Beijing wove its network of influence, painstakingly recording whether the cooperation was friendly, cooperative or strategic. Pakistan, which receives the bulk of billions in construction investment for ports, power plants, roads and railroads, became the first country Beijing elevated to its “All-Weather Strategic Cooperative Partners.” Head of State Xi and Pakistan’s Premier Anwar Kakkar agreed in October to further elevate their relationship to “everlasting” and “unbreakable,” calling themselves “iron brothers” (中巴两国是全天候战略合作伙伴和 “铁杆 “兄弟,两国友谊历久弥坚、牢不可破).

Colorful friendship title, high dependence

By now, however, Beijing has forged “all-weather” partnerships with half a dozen states, including Belarus and Ethiopia. The more colorful China’s formulas, the greater the dependence of the country in question on China, which, in the meantime, has also become known as the “debt trap.” In a recent agreement, Beijing has waived some of its debt claims for particularly battered Sri Lanka. In return, it will have to support China. Initially, Beijing wanted all partner states to merely respect its “core interests” and, above all, recognize its claim over Taiwan. Then, it demanded they support memoranda to China’s Silk Road initiative. Today, Xi wants more: Dozens of countries signed on for his new China Initiatives on Global Development (GDI), Global Security (GSI), and Global Civilization (GCI) (全球发展倡议、全球安全倡议、全球文明倡议).

In October, Beijing signed an agreement with Chile to enter a new “global data security” initiative with China (智方赞赏中方提出的《全球数据安全倡议》). Beijing always sets the standards – party leader Xi recently proposed another “Global AI Governance Initiative,” another one of Beijing’s attempts to subject the Internet to international control by invoking sovereignty clauses.

On Wednesday, Xi Jinping and Colombia’s Gustavo Petro caused a stir in Beijing by upgrading their relations to a “strategic partnership.” Colombia, which is heavily indebted in trade with China, was previously considered the oldest US ally in Latin America. “The upgrade of relations with Colombia means China now has strategic ties with 10 out of the 11 South American countries with which it has relations,” Reuters reported.

In this way, China crawls its way into Xi’s coveted role as a global power. Beijing’s plan to use the mass of its bilateral agreements to set the tone for future international affairs or to exert more influence on votes in the United Nations, is obviously part of its Chinese Zeitenwende.

  • Neue Seidenstraße

Executive Moves

Fan Yun now serves as Deputy Editor-in-Chief of China Media Group.

Xiao Yanshun heads the State Council’s research office as Deputy Director.

Wang Jingtao has moved from the post of Deputy Director of the National Administration of State Secrets Protection to the post of Deputy Director of the Cyberspace Administration of China. The post was previously held by Zhao Zeliang.

Is something changing in your organization? Let us know at heads@table.media!

Dessert

Dramatic morning scene over the Emperor’s Canal: Parts of the world’s longest man-made waterway were already built more than 2,400 years ago. The canal is more than 1,800 kilometers long and connects Beijing with Hangzhou; it is also used for irrigation. Long barges transport goods like coal or building materials on it. However, the old structure is suffering from a lack of water. As a result, it is sometimes impassable and has thus lost at least its transregional significance.

China.Table editorial office

CHINA.TABLE EDITORIAL OFFICE

Licenses:
    Dear reader,

    Leapmotor is still largely unknown in Europe, but the car company is now set to serve as a strong shoulder for the Stellantis Group. After Volkswagen, which will cooperate with XPeng in China, Stellantis is also joining forces with a Chinese car manufacturer. At a press conference immediately after the announcement, Stellantis CEO Carlos Tavares made it clear that he does not think much of the EU’s subsidy investigations.

    The deal with Leapmotor also entails dealing with a moral dilemma. Zhu Jiangming, the car manufacturer’s founder, earned his fortune with the surveillance company Dahua Technology, which develops cameras with facial recognition software. The software can also distinguish between Uyghurs and Han Chinese, reports Fabian Kretschmer.

    Companies in China and overseas eagerly await the most important Party meeting in years, the Third Plenum. They hope for answers on China’s long-term economic policy direction. Although the date is unknown, the conference is usually held at the end of October or in the first half of November.

    The Third Plenum is likely to offer the clearest indication yet of the economic reforms that China will embark on under President Xi and the new leadership,” predicts Zhouchen Mao, chief analyst at think tank Asia House. Depending on the outcome, the summit could spread a sense of optimism and regain lost trust. In the past, the Third Plenum has triggered major upheavals – five years ago, however, it disappointed. Joern Petring gives an insight into this Chinese political institution.

    Your
    Julia Fiedler
    Image of Julia  Fiedler

    Feature

    Stellantis makes a U-turn

    Visitors at the Leapmotor booth at this year’s IAA.

    On Thursday, the Portuguese car executive Carlos Tavares made a spectacular U-turn. Just last year, Stellantis’ boss warned of the dangers posed by China’s industrial policy and gradually withdrew from this market. Now, however, the 65-year-old unveiled a 1.5 billion euro deal: The multinational automotive manufacturing company acquires a 21 percent stake in the Chinese EV manufacturer Leapmotor and launches a joint venture. “the Chinese offensive has already started, and we do not want to be a victim, but a leader,” the French daily Le Figaro quoted Tavares.

    A fundamental paradigm shift is taking place in the car market lately: Chinese brands, which have always played a minor role in the combustion engine car market, have taken pole position in the electric segment – partly thanks to the Chinese government’s consistent industrial policy. One in two EVs is already on Chinese roads, and the dominance of BYD, NIO and Li Auto in the domestic market is overwhelming. And these companies are also likely to start their triumphant march in Europe in the future.

    Competitive edge also thanks to subsidies

    However, Germany’s top dogs are already catching up. After initially suffering painful setbacks, they had to realize that they could not succeed alone: Just like Stellantis, Volkswagen already acquired a stake in the Chinese competition in July. For around 700 million dollars, the Wolfsburg-based company gained just under five percent of Xpeng. The industry interpreted the deal as a kind of “Sputnik moment”: The former market leader in China now risks being sidelined.

    On Thursday, Volkswagen’s German CFO Arno Antlitz predicted more difficult years in the Chinese market. Volkswagen remains the market leader for combustion cars in China, but in the meantime, Chinese manufacturers such as BYD have overtaken the Germans in the EV segment. Volkswagen’s EV market share is expected to continue to shrink in the next one to two years. After that, Antlitz hopes the situation will improve thanks to the cooperation with Xpeng: “Then we will catch up from 2026 onwards with full competitiveness,” Antlitz said.

    Competition in the EV market is fierce; Chinese manufacturers have higher-quality entertainment systems and more powerful electric batteries at lower prices. However, the competitive advantages are also built on market-distorting state subsidies. In September, EU Commission President Ursula von der Leyen announced an “anti-subsidy investigation” that could possibly result in punitive tariffs against Chinese car brands. As justification, von der Leyen also cited the solar industry as an example – an industry that European companies initially dominated before Chinese state-owned enterprises drove out the competition through illegal price dumping.

    Manufacturers fear Beijing’s retaliation

    The criticism may be justified at its core. But German carmakers are by no means welcoming Brussels’ rhetoric. They already fear the retaliatory measures of the Chinese government. According to Volkswagen, Daimler and BMW, the problems could better be solved in a face-saving and subtle way instead of going for an open confrontation. They are too dependent on the Chinese market to alienate Beijing.

    Stellantis’ deal with Leapmotor also bluntly reveals that moral dilemmas often accompany business in the Far East. Zhu Jiangming, Leapmotor’s founder, made his fortune with the surveillance company Dahua Technology. The United States blacklisted the company because of its role in helping the Chinese state repress the Uyghurs in Xinjiang. Among other things, Dahua has developed cameras with facial recognition software that can identify people by ethnicity – and specifically filter Uyghurs and Tibetans from Han Chinese. Fabian Kretschmer

    • Stellantis
    • Volkswagen
    • Xpeng

    Tension rises in the CCP ahead of the Third Plenum

    The Third Plenum is just around the corner – the key meeting of the party leadership, held only every five years, where the economic course is discussed above all. Most observers expect it to take place this year in late October or, at the latest, in the first half of November. This has usually been the case in the past.

    Both Chinese and foreign companies eagerly anticipate the date. Recently, many economic indicators pointed to a stabilization of the Chinese economy after a weaker-than-expected first half of the year.

    Nevertheless, many decision-makers remain hesitant. In the best case, the leadership’s decisions at the symbolic plenary session could spread a spirit of optimism and win back lost trust. The recovery could then gain further momentum towards the end of the year. Above all, however, answers concerning China’s long-term economic policy must be provided.

    Important course changes

    The Third Plenary Session of the Central Committee of the Party refers to the third meeting of the Central Committee held after a Party Congress. These meetings have often marked important policy shifts in CCP history.

    Historically, the best known is the 3rd Plenary Session of the 11th Central Committee in 1978, where far-reaching reforms were introduced under the leadership of Deng Xiaoping, which are considered the beginning of China’s reform and opening-up policy. These reforms introduced elements of a market economy and opened the country to foreign investment.

    These were the key decisions of the Third Plenary Session of the 18th Central Committee in 2013, the first Third Plenum under Xi Jinping:

    • The market has been given a “decisive role.”
    • Unprofitable state-owned enterprises were to become more efficient.
    • The plan to fight corruption in the government and the party and to achieve a more transparent judiciary and state apparatus.

    Disillusionment after previous meetings

    But five years later, disillusionment set in at the next Third Plenum in 2018. The meeting was held earlier than usual, not in the fall but in spring. And the main news had nothing to do with the economy. The head of state and party, now firmly in the saddle, used the meeting to consolidate his power further.

    The plenary paved the way for lifting presidential term limits, for example. “It has been a decade since a comprehensive economic reform programme was presented,” writes Professor Bert Hofman, former World Bank Country Director for China, in an analysis for Asia Society.

    The upcoming plenum is, therefore, “an opportunity to present a program of structural reforms that could address some of the country’s economic challenges,” Hofman continues. The plenum is also the first opportunity for Xi’s new economic team to present an integrated vision for the Chinese economy.

    Opportunity for reform

    Other analysts also expect an economically oriented program. “The Third Plenum is likely to offer the clearest indication yet of the economic reforms that China will embark on under President Xi and the new leadership,” says Zhouchen Mao, chief analyst at think tank Asia House.

    Mao believes that the “New Development Pattern,” in particular, first mentioned by Xi in 2020, will play a prominent role in the plenum’s communiqué. The goal is to lead China to the top of the world in scientific and technological innovation.

    Competition with the US as driver for resolutions

    This is not least a consequence of the growing tensions with the US over the years. For Xi, independence from foreign technologies is a matter of national security. “Decisions made at the Third Plenum should provide further insights into how Beijing intends to achieve this,” writes Mao.

    A balancing act is emerging: On the one hand, Beijing is likely to be keen to raise the depressed economic mood in the short term. On the other hand, it is expected to emphasize that the economy should be driven by sectors that are in line with national strategic goals. This includes, above all, the high-tech sector. Beijing no longer seeks growth at all costs.

    • Xi Jinping

    Events

    Oct. 30, 2023; 10 a.m. (EDT)
    Center for Strategic and International Studies/Book Event Party of One: The Rise of Xi Jinping and China’s Superpower Future More

    Oct. 30, 2023; 4 p.m. (GMT-4) – Harvard
    Fairbanks Center for Chinese Studies/Webinar: Environment in Asia Series featuring Scott Moore – The Climate Risk to China’s Rise: Political, Economic, and Ecological Implications of Extreme Weather in China. More

    Oct. 30, 2023; 5 p.m. (GMT+1)
    SOAS University of London /Webinar: Professor Chenggang Xu: Institutional Genes – Totalitarianism in China More

    Oct. 30, 2023; 3:30 p.m. (GMT+8) – Guangzhou
    AHK Greater China: Office Open Day More

    Oct. 31, 2023; 10 a.m. (EDT)
    Center for Strategic and International Studies/Webinar: Unpacking Recent Developments in the Chinese Military: What’s Happening within the PLA? More

    Oct. 31, 2023; 8:30 a.m. (GMT-4) – Harvard
    Fairbanks Center for Chinese Studies/Webinar: Urban China Series Featuring Yang Yuzhen – The Production of Public Space and Collective Memory: A Chinese Inland City Across Time More

    Nov. 1, 2023; 12 p.m. (GMT-4) – Harvard
    Fairbanks Center for Chinese Studies/Webinar: Critical Issues Confronting China Series featuring Kenneth Juster – How China is Reshaping U.S.-India Relations and the Quad More

    Nov. 2, 2023; 9 a.m. (CEST) – Berlin
    MERICS/closed-door conversation: What kind of relationship does China want to have with foreign enterprises? A conversation with EUCCC president Jens Eskelund More

    News

    EU: President of the African Union calls for more industrial partnerships

    The President of the African Union, Azali Assoumani, has called for more partnerships between European and African economies. These could make an important contribution to the continent’s socio-economic development, Assoumani said on Thursday at the closing event of the Global Gateway Forum in Brussels. The EU infrastructure initiative is intended as an alternative to China’s New Silk Road. The Global Gateway framework is complex, involving national banks and the private sector alongside EU agencies and lending institutions.

    Assoumani praised the “renewed will to accompany Africa in its new quest for sustainable economic growth” and to face the “very important challenge” of being able to manage the financing of infrastructure. He also highlighted the digital divide in Africa: “More than half of the African population has no access to the internet.”

    The EU Commission announced dozens of project proposals at the Forum. After a difficult start to the initiative, the EU must now show its credible will in implementing the projects. There is a “battle of offers,” said EU External Relations Commissioner Josep Borrell. “Not only the nicest stories, but the best actions,” he added. According to the EU Commissioner for International Partnerships, Jutta Urpilainen, some 90 high-level state representatives were present at the two-day Forum in Brussels.

    On the closing day, representatives from member states, including the prime ministers of Portugal, Belgium and Luxembourg, spoke alongside EU officials. Foreign Minister and Deputy Prime Minister Antonio Tajani spoke on behalf of Italy, the only EU state still officially part of the New Silk Road. By the end of the year, Italy must decide whether it wants to extend the contract with China. All signs point to Italy leaving the BRI, but it must be officially confirmed in parliament. ari

    Beijing rejects US interference after boat collision

    Following an incident in the South China Sea on Sunday in which a Chinese ship collided with a Philippine boat, China opposes US interference. “The US is not a party to the South China Sea issue and has no right to interfere in the issue between China and the Philippines,” said Mao Ning, spokeswoman for China’s foreign ministry. “The US defense commitment to the Philippines should not undermine China’s sovereignty and maritime rights and interests in South China Sea, nor should it support the illegal claims of the Philippines,” Mao continued.

    Manila strongly condemned the “dangerous blocking maneuvers” by the Chinese vessel. US President Joe Biden said at the White House on Wednesday that America’s commitment to the defense of the Philippines remained “ironclad” and accused China of acting “dangerously and not lawfully” in the South China Sea. The United States and the Philippines recently amended their 1951 mutual defense treaty. It now explicitly states that the obligation to provide assistance is triggered if there is an armed attack on either country “anywhere in the South China Sea.”

    Meanwhile, Bloomberg reports that the Chinese military has released video footage it claims shows “provocative” actions by a US warship in the South China Sea. The clip reportedly shows the US destroyer USS Ralph Johnson harassing a People’s Liberation Army (PLA) task force during a routine training exercise in the South China Sea on 19 August. There have been several confrontations between China and the Philippines in the South China Sea in recent months, especially in the disputed waters of the Spratly Islands. jul/rtr

    China sends humanitarian aid to Gaza

    On Tuesday, the China International Development Cooperation Agency announced that China will provide humanitarian aid worth 15 million yuan (just under two million euros) to the people of the Gaza Strip, including food and medicine.

    In parallel, Israel’s envoy in Taipei, Maya Yaron, called China’s response to the attack by Hamas militants “disturbing.” In contrast, she described Taiwan as a “good friend” whose support Israel appreciates. Like most countries, Israel maintains no official diplomatic relations with Taiwan. Taipei immediately condemned the attack by Palestinian Hamas militants on 7 October and assured Israel of Taiwan’s full support and sympathy.

    Yaron reiterated her government’s disappointment with China for not condemning Hamas’ attacks on civilians. Although China condemned the violence and attacks on civilians in the conflict, Chinese Foreign Minister Wang Yi stated that Israel’s actions in Gaza were “beyond the scope of self-defense.” However, he made no mention of Hamas.

    On Wednesday, Russia and China vetoed a US motion in the United Nations Security Council. The move aimed to push for a ceasefire in the conflict between Israel and Hamas to allow access to humanitarian aid, protect civilians and stop Hamas and other militant groups from arming themselves in the Gaza Strip. cyb/rtr

    Huawei snatches market share from Apple

    Huawei strongly increased its smartphone sales in the People’s Republic in the third quarter and snatched market share from Apple. According to a study by the market research company Counterpoint, Huawei improved its market share from 9 percent year-on-year to 13 percent. Huawei’s smartphone sales surged by 37 percent thanks to the launch of the new Mate 60. On the other hand, Apple’s sales fell by six percent despite the launch of the new iPhone 15 on 22 September, Canalys experts noted.

    Counterpoint reports an overall decline of three percent in smartphone sales in China. Huawei’s smartphone business was hit hard by the US sanctions imposed in 2019. Now, the Shenzhen-based company is celebrating a comeback. The competition, on the other hand, felt the impact of China’s slowing economy. The iPhone 15 sold worse than its predecessor, the iPhone 14, shortly after its market launch.

    The market leader in China is Honor, with a share of 18 percent, while Oppo and Apple are tied in second place, both with a market share of 16 percent each. rtr

    • Smartphones

    Opinion

    Beijing’s Zeitenwende

    By Johnny Erling
    Johnny Erling schreibt die Kolumne für die China.Table Professional Briefings

    After four years of absence, Beijing celebrated its participation in this year’s Frankfurt Book Fair with a special brochure displayed in every exhibition hall. It proclaimed: “China’s publishers return to Frankfurt.” Covid-19 was in the past. Although the pandemic had been particularly hard on the book trade in 2022, the downturn had slowed.

    But there are other reasons for the slow demand. The highly politicized culture industry has become increasingly unattractive, and China’s book supply has to be careful of the party’s ubiquitous censorship. In October, it hit the reprint of a sold-out 2016 dynasty history by renowned historian Chen Wutong about the last Ming emperor Chongzhen (崇祯), who hanged himself in 1644 after he brought ruin to his dynasty. The new edition would have been a bestseller, but Beijing’s ideology watchdogs emptied the shelves and deleted all online advertising along with it.

    They took offense at the book’s new cover: On it, the emperor’s name character “Chong” dangles from a noose. The book’s sleeve advertises, “Chong Zhen: With an overzealous rule, he brought down the empire.” (崇祯:勤政的亡国君) The regent ruled for 16 years and had high officials prosecuted whom he accused of not loyally serving him. He kept the nation on edge with haphazard actions, which led to the fall of his Ming Empire. Politically astute readers immediately thought of the omnipotent party leader Xi Jinping.

    The cover of the history book about the fate of the last Ming emperor censored in September.

    China’s exhibitors claimed they had never heard of the book, which was hotly debated in online chats. Yet they were represented by “around 100 participating publishers,” the state broadcaster CRI reported, praising how the fair was being enriched: “Chinese publishing institutions bring vitality to Frankfurt Book Fair.”

    There was little evidence of this at China’s book booths. In dull simplicity, they mainly exhibited speeches, writings, monographs or selected works by Xi, sometimes as a wall of books, sometimes set up in a circle.

    When Xi presented Merkel with books by Jiang Zemin

    I couldn’t help but think back to 2009. Frankfurt’s Book Fair had chosen China as its international partner country. Although the German public hotly debated their decision because of Beijing’s censorship, suppression of minorities and human rights, it also raised hopes for literary diversity. It was a time when China’s then Vice-President Xi Jinping still kept a low profile, although his reputation as crown prince designate and successor to the party and state leader Hu Jintao, who remained in office until 2012, already preceded him.

    As head of the delegation, Xi opened the book fair together with German Chancellor Angela Merkel. He even modestly played the letter carrier for state and party leader Jiang Zemin, who retired in 2002. Upon meeting Chancellor Merkel, Xi handed over two non-fiction books on information technology and energy, signed by Jiang and translated into English, as a courtesy gift (论中国信息技术产业发展 and 中国能源问题研究).

    What no one knew at the time was that Xi was flattering the old politician Jiang, who was still pulling all the strings in the background and who supported Xi’s election as party leader in late 2012 and as president in March 2013. Since then, Xi never gave away any books other than his own.

    China’s publishers brought 5,000 titles to the book fair – many hundreds, including books by State and Party leader Xi Jinping or about him.

    As head of state and party leader, Xi was a different man from the very first moment. His agenda was to bring about a new era for China – ideologically on the inside and globally on the outside. The New York Times noticed that Xi visited Vladimir Putin only eight days after being elected head of state. The latter turned it into a show, seated Xi next to him in one of the two gold-framed chairs in the Kremlin, and had tea served. In 2013, Xi met Putin two more times and even celebrated his 61st birthday.

    So much pomp and protocol did not hide the fact that both autocrats had a hard time building a special relationship. Their glue consisted primarily of a shared desire to replace Western domination, especially that of the United States.

    Xi’s long-planned Zeitenwende

    Ten years later, in these days of October, Xi returned the favor. He let himself and the tenth anniversary of China’s now global “Belt and Road” infrastructure network be celebrated. In 2013, he proposed it as his global Silk Road initiative. When the gold-colored double doors opened in October for the opening ceremony in the Great Hall of the People, Xi stepped in shoulder to shoulder with Putin.

    He publicly proclaimed that he had met “my old friend” Putin 42 times since their first meeting in March 2013. Putin, who is wanted on an international arrest warrant for alleged war crimes, had to look up to Xi.

    The glue for the paradigm shift has now hardened for China; the Zeitenwende that began ten years ago is real, while foreign countries continue to debate their Zeitenwende in relations with China. Only by looking back does it become clear how purposefully Xi acted. In the starting year of 2013, he slammed the reverse brake on the domestic front and stepped on the gas for a radical international expansion. It started with his proposal to always link China’s enterprises strictly bilaterally with dozens of countries (later more than 100), first along the Central Asian Silk Road and economic corridors. Then, they were allowed to expand infrastructure-wise via port, rail, and pipeline construction, technology, and foreign trade in all global directions. Simultaneously, Xi ordered the build-up of China’s army and navy into a military power capable of waging war and secretly had artificial islands filled up in the South China Sea to underpin Beijing’s claim over the sea.

    Ties through individual agreements and conferences

    One of the reasons Beijing got away with this development and expansion strategy so smoothly is China’s clever combination of major international conferences and summits in which it participated, as well as each strictly bilateral agreement, treaty and cooperation project it signed. By 2014, China had signed agreements with 58 countries; today, it is twice as many.

    China’s publishing industry returned to the Frankfurt Book Fair with around 100 publishers after the end of the Covid pandemic and a four-year absence. Chinese promotional brochures trumpeted: “China’s publishers are returning to Frankfurt.”

    During the Beijing BRI Anniversary Conference in October and at the tenth anniversary China-Asia neighborhood conference this week, dozens of new and expanded bilateral cooperation agreements were signed with attending heads of state.

    Xi chaired each meeting personally. The texts of the joint statements are available online in the Foreign Ministry’s archive. They document how meticulously Beijing wove its network of influence, painstakingly recording whether the cooperation was friendly, cooperative or strategic. Pakistan, which receives the bulk of billions in construction investment for ports, power plants, roads and railroads, became the first country Beijing elevated to its “All-Weather Strategic Cooperative Partners.” Head of State Xi and Pakistan’s Premier Anwar Kakkar agreed in October to further elevate their relationship to “everlasting” and “unbreakable,” calling themselves “iron brothers” (中巴两国是全天候战略合作伙伴和 “铁杆 “兄弟,两国友谊历久弥坚、牢不可破).

    Colorful friendship title, high dependence

    By now, however, Beijing has forged “all-weather” partnerships with half a dozen states, including Belarus and Ethiopia. The more colorful China’s formulas, the greater the dependence of the country in question on China, which, in the meantime, has also become known as the “debt trap.” In a recent agreement, Beijing has waived some of its debt claims for particularly battered Sri Lanka. In return, it will have to support China. Initially, Beijing wanted all partner states to merely respect its “core interests” and, above all, recognize its claim over Taiwan. Then, it demanded they support memoranda to China’s Silk Road initiative. Today, Xi wants more: Dozens of countries signed on for his new China Initiatives on Global Development (GDI), Global Security (GSI), and Global Civilization (GCI) (全球发展倡议、全球安全倡议、全球文明倡议).

    In October, Beijing signed an agreement with Chile to enter a new “global data security” initiative with China (智方赞赏中方提出的《全球数据安全倡议》). Beijing always sets the standards – party leader Xi recently proposed another “Global AI Governance Initiative,” another one of Beijing’s attempts to subject the Internet to international control by invoking sovereignty clauses.

    On Wednesday, Xi Jinping and Colombia’s Gustavo Petro caused a stir in Beijing by upgrading their relations to a “strategic partnership.” Colombia, which is heavily indebted in trade with China, was previously considered the oldest US ally in Latin America. “The upgrade of relations with Colombia means China now has strategic ties with 10 out of the 11 South American countries with which it has relations,” Reuters reported.

    In this way, China crawls its way into Xi’s coveted role as a global power. Beijing’s plan to use the mass of its bilateral agreements to set the tone for future international affairs or to exert more influence on votes in the United Nations, is obviously part of its Chinese Zeitenwende.

    • Neue Seidenstraße

    Executive Moves

    Fan Yun now serves as Deputy Editor-in-Chief of China Media Group.

    Xiao Yanshun heads the State Council’s research office as Deputy Director.

    Wang Jingtao has moved from the post of Deputy Director of the National Administration of State Secrets Protection to the post of Deputy Director of the Cyberspace Administration of China. The post was previously held by Zhao Zeliang.

    Is something changing in your organization? Let us know at heads@table.media!

    Dessert

    Dramatic morning scene over the Emperor’s Canal: Parts of the world’s longest man-made waterway were already built more than 2,400 years ago. The canal is more than 1,800 kilometers long and connects Beijing with Hangzhou; it is also used for irrigation. Long barges transport goods like coal or building materials on it. However, the old structure is suffering from a lack of water. As a result, it is sometimes impassable and has thus lost at least its transregional significance.

    China.Table editorial office

    CHINA.TABLE EDITORIAL OFFICE

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