Table.Briefing: China (English)

The consequences of China’s overcapacity + Europe’s lead in autonomous driving

Dear reader,

In the race for economic supremacy, a familiar term is once again in vogue. So-called overcapacity is again a regular source of friction between China and the West – unused production facilities that allow production well above demand. The resulting low prices can put pressure on industries worldwide.

Such overcapacities have existed since 1978, when China started its economic reform. Christiane Kuehl has taken a closer look at why the issue is currently boiling over. It has to do with China’s industrial policy, declining domestic demand, and the fact that important sectors are affected, for instance, the automotive industry, where the US, Europe, and China are currently in fierce competition as it is.

Christian Domke Seidel has analyzed how Europe could actually catch up with autonomous driving in this race. A new initiative brings together industry leaders from many countries with the aim of creating global safety standards. From the perspective of the European participants, this is an area where Chinese suppliers can still learn from European manufacturers. In any case, it helps counter the impression that China has long since surpassed Europe here.

Your
Carolyn Braun
Image of Carolyn  Braun

Feature

Overcapacity: Which industries are at risk

Metallurgy plant in Zhangye, Gansu province: The sector struggles the most with underutilized capacities.

Although overcapacity has existed in China’s industry since the beginning of the country’s economic reform in 1978, the problem has never caused as much controversy as it does now. One reason is that the West has become much more aware of the vulnerability of its own markets – partly because China is now importing innovative products instead of cheap plastic tubs and T-shirts. “Today, overcapacity is concentrated in equipment manufacturing and downstream consumer industries, involving more private producers than SOEs,” the South China Morning Post quotes a study by Zhong Zhengsheng, chief economist at Ping An Securities in Shenzhen. A decade ago, however, state-owned manufacturers of steel, cement and non-ferrous metals were at the center of the problem.

According to the German business dictionary “Gabler Wirtschaftslexikon,” the term “overcapacity” describes a situation in which there is not enough available use for the “facilities or production factors of a company, an economic sector or an entire economy.” This means that demand is below the potential production output of factories. This leaves them with the choice of either leaving production capacities idle – or producing large quantities and then exporting them abroad, provided there is demand. Only the latter case creates a problem for Western economies.

And that is precisely what is increasingly happening. This is because Beijing’s strategy has changed: The government used to tackle the overcapacity of inefficient state-owned companies. Now, however, Beijing sees cleantech products such as the “new three” – electric cars, solar modules and lithium batteries – as rays of hope amid a weak economy. Like the “Old Three” – clothing, household appliances and furniture – they are set to become export hits.

According to a study by the Australian Griffith Asia Institute, the combined export value of the “new three” will reach more than 150 billion US dollars, or over one trillion yuan, by 2023. However, China’s solar companies already groan about falling prices and company deaths, forcing them to shut down capacities on a large scale. It remains to be seen how the flood of solar module exports will continue.

Promotion of innovative sectors

Either way, Beijing is specifically promoting innovative sectors. The state newspaper China Daily recently reported on plans to support the development of solid-state batteries for electric cars with up to six billion yuan (around 763 million euros). Some critics even assume that China is inflating its production capacities for the sole purpose of dominating global supply chains.

China strongly rejects such accusations by claiming that its low-cost cleantech products are helping the world’s energy transition. Indeed, developing countries, in particular, benefit from this. But which of Beijing’s promotion plans are considered illegal subsidies in international trade? The EU, among others, is currently trying to determine this in the EV segment.

China’s weak demand is partly to blame

Another question is whether China’s industrial policy alone is really responsible for the overcapacity. Louise Loo, senior economist at the British consultancy firm Oxford Economics, doubts this. She writes that a more nuanced view of the current industrial cycle suggests that the existing imbalance between supply and demand is primarily due to much weaker domestic demand. According to Loo, Inventories in the Chinese industry have increased by 39 percent since the end of 2019, which is far higher than the 24 percent increase in industrial production. For example, the property crisis has led to a slump in demand for products from the metallurgical industry. However, their capacities are still standing.

Given the “weak domestic demand and a production-oriented economic program,” Loo suggests that there will be a “cyclical oversupply.” She also notes that various documents suggest that the country’s political circles are well aware of this economic risk. However, the risk of truly excessive overcapacity in China is limited to a handful of sectors.

Mixed capacity utilization in sectors

According to data from Oxford Economics, overcapacity in the first quarter of 2024 was most severe in the non-ferrous metals industry (under 65 percent capacity utilization), followed by car manufacturing and food production. Official data shows that industrial capacity utilization across all sectors averaged just under 73.6 percent in the first quarter. According to Zhong Zhengsheng, a capacity utilization rate of 76 to 80 percent is considered normal in most sectors.

However, according to Loo, the picture is also mixed within sectors. For example, the plants of EV market leaders such as BYD, Li Auto and SAIC have a significantly higher capacity utilization of over 80 percent than the average of a meager 50 percent in the electric segment.

Internal criticism of overinvestment in the cleantech sector

Just months ago, top Chinese politicians admitted that “overcapacity in some industries” would pose a major economic challenge this year. In March, President Xi Jinping warned against “rushing into new projects” as part of his push for “new productive forces.” At a meeting with economists and business leaders on 23 May, he said that overinvestment in the cleantech sector would be “counterproductive” and more investment should go into modernizing traditional industrial sectors instead.

Analysts at Trivium China say that Xi wants investment to be spread more broadly across the “new high-quality productive forces.” These are usually associated with high-tech upgrades to “increase economic, resource and energy efficiency.” They say the problem is that “domestic innovators will continue to focus on cleantech as long as it has the best growth prospects. Telling them to invest in modernizing traditional industries such as steel is difficult to convey.” Therefore, the Trivium analyses expect: “The cleantech sector will remain overheated without (unlikely) direct government intervention.”

The official line has also changed in the meantime, no doubt in response to the concentrated criticism from the West. Today, government politicians insist that there is no such thing as “China’s overcapacity problem.”

  • Geopolitics
  • Industrial policy
  • Trade

Common safety standards: What China can learn from Europe when it comes to autonomous driving

No hands: Tesla’s autopilot is impressive, but cars without a steering wheel are still unthinkable.

The initiative “The Autonomous” aims to promote global safety standards for autonomous driving. The European participants in the new platform believe that Chinese manufacturers can learn from European manufacturers, at least in this regard. The industry leaders, scientists and experts involved in the initiative want to counter the impression that China is pulling away when it comes to autonomous driving, leaving Europe in the dust.

Indeed, representatives of the German government and Chinese Industry Minister Jin Zhuanglong signed a memorandum of understanding on autonomous driving during Olaf Scholz’s visit to China. It states that the two countries will continue cooperating and exchanging ideas on developing technologies and international standards for automated driving.

Level 5 is unrealistic

What is it about? The automotive industry is currently working on the big technological leap from Level 3 to Level 4 autonomous driving, where the system takes over control of the vehicle permanently while the driver can focus on other activities. At least until the system needs assistance. Some experts see level 5 as the ultimate goal, where cars have neither steering wheel nor pedals because human intervention is no longer necessary.

A technological fantasy that Ricky Hudi, Chairman of The Autonomous, firmly rejected in an interview with Table.Briefings on the fringes of the Vienna Motor Symposium. He believes level 5 is simply unrealistic with the current and foreseeable technology. He should know, as he is bringing together current research under one roof with “The Autonomous.” In addition to initiator TTTech, Nvidia, SAIC, Continental, BMW, Volkswagen, Infineon, Amazon and the Fraunhofer Institute are also involved in the alliance. The most important output to date is the study “Safe Automated Driving: Requirements and Architectures.”

Cooperation to pool scarce resources

As Hudi puts it, autonomous driving is “the biggest challenge since the invention of the car.” Alone, companies could only fail, hence the collaboration. In fact, neither Chinese, American, nor European manufacturers can build reliable Level 4 vehicles on a large scale. The chaos surrounding Cariad and the glaring safety deficiencies at Tesla are two prominent examples of major players in this field.

That is why Hudi says it is important to share progress on security first and foremost. “The Autonomous” aims for an open-source solution. Scarce R&D resources could be pooled in this way – cooperation instead of competition, as Hudi summarizes it. What sounds altruistic has an economic background. “We must not wait until harmful measures force us to work together,” Hudi said in a 20222 keynote speech.

China relies on trial and error

The EU has set itself the target of halving the number of traffic deaths by 2030. And by 2050, the aim is for no one to die on the roads. Some US cities have set themselves similar targets. Achieving these goals depends heavily on technical progress in the automotive sector – and companies do not want to be forced to do so by law as soon as the EU’s self-imposed deadlines approach.

Although China is regarded as a pioneer in autonomous driving, this alliance also benefits companies from the People’s Republic. According to Hudi, this is mainly due to the different working methods. While in the US, and especially in Europe, a great deal of testing is carried out before a new technology is put on the road, Chinese companies push ahead and work with much trial and error. The right conclusions can then be drawn in cooperation with the companies of “The Autonomous.”

Data laws complicate cooperation

However, cooperation is reaching its limits. The biggest hurdle is China’s restrictive data legislation. Strict regulations make it difficult to transfer data from China to the EU. Conversely, as digital expert Rebecca Arcesati recently explained in an interview, there are still questions about data security.

Whether there is actually that much interest in China is at least questionable. “The Autonomous” and the envisaged open-source solution cannot conceal the fact that China and Europe are working at two completely different paces. Geely recently proved this again by becoming the first car manufacturer with its own satellite network – a technology that is considered a foundation for relevant progress in the field of connectivity and autonomous driving.

  • Autoindustrie

Sinolytics Radar

Semiconductors: How a new automotive alliance will secure supply

Dieser Inhalt ist Lizenznehmern unserer Vollversion vorbehalten.
  • China has accelerated its efforts to increase self-sufficiency in cutting-edge chip manufacturing capabilities as US and EU export controls continue to deny China access to advanced semiconductor manufacturing equipment.​
  • That effort, however, also extends to less advanced chips, for example for applications in electric vehicles. China still imports around 90 percent of its automotive chips as Chinese producers struggle to replace leading US and EU companies in the Chinese market. ​
  • Li Shaohua, Vice-President of China’s Association of Automotive Manufacturers (CAAM), argues that promoting localization of the chip supply chain is an important measure to ensure the healthy development of the automotive industry.​
  • Standards play a decisive role in promoting domestic substitution. A key hurdle for Chinese automotive chip vendors to break into the market is missing trust in the safety and reliability of their chips even by Chinese automotive OEMs. Since automotive chips need to face harsh external environments, they need to meet much higher standards than commercial chips, as outlined in further detail in the Digital Power China study “Reverse Dependencies.” ​
  • To promote cooperation along the entire automotive chip value chain and create trust between chip vendors and auto OEMs, the Ministry of Industry and Information Technologies has set up the China Automotive Industry Innovation Alliance. The alliance’s objective, amongst others, is to achieve independence for China’s automotive industry and promote domestic substitutions. ​
  • Membership of the alliance is made up of Chinese OEMs (e.g. SAIC, BYD, FAW), automotive electronics and software vendors (e.g. CETC, CATL, Weichai), chip companies (e.g. SMIC, Black Sesame, Horizon), and state-linked research institutions (e.g. CAICT). While the alliance claims to be open to all industry participants, the technical committee is made up purely of Chinese entities.​

Sinolytics is a research-based business consultancy entirely focused on China. It advises European companies on their strategic orientation and specific business activities in the People’s Republic.

  • Autoindustrie

News

Tiananmen massacre: How the world commemorated the anniversary

On the 35th anniversary of the bloody crackdown on protests in Tiananmen Square, Beijing has criticized the “interference” of other states. “As to the political disturbance that occurred in the late 1980s, the Chinese government has long had a clear conclusion,” said Foreign Ministry spokeswoman Mao Ning on Tuesday, without going into further detail about the disturbance in question. “We are firmly opposed to anyone using this as a pretext to attack and smear China and interfere in China’s internal affairs.”

The public commemoration of the student protests of June 4, 1989, is banned in China. On Tuesday, visitors to Tiananmen Square had to undergo strict ID and bag checks. In the Chinese Special Administrative Region of Hong Kong, the police reacted to the anniversary with an increased presence. Until the enforcement of the National Security Law, commemorative events on June 4 were an integral part of the city’s culture of remembrance. Now, police patrols have been deployed, particularly around Victoria Park, where annual vigils were held until 2019. During the day, the area was used for a Chinese folklore festival.

In the past few days, several arrests in Hong Kong have also been made related to commemoration. Among the arrested was artist Sanmu Chen, who was detained on Monday evening near Causeway Bay station for a pantomime performance. He drew the date of the anniversary in the air with his finger. A spokesperson for the Hong Kong police told The Guardian that Chen had been taken to the police station for investigation, but has since been released.

Taiwan’s President Lai Ching-te has also commemorated the victims of the bloody crackdown on democracy protests in Beijing’s Tiananmen Square and criticized Beijing. “A truly respectable country is one where people speak out,” he wrote on Facebook on Tuesday. “Any regime should face up to the voice of the people.” Over 1,000 people held a vigil in Taiwan’s capital, Taipei. With candles and a 64-second minute’s silence, people commemorated the victims with the theme “Ideals are bulletproof.”

The German embassy in Beijing also made a statement to mark the anniversary. At night, the windows of the embassy building were lit up with projected candles. Ambassador Patricia Flor shared a picture of this on X. fpe

  • Tiananmen-Massaker

Chang’e-6: How the rock samples return to Earth

The Chinese probe Chang’e-6 has begun its return journey from the far side of the moon. With its successful departure, China has come closer to its goal of being the first country to bring back samples from the far side of the moon.

The probe, which left the moon at 1:38 a.m. Central European Summer Time on Tuesday, successfully completed its sample collection between June 2 and 3. In a statement, the China National Space Administration (CNSA) said that Chang’e-6 withstood the “test of high temperatures” on the far side of the moon.

The probe is in lunar orbit and will now move to rendezvous with another spacecraft in orbit, according to the CNSA. The samples will then be transferred to a return module that will fly back to Earth and is expected to land in Inner Mongolia around June 25. Scientists around the world hope that the soil samples will provide answers to questions about the origins of the solar system. rtr

  • Wissenschaft

European elections: How a Dutch party is being influenced by Beijing

The Dutch party NL Plan, which is running in the European Parliament elections for the first time, reportedly has close ties to China. This is the result of an investigation by the Dutch news channel RTL Nieuws and the investigative platform Follow The Money. According to the report, NL Plan is being financed by organizations close to the Chinese Communist Party and its United Front. Representatives of the party allegedly voiced pro-Chinese views in Chinese-language media. Among other things, NL Plan is the only Dutch party that opposes the supposed “oppression of China” by the EU and the Western world.

The list of donors also includes prominent pro-Chinese associations such as the National Federation of Chinese Organizations in the Netherlands (LFCON) and the Dutch-Chinese Chamber of Commerce. Chinese-language newspapers in the Netherlands, such as the United Times and the China Times, have also made donations to NL Plan.

With its social media campaigns, NL Plan primarily focuses on young voters. Among other things, it advocates social housing and combating poverty. Its co-founder and lead candidate, Kok Kuen Chan, is a 54-year-old from Amsterdam with Hong Kong roots who runs a wine business and the wholesale company Brand New China. fpe

  • Europapolitik

Office raids: Why Nuctech sues the EU Commission

The Chinese security technology manufacturer Nuctech has taken legal action against the European Commission over raids on its Dutch and Polish offices. The company, which manufactures body and baggage scanners for airports and ports, has announced that it has filed an appeal with the General Court of the European Union in Luxembourg, the EU’s second-highest court.

Nuctech has also requested that the court suspend the EU investigation in order to avert potential damage to the company. Nuctech stressed that there was no evidence to support the allegations that it had received illegal state subsidies. The searches of the company’s offices in late April were based on the EU’s Foreign Subsidies Regulation (FSR), designed to prevent foreign companies in the EU from benefiting from subsidies from their home country. rtr/ari

  • Subventionen

Opinion

Personal rights: Why a ruling on AI-assisted voice imitation is groundbreaking

By Sebastian Wiendieck and Peter Stark
Sebastian Wiendieck (photo) and Peter Stark are lawyers at Roedl & Partner in China.

In April 2024, the Beijing Internet Court issued another landmark ruling on the use of artificial intelligence (AI), after the same court ruled in November 2023 that AI-generated images can be copyrightable​. The new ruling concerns the infringement of personal rights by AI-generated voice imitations.​

The plaintiff in the case, a voice artist, discovered that her voice had been used in numerous audio books without her consent. Through her own research, she discovered that audio recordings of her that she had previously made for audio books with a media company had been licensed by the company to an AI software company with permission to commercially use, reproduce and modify the audio recordings. This company used the voice to train an AI-based tool (text-to-speech application) and marketed the application with the plaintiff’s voice. Another company acquired the application and used it to produce various audio books.

The court found that the defendants had used the plaintiff’s voice without her consent, thereby violating her personal rights, and ordered the defendants to pay damages and apologize.

The voice of the actress is unique

A key question for the court was whether a person’s right to their voice includes the voice reproduced by the use of AI. The court’s answer was in the affirmative. A person’s natural voice can be identified by its tone and frequency. It has unique and consistent characteristics that are capable of evoking thoughts and feelings associated with that person. Minor changes to the voice through the use of the AI application do not prevent listeners from associating the voice generated by the application with natural voices, thereby evoking the thoughts and feelings associated with the original person and directly associating the voice heard with that person. This reveals the person’s identity.

In the proceedings, the court found that the AI-generated voice and the plaintiff’s voice were very similar in timbre, tonality and pronunciation style, which could lead listeners to associate or attribute the AI-generated voice to the plaintiff herself. The AI-generated voice is identifiable as the plaintiff’s voice, so that the plaintiff’s rights in her voice can be extended to the AI-generated voice.

According to the Chinese Civil Code, the provisions on the protection of the right to one’s own image also apply to the protection of the right to one’s own voice. Accordingly, any natural or legal person is prohibited from using, falsifying or manipulating a person’s voice using technology. The law prohibits the production, use or distribution of a person’s voice without his or her consent.

The decision of the Beijing Internet Court is likely to set the standard for all cases in which an AI-generated voice can be traced back to the voice of a natural person. If the person has not consented to the use of his or her voice, the person’s personal rights have been violated, which may lead to a claim for damages.

However, even if there is a contract with a person, e.g. for the production of an advertisement, the recordings cannot simply be used for other purposes. According to the Beijing Internet Court, the purpose and scope of a person’s original contractual consent to use, for example, their voice, must be considered.

The training of generative AI requires the use of a variety of existing data, such as text, images, videos, etc. Many of these sources may be copyrighted. The use of such sources for training may therefore involve a risk of copyright infringement.​

Sebastian Wiendieck and Peter Stark are lawyers at Roedl & Partner in China. They mainly advise German and European companies represented in China by subsidiaries and branches or wishing to become active in the Chinese market in other ways.

This article is part of the event series “Global China Conversations” by the Kiel Institute for the World Economy (IfW). On Thursday (June 6, 2024; 11 a.m., CEST), Stephan Meyer, Professor of Public Law at the Technical University of Applied Sciences Wildau, and Sebastian Wiendieck, author of this text and Head of the Legal Department of Roedl & Partner in China, will discuss the topic of data handling under the moderation of Dietmar Baetge, Professor of International Business Law and Private Business Law at the Technical University of Applied Sciences Wildau: What are the challenges for foreign companies in China?
China.Table and Rödl & Partner are media partners of this event series.

  • Artificial intelligence
  • Technologie
  • Technology

Executive Moves

Bin Gong has taken over the position of Managing Director at Synova China. Synova is headquartered in Duillier, Switzerland, and manufactures laser cutting systems. Gong was previously Sales Director China at the French laser technology company Amplitude.

Alex Blackie has been Head of Experiential Marketing & Sponsorships at Audi China since May. Blackie has been working for the car manufacturer in Beijing for more than eight years. Most recently, he was responsible for motorsport marketing.

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

Dessert

On International Children’s Day on June 1, “Doraemon the Movie: Nobita’s Earth Symphony” hit the Chinese box office. According to data from the China Movie Data Information Network, the Japanese animated film grossed around 2.49 million US dollars by Sunday.

The robot cat is one of the most popular cartoon characters in Asia, as this light spectacle performed by drones in Hong Kong shows. The character, who was invented in 1969, made her cinema debut in China in 2007. A new film has been released on the mainland every year since 2015. “Nobita’s Earth Symphony” is already the 43rd installment in the series.

China.Table editorial team

CHINA.TABLE EDITORIAL OFFICE

Licenses:
    Dear reader,

    In the race for economic supremacy, a familiar term is once again in vogue. So-called overcapacity is again a regular source of friction between China and the West – unused production facilities that allow production well above demand. The resulting low prices can put pressure on industries worldwide.

    Such overcapacities have existed since 1978, when China started its economic reform. Christiane Kuehl has taken a closer look at why the issue is currently boiling over. It has to do with China’s industrial policy, declining domestic demand, and the fact that important sectors are affected, for instance, the automotive industry, where the US, Europe, and China are currently in fierce competition as it is.

    Christian Domke Seidel has analyzed how Europe could actually catch up with autonomous driving in this race. A new initiative brings together industry leaders from many countries with the aim of creating global safety standards. From the perspective of the European participants, this is an area where Chinese suppliers can still learn from European manufacturers. In any case, it helps counter the impression that China has long since surpassed Europe here.

    Your
    Carolyn Braun
    Image of Carolyn  Braun

    Feature

    Overcapacity: Which industries are at risk

    Metallurgy plant in Zhangye, Gansu province: The sector struggles the most with underutilized capacities.

    Although overcapacity has existed in China’s industry since the beginning of the country’s economic reform in 1978, the problem has never caused as much controversy as it does now. One reason is that the West has become much more aware of the vulnerability of its own markets – partly because China is now importing innovative products instead of cheap plastic tubs and T-shirts. “Today, overcapacity is concentrated in equipment manufacturing and downstream consumer industries, involving more private producers than SOEs,” the South China Morning Post quotes a study by Zhong Zhengsheng, chief economist at Ping An Securities in Shenzhen. A decade ago, however, state-owned manufacturers of steel, cement and non-ferrous metals were at the center of the problem.

    According to the German business dictionary “Gabler Wirtschaftslexikon,” the term “overcapacity” describes a situation in which there is not enough available use for the “facilities or production factors of a company, an economic sector or an entire economy.” This means that demand is below the potential production output of factories. This leaves them with the choice of either leaving production capacities idle – or producing large quantities and then exporting them abroad, provided there is demand. Only the latter case creates a problem for Western economies.

    And that is precisely what is increasingly happening. This is because Beijing’s strategy has changed: The government used to tackle the overcapacity of inefficient state-owned companies. Now, however, Beijing sees cleantech products such as the “new three” – electric cars, solar modules and lithium batteries – as rays of hope amid a weak economy. Like the “Old Three” – clothing, household appliances and furniture – they are set to become export hits.

    According to a study by the Australian Griffith Asia Institute, the combined export value of the “new three” will reach more than 150 billion US dollars, or over one trillion yuan, by 2023. However, China’s solar companies already groan about falling prices and company deaths, forcing them to shut down capacities on a large scale. It remains to be seen how the flood of solar module exports will continue.

    Promotion of innovative sectors

    Either way, Beijing is specifically promoting innovative sectors. The state newspaper China Daily recently reported on plans to support the development of solid-state batteries for electric cars with up to six billion yuan (around 763 million euros). Some critics even assume that China is inflating its production capacities for the sole purpose of dominating global supply chains.

    China strongly rejects such accusations by claiming that its low-cost cleantech products are helping the world’s energy transition. Indeed, developing countries, in particular, benefit from this. But which of Beijing’s promotion plans are considered illegal subsidies in international trade? The EU, among others, is currently trying to determine this in the EV segment.

    China’s weak demand is partly to blame

    Another question is whether China’s industrial policy alone is really responsible for the overcapacity. Louise Loo, senior economist at the British consultancy firm Oxford Economics, doubts this. She writes that a more nuanced view of the current industrial cycle suggests that the existing imbalance between supply and demand is primarily due to much weaker domestic demand. According to Loo, Inventories in the Chinese industry have increased by 39 percent since the end of 2019, which is far higher than the 24 percent increase in industrial production. For example, the property crisis has led to a slump in demand for products from the metallurgical industry. However, their capacities are still standing.

    Given the “weak domestic demand and a production-oriented economic program,” Loo suggests that there will be a “cyclical oversupply.” She also notes that various documents suggest that the country’s political circles are well aware of this economic risk. However, the risk of truly excessive overcapacity in China is limited to a handful of sectors.

    Mixed capacity utilization in sectors

    According to data from Oxford Economics, overcapacity in the first quarter of 2024 was most severe in the non-ferrous metals industry (under 65 percent capacity utilization), followed by car manufacturing and food production. Official data shows that industrial capacity utilization across all sectors averaged just under 73.6 percent in the first quarter. According to Zhong Zhengsheng, a capacity utilization rate of 76 to 80 percent is considered normal in most sectors.

    However, according to Loo, the picture is also mixed within sectors. For example, the plants of EV market leaders such as BYD, Li Auto and SAIC have a significantly higher capacity utilization of over 80 percent than the average of a meager 50 percent in the electric segment.

    Internal criticism of overinvestment in the cleantech sector

    Just months ago, top Chinese politicians admitted that “overcapacity in some industries” would pose a major economic challenge this year. In March, President Xi Jinping warned against “rushing into new projects” as part of his push for “new productive forces.” At a meeting with economists and business leaders on 23 May, he said that overinvestment in the cleantech sector would be “counterproductive” and more investment should go into modernizing traditional industrial sectors instead.

    Analysts at Trivium China say that Xi wants investment to be spread more broadly across the “new high-quality productive forces.” These are usually associated with high-tech upgrades to “increase economic, resource and energy efficiency.” They say the problem is that “domestic innovators will continue to focus on cleantech as long as it has the best growth prospects. Telling them to invest in modernizing traditional industries such as steel is difficult to convey.” Therefore, the Trivium analyses expect: “The cleantech sector will remain overheated without (unlikely) direct government intervention.”

    The official line has also changed in the meantime, no doubt in response to the concentrated criticism from the West. Today, government politicians insist that there is no such thing as “China’s overcapacity problem.”

    • Geopolitics
    • Industrial policy
    • Trade

    Common safety standards: What China can learn from Europe when it comes to autonomous driving

    No hands: Tesla’s autopilot is impressive, but cars without a steering wheel are still unthinkable.

    The initiative “The Autonomous” aims to promote global safety standards for autonomous driving. The European participants in the new platform believe that Chinese manufacturers can learn from European manufacturers, at least in this regard. The industry leaders, scientists and experts involved in the initiative want to counter the impression that China is pulling away when it comes to autonomous driving, leaving Europe in the dust.

    Indeed, representatives of the German government and Chinese Industry Minister Jin Zhuanglong signed a memorandum of understanding on autonomous driving during Olaf Scholz’s visit to China. It states that the two countries will continue cooperating and exchanging ideas on developing technologies and international standards for automated driving.

    Level 5 is unrealistic

    What is it about? The automotive industry is currently working on the big technological leap from Level 3 to Level 4 autonomous driving, where the system takes over control of the vehicle permanently while the driver can focus on other activities. At least until the system needs assistance. Some experts see level 5 as the ultimate goal, where cars have neither steering wheel nor pedals because human intervention is no longer necessary.

    A technological fantasy that Ricky Hudi, Chairman of The Autonomous, firmly rejected in an interview with Table.Briefings on the fringes of the Vienna Motor Symposium. He believes level 5 is simply unrealistic with the current and foreseeable technology. He should know, as he is bringing together current research under one roof with “The Autonomous.” In addition to initiator TTTech, Nvidia, SAIC, Continental, BMW, Volkswagen, Infineon, Amazon and the Fraunhofer Institute are also involved in the alliance. The most important output to date is the study “Safe Automated Driving: Requirements and Architectures.”

    Cooperation to pool scarce resources

    As Hudi puts it, autonomous driving is “the biggest challenge since the invention of the car.” Alone, companies could only fail, hence the collaboration. In fact, neither Chinese, American, nor European manufacturers can build reliable Level 4 vehicles on a large scale. The chaos surrounding Cariad and the glaring safety deficiencies at Tesla are two prominent examples of major players in this field.

    That is why Hudi says it is important to share progress on security first and foremost. “The Autonomous” aims for an open-source solution. Scarce R&D resources could be pooled in this way – cooperation instead of competition, as Hudi summarizes it. What sounds altruistic has an economic background. “We must not wait until harmful measures force us to work together,” Hudi said in a 20222 keynote speech.

    China relies on trial and error

    The EU has set itself the target of halving the number of traffic deaths by 2030. And by 2050, the aim is for no one to die on the roads. Some US cities have set themselves similar targets. Achieving these goals depends heavily on technical progress in the automotive sector – and companies do not want to be forced to do so by law as soon as the EU’s self-imposed deadlines approach.

    Although China is regarded as a pioneer in autonomous driving, this alliance also benefits companies from the People’s Republic. According to Hudi, this is mainly due to the different working methods. While in the US, and especially in Europe, a great deal of testing is carried out before a new technology is put on the road, Chinese companies push ahead and work with much trial and error. The right conclusions can then be drawn in cooperation with the companies of “The Autonomous.”

    Data laws complicate cooperation

    However, cooperation is reaching its limits. The biggest hurdle is China’s restrictive data legislation. Strict regulations make it difficult to transfer data from China to the EU. Conversely, as digital expert Rebecca Arcesati recently explained in an interview, there are still questions about data security.

    Whether there is actually that much interest in China is at least questionable. “The Autonomous” and the envisaged open-source solution cannot conceal the fact that China and Europe are working at two completely different paces. Geely recently proved this again by becoming the first car manufacturer with its own satellite network – a technology that is considered a foundation for relevant progress in the field of connectivity and autonomous driving.

    • Autoindustrie

    Sinolytics Radar

    Semiconductors: How a new automotive alliance will secure supply

    Dieser Inhalt ist Lizenznehmern unserer Vollversion vorbehalten.
    • China has accelerated its efforts to increase self-sufficiency in cutting-edge chip manufacturing capabilities as US and EU export controls continue to deny China access to advanced semiconductor manufacturing equipment.​
    • That effort, however, also extends to less advanced chips, for example for applications in electric vehicles. China still imports around 90 percent of its automotive chips as Chinese producers struggle to replace leading US and EU companies in the Chinese market. ​
    • Li Shaohua, Vice-President of China’s Association of Automotive Manufacturers (CAAM), argues that promoting localization of the chip supply chain is an important measure to ensure the healthy development of the automotive industry.​
    • Standards play a decisive role in promoting domestic substitution. A key hurdle for Chinese automotive chip vendors to break into the market is missing trust in the safety and reliability of their chips even by Chinese automotive OEMs. Since automotive chips need to face harsh external environments, they need to meet much higher standards than commercial chips, as outlined in further detail in the Digital Power China study “Reverse Dependencies.” ​
    • To promote cooperation along the entire automotive chip value chain and create trust between chip vendors and auto OEMs, the Ministry of Industry and Information Technologies has set up the China Automotive Industry Innovation Alliance. The alliance’s objective, amongst others, is to achieve independence for China’s automotive industry and promote domestic substitutions. ​
    • Membership of the alliance is made up of Chinese OEMs (e.g. SAIC, BYD, FAW), automotive electronics and software vendors (e.g. CETC, CATL, Weichai), chip companies (e.g. SMIC, Black Sesame, Horizon), and state-linked research institutions (e.g. CAICT). While the alliance claims to be open to all industry participants, the technical committee is made up purely of Chinese entities.​

    Sinolytics is a research-based business consultancy entirely focused on China. It advises European companies on their strategic orientation and specific business activities in the People’s Republic.

    • Autoindustrie

    News

    Tiananmen massacre: How the world commemorated the anniversary

    On the 35th anniversary of the bloody crackdown on protests in Tiananmen Square, Beijing has criticized the “interference” of other states. “As to the political disturbance that occurred in the late 1980s, the Chinese government has long had a clear conclusion,” said Foreign Ministry spokeswoman Mao Ning on Tuesday, without going into further detail about the disturbance in question. “We are firmly opposed to anyone using this as a pretext to attack and smear China and interfere in China’s internal affairs.”

    The public commemoration of the student protests of June 4, 1989, is banned in China. On Tuesday, visitors to Tiananmen Square had to undergo strict ID and bag checks. In the Chinese Special Administrative Region of Hong Kong, the police reacted to the anniversary with an increased presence. Until the enforcement of the National Security Law, commemorative events on June 4 were an integral part of the city’s culture of remembrance. Now, police patrols have been deployed, particularly around Victoria Park, where annual vigils were held until 2019. During the day, the area was used for a Chinese folklore festival.

    In the past few days, several arrests in Hong Kong have also been made related to commemoration. Among the arrested was artist Sanmu Chen, who was detained on Monday evening near Causeway Bay station for a pantomime performance. He drew the date of the anniversary in the air with his finger. A spokesperson for the Hong Kong police told The Guardian that Chen had been taken to the police station for investigation, but has since been released.

    Taiwan’s President Lai Ching-te has also commemorated the victims of the bloody crackdown on democracy protests in Beijing’s Tiananmen Square and criticized Beijing. “A truly respectable country is one where people speak out,” he wrote on Facebook on Tuesday. “Any regime should face up to the voice of the people.” Over 1,000 people held a vigil in Taiwan’s capital, Taipei. With candles and a 64-second minute’s silence, people commemorated the victims with the theme “Ideals are bulletproof.”

    The German embassy in Beijing also made a statement to mark the anniversary. At night, the windows of the embassy building were lit up with projected candles. Ambassador Patricia Flor shared a picture of this on X. fpe

    • Tiananmen-Massaker

    Chang’e-6: How the rock samples return to Earth

    The Chinese probe Chang’e-6 has begun its return journey from the far side of the moon. With its successful departure, China has come closer to its goal of being the first country to bring back samples from the far side of the moon.

    The probe, which left the moon at 1:38 a.m. Central European Summer Time on Tuesday, successfully completed its sample collection between June 2 and 3. In a statement, the China National Space Administration (CNSA) said that Chang’e-6 withstood the “test of high temperatures” on the far side of the moon.

    The probe is in lunar orbit and will now move to rendezvous with another spacecraft in orbit, according to the CNSA. The samples will then be transferred to a return module that will fly back to Earth and is expected to land in Inner Mongolia around June 25. Scientists around the world hope that the soil samples will provide answers to questions about the origins of the solar system. rtr

    • Wissenschaft

    European elections: How a Dutch party is being influenced by Beijing

    The Dutch party NL Plan, which is running in the European Parliament elections for the first time, reportedly has close ties to China. This is the result of an investigation by the Dutch news channel RTL Nieuws and the investigative platform Follow The Money. According to the report, NL Plan is being financed by organizations close to the Chinese Communist Party and its United Front. Representatives of the party allegedly voiced pro-Chinese views in Chinese-language media. Among other things, NL Plan is the only Dutch party that opposes the supposed “oppression of China” by the EU and the Western world.

    The list of donors also includes prominent pro-Chinese associations such as the National Federation of Chinese Organizations in the Netherlands (LFCON) and the Dutch-Chinese Chamber of Commerce. Chinese-language newspapers in the Netherlands, such as the United Times and the China Times, have also made donations to NL Plan.

    With its social media campaigns, NL Plan primarily focuses on young voters. Among other things, it advocates social housing and combating poverty. Its co-founder and lead candidate, Kok Kuen Chan, is a 54-year-old from Amsterdam with Hong Kong roots who runs a wine business and the wholesale company Brand New China. fpe

    • Europapolitik

    Office raids: Why Nuctech sues the EU Commission

    The Chinese security technology manufacturer Nuctech has taken legal action against the European Commission over raids on its Dutch and Polish offices. The company, which manufactures body and baggage scanners for airports and ports, has announced that it has filed an appeal with the General Court of the European Union in Luxembourg, the EU’s second-highest court.

    Nuctech has also requested that the court suspend the EU investigation in order to avert potential damage to the company. Nuctech stressed that there was no evidence to support the allegations that it had received illegal state subsidies. The searches of the company’s offices in late April were based on the EU’s Foreign Subsidies Regulation (FSR), designed to prevent foreign companies in the EU from benefiting from subsidies from their home country. rtr/ari

    • Subventionen

    Opinion

    Personal rights: Why a ruling on AI-assisted voice imitation is groundbreaking

    By Sebastian Wiendieck and Peter Stark
    Sebastian Wiendieck (photo) and Peter Stark are lawyers at Roedl & Partner in China.

    In April 2024, the Beijing Internet Court issued another landmark ruling on the use of artificial intelligence (AI), after the same court ruled in November 2023 that AI-generated images can be copyrightable​. The new ruling concerns the infringement of personal rights by AI-generated voice imitations.​

    The plaintiff in the case, a voice artist, discovered that her voice had been used in numerous audio books without her consent. Through her own research, she discovered that audio recordings of her that she had previously made for audio books with a media company had been licensed by the company to an AI software company with permission to commercially use, reproduce and modify the audio recordings. This company used the voice to train an AI-based tool (text-to-speech application) and marketed the application with the plaintiff’s voice. Another company acquired the application and used it to produce various audio books.

    The court found that the defendants had used the plaintiff’s voice without her consent, thereby violating her personal rights, and ordered the defendants to pay damages and apologize.

    The voice of the actress is unique

    A key question for the court was whether a person’s right to their voice includes the voice reproduced by the use of AI. The court’s answer was in the affirmative. A person’s natural voice can be identified by its tone and frequency. It has unique and consistent characteristics that are capable of evoking thoughts and feelings associated with that person. Minor changes to the voice through the use of the AI application do not prevent listeners from associating the voice generated by the application with natural voices, thereby evoking the thoughts and feelings associated with the original person and directly associating the voice heard with that person. This reveals the person’s identity.

    In the proceedings, the court found that the AI-generated voice and the plaintiff’s voice were very similar in timbre, tonality and pronunciation style, which could lead listeners to associate or attribute the AI-generated voice to the plaintiff herself. The AI-generated voice is identifiable as the plaintiff’s voice, so that the plaintiff’s rights in her voice can be extended to the AI-generated voice.

    According to the Chinese Civil Code, the provisions on the protection of the right to one’s own image also apply to the protection of the right to one’s own voice. Accordingly, any natural or legal person is prohibited from using, falsifying or manipulating a person’s voice using technology. The law prohibits the production, use or distribution of a person’s voice without his or her consent.

    The decision of the Beijing Internet Court is likely to set the standard for all cases in which an AI-generated voice can be traced back to the voice of a natural person. If the person has not consented to the use of his or her voice, the person’s personal rights have been violated, which may lead to a claim for damages.

    However, even if there is a contract with a person, e.g. for the production of an advertisement, the recordings cannot simply be used for other purposes. According to the Beijing Internet Court, the purpose and scope of a person’s original contractual consent to use, for example, their voice, must be considered.

    The training of generative AI requires the use of a variety of existing data, such as text, images, videos, etc. Many of these sources may be copyrighted. The use of such sources for training may therefore involve a risk of copyright infringement.​

    Sebastian Wiendieck and Peter Stark are lawyers at Roedl & Partner in China. They mainly advise German and European companies represented in China by subsidiaries and branches or wishing to become active in the Chinese market in other ways.

    This article is part of the event series “Global China Conversations” by the Kiel Institute for the World Economy (IfW). On Thursday (June 6, 2024; 11 a.m., CEST), Stephan Meyer, Professor of Public Law at the Technical University of Applied Sciences Wildau, and Sebastian Wiendieck, author of this text and Head of the Legal Department of Roedl & Partner in China, will discuss the topic of data handling under the moderation of Dietmar Baetge, Professor of International Business Law and Private Business Law at the Technical University of Applied Sciences Wildau: What are the challenges for foreign companies in China?
    China.Table and Rödl & Partner are media partners of this event series.

    • Artificial intelligence
    • Technologie
    • Technology

    Executive Moves

    Bin Gong has taken over the position of Managing Director at Synova China. Synova is headquartered in Duillier, Switzerland, and manufactures laser cutting systems. Gong was previously Sales Director China at the French laser technology company Amplitude.

    Alex Blackie has been Head of Experiential Marketing & Sponsorships at Audi China since May. Blackie has been working for the car manufacturer in Beijing for more than eight years. Most recently, he was responsible for motorsport marketing.

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

    Dessert

    On International Children’s Day on June 1, “Doraemon the Movie: Nobita’s Earth Symphony” hit the Chinese box office. According to data from the China Movie Data Information Network, the Japanese animated film grossed around 2.49 million US dollars by Sunday.

    The robot cat is one of the most popular cartoon characters in Asia, as this light spectacle performed by drones in Hong Kong shows. The character, who was invented in 1969, made her cinema debut in China in 2007. A new film has been released on the mainland every year since 2015. “Nobita’s Earth Symphony” is already the 43rd installment in the series.

    China.Table editorial team

    CHINA.TABLE EDITORIAL OFFICE

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