Detention in camps and forced labor are not as far off from German actors as they might think. After all, today’s globalized economy connects all parts of the world. Since the revelations of the Xinjiang Files at the latest, the issue has also arrived in Western societies.
Companies are also beginning to feel the pressure – for example, the German car manufacturer Volkswagen, which operates a plant in the Xinjiang region. That is why Table.Media wanted to find out what the German public thinks about the issue and our own behavior.
Marcel Grzanna presents the results of the survey conducted by the market research institute Civey: VW should shut down its plant in Xinjiang, says a majority of respondents. Entirely unrelated to this, a majority believes that the import of products made from forced labor should be banned, as is already the case in the United States. Corresponding political initiatives thus receive broad support.
The G7 leaders were demonstratively relaxed in Elmau, Bavaria: no ties, open jackets, arm in arm and constantly laughing. Felix Lee traveled to the summit and gained some fascinating looks behind the scenes for Table.Media: With all the pressing problems – from the Ukraine war, and sanctions against Russia to the Western infrastructure initiative “Global Gateway” – one thing became clear in the confidential discussions: In the end, it’s all about China. Lee shows what the G7 decided in Elmau, what goals they are pursuing, and also where the problems of their plans lie.
The issue of forced labor has moved closer to German consumers than at any time since the end of World War II. The overwhelming evidence that hundreds of thousands of people are forced to work in Chinese factories for ridiculously low pay or no pay at all sparks discussions about morals and responsibilities, and about the injustices in a globalized world. Most recently, the leak of the Xinjiang Police Files, which contain huge data sets on imprisoned Uyghurs, has created a new dynamic.
While international supply chains connect consumers with factories all over the world, they can easily escape the significance of the issue. Food, consumer goods and industrial materials nowadays consist of globally sourced components. The northwest Chinese autonomous region of Xinjiang is internationally synonymous with the use of human labor at meager wages. In particular, sectors such as the textile industry, agriculture or the solar industry are considered risk sectors where the probability of forced labor being integrated into the value creation process is rapidly increasing.
Awareness of the problem in Germany has increased significantly because politicians and civil society regularly put the issue on the agenda. In the vast majority of cases, this happens in a critical context. Accordingly, the result of a survey conducted by the opinion research company Civey and commissioned by Table.Media seems to confirm the critical engagement with the issue.
Of more than 5,000 respondents, a vast majority of 71 percent of German consumers tend to reject the import of products if there is the slightest suspicion that forced labor may have been part of the value creation process. For more than half (56 percent), suspicion is enough to categorically reject the import of a product. However, ten percent of respondents “clearly reject” an import ban of such suspicious goods.
The results can be assigned to political milieus. While 88 percent of Green voters are opposed to an import, only 44 percent of right-wing AfD voters are. Left-wing Die Linke (56 percent) and liberal FDP voters (59 percent) also show a clear disparity with the top value. Of the conservative CDU/CSU clientele, 66 percent are skeptical about the import. The closest to Green voters are social democratic SPD supporters, four out of five of whom would support an import ban in the event of suspected forced labor.
While political views partly show striking differences in the assessment of an import ban, the age of respondents, on the other hand, hardly plays a role. Across all age groups, a clear majority is in favor of the import ban. Although the 18 to 29-year-olds lead the evaluation with 75 percent approval, the 50 to 64-year-olds are not far behind with 74 percent approval. The over-65-year-olds bring up the rear, but even there, two-thirds (67 percent) of all respondents share the same view as the majority of young people.
However, the Xinjiang debate does not only concern the production of tomatoes or T-shirts by anonymous suppliers. Volkswagen, a large company, also has a presence in Xinjiang with its own plant. The German carmaker operates a plant on the outskirts of the regional capital Urumqi, where around 50,000 vehicles are produced per year. According to the Civey survey, a majority of Germans are in favor of shutting down the VW plant in Xinjiang, with 67 percent of respondents stating that VW should withdraw from the region.
The factory has been a political issue from the beginning, as it provides international legitimacy for Chinese economic policy in the region. Most recently, criticism of the site has come not only from human rights groups, but from individuals with considerable influence at VW.
For example, the Minister-President of the German state of Lower Saxony, Peter Weil (SPD), has weighed in on the debate (China.Table reported). The state of Lower Saxony holds 20 percent of the voting rights in VW. Weil, therefore, sits on the company’s supervisory board. His party also currently holds the chancellorship. “The pictures and reports of severe human rights violations against the Uyghur minority in the Chinese region of Xinjiang are upsetting”: When somebody like Weil says such a thing, VW would have to sit up and take notice.
Criticism also comes from trade unions. IG Metall, for example, demands that the appropriate conclusions be drawn from the human rights situation and the plant should be closed. VW Works Council Head Daniela Cavallo also criticized the activities in Xinjiang. “I am deeply shocked by these reports of human rights violations.”
Volkswagen itself defends the site and argues that the plant would help the people in Xinjiang to develop economic prospects. No one has accused the company of employing forced laborers. By all accounts, VW would be considered a good and popular employer in Urumqi.
As with the import ban, views on the VW plant are widely divided between Green voters (86 percent) and those of the FDP (50 percent). SPD supporters show a clear majority in favor of a closure, with 76 percent in favor.
Unlike the import issue, however, it is primarily young people between the ages of 18 and 29 who think the plant should be closed. At 84 percent, they are by far the largest group, while all other age groups from 30 upwards have largely identical opinions, ranging from 63 to 68 percent.
Growing consumer sensitivity among the major industrialized nations is now being reflected at all political levels through the imminent introduction of supply chain laws in Germany and Europe or the Uyghur Forced Labor Prevention Act (UFLPA) in the USA (China.Table reported.) Their effectiveness, however, has yet to be proven in practice. Critics believe that forced labor cannot be eliminated even through tougher legislation. But there is no doubt that these political efforts are an expression of a growing social consensus that the global economic cycles must become fairer.
There is no question about it: Russia’s President Vladimir Putin is currently the main enemy of the G7 countries. And the leaders at the summit in Elmau made this unmistakably clear when they spoke of Russia’s “dirty war of aggression” and expressed their solidarity with Ukraine. But one other country, in particular, is targeted by US President Joe Biden: China. And here, the situation for the G7 is far more complex.
The G7 are unanimous in their desire to further tighten sanctions against Russia. But no matter how they spin it. Their proposals keep hitting limits. And that is because of China.
For example, the US proposal for a price cap on Russian oil: The US already no longer buys Russian oil, the EU wants to do the same by the end of the year at the latest. And yet the sanctions have only a limited effect because other countries continue to buy Russian oil, above all China and India. The US wants to close these gaps and has proposed to put a price cap on Russian oil.
Washington hopes for two effects in particular: Most recently, Russia’s earnings have even increased due to massively rising oil and gas prices, despite the Western sanctions. The price cap would prevent this. Secondly, in view of rising inflation, a price cap would limit the impact on third markets and consumers worldwide.
The only problem is that such a price cap for Russian oil would only work if India and China joined in. India was one of five guest countries present at the G7 summit on Monday. The G7 addressed the Indian prime minister. As for China, they still have to talk first.
Another initiative initiated by the US is a ban on imports of Russian gold. US President Biden believes that this would deprive Russia of billions in revenue from this important export commodity. The Europeans are quite open to the plans. “However, the actual impact on the gold market is likely to be too small to have a lasting effect on price developments,” says commodities expert Carsten Fritsch of Commerzbank.
According to the industry association World Gold Council, Russia is one of the most important gold producers with a mining output of 330 tons last year. “However, only a small part of Russian production is likely to have gone to the West,” said Fritsch. Expert Alexander Zumpfe of trading house Heraeus pointed to the major buyer countries China and India. This makes “an immediate shortage on the gold market unlikely,” Zumpfe said. So, this plan would also require China.
One initiative that the G7 solemnly announced on Sunday is directly aimed at China: the Partnership for Global Infrastructure. With this infrastructure initiative for developing countries, the G7 wants to compete with Beijing’s New Silk Road project, launched in 2013, which China uses to open up new trade routes to Europe, Africa, Latin America and in Asia. “Collectively, we aim to mobilize nearly $600 billion from the G7 by 2027. ,” announced Biden, who initiated the project. “And I’m proud to announce the United States will mobilize $200 billion in public and private capital over the next five years for that Partnership.” EU Commission President Ursula von der Leyen beat this, announcing that “Team Europe” would provide $300 billion. G7 state Japan pledged $68 billion.
Biden added that this was not mere charity. “It’s an investment that will deliver returns for everyone, including the American people and the people of all our nations. It’ll boost all of our economies, and it’s a chance for us to share our positive vision for the future.”
German Chancellor Olaf Scholz sees the initiative as yet another example of the unity of the G7. A US government representative specified that the initiative is aimed at low- and middle-income countries. The goal is infrastructure investments “that countries need without being dictated to from outside.” Projects would be held to high standards “to ensure that these investments are economically and commercially driven and do not lead to debt traps”.
But as right as the US representative may be, he unknowingly names a problem of the Western initiative in the same breath: It is true that many countries that have used funds from the Chinese project now realize that their debt mountains have grown massively and are hopelessly over-indebted to China. But what made China’s offer so appealing to many countries – and at the same time could become a problem for the Western initiative: The Chinese leadership does not attach any political strings to its investment aid. But that’s what the G7 wants to do – or at least that’s what they assure. However, this makes their investment program less attractive to authoritarian states.
Moreover, the G7 also have an organizational problem: While China’s New Silk Road Initiative is centrally controlled in Beijing, the G7 are not as cohesive as Scholz claimed in Elmau. There is no clear consensus on whether the gigantic infrastructure projects will be coordinated at all, and if so, where they will be coordinated from. Or will each industrialized country invest on its own and in an uncoordinated manner somewhere in Central Asia and Africa – as was the case in the past.
It is still unclear whether the G7 countries will be able to provide the billions in funding at all – at least many doubt that they will. In the past, the G7 had also pledged fixed sums for development aid and the fight against global poverty, but also for the promise to help impoverished countries make the transition to carbon neutrality. These promises have never been kept.
After the summit is before the summit. All G7 leaders will fly on to Madrid on Tuesday for the NATO summit. There, the NATO member states want to express their concerns about China for the first time in their new security strategy. But the exact wording is still a matter of debate: While the United States and the United Kingdom are pushing for a harsher tone, France and Germany are in favor of a more balanced approach. What they all have in common is that they do not want Beijing to get the impression that NATO is losing sight of East Asia because of the war in Europe. So for the first time, top politicians from four countries in the Indo-Pacific region will also be attending: Japan, South Korea, Australia and New Zealand.
At the summit in Spain, Russia’s war against Ukraine and the accession of Sweden and Finland to NATO are at the top of the agenda. In addition, the new Strategic Concept of the defense alliance will be adopted. The defense alliance’s approach to Beijing will be part of the Strategic Concept for the first time, NATO Secretary-General Jens Stoltenberg announced at Monday’s press conference. The Strategic Concept will also address “the challenges that Beijing poses to our security, interests, and values,” Stoltenberg said. The Strategic Concept lays the groundwork for NATO’s future political and military development and is the most important document after the 1949 North Atlantic Treaty.
The final wording is under discussion: According to a diplomat, it could come down to China being described as a “systemic challenge”, while NATO also clearly expresses its desire to cooperate with the government in Beijing “in areas of common interest”. The term is not entirely new. The alliance first called China a “systemic challenge” at its summit last year (China.Table reported). But if it were to also appear in the basic Strategy Concept, it would certainly anger Beijing.
What is already clear is that Russia is seen as the greatest threat in the Strategy Concept, although this was already clear before the attack on Ukraine. The concept is also expected to warn about China’s influence in the Indo-Pacific as well as Beijing’s and Moscow’s activities in Africa. Australia’s Prime Minister Anthony Albanese traveled to Europe with words of warning: “Russia and China, their arrangements and closeness that has occurred in recent times means that it’s also very important for our region,” Albanese said. In collaboration with: Amelie Richter
The Chinese state is investing billions in Shenzhen-based semiconductor startup Swaysure Technology to grow a manufacturer of much-needed memory chips. According to Taiwanese websites, investments of ¥300 billion are planned via funds from the city of Shenzhen in a factory that is to be ready in early 2024. That would be a good €40 billion. Swaysure had recently attracted attention by poaching Japanese management veteran Yukio Sakamoto.
The company plans to manufacture DRAMs. These are memory chips that are currently in high demand. They are needed for everything, from PCs and smartphones to automobiles. So far, the market is divided between three suppliers: Samsung and SK Hynix from South Korea, and US company Micron Technology. China and Europe play virtually no role in the production, but want to catch up. The supplier Changxin Memory has already emerged in Hefei, but is technically significantly behind the Koreans.
The amount of investment planned in Shenzhen is less than the amount US manufacturer Intel intends to spend on its expansion in Europe: €80 billion. In Germany, the program includes plans to build a chip factory costing €17 billion. However, its focus will not be on memory components, but on processors. Also comparable is the EU funding for the establishment of an own semiconductor industry. Brussels is allocating €43 billion for this purpose. fin
China wants to make its national currency, the renminbi, more attractive to foreign investors. According to insiders, this is to be achieved by extending trading hours on the foreign exchange market. The central bank has asked a number of important market participants for their opinions on a possible extension of daily trading hours. Under discussion is a shift of the trading deadline from the current 11:30 PM to 3 AM Beijing time, several people familiar with the talks told Reuters on Monday.
This would cover most of the European and American trading days. This, in turn, could allow foreign investors to better hedge their currency risk and gradually increase the global utility of the yuan, as the renminbi is commonly known. “Expanded night trading can provide market participants with more flexibility, incentivizing greater global use of the yuan,” analysts at bank HSBC wrote in a research note back in early June. An increase in yuan trading volume outside of regular trading hours in Asia would also provide better guidance for trades in the Chinese currency. It could also reduce exchange rate fluctuations.
Covering global trading hours is also supported by the International Monetary Fund (IMF). Just last month, the IMF increased the weighting of the Chinese yuan in its basket of so-called Special Drawing Rights – the name given to reserve assets introduced in 1969 that are managed like book credits. The yuan was added to this basket of currencies in 2016 – a milestone for Beijing’s efforts to internationalize its currency. When asked, the state-run stock exchange regulator initially declined to comment on the insiders’ information about plans to extend trading hours.
China is currently trying to strengthen the yuan’s status on the international financial and foreign exchange markets with several measures. Among other things, it is negotiating with Saudi Arabia to settle oil sales in yuan instead of US dollars in the future (China.Table reported). About 80 percent of global oil sales are currently denominated in dollars. Oil imports in the Chinese currency could weaken the role of the dollar and thus the political influence of the USA in the long term. rtr/rad
The heavily indebted Chinese real estate group Evergrande could get into real trouble with its creditors. The company “Top Shine Global Limited of Intershore Consult (Samoa) Limited” has filed a winding-up lawsuit against China Evergrande Group with the Hong Kong High Court. According to the filing, a hearing is to be held on August 31.
Evergrande has more than $300 billion in outstanding debt and has defaulted on interest payments on foreign bonds in recent months. The company owes foreign investors around $20 billion. Despite this, Evergrande has so far managed to delay the company’s demise. In an interview with China.Table, lawyer Elske Fehl-Weileder explained why this is possible in China, and warned: “Evergrande’s creditors will lose money.” The process shows: Large corporate bankruptcies often do not end in time with bankruptcy proceedings. Especially in China, an agonizingly long phase of denial of reality tends to follow (China.Table reported).
The company now plans to present a preliminary restructuring plan by the end of July. Since the beginning of the year, state-owned companies have stepped in to help Evergrande restructure. rad/rtr
Which universities and research institutes in Europe are collaborating with Chinese institutions? This is the first time that the “Academic engagement tracker” of the Central European think tank The Central European Institute of Asian Studies (CEIAS) has explored this question in detail. The think tank has recorded more than 2,300 connections between academic institutions and Chinese cooperation partners on maps for several European countries, including Germany, and compiled details on the respective academic cooperation. In addition, the risk of the respective cooperation is rated. Just a few weeks ago, reports of research and scientific cooperation between German universities and partners from the People’s Republic surfaced, which allegedly have close ties to the Chinese military (China.Table reported). ari
Philip Clart can barely be reached at the moment. His research semester in Cambridge recently ended, “sadly,” he says. Now he’s back in the busy life of the University of Leipzig and jumps from appointment to appointment. Just finished with his lectures, he is next off to attend a lecture by one of his colleagues, followed by an exhibition opening.
For nearly 14 years, Clart has worked as a Professor of Culture & History of China at the East Asian Institute of the Saxon University. His research focuses primarily on religious movements in Taiwan and China’s religious change and religious policy. How he ended up with this research focus? “Rather by chance,” says Clart.
After earning his master’s degree in Bonn, he was supposed to travel to the Chinese side of the Karakoram Mountains in 1989 for an ethnological doctoral project. The research project fell through, however, because the protests on Tiananmen Square in Beijing and in other parts of the country threw China into turmoil, and their bloody suppression marked a turning point in the history of the People’s Republic.
“China was closed off,” Clart recounts. “It was impossible to get a research permit anymore.” So there he was, without a job or immediate prospects. On short notice, Clart traveled to Taiwan with his wife because it was easy for him to get a work permit here. He stayed for nine months.
In Taichung, on the west coast of the island nation, he hired out as a language teacher at private schools and was drawn in by the special spirituality of the place. “When you live in Taiwan, you’re surrounded by a colorful world of temples,” he says. “There are often only a few meters between temples, which are located on almost every street corner. The whole city smells of incense.”
Clart was fascinated by these impressions, learned more and more about the religious culture of the country and lived for a while in a mountain temple outside the city. He wrote dissertations on new religious movements and new forms of temple worship in Taiwan. “How do traditional religious practices change in a rapidly industrializing, modernizing society?” he wondered at the time. He has maintained this research focus to this day.
“Basically, people’s relationship with religion in Taiwan is no different than in China,” Clart tells us. Culturally, he says, Taiwan is largely Chinese. “The difference, however, is that religious life in China was severely affected and destroyed during the Cultural Revolution in the 1960s and 1970s.” Mao Zedong banned religious practice at the time, and countless temples were torn down. “That didn’t happen in Taiwan.”
The island nation’s cultural identity is a mix of a modern society and sometimes very traditional practices. “That’s what I find so exciting.” To this day, Clart maintains close friendships with Taichung and regularly travels to the city, where his life – or at least his research – was completely reoriented at the time. Svenja Napp
Frank Fang Yang is to become the new CEO of the Digital Sales and Services Company at Volkswagen China. The 43-year-old previously worked for various Chinese and international companies, including in sales, marketing, brand development and research & development. He is also the founder and CEO of the controlling startup AVATR Technology.
China and Hong Kong flags adorn the courtyard of a Hong Kong apartment block: On Friday, China celebrates the return of Hong Kong 25 years ago. On the night of July 1, 1997, British colonial rule over the metropolis ended after 99 years.
Detention in camps and forced labor are not as far off from German actors as they might think. After all, today’s globalized economy connects all parts of the world. Since the revelations of the Xinjiang Files at the latest, the issue has also arrived in Western societies.
Companies are also beginning to feel the pressure – for example, the German car manufacturer Volkswagen, which operates a plant in the Xinjiang region. That is why Table.Media wanted to find out what the German public thinks about the issue and our own behavior.
Marcel Grzanna presents the results of the survey conducted by the market research institute Civey: VW should shut down its plant in Xinjiang, says a majority of respondents. Entirely unrelated to this, a majority believes that the import of products made from forced labor should be banned, as is already the case in the United States. Corresponding political initiatives thus receive broad support.
The G7 leaders were demonstratively relaxed in Elmau, Bavaria: no ties, open jackets, arm in arm and constantly laughing. Felix Lee traveled to the summit and gained some fascinating looks behind the scenes for Table.Media: With all the pressing problems – from the Ukraine war, and sanctions against Russia to the Western infrastructure initiative “Global Gateway” – one thing became clear in the confidential discussions: In the end, it’s all about China. Lee shows what the G7 decided in Elmau, what goals they are pursuing, and also where the problems of their plans lie.
The issue of forced labor has moved closer to German consumers than at any time since the end of World War II. The overwhelming evidence that hundreds of thousands of people are forced to work in Chinese factories for ridiculously low pay or no pay at all sparks discussions about morals and responsibilities, and about the injustices in a globalized world. Most recently, the leak of the Xinjiang Police Files, which contain huge data sets on imprisoned Uyghurs, has created a new dynamic.
While international supply chains connect consumers with factories all over the world, they can easily escape the significance of the issue. Food, consumer goods and industrial materials nowadays consist of globally sourced components. The northwest Chinese autonomous region of Xinjiang is internationally synonymous with the use of human labor at meager wages. In particular, sectors such as the textile industry, agriculture or the solar industry are considered risk sectors where the probability of forced labor being integrated into the value creation process is rapidly increasing.
Awareness of the problem in Germany has increased significantly because politicians and civil society regularly put the issue on the agenda. In the vast majority of cases, this happens in a critical context. Accordingly, the result of a survey conducted by the opinion research company Civey and commissioned by Table.Media seems to confirm the critical engagement with the issue.
Of more than 5,000 respondents, a vast majority of 71 percent of German consumers tend to reject the import of products if there is the slightest suspicion that forced labor may have been part of the value creation process. For more than half (56 percent), suspicion is enough to categorically reject the import of a product. However, ten percent of respondents “clearly reject” an import ban of such suspicious goods.
The results can be assigned to political milieus. While 88 percent of Green voters are opposed to an import, only 44 percent of right-wing AfD voters are. Left-wing Die Linke (56 percent) and liberal FDP voters (59 percent) also show a clear disparity with the top value. Of the conservative CDU/CSU clientele, 66 percent are skeptical about the import. The closest to Green voters are social democratic SPD supporters, four out of five of whom would support an import ban in the event of suspected forced labor.
While political views partly show striking differences in the assessment of an import ban, the age of respondents, on the other hand, hardly plays a role. Across all age groups, a clear majority is in favor of the import ban. Although the 18 to 29-year-olds lead the evaluation with 75 percent approval, the 50 to 64-year-olds are not far behind with 74 percent approval. The over-65-year-olds bring up the rear, but even there, two-thirds (67 percent) of all respondents share the same view as the majority of young people.
However, the Xinjiang debate does not only concern the production of tomatoes or T-shirts by anonymous suppliers. Volkswagen, a large company, also has a presence in Xinjiang with its own plant. The German carmaker operates a plant on the outskirts of the regional capital Urumqi, where around 50,000 vehicles are produced per year. According to the Civey survey, a majority of Germans are in favor of shutting down the VW plant in Xinjiang, with 67 percent of respondents stating that VW should withdraw from the region.
The factory has been a political issue from the beginning, as it provides international legitimacy for Chinese economic policy in the region. Most recently, criticism of the site has come not only from human rights groups, but from individuals with considerable influence at VW.
For example, the Minister-President of the German state of Lower Saxony, Peter Weil (SPD), has weighed in on the debate (China.Table reported). The state of Lower Saxony holds 20 percent of the voting rights in VW. Weil, therefore, sits on the company’s supervisory board. His party also currently holds the chancellorship. “The pictures and reports of severe human rights violations against the Uyghur minority in the Chinese region of Xinjiang are upsetting”: When somebody like Weil says such a thing, VW would have to sit up and take notice.
Criticism also comes from trade unions. IG Metall, for example, demands that the appropriate conclusions be drawn from the human rights situation and the plant should be closed. VW Works Council Head Daniela Cavallo also criticized the activities in Xinjiang. “I am deeply shocked by these reports of human rights violations.”
Volkswagen itself defends the site and argues that the plant would help the people in Xinjiang to develop economic prospects. No one has accused the company of employing forced laborers. By all accounts, VW would be considered a good and popular employer in Urumqi.
As with the import ban, views on the VW plant are widely divided between Green voters (86 percent) and those of the FDP (50 percent). SPD supporters show a clear majority in favor of a closure, with 76 percent in favor.
Unlike the import issue, however, it is primarily young people between the ages of 18 and 29 who think the plant should be closed. At 84 percent, they are by far the largest group, while all other age groups from 30 upwards have largely identical opinions, ranging from 63 to 68 percent.
Growing consumer sensitivity among the major industrialized nations is now being reflected at all political levels through the imminent introduction of supply chain laws in Germany and Europe or the Uyghur Forced Labor Prevention Act (UFLPA) in the USA (China.Table reported.) Their effectiveness, however, has yet to be proven in practice. Critics believe that forced labor cannot be eliminated even through tougher legislation. But there is no doubt that these political efforts are an expression of a growing social consensus that the global economic cycles must become fairer.
There is no question about it: Russia’s President Vladimir Putin is currently the main enemy of the G7 countries. And the leaders at the summit in Elmau made this unmistakably clear when they spoke of Russia’s “dirty war of aggression” and expressed their solidarity with Ukraine. But one other country, in particular, is targeted by US President Joe Biden: China. And here, the situation for the G7 is far more complex.
The G7 are unanimous in their desire to further tighten sanctions against Russia. But no matter how they spin it. Their proposals keep hitting limits. And that is because of China.
For example, the US proposal for a price cap on Russian oil: The US already no longer buys Russian oil, the EU wants to do the same by the end of the year at the latest. And yet the sanctions have only a limited effect because other countries continue to buy Russian oil, above all China and India. The US wants to close these gaps and has proposed to put a price cap on Russian oil.
Washington hopes for two effects in particular: Most recently, Russia’s earnings have even increased due to massively rising oil and gas prices, despite the Western sanctions. The price cap would prevent this. Secondly, in view of rising inflation, a price cap would limit the impact on third markets and consumers worldwide.
The only problem is that such a price cap for Russian oil would only work if India and China joined in. India was one of five guest countries present at the G7 summit on Monday. The G7 addressed the Indian prime minister. As for China, they still have to talk first.
Another initiative initiated by the US is a ban on imports of Russian gold. US President Biden believes that this would deprive Russia of billions in revenue from this important export commodity. The Europeans are quite open to the plans. “However, the actual impact on the gold market is likely to be too small to have a lasting effect on price developments,” says commodities expert Carsten Fritsch of Commerzbank.
According to the industry association World Gold Council, Russia is one of the most important gold producers with a mining output of 330 tons last year. “However, only a small part of Russian production is likely to have gone to the West,” said Fritsch. Expert Alexander Zumpfe of trading house Heraeus pointed to the major buyer countries China and India. This makes “an immediate shortage on the gold market unlikely,” Zumpfe said. So, this plan would also require China.
One initiative that the G7 solemnly announced on Sunday is directly aimed at China: the Partnership for Global Infrastructure. With this infrastructure initiative for developing countries, the G7 wants to compete with Beijing’s New Silk Road project, launched in 2013, which China uses to open up new trade routes to Europe, Africa, Latin America and in Asia. “Collectively, we aim to mobilize nearly $600 billion from the G7 by 2027. ,” announced Biden, who initiated the project. “And I’m proud to announce the United States will mobilize $200 billion in public and private capital over the next five years for that Partnership.” EU Commission President Ursula von der Leyen beat this, announcing that “Team Europe” would provide $300 billion. G7 state Japan pledged $68 billion.
Biden added that this was not mere charity. “It’s an investment that will deliver returns for everyone, including the American people and the people of all our nations. It’ll boost all of our economies, and it’s a chance for us to share our positive vision for the future.”
German Chancellor Olaf Scholz sees the initiative as yet another example of the unity of the G7. A US government representative specified that the initiative is aimed at low- and middle-income countries. The goal is infrastructure investments “that countries need without being dictated to from outside.” Projects would be held to high standards “to ensure that these investments are economically and commercially driven and do not lead to debt traps”.
But as right as the US representative may be, he unknowingly names a problem of the Western initiative in the same breath: It is true that many countries that have used funds from the Chinese project now realize that their debt mountains have grown massively and are hopelessly over-indebted to China. But what made China’s offer so appealing to many countries – and at the same time could become a problem for the Western initiative: The Chinese leadership does not attach any political strings to its investment aid. But that’s what the G7 wants to do – or at least that’s what they assure. However, this makes their investment program less attractive to authoritarian states.
Moreover, the G7 also have an organizational problem: While China’s New Silk Road Initiative is centrally controlled in Beijing, the G7 are not as cohesive as Scholz claimed in Elmau. There is no clear consensus on whether the gigantic infrastructure projects will be coordinated at all, and if so, where they will be coordinated from. Or will each industrialized country invest on its own and in an uncoordinated manner somewhere in Central Asia and Africa – as was the case in the past.
It is still unclear whether the G7 countries will be able to provide the billions in funding at all – at least many doubt that they will. In the past, the G7 had also pledged fixed sums for development aid and the fight against global poverty, but also for the promise to help impoverished countries make the transition to carbon neutrality. These promises have never been kept.
After the summit is before the summit. All G7 leaders will fly on to Madrid on Tuesday for the NATO summit. There, the NATO member states want to express their concerns about China for the first time in their new security strategy. But the exact wording is still a matter of debate: While the United States and the United Kingdom are pushing for a harsher tone, France and Germany are in favor of a more balanced approach. What they all have in common is that they do not want Beijing to get the impression that NATO is losing sight of East Asia because of the war in Europe. So for the first time, top politicians from four countries in the Indo-Pacific region will also be attending: Japan, South Korea, Australia and New Zealand.
At the summit in Spain, Russia’s war against Ukraine and the accession of Sweden and Finland to NATO are at the top of the agenda. In addition, the new Strategic Concept of the defense alliance will be adopted. The defense alliance’s approach to Beijing will be part of the Strategic Concept for the first time, NATO Secretary-General Jens Stoltenberg announced at Monday’s press conference. The Strategic Concept will also address “the challenges that Beijing poses to our security, interests, and values,” Stoltenberg said. The Strategic Concept lays the groundwork for NATO’s future political and military development and is the most important document after the 1949 North Atlantic Treaty.
The final wording is under discussion: According to a diplomat, it could come down to China being described as a “systemic challenge”, while NATO also clearly expresses its desire to cooperate with the government in Beijing “in areas of common interest”. The term is not entirely new. The alliance first called China a “systemic challenge” at its summit last year (China.Table reported). But if it were to also appear in the basic Strategy Concept, it would certainly anger Beijing.
What is already clear is that Russia is seen as the greatest threat in the Strategy Concept, although this was already clear before the attack on Ukraine. The concept is also expected to warn about China’s influence in the Indo-Pacific as well as Beijing’s and Moscow’s activities in Africa. Australia’s Prime Minister Anthony Albanese traveled to Europe with words of warning: “Russia and China, their arrangements and closeness that has occurred in recent times means that it’s also very important for our region,” Albanese said. In collaboration with: Amelie Richter
The Chinese state is investing billions in Shenzhen-based semiconductor startup Swaysure Technology to grow a manufacturer of much-needed memory chips. According to Taiwanese websites, investments of ¥300 billion are planned via funds from the city of Shenzhen in a factory that is to be ready in early 2024. That would be a good €40 billion. Swaysure had recently attracted attention by poaching Japanese management veteran Yukio Sakamoto.
The company plans to manufacture DRAMs. These are memory chips that are currently in high demand. They are needed for everything, from PCs and smartphones to automobiles. So far, the market is divided between three suppliers: Samsung and SK Hynix from South Korea, and US company Micron Technology. China and Europe play virtually no role in the production, but want to catch up. The supplier Changxin Memory has already emerged in Hefei, but is technically significantly behind the Koreans.
The amount of investment planned in Shenzhen is less than the amount US manufacturer Intel intends to spend on its expansion in Europe: €80 billion. In Germany, the program includes plans to build a chip factory costing €17 billion. However, its focus will not be on memory components, but on processors. Also comparable is the EU funding for the establishment of an own semiconductor industry. Brussels is allocating €43 billion for this purpose. fin
China wants to make its national currency, the renminbi, more attractive to foreign investors. According to insiders, this is to be achieved by extending trading hours on the foreign exchange market. The central bank has asked a number of important market participants for their opinions on a possible extension of daily trading hours. Under discussion is a shift of the trading deadline from the current 11:30 PM to 3 AM Beijing time, several people familiar with the talks told Reuters on Monday.
This would cover most of the European and American trading days. This, in turn, could allow foreign investors to better hedge their currency risk and gradually increase the global utility of the yuan, as the renminbi is commonly known. “Expanded night trading can provide market participants with more flexibility, incentivizing greater global use of the yuan,” analysts at bank HSBC wrote in a research note back in early June. An increase in yuan trading volume outside of regular trading hours in Asia would also provide better guidance for trades in the Chinese currency. It could also reduce exchange rate fluctuations.
Covering global trading hours is also supported by the International Monetary Fund (IMF). Just last month, the IMF increased the weighting of the Chinese yuan in its basket of so-called Special Drawing Rights – the name given to reserve assets introduced in 1969 that are managed like book credits. The yuan was added to this basket of currencies in 2016 – a milestone for Beijing’s efforts to internationalize its currency. When asked, the state-run stock exchange regulator initially declined to comment on the insiders’ information about plans to extend trading hours.
China is currently trying to strengthen the yuan’s status on the international financial and foreign exchange markets with several measures. Among other things, it is negotiating with Saudi Arabia to settle oil sales in yuan instead of US dollars in the future (China.Table reported). About 80 percent of global oil sales are currently denominated in dollars. Oil imports in the Chinese currency could weaken the role of the dollar and thus the political influence of the USA in the long term. rtr/rad
The heavily indebted Chinese real estate group Evergrande could get into real trouble with its creditors. The company “Top Shine Global Limited of Intershore Consult (Samoa) Limited” has filed a winding-up lawsuit against China Evergrande Group with the Hong Kong High Court. According to the filing, a hearing is to be held on August 31.
Evergrande has more than $300 billion in outstanding debt and has defaulted on interest payments on foreign bonds in recent months. The company owes foreign investors around $20 billion. Despite this, Evergrande has so far managed to delay the company’s demise. In an interview with China.Table, lawyer Elske Fehl-Weileder explained why this is possible in China, and warned: “Evergrande’s creditors will lose money.” The process shows: Large corporate bankruptcies often do not end in time with bankruptcy proceedings. Especially in China, an agonizingly long phase of denial of reality tends to follow (China.Table reported).
The company now plans to present a preliminary restructuring plan by the end of July. Since the beginning of the year, state-owned companies have stepped in to help Evergrande restructure. rad/rtr
Which universities and research institutes in Europe are collaborating with Chinese institutions? This is the first time that the “Academic engagement tracker” of the Central European think tank The Central European Institute of Asian Studies (CEIAS) has explored this question in detail. The think tank has recorded more than 2,300 connections between academic institutions and Chinese cooperation partners on maps for several European countries, including Germany, and compiled details on the respective academic cooperation. In addition, the risk of the respective cooperation is rated. Just a few weeks ago, reports of research and scientific cooperation between German universities and partners from the People’s Republic surfaced, which allegedly have close ties to the Chinese military (China.Table reported). ari
Philip Clart can barely be reached at the moment. His research semester in Cambridge recently ended, “sadly,” he says. Now he’s back in the busy life of the University of Leipzig and jumps from appointment to appointment. Just finished with his lectures, he is next off to attend a lecture by one of his colleagues, followed by an exhibition opening.
For nearly 14 years, Clart has worked as a Professor of Culture & History of China at the East Asian Institute of the Saxon University. His research focuses primarily on religious movements in Taiwan and China’s religious change and religious policy. How he ended up with this research focus? “Rather by chance,” says Clart.
After earning his master’s degree in Bonn, he was supposed to travel to the Chinese side of the Karakoram Mountains in 1989 for an ethnological doctoral project. The research project fell through, however, because the protests on Tiananmen Square in Beijing and in other parts of the country threw China into turmoil, and their bloody suppression marked a turning point in the history of the People’s Republic.
“China was closed off,” Clart recounts. “It was impossible to get a research permit anymore.” So there he was, without a job or immediate prospects. On short notice, Clart traveled to Taiwan with his wife because it was easy for him to get a work permit here. He stayed for nine months.
In Taichung, on the west coast of the island nation, he hired out as a language teacher at private schools and was drawn in by the special spirituality of the place. “When you live in Taiwan, you’re surrounded by a colorful world of temples,” he says. “There are often only a few meters between temples, which are located on almost every street corner. The whole city smells of incense.”
Clart was fascinated by these impressions, learned more and more about the religious culture of the country and lived for a while in a mountain temple outside the city. He wrote dissertations on new religious movements and new forms of temple worship in Taiwan. “How do traditional religious practices change in a rapidly industrializing, modernizing society?” he wondered at the time. He has maintained this research focus to this day.
“Basically, people’s relationship with religion in Taiwan is no different than in China,” Clart tells us. Culturally, he says, Taiwan is largely Chinese. “The difference, however, is that religious life in China was severely affected and destroyed during the Cultural Revolution in the 1960s and 1970s.” Mao Zedong banned religious practice at the time, and countless temples were torn down. “That didn’t happen in Taiwan.”
The island nation’s cultural identity is a mix of a modern society and sometimes very traditional practices. “That’s what I find so exciting.” To this day, Clart maintains close friendships with Taichung and regularly travels to the city, where his life – or at least his research – was completely reoriented at the time. Svenja Napp
Frank Fang Yang is to become the new CEO of the Digital Sales and Services Company at Volkswagen China. The 43-year-old previously worked for various Chinese and international companies, including in sales, marketing, brand development and research & development. He is also the founder and CEO of the controlling startup AVATR Technology.
China and Hong Kong flags adorn the courtyard of a Hong Kong apartment block: On Friday, China celebrates the return of Hong Kong 25 years ago. On the night of July 1, 1997, British colonial rule over the metropolis ended after 99 years.