Table.Briefing: China

EU Chamber of Commerce survey + Wuhan lab thesis + Digital renminbi

  • Business climate survey of the European Chamber of Commerce China
  • The consequences of the Wuhan lab thesis
  • How e-CNY is to become a world currency
  • Daimler to increase capacity by 45 percent
  • BYD enters Norway with EVs
  • Foreign trade grows less than expected
  • Birth control in Xinjiang
  • First Steigenberger hotel in Jinan
  • Heads: Michael Kahn-Ackermann – China’s first Goethe-Institut director
Dear reader,

The world is still fighting Covid-19. In Germany, companies receive Covid aid, but what does the pandemic mean for European companies in China? The latest survey by the EU Chamber of Commerce in Beijing shows something astonishing: no sign of a crisis. Even in the pandemic year 2020, companies in the People’s Republic earned more than expected. But the problems are increasing: difficult market access, unequal treatment, and political influence. Chamber of Commerce President Joerg Wuttke laments another serious problem in an interview with China.Table: “The number of expats is downright plummeting.” Thus, many years of China experience are being lost and may not be regained, Wuttke warns. But a look into the future also reveals something surprising: More than two-thirds of the respondents continue to expect positive sales developments in their industry and therefore want to invest more in China, reports Christiane Kuehl.

Meanwhile, the origin of the Covid pandemic is still unclear. However, the suspicion that the pathogen could have originated in a laboratory in Wuhan persists. That Beijing is doing little to clarify the situation will cause enormous political damage to the People’s Republic, analyses Marcel Grzanna. Claims for damages or a diplomatic boycott of the 2022 Winter Olympics would be just two possible consequences.

In addition to military and economic power, an influential world power also needs an internationally significant currency. So far, China lacks that. But Beijing is working flat out on a revolution in the financial sector: through the digital renminbi. China is well on its way to becoming the first major economy to introduce a state-owned digital currency. The first tests show how much Beijing is gaining control nationally as a result. But this is not intended to stop there. With the e-CNY, Beijing wants to challenge the dominance of the US dollar as the global reserve currency, as Frank Sieren reports.

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Michael Radunski
Image of Michael  Radunski

Feature

New EU Chamber of Commerce survey: no sign of a crisis

Business is unexpectedly good. But after the dark time of Covid-19, there is a “storm on the horizon” that requires companies to adjust their strategy. This is how the EU Chamber of Commerce in China (EUCCC) sums up the findings of its member survey presented on Tuesday. With the world still reeling from the pandemic, the relatively optimistic business expectations – with simultaneous complaints about old and new problems – are exceedingly surprising: 68 percent of respondents expect positive developments in their industry, up from 45 percent in the pre-Covid year of 2019. The last time companies were this optimistic was in 2014.

This may be because business in the Covid year 2020 went better than the companies expected. At the beginning of 2020, half of the companies had expected sales to fall, and only one in two hundred had expected a plus. But in fact, 42 percent reported rising revenues, especially those in the consumer sector. “This was largely thanks to Chinese customers who, unable to travel, instead spent their disposable income on cars, cosmetics and clothes,” the Chamber of Commerce survey says. Only a quarter reported declining revenues, especially in industries directly hit by the pandemic, such as travel. Profits also remained surprisingly stable: 73 percent had positive earnings before interest and taxes (EBIT) – roughly the same level as in the past five years.

Still many unresolved problems

Meanwhile, the list of concerns is long, as always. For 73 percent, the ongoing Covid travel restrictions are a major concern. 45 percent said they are losing business due to direct and indirect market access restrictions – a figure that has remained constant for years. 44 percent report unequal treatment in areas such as government contracts, licensing, and access to subsidies. 46 percent of respondents expect regulatory barriers to increase in China over the next five years. And 41 percent complained about an increasing politicization of business life – for example, due to the conflict over the Xinjiang sanctions.

It was surprising that half of the companies blamed the Chinese government for this politicization, EUCCC President Joerg Wuttke told China.Table: “40 percent blamed Chinese media in the survey, and 28 percent blamed international media.” Wuttke also said he was surprised by how dramatic the situation was in relation to foreign employees. “The number of expats is downright plummeting.” The chamber has heard from members that so many of the expats still stuck abroad have now given up on returning to China and are settling elsewhere, the survey says. In the process, “years of China experience are lost and may not be regained.” It also could create a gap between the China office and headquarters. There is already discussion in the community about ways to prevent “a sinicization of companies,” Wuttke says.

Companies plan to expand their activities

Despite everything, companies are planning to stay and invest in China. 72 percent of respondents see Chinese companies as innovative or even more innovative than European companies. This is one of the main reasons why members want and need to stay in China, the survey study said. “If you don’t play the game here and have these companies around you as competitors – how are you going to keep up with them on the global market later?” said Wuttke.

In the EUCCC survey a year ago half of the respondents still said they planned to cut costs in China. In 2021, only 38 percent said the same. Instead, 27 percent of respondents in 2020 increased their stake in an existing joint venture – or bought out the partner altogether. “China will account for one-third of world demand in the next ten years,” Wuttke expects. China is too important to save money here.

Own China supply chains for security

Therefore, it is not the case that companies would withdraw their production en masse to other emerging markets due to problems or geopolitical tensions. On the contrary: The survey recorded “the lowest ever measured desire to leave the market.” According to the survey, only nine percent intend to relocate existing operations or make new investments more likely in other countries. Twenty-six percent want to bring more parts of their supply chains to China. Wuttke observes a tremendous wave of localization. Companies want to decouple their China operations from their global operations because of the uncertain world situation: “Many companies are trying to secure their supply chains.” And in China, he says, that often means onshoring – so that the entire supply chain is in one place and cannot be disrupted by external factors.

But this is not an easy task. Companies describe “critical inputs”: Important, imported components or equipment that is difficult to replace in China. 34 percent of respondents see no viable alternatives at all for their critical inputs in China. 55 percent are able to find alternatives – but only at higher prices or lower quality. For only 21 percent this is currently not an issue.

Other problems for companies include ambiguities in rules and regulations and unforeseen changes in the law. Increasing data security requirements are a concern for many companies, as much data must now be stored in China, and standards for the required security infrastructure differ from those abroad. In the worst-case scenario, this could lead to companies having to build a wickedly expensive technology island solution in China. While the cybersecurity law is only beginning to take shape, 33 percent of respondents fear drawbacks. 16 percent are also still grappling with the compulsion to transfer technology, even though the new investment law means this should no longer be the case. But there is also progress: In 2021, for the first time, a majority of respondents described the handling of the ongoing issue of intellectual property as adequate or even excellent.

  • Coronavirus
  • Health
  • Supply chains
  • Technology

The laboratory thesis and its consequences

The Chinese government has already let more than a year pass to prove its willingness to be unconditionally transparent in the search for the origin of the Covid-19 virus to the rest of the world. Contrary to its announcement of full support for the World Health Organization (WHO), it gave the impression of having predetermined the outcome of the investigation. Instead of granting the experts quick and unbureaucratic access, China had taken months to prepare. Instead of making all the necessary raw data accessible, the country filtered out according to its own criteria.

Only the Chinese government itself knows why this is the case. But the strategy is certainly not having the desired effect. The discussion about the origin of the pathogen has by no means died down, as Beijing would have liked, but has gained momentum again. This is also because China’s handling of the reappraisal has fuelled new mistrust. The return of the laboratory thesis, which has been discussed again for a few weeks, is based on precisely this mistrust. The question is: Did the Covid virus come from the Institute of Virology in Wuhan? (China.Table reported on the previous exclusion of the WHO experts.)

The truth is: There will be no definite answer in the foreseeable future. China categorically rejects the laboratory thesis and will also prevent anything that would be conducive to a potential confirmation. Nevertheless, the Chinese government is threatened with massive political damage. The Communist Party is already fighting for its credibility on other fronts. It faces accusations of genocide for its treatment of the Uyghur minority in Xinjiang. In Hong Kong, the introduction of the National Security Act and electoral reform are making Beijing look like a deal breaker. If the international community accepts the suspicion of a laboratory accident as a plausible explanation for the Covid outbreak, the Chinese government must reckon with a further considerable loss of confidence.

Critical attitude is formulated more clearly

And this is at a time when a critical stance toward the second-largest economy is being formulated ever more clearly, even in Germany. For example, Siegfried Russwurm, President of the Federation of German Industries (BDI), told Bild am Sonntag: “China is a growing competitor that repeatedly violates global rules. As an exporting country, we must draw a line where the ability to compromise stops: Human rights are not an internal matter.” And Joe Kaeser, Chairman of the Asia-Pacific Committee of German Business, recommended in an interview with China.Table that German companies look at “what other markets and partner countries exist in the region besides China.”

Both statements show that economic engagement in China is no longer viewed in isolation from political circumstances but that conditions are being set and dangers outlined much more clearly than was the case just a few years ago. In this mixed situation, further loss of confidence is poison for China’s plans to make the world compliant with lures such as sales markets and opportunities. By 2035, China wants to set industrial standards that will serve as benchmarks for other economies. No one has estimated yet how this calculation will work out if confidence continues to fall. As concerns grow about dependence on a country with an increasingly poor reputation, Beijing will face more resistance. Willingness to befriend Chinese leadership roles is likely to decline further in the rest of the world. Already the G7 meeting of the largest economies other than China next weekend in the UK will document the growing resistance when future dealings with the People’s Republic are discussed.

It is all the more astonishing that the Chinese government is not pulling out all the stops to debunk the laboratory thesis once and for all. If the country has nothing to hide, it should be interested in the best possible clarification and comply with the demands for unrestricted access for independent scientists. Especially, since the laboratory thesis is also judged to be baseless by many scientists outside China, with as much of a lack of solid counter-evidence as of evidence to confirm it. So what is holding back the government?

Trump demands tens of trillions in compensation

Instead, China is now facing demands for compensation amounting to $10 trillion. Donald Trump was the one who brought this sum into play last week. He is no longer US president, but his influence on his party, the Republicans, remains enormous and his candidacy once again is not out of the question. If Trump succeeds in convincing Americans that the People’s Republic owes the country a trillion-dollar sum, American concessions to the Chinese government will be negotiated even harder. This is not in the interests of the Chinese. Just last week, US President Joe Biden showed his distrust – and temporarily banned 59 Chinese companies as investment targets for American investors (as China.Table reported).

Claims for damages could also massively exacerbate tensions between China and the international community. “Enormous claims for damages from practically the entire world against the Chinese state would be obvious. If China rejects these, the respective countries could seize the foreign assets of Chinese state-owned companies that they have,” writes financial mathematician Andreas Beck in an analysis for the news portal ntv.de. Such an escalation would mean a “dramatic storm” politically, but also for the financial markets.

An additional dose of mistrust towards the Chinese regime also lowers the inhibition threshold for a diplomatic boycott of the 2022 Winter Olympics in Beijing. On Monday, the Interparliamentary Alliance on China (IPAC), a grouping of MEPs from around the world that aims to promote a consistent stance by democratic states toward the People’s Republic, launched a concerted action: Ten IPAC members from the European Parliament are calling on the European Council to adopt an EU position. Representatives from the parliaments of Germany, the US, Canada, Italy, the Czech Republic, Denmark and the UK are involved in the IPAC initiative.

True, the initiative refers to human rights crimes in Xinjiang and not to doubts about the origin of the Covid pandemic. But the chances that it will fall on fertile ground increase if trust in the Chinese government continues to decline due to its lack of transparency on Covid.

  • Coronavirus
  • Geopolitics
  • Health
  • Human Rights
  • Laborthesis
  • Trade

How the digital renminbi is to become a world currency

China has taken important steps in implementing its digital central bank currency: the e-CNY. Around ¥200 million are already in circulation, the equivalent of around $30 million. This makes China the first major economy to conduct comprehensive tests of an e-currency (as reported by China.Table). The US consulting firm PWC has found that only the Bahamas and Cambodia are further along. They have already gone through the testing phase. Internationally, however, the two states hardly play a role.

A look at the booming online retail sector shows how advanced the tests in China already are: JD.com, the country’s second-largest internet retailer, explained at a digital conference in the eastern Chinese province of Fujian that it has been offering its employees salary payments in the digital state currency as an alternative since January. Digital wages have been paid in the tech metropolises of Shanghai, Shenzhen and Chengdu, as well as other cities in the southern Chinese province of Guangdong, and the digital currency is already being used for business-to-business payments to partner companies and cross-bank settlements.

The company’s own website JD.com has been accepting digital yuan as a payment method for the purchase of selected products since December, making it the first e-commerce platform in the country to accept the state-owned digital currency. According to the company, nearly 20,000 orders were processed via e-CNY in the first week. Meanwhile, China’s well-known video streaming platform Bilibili, on-demand service provider Meituan and car-hailing app DiDi are also accepting the digital yuan for user purchases.

In mid-May, industry leader Alibaba followed suit: Using the Alipay app, selected customers can connect their accounts at the online bank Mybank with the digital yuan app. Alibaba has a 30 percent stake in the online bank. The bank has over 30 million customers and grew by nearly 70 percent last year. Tencent’s WeChat Pay works similarly. Alibaba’s Alipay and Tencent’s WeChat Pay have become China’s dominant digital payment players with the proliferation of smartphones. Didi Chuxing, the driving, delivery, and ride-sharing service is also in the mix, even American companies like Starbucks, Mcdonald’s and Subway are part of the testing in China.

What at first glance seems like a small change in apps or on the website is, in fact, an important political step: The state thus takes away the companies’ sovereignty over payment transactions. Alibaba & Co. has recently been handling more and more payments outside the state banks. The e-CNY now enables the state to regain sovereignty in this area. Among other things, it will gain better insights into payment flows. And many answers to the questions: Who pays what, and why? Of course, the companies would have liked to keep this information to themselves. But that’s over now.

But it is not only in online retail that the e-CNY is on the rise. The financial arm of Alibaba AntGroup, which is under strict regulatory scrutiny after its IPO was canceled at short notice, has announced that it will support the research and development of a technical platform for the e-CNY. Tencent, the parent company of WeChat, also declared that it wants to conduct controlled test runs with the e-CNY under the guidance of the Chinese central bank. This increasingly involves fintech services, such as the business of loans. In China, Alibaba’s Ant Financial has become the lender of choice for individuals and small businesses. Here, too, the state wants to take back control: Beijing wants to reform the financial sector but not jeopardize its stability in the process. The e-CNY offers the authorities the possibility of tracking more comprehensively and quickly where payment flows are going and who is in debt to whom.

Digital lottery win

The People’s Bank of China (PBOC) has been working on a centrally controlled digital currency since 2014. Six of the largest state-owned banks are involved in establishing the so-called Digital Currency Electronic Payment (DCEP), including the Bank of China, the China Construction Bank, the Industrial & Commercial Bank of China and the Agricultural Bank of China, where cash can already be exchanged for the digital yuan at selected ATMs in Shenzhen.

However, the e-CNY has only been rolled out nationwide in pilot projects so far. At the end of last year, for example, the PBOC conducted a series of lotteries in major cities such as Shenzhen, Suzhou, and Chengdu. These involved randomly distributing digital yuan to up to 500,000 residents, who could then spend the money at pre-determined retailers. The tests are part of the current five-year plan, which also includes the introduction of defined trading zones for cryptocurrencies.

China’s central bank will increase the scale of pilot projects, central bank Vice Chairman Li Bo said. At the 2022 Winter Olympics, the currency will be subjected to another widespread practical test.

There is no timetable yet for when the pilot phase will end. “There are still a few things we need to do before we can roll out the digital currency nationally,” says central banker Li Bo. When it does, Chinese people will be allowed to exchange their paper and coin money on a one-for-one basis. The converted hard cash will then be destroyed.

Internationalization with built-in braking effect

But there is more behind the PBOC’s efforts to create a digital currency. With the help of the e-CNY, Beijing wants to use its own national currency across countries in the long term. “I think our goal is to give the market a choice to do international trade and investment,” PBOC Vice President Li Bo said. China’s central bank has already joined forces with the central banks of Hong Kong, the United Arab Emirates and Thailand to explore the use of China’s digital currency for cross-border payments. In addition, the digital yuan is also expected to play a key role in trade with the 65 countries participating in China’s Belt and Road Initiative.

However, strict capital controls are still in place between China and abroad. Also, the yuan is not freely convertible. One solution: splitting it into an international yuan, which is freely convertible, and a domestic yuan, which has only a limited bandwidth. “If you want to have a global reserve currency, you have to allow foreigners to hold and use it,” says Shen Jianguang, Chief Economist at JD.com. Splitting it up would make that possible, and “technical testing” with the Hong Kong Monetary Authority, a kind of central bank for the Hong Kong dollar, already began in April. The e-CNY is to be rolled out internationally via Hong Kong.

However, there is a long way to go for the e-CNY to become a world currency. In value, 80 percent of international payments are made in dollars. In number terms, it is around 40 percent. The rest is largely accounted for by the euro. China’s yuan only accounts for two percent.

  • Digitization
  • E-Yuan
  • Finance
  • Technology

News

Daimler plans to increase capacity by 45 percent

To be able to meet the increasing demand in China, Daimler wants to expand production capacities by 45 percent with its joint venture partner Baic Motor. The Chinese website of the Beijing Benz Automotive (BBAC) joint venture published a document showing that the number of working days at the two plants in Beijing will be increased to 312 a year. Previously, the production days at the two factories were 290 and 250 days. In addition, a 7.5-hour shift per working day is to be introduced at one of the two factories. The combined capacity of the two factories was last 520,000 vehicles a year.

Last year, BBAC sold 611,000 vehicles, an eight percent increase over 2019. Daimler owns 49 percent of the joint venture and also has a partnership with Chinese automaker Geely, which owns 9.7 percent of Daimler. With Geely, Daimler plans to build the electric smart car in China and launch it as early as next year. Beijing had announced that by 2025 at least 20 percent of new cars sold will be electric, plug-in hybrid, or hydrogen fuel cell vehicles. niw

  • Car Industry
  • Electromobility

BYD enters Norway with electric passenger cars

After start-ups Xpeng and Nio, China’s electric pioneer BYD is also starting to sell EVs in Norway. 100 models of the Tang electric sports utility vehicle were shipped to Norway from Shanghai on Monday, according to BYD. This marks its entry into the European EV business, the company said. BYD has already been successfully selling electric buses for public transport in Europe for several years.

According to the announcement, BYD cooperates on sales, service, and parts supply with the Scandinavian car company RSA. The first 100 cars are expected to arrive at dealers by the end of the summer; BYD plans to bring a total of 1500 Tang models to Norway by the end of the year.

The Tang model for Norway is a new version developed specifically for Europe with a “distinct European design aesthetic as well as a number of new technologies,” BYD said. These include the Tang’s new space-saving Blade battery with a range of more than 500 km. Wolfgang Egger, who was brought in from Audi, has been responsible for the design of BYD cars since 2016 (China.Table reported). ck

  • Car Industry
  • Electromobility
  • Truck

Foreign trade grows less than expected

China’s foreign trade increased strongly in May. As the Beijing customs authority announced on Monday, exports rose by 27.9 percent compared to May of the previous year to $263.9 billion (about €216.9 billion). Imports even increased by 51.1 percent – as strongly as they last did ten years ago. They now amount to $218.4 billion. There was already a plus of 43.1 percent in April.

The main reason for the exceptionally large increases is that world trade had slumped sharply in the previous year due to the Covid crisis. In the meantime, China has apparently had the pandemic under control for several months, which is why the country’s economic performance has recently regained considerable momentum. Chinese exports are now also benefiting from rising demand in Western industrialized countries. Analysts had expected an even stronger recovery in May.

“Exports surprised a bit on the downside, maybe due to the Covid cases in Guangdong,” Zhiwei Zhang, an analyst at Pinpoint Asset Management told Reuters news agency (China Table reported: Travel restrictions in Guangdong). He said the new infections had significantly slowed transshipment at the nearby ports of Shenzhen and Guangzhou.

In addition, China’s exporters face higher raw material and freight costs, logistical bottlenecks and a stronger yuan. Prices for industrial commodities such as aluminum, copper, nickel and zinc alone have risen by about ten percent since the beginning of April. “The rapid recovery of the global economy and especially the strong upward trend of the Chinese economy are creating a high demand for raw materials,” writes the Hamburg-based research institute HWWI in a study.

This can be observed particularly in the case of copper. According to the HWWI study, China is the world’s largest consumer of copper, with around half of global production required in China. The price of tin rose by around 14 percent in May, reaching a ten-year high. The high cost of raw materials is also likely the reason for the sharp 51.1 percent rise in Chinese imports, as that figure refers to sales, not volume. Overall, China’s trade surplus thus climbed to $45.53 billion in May, up from $42.86 billion in April. Analysts, however, had forecast $50.5 billion. rad

  • Export
  • Import
  • Iron Ore
  • Raw materials
  • Trade

Possibly 4.5 million fewer births in Xinjiang by 2040

The Chinese government’s birth control policies could drastically reduce the number of newborns in the Xinjiang Autonomous Region by 2040. An analysis by German anthropologist Adrian Zenz, obtained by Reuters ahead of its publication, predicts 2.6 to 4.5 million prevented births over the next 20 years.

The figures support the thesis that the Chinese government wants to reduce the population share of Muslim minorities in the region through state policy. Around twelve million Uyghurs and members of other minorities live in Xinjiang. According to Zenz, the government’s measures would amount to a proportion increase of Han Chinese in the region from the current 8.4 percent to around 25 percent. Official statistics already show a 48.7 percent drop in the region’s birth rate from 2017 to 2019.

Because of its strict birth control in Xinjiang, which is also enforced by forced sterilizations and family separations, the Chinese government faces accusations of genocide. Beijing, on the other hand, blames the decline in birth rates on the full implementation of the region’s existing birth quotas as well as increased per capita income and wider access to family planning services. grz

  • Demographics
  • Genocide
  • Society

First Steigenberger in Jinan

Deutsche Hospitality opens its first Steigenberger brand hotel in China with shareholder Huazhu Group. The luxury hotel is located in Jinan, a metropolis of seven million people in Shandong province. The hotel was inaugurated last week. Due to its location near the East Railway Station and Yaoqing Airport, the hotel is mainly aimed at business travelers, according to Deutsche Hospitality. Deutsche Hospitality is the umbrella brand of the German hotel company Steigenberger Hotels AG, which has been owned by the Chinese Huazhu Group since 2020.

The hotel opening in Jinan is only the beginning. The hotel group has extensive plans in China. In 2022, two more Steigenberger Hotels will open in Haiyan (between Shanghai and Hangzhou). A Steigenberger Hotel is also scheduled to open in Kunming, the capital of Yunnan Province, in 2024.

Steigenberger is thus the second brand to bring Deutsche Hospitality to China. An Intercity hotel was already opened in Qingdao in 2016. A second Intercity Hotel was opened in Yangzhou at the end of May.

A recent survey by the world’s largest hospitality consultancy brand Horwath HT shows that there has been robust growth in the upper mid-range hotel market in China in 2020. In particular, luxury hotel offerings recorded a 167 percent year-on-year increase. bw

  • Society

Heads

Michael Kahn-Ackermann – Founding Director of the first Goethe-Institut in Beijing

Michael Kahn-Ackermann has actually been retired for almost ten years, but the soon-to-be 75-year-old is far from “retired.” Just a few months ago, he was hit by a wave of Chinese indignation after he translated the “Wuhan Diary” by writer Fang Fang into German. The book about the experience of the Covid crisis became a bestseller in Germany. Kahn-Ackermann finds it “completely ridiculous” that he is approached as a translator for the content of the text. But he knows, “The dynamics behind such cases are highly complex.”

Kahn-Ackermann knows China’s approach to culture better than anyone, having advised the Confucius Institute headquarters for eight years until 2019. “China has very little experience in foreign cultural policy.” However, China also seemed to care particularly about changing that, which is why the cooperation was moderately successful, Kahn-Ackermann said. At the same time, he has been working as a “China Special Representative” for the Mercator Foundation since 2011. There, he primarily helps with contacts because he has a “relatively large network of connections,” as he says himself.

That’s not surprising because he already had contacts in China when the country was still little regarded in the West. In 1970, Kahn-Ackermann decided to study Sinology: “The pretty much most useless thing on offer at Munich University at the time.” In 1974, still on scholarship during the Cultural Revolution, he traveled to China as one of ten students. In the two years at Beijing University, he learned Chinese – and in the years that followed, studying sinology turned out to be not so useless.

The first Goethe-Institut in China was officially opened at the end of 1988 – with Kahn-Ackermann as Founding Director. The early years were difficult “until they realized we were not there for espionage purposes.” It was not until 1993 that the Beijing Goethe-Institut was allowed to offer cultural programs and language teaching. For 16 years, it was the only foreign institution in the fields of culture and education in China. At that time, the Goethe-Institut was “a very important window to the outside world for the Chinese.” From 1994 to 2006, Kahn-Ackermann made professional stops at the Goethe Institutes in Moscow and Rome. In 2006 he returned to Beijing to the Goethe-Institut. Even though its function has changed in the meantime, Kahn-Ackermann is convinced: “The Goethe-Institut is still a place where you can try out something that would not be so easy to try out in other institutions.”

He is particularly fascinated by the “acceleration” he has witnessed in China. China was still a developing country when he was there for the first time. Now it is a world power. He describes his relationship with China as having “an emotional scale from love to anger, from joy to pain.” In contrast, he experiences an unrealistic” image of China among many Europeans and in the Western media. He finds it very difficult to change this.

In the meantime, Michael Kahn-Ackermann lives in Nanjing “because of love.” His circle of friends consists mainly of Chinese. For some time, he has been curating art exhibitions, he still doesn’t get bored. In April 2021, Fang Fang’s novel “Soft Burial” was published in German – translated by Kahn-Ackermann. Paula Faul

  • Culture
  • Germany

Executive Moves

Translation missing.

Dessert

The Gaokao exams are taking place in China these days. Gakao, probably the toughest exam in the world, decides on a student’s future career: on access to the country’s universities, on the chances of getting a well-paid job. Here, students in Nanjing are just coming out of their exams. Some even have a smile on their faces.

  • Society

China.Table Editors

CHINA.TABLE EDITORIAL OFFICE

Licenses:
    • Business climate survey of the European Chamber of Commerce China
    • The consequences of the Wuhan lab thesis
    • How e-CNY is to become a world currency
    • Daimler to increase capacity by 45 percent
    • BYD enters Norway with EVs
    • Foreign trade grows less than expected
    • Birth control in Xinjiang
    • First Steigenberger hotel in Jinan
    • Heads: Michael Kahn-Ackermann – China’s first Goethe-Institut director
    Dear reader,

    The world is still fighting Covid-19. In Germany, companies receive Covid aid, but what does the pandemic mean for European companies in China? The latest survey by the EU Chamber of Commerce in Beijing shows something astonishing: no sign of a crisis. Even in the pandemic year 2020, companies in the People’s Republic earned more than expected. But the problems are increasing: difficult market access, unequal treatment, and political influence. Chamber of Commerce President Joerg Wuttke laments another serious problem in an interview with China.Table: “The number of expats is downright plummeting.” Thus, many years of China experience are being lost and may not be regained, Wuttke warns. But a look into the future also reveals something surprising: More than two-thirds of the respondents continue to expect positive sales developments in their industry and therefore want to invest more in China, reports Christiane Kuehl.

    Meanwhile, the origin of the Covid pandemic is still unclear. However, the suspicion that the pathogen could have originated in a laboratory in Wuhan persists. That Beijing is doing little to clarify the situation will cause enormous political damage to the People’s Republic, analyses Marcel Grzanna. Claims for damages or a diplomatic boycott of the 2022 Winter Olympics would be just two possible consequences.

    In addition to military and economic power, an influential world power also needs an internationally significant currency. So far, China lacks that. But Beijing is working flat out on a revolution in the financial sector: through the digital renminbi. China is well on its way to becoming the first major economy to introduce a state-owned digital currency. The first tests show how much Beijing is gaining control nationally as a result. But this is not intended to stop there. With the e-CNY, Beijing wants to challenge the dominance of the US dollar as the global reserve currency, as Frank Sieren reports.

    Your
    Michael Radunski
    Image of Michael  Radunski

    Feature

    New EU Chamber of Commerce survey: no sign of a crisis

    Business is unexpectedly good. But after the dark time of Covid-19, there is a “storm on the horizon” that requires companies to adjust their strategy. This is how the EU Chamber of Commerce in China (EUCCC) sums up the findings of its member survey presented on Tuesday. With the world still reeling from the pandemic, the relatively optimistic business expectations – with simultaneous complaints about old and new problems – are exceedingly surprising: 68 percent of respondents expect positive developments in their industry, up from 45 percent in the pre-Covid year of 2019. The last time companies were this optimistic was in 2014.

    This may be because business in the Covid year 2020 went better than the companies expected. At the beginning of 2020, half of the companies had expected sales to fall, and only one in two hundred had expected a plus. But in fact, 42 percent reported rising revenues, especially those in the consumer sector. “This was largely thanks to Chinese customers who, unable to travel, instead spent their disposable income on cars, cosmetics and clothes,” the Chamber of Commerce survey says. Only a quarter reported declining revenues, especially in industries directly hit by the pandemic, such as travel. Profits also remained surprisingly stable: 73 percent had positive earnings before interest and taxes (EBIT) – roughly the same level as in the past five years.

    Still many unresolved problems

    Meanwhile, the list of concerns is long, as always. For 73 percent, the ongoing Covid travel restrictions are a major concern. 45 percent said they are losing business due to direct and indirect market access restrictions – a figure that has remained constant for years. 44 percent report unequal treatment in areas such as government contracts, licensing, and access to subsidies. 46 percent of respondents expect regulatory barriers to increase in China over the next five years. And 41 percent complained about an increasing politicization of business life – for example, due to the conflict over the Xinjiang sanctions.

    It was surprising that half of the companies blamed the Chinese government for this politicization, EUCCC President Joerg Wuttke told China.Table: “40 percent blamed Chinese media in the survey, and 28 percent blamed international media.” Wuttke also said he was surprised by how dramatic the situation was in relation to foreign employees. “The number of expats is downright plummeting.” The chamber has heard from members that so many of the expats still stuck abroad have now given up on returning to China and are settling elsewhere, the survey says. In the process, “years of China experience are lost and may not be regained.” It also could create a gap between the China office and headquarters. There is already discussion in the community about ways to prevent “a sinicization of companies,” Wuttke says.

    Companies plan to expand their activities

    Despite everything, companies are planning to stay and invest in China. 72 percent of respondents see Chinese companies as innovative or even more innovative than European companies. This is one of the main reasons why members want and need to stay in China, the survey study said. “If you don’t play the game here and have these companies around you as competitors – how are you going to keep up with them on the global market later?” said Wuttke.

    In the EUCCC survey a year ago half of the respondents still said they planned to cut costs in China. In 2021, only 38 percent said the same. Instead, 27 percent of respondents in 2020 increased their stake in an existing joint venture – or bought out the partner altogether. “China will account for one-third of world demand in the next ten years,” Wuttke expects. China is too important to save money here.

    Own China supply chains for security

    Therefore, it is not the case that companies would withdraw their production en masse to other emerging markets due to problems or geopolitical tensions. On the contrary: The survey recorded “the lowest ever measured desire to leave the market.” According to the survey, only nine percent intend to relocate existing operations or make new investments more likely in other countries. Twenty-six percent want to bring more parts of their supply chains to China. Wuttke observes a tremendous wave of localization. Companies want to decouple their China operations from their global operations because of the uncertain world situation: “Many companies are trying to secure their supply chains.” And in China, he says, that often means onshoring – so that the entire supply chain is in one place and cannot be disrupted by external factors.

    But this is not an easy task. Companies describe “critical inputs”: Important, imported components or equipment that is difficult to replace in China. 34 percent of respondents see no viable alternatives at all for their critical inputs in China. 55 percent are able to find alternatives – but only at higher prices or lower quality. For only 21 percent this is currently not an issue.

    Other problems for companies include ambiguities in rules and regulations and unforeseen changes in the law. Increasing data security requirements are a concern for many companies, as much data must now be stored in China, and standards for the required security infrastructure differ from those abroad. In the worst-case scenario, this could lead to companies having to build a wickedly expensive technology island solution in China. While the cybersecurity law is only beginning to take shape, 33 percent of respondents fear drawbacks. 16 percent are also still grappling with the compulsion to transfer technology, even though the new investment law means this should no longer be the case. But there is also progress: In 2021, for the first time, a majority of respondents described the handling of the ongoing issue of intellectual property as adequate or even excellent.

    • Coronavirus
    • Health
    • Supply chains
    • Technology

    The laboratory thesis and its consequences

    The Chinese government has already let more than a year pass to prove its willingness to be unconditionally transparent in the search for the origin of the Covid-19 virus to the rest of the world. Contrary to its announcement of full support for the World Health Organization (WHO), it gave the impression of having predetermined the outcome of the investigation. Instead of granting the experts quick and unbureaucratic access, China had taken months to prepare. Instead of making all the necessary raw data accessible, the country filtered out according to its own criteria.

    Only the Chinese government itself knows why this is the case. But the strategy is certainly not having the desired effect. The discussion about the origin of the pathogen has by no means died down, as Beijing would have liked, but has gained momentum again. This is also because China’s handling of the reappraisal has fuelled new mistrust. The return of the laboratory thesis, which has been discussed again for a few weeks, is based on precisely this mistrust. The question is: Did the Covid virus come from the Institute of Virology in Wuhan? (China.Table reported on the previous exclusion of the WHO experts.)

    The truth is: There will be no definite answer in the foreseeable future. China categorically rejects the laboratory thesis and will also prevent anything that would be conducive to a potential confirmation. Nevertheless, the Chinese government is threatened with massive political damage. The Communist Party is already fighting for its credibility on other fronts. It faces accusations of genocide for its treatment of the Uyghur minority in Xinjiang. In Hong Kong, the introduction of the National Security Act and electoral reform are making Beijing look like a deal breaker. If the international community accepts the suspicion of a laboratory accident as a plausible explanation for the Covid outbreak, the Chinese government must reckon with a further considerable loss of confidence.

    Critical attitude is formulated more clearly

    And this is at a time when a critical stance toward the second-largest economy is being formulated ever more clearly, even in Germany. For example, Siegfried Russwurm, President of the Federation of German Industries (BDI), told Bild am Sonntag: “China is a growing competitor that repeatedly violates global rules. As an exporting country, we must draw a line where the ability to compromise stops: Human rights are not an internal matter.” And Joe Kaeser, Chairman of the Asia-Pacific Committee of German Business, recommended in an interview with China.Table that German companies look at “what other markets and partner countries exist in the region besides China.”

    Both statements show that economic engagement in China is no longer viewed in isolation from political circumstances but that conditions are being set and dangers outlined much more clearly than was the case just a few years ago. In this mixed situation, further loss of confidence is poison for China’s plans to make the world compliant with lures such as sales markets and opportunities. By 2035, China wants to set industrial standards that will serve as benchmarks for other economies. No one has estimated yet how this calculation will work out if confidence continues to fall. As concerns grow about dependence on a country with an increasingly poor reputation, Beijing will face more resistance. Willingness to befriend Chinese leadership roles is likely to decline further in the rest of the world. Already the G7 meeting of the largest economies other than China next weekend in the UK will document the growing resistance when future dealings with the People’s Republic are discussed.

    It is all the more astonishing that the Chinese government is not pulling out all the stops to debunk the laboratory thesis once and for all. If the country has nothing to hide, it should be interested in the best possible clarification and comply with the demands for unrestricted access for independent scientists. Especially, since the laboratory thesis is also judged to be baseless by many scientists outside China, with as much of a lack of solid counter-evidence as of evidence to confirm it. So what is holding back the government?

    Trump demands tens of trillions in compensation

    Instead, China is now facing demands for compensation amounting to $10 trillion. Donald Trump was the one who brought this sum into play last week. He is no longer US president, but his influence on his party, the Republicans, remains enormous and his candidacy once again is not out of the question. If Trump succeeds in convincing Americans that the People’s Republic owes the country a trillion-dollar sum, American concessions to the Chinese government will be negotiated even harder. This is not in the interests of the Chinese. Just last week, US President Joe Biden showed his distrust – and temporarily banned 59 Chinese companies as investment targets for American investors (as China.Table reported).

    Claims for damages could also massively exacerbate tensions between China and the international community. “Enormous claims for damages from practically the entire world against the Chinese state would be obvious. If China rejects these, the respective countries could seize the foreign assets of Chinese state-owned companies that they have,” writes financial mathematician Andreas Beck in an analysis for the news portal ntv.de. Such an escalation would mean a “dramatic storm” politically, but also for the financial markets.

    An additional dose of mistrust towards the Chinese regime also lowers the inhibition threshold for a diplomatic boycott of the 2022 Winter Olympics in Beijing. On Monday, the Interparliamentary Alliance on China (IPAC), a grouping of MEPs from around the world that aims to promote a consistent stance by democratic states toward the People’s Republic, launched a concerted action: Ten IPAC members from the European Parliament are calling on the European Council to adopt an EU position. Representatives from the parliaments of Germany, the US, Canada, Italy, the Czech Republic, Denmark and the UK are involved in the IPAC initiative.

    True, the initiative refers to human rights crimes in Xinjiang and not to doubts about the origin of the Covid pandemic. But the chances that it will fall on fertile ground increase if trust in the Chinese government continues to decline due to its lack of transparency on Covid.

    • Coronavirus
    • Geopolitics
    • Health
    • Human Rights
    • Laborthesis
    • Trade

    How the digital renminbi is to become a world currency

    China has taken important steps in implementing its digital central bank currency: the e-CNY. Around ¥200 million are already in circulation, the equivalent of around $30 million. This makes China the first major economy to conduct comprehensive tests of an e-currency (as reported by China.Table). The US consulting firm PWC has found that only the Bahamas and Cambodia are further along. They have already gone through the testing phase. Internationally, however, the two states hardly play a role.

    A look at the booming online retail sector shows how advanced the tests in China already are: JD.com, the country’s second-largest internet retailer, explained at a digital conference in the eastern Chinese province of Fujian that it has been offering its employees salary payments in the digital state currency as an alternative since January. Digital wages have been paid in the tech metropolises of Shanghai, Shenzhen and Chengdu, as well as other cities in the southern Chinese province of Guangdong, and the digital currency is already being used for business-to-business payments to partner companies and cross-bank settlements.

    The company’s own website JD.com has been accepting digital yuan as a payment method for the purchase of selected products since December, making it the first e-commerce platform in the country to accept the state-owned digital currency. According to the company, nearly 20,000 orders were processed via e-CNY in the first week. Meanwhile, China’s well-known video streaming platform Bilibili, on-demand service provider Meituan and car-hailing app DiDi are also accepting the digital yuan for user purchases.

    In mid-May, industry leader Alibaba followed suit: Using the Alipay app, selected customers can connect their accounts at the online bank Mybank with the digital yuan app. Alibaba has a 30 percent stake in the online bank. The bank has over 30 million customers and grew by nearly 70 percent last year. Tencent’s WeChat Pay works similarly. Alibaba’s Alipay and Tencent’s WeChat Pay have become China’s dominant digital payment players with the proliferation of smartphones. Didi Chuxing, the driving, delivery, and ride-sharing service is also in the mix, even American companies like Starbucks, Mcdonald’s and Subway are part of the testing in China.

    What at first glance seems like a small change in apps or on the website is, in fact, an important political step: The state thus takes away the companies’ sovereignty over payment transactions. Alibaba & Co. has recently been handling more and more payments outside the state banks. The e-CNY now enables the state to regain sovereignty in this area. Among other things, it will gain better insights into payment flows. And many answers to the questions: Who pays what, and why? Of course, the companies would have liked to keep this information to themselves. But that’s over now.

    But it is not only in online retail that the e-CNY is on the rise. The financial arm of Alibaba AntGroup, which is under strict regulatory scrutiny after its IPO was canceled at short notice, has announced that it will support the research and development of a technical platform for the e-CNY. Tencent, the parent company of WeChat, also declared that it wants to conduct controlled test runs with the e-CNY under the guidance of the Chinese central bank. This increasingly involves fintech services, such as the business of loans. In China, Alibaba’s Ant Financial has become the lender of choice for individuals and small businesses. Here, too, the state wants to take back control: Beijing wants to reform the financial sector but not jeopardize its stability in the process. The e-CNY offers the authorities the possibility of tracking more comprehensively and quickly where payment flows are going and who is in debt to whom.

    Digital lottery win

    The People’s Bank of China (PBOC) has been working on a centrally controlled digital currency since 2014. Six of the largest state-owned banks are involved in establishing the so-called Digital Currency Electronic Payment (DCEP), including the Bank of China, the China Construction Bank, the Industrial & Commercial Bank of China and the Agricultural Bank of China, where cash can already be exchanged for the digital yuan at selected ATMs in Shenzhen.

    However, the e-CNY has only been rolled out nationwide in pilot projects so far. At the end of last year, for example, the PBOC conducted a series of lotteries in major cities such as Shenzhen, Suzhou, and Chengdu. These involved randomly distributing digital yuan to up to 500,000 residents, who could then spend the money at pre-determined retailers. The tests are part of the current five-year plan, which also includes the introduction of defined trading zones for cryptocurrencies.

    China’s central bank will increase the scale of pilot projects, central bank Vice Chairman Li Bo said. At the 2022 Winter Olympics, the currency will be subjected to another widespread practical test.

    There is no timetable yet for when the pilot phase will end. “There are still a few things we need to do before we can roll out the digital currency nationally,” says central banker Li Bo. When it does, Chinese people will be allowed to exchange their paper and coin money on a one-for-one basis. The converted hard cash will then be destroyed.

    Internationalization with built-in braking effect

    But there is more behind the PBOC’s efforts to create a digital currency. With the help of the e-CNY, Beijing wants to use its own national currency across countries in the long term. “I think our goal is to give the market a choice to do international trade and investment,” PBOC Vice President Li Bo said. China’s central bank has already joined forces with the central banks of Hong Kong, the United Arab Emirates and Thailand to explore the use of China’s digital currency for cross-border payments. In addition, the digital yuan is also expected to play a key role in trade with the 65 countries participating in China’s Belt and Road Initiative.

    However, strict capital controls are still in place between China and abroad. Also, the yuan is not freely convertible. One solution: splitting it into an international yuan, which is freely convertible, and a domestic yuan, which has only a limited bandwidth. “If you want to have a global reserve currency, you have to allow foreigners to hold and use it,” says Shen Jianguang, Chief Economist at JD.com. Splitting it up would make that possible, and “technical testing” with the Hong Kong Monetary Authority, a kind of central bank for the Hong Kong dollar, already began in April. The e-CNY is to be rolled out internationally via Hong Kong.

    However, there is a long way to go for the e-CNY to become a world currency. In value, 80 percent of international payments are made in dollars. In number terms, it is around 40 percent. The rest is largely accounted for by the euro. China’s yuan only accounts for two percent.

    • Digitization
    • E-Yuan
    • Finance
    • Technology

    News

    Daimler plans to increase capacity by 45 percent

    To be able to meet the increasing demand in China, Daimler wants to expand production capacities by 45 percent with its joint venture partner Baic Motor. The Chinese website of the Beijing Benz Automotive (BBAC) joint venture published a document showing that the number of working days at the two plants in Beijing will be increased to 312 a year. Previously, the production days at the two factories were 290 and 250 days. In addition, a 7.5-hour shift per working day is to be introduced at one of the two factories. The combined capacity of the two factories was last 520,000 vehicles a year.

    Last year, BBAC sold 611,000 vehicles, an eight percent increase over 2019. Daimler owns 49 percent of the joint venture and also has a partnership with Chinese automaker Geely, which owns 9.7 percent of Daimler. With Geely, Daimler plans to build the electric smart car in China and launch it as early as next year. Beijing had announced that by 2025 at least 20 percent of new cars sold will be electric, plug-in hybrid, or hydrogen fuel cell vehicles. niw

    • Car Industry
    • Electromobility

    BYD enters Norway with electric passenger cars

    After start-ups Xpeng and Nio, China’s electric pioneer BYD is also starting to sell EVs in Norway. 100 models of the Tang electric sports utility vehicle were shipped to Norway from Shanghai on Monday, according to BYD. This marks its entry into the European EV business, the company said. BYD has already been successfully selling electric buses for public transport in Europe for several years.

    According to the announcement, BYD cooperates on sales, service, and parts supply with the Scandinavian car company RSA. The first 100 cars are expected to arrive at dealers by the end of the summer; BYD plans to bring a total of 1500 Tang models to Norway by the end of the year.

    The Tang model for Norway is a new version developed specifically for Europe with a “distinct European design aesthetic as well as a number of new technologies,” BYD said. These include the Tang’s new space-saving Blade battery with a range of more than 500 km. Wolfgang Egger, who was brought in from Audi, has been responsible for the design of BYD cars since 2016 (China.Table reported). ck

    • Car Industry
    • Electromobility
    • Truck

    Foreign trade grows less than expected

    China’s foreign trade increased strongly in May. As the Beijing customs authority announced on Monday, exports rose by 27.9 percent compared to May of the previous year to $263.9 billion (about €216.9 billion). Imports even increased by 51.1 percent – as strongly as they last did ten years ago. They now amount to $218.4 billion. There was already a plus of 43.1 percent in April.

    The main reason for the exceptionally large increases is that world trade had slumped sharply in the previous year due to the Covid crisis. In the meantime, China has apparently had the pandemic under control for several months, which is why the country’s economic performance has recently regained considerable momentum. Chinese exports are now also benefiting from rising demand in Western industrialized countries. Analysts had expected an even stronger recovery in May.

    “Exports surprised a bit on the downside, maybe due to the Covid cases in Guangdong,” Zhiwei Zhang, an analyst at Pinpoint Asset Management told Reuters news agency (China Table reported: Travel restrictions in Guangdong). He said the new infections had significantly slowed transshipment at the nearby ports of Shenzhen and Guangzhou.

    In addition, China’s exporters face higher raw material and freight costs, logistical bottlenecks and a stronger yuan. Prices for industrial commodities such as aluminum, copper, nickel and zinc alone have risen by about ten percent since the beginning of April. “The rapid recovery of the global economy and especially the strong upward trend of the Chinese economy are creating a high demand for raw materials,” writes the Hamburg-based research institute HWWI in a study.

    This can be observed particularly in the case of copper. According to the HWWI study, China is the world’s largest consumer of copper, with around half of global production required in China. The price of tin rose by around 14 percent in May, reaching a ten-year high. The high cost of raw materials is also likely the reason for the sharp 51.1 percent rise in Chinese imports, as that figure refers to sales, not volume. Overall, China’s trade surplus thus climbed to $45.53 billion in May, up from $42.86 billion in April. Analysts, however, had forecast $50.5 billion. rad

    • Export
    • Import
    • Iron Ore
    • Raw materials
    • Trade

    Possibly 4.5 million fewer births in Xinjiang by 2040

    The Chinese government’s birth control policies could drastically reduce the number of newborns in the Xinjiang Autonomous Region by 2040. An analysis by German anthropologist Adrian Zenz, obtained by Reuters ahead of its publication, predicts 2.6 to 4.5 million prevented births over the next 20 years.

    The figures support the thesis that the Chinese government wants to reduce the population share of Muslim minorities in the region through state policy. Around twelve million Uyghurs and members of other minorities live in Xinjiang. According to Zenz, the government’s measures would amount to a proportion increase of Han Chinese in the region from the current 8.4 percent to around 25 percent. Official statistics already show a 48.7 percent drop in the region’s birth rate from 2017 to 2019.

    Because of its strict birth control in Xinjiang, which is also enforced by forced sterilizations and family separations, the Chinese government faces accusations of genocide. Beijing, on the other hand, blames the decline in birth rates on the full implementation of the region’s existing birth quotas as well as increased per capita income and wider access to family planning services. grz

    • Demographics
    • Genocide
    • Society

    First Steigenberger in Jinan

    Deutsche Hospitality opens its first Steigenberger brand hotel in China with shareholder Huazhu Group. The luxury hotel is located in Jinan, a metropolis of seven million people in Shandong province. The hotel was inaugurated last week. Due to its location near the East Railway Station and Yaoqing Airport, the hotel is mainly aimed at business travelers, according to Deutsche Hospitality. Deutsche Hospitality is the umbrella brand of the German hotel company Steigenberger Hotels AG, which has been owned by the Chinese Huazhu Group since 2020.

    The hotel opening in Jinan is only the beginning. The hotel group has extensive plans in China. In 2022, two more Steigenberger Hotels will open in Haiyan (between Shanghai and Hangzhou). A Steigenberger Hotel is also scheduled to open in Kunming, the capital of Yunnan Province, in 2024.

    Steigenberger is thus the second brand to bring Deutsche Hospitality to China. An Intercity hotel was already opened in Qingdao in 2016. A second Intercity Hotel was opened in Yangzhou at the end of May.

    A recent survey by the world’s largest hospitality consultancy brand Horwath HT shows that there has been robust growth in the upper mid-range hotel market in China in 2020. In particular, luxury hotel offerings recorded a 167 percent year-on-year increase. bw

    • Society

    Heads

    Michael Kahn-Ackermann – Founding Director of the first Goethe-Institut in Beijing

    Michael Kahn-Ackermann has actually been retired for almost ten years, but the soon-to-be 75-year-old is far from “retired.” Just a few months ago, he was hit by a wave of Chinese indignation after he translated the “Wuhan Diary” by writer Fang Fang into German. The book about the experience of the Covid crisis became a bestseller in Germany. Kahn-Ackermann finds it “completely ridiculous” that he is approached as a translator for the content of the text. But he knows, “The dynamics behind such cases are highly complex.”

    Kahn-Ackermann knows China’s approach to culture better than anyone, having advised the Confucius Institute headquarters for eight years until 2019. “China has very little experience in foreign cultural policy.” However, China also seemed to care particularly about changing that, which is why the cooperation was moderately successful, Kahn-Ackermann said. At the same time, he has been working as a “China Special Representative” for the Mercator Foundation since 2011. There, he primarily helps with contacts because he has a “relatively large network of connections,” as he says himself.

    That’s not surprising because he already had contacts in China when the country was still little regarded in the West. In 1970, Kahn-Ackermann decided to study Sinology: “The pretty much most useless thing on offer at Munich University at the time.” In 1974, still on scholarship during the Cultural Revolution, he traveled to China as one of ten students. In the two years at Beijing University, he learned Chinese – and in the years that followed, studying sinology turned out to be not so useless.

    The first Goethe-Institut in China was officially opened at the end of 1988 – with Kahn-Ackermann as Founding Director. The early years were difficult “until they realized we were not there for espionage purposes.” It was not until 1993 that the Beijing Goethe-Institut was allowed to offer cultural programs and language teaching. For 16 years, it was the only foreign institution in the fields of culture and education in China. At that time, the Goethe-Institut was “a very important window to the outside world for the Chinese.” From 1994 to 2006, Kahn-Ackermann made professional stops at the Goethe Institutes in Moscow and Rome. In 2006 he returned to Beijing to the Goethe-Institut. Even though its function has changed in the meantime, Kahn-Ackermann is convinced: “The Goethe-Institut is still a place where you can try out something that would not be so easy to try out in other institutions.”

    He is particularly fascinated by the “acceleration” he has witnessed in China. China was still a developing country when he was there for the first time. Now it is a world power. He describes his relationship with China as having “an emotional scale from love to anger, from joy to pain.” In contrast, he experiences an unrealistic” image of China among many Europeans and in the Western media. He finds it very difficult to change this.

    In the meantime, Michael Kahn-Ackermann lives in Nanjing “because of love.” His circle of friends consists mainly of Chinese. For some time, he has been curating art exhibitions, he still doesn’t get bored. In April 2021, Fang Fang’s novel “Soft Burial” was published in German – translated by Kahn-Ackermann. Paula Faul

    • Culture
    • Germany

    Executive Moves

    Translation missing.

    Dessert

    The Gaokao exams are taking place in China these days. Gakao, probably the toughest exam in the world, decides on a student’s future career: on access to the country’s universities, on the chances of getting a well-paid job. Here, students in Nanjing are just coming out of their exams. Some even have a smile on their faces.

    • Society

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