Table.Briefing: China

3rd Plenary Session + Interview on the US and China

Dear reader,

The late fall one year after a Chinese Communist Party congress is always the time of the so-called 3rd Plenary Session of the Central Committee. Between the National Congresses, which only meet every five years, the entire Central Committee only convenes around seven times; each of the numbered plenary sessions, therefore, only takes place every five years. In the CP calendar, the 3rd Plenary Session is traditionally the one at which the party sets the future course of economic policy: more opening or more control? Strengthening private companies or state-owned enterprises?

The upcoming 3rd Plenary Session is overdue, as Finn Mayer-Kuckuk explains. The fact that no date has yet been set signals that head of state and party leader Xi Jinping must balance the party’s internal ideas on reforms.

Meanwhile, the relationship between China and the US has been in the spotlight since the summit between Xi and US President Joe Biden. The hope is that the two superpowers will finally manage to stabilize their difficult relations. Michael Radunski spoke with US historian Meredith Oyen about what mistakes both sides have made. And what the USA can do better.

Your
Christiane Kühl
Image of Christiane  Kühl

Feature

Waiting and hoping for the 3rd Plenary: reform debate under Xi

It is currently completely unclear to the outside world to what extent debates are still ongoing inside the Chinese Communist Party. Even experts can only speculate. The events surrounding the upcoming 3rd Plenary Session of the Central Committee now indicate more disagreement about economic policy than it appears, at least in the ranks under ruler Xi Jinping.

The focus is on economic policy. The party leadership traditionally sets the economic direction at third plenums. Exactly ten years ago, at the 3rd Plenum in 2013, Xi agreed to a reform program, which, however, he did not implement out of a thirst for control. Now, accusations are being raised that he is squandering opportunities to dynamize the economy. After all, China’s growth is currently slowing down.

The myth of the 3rd Plenum

The CP Central Committee consists of 205 of the most powerful cadres from across the country and forms the party’s core. As a rule, they convene at least once a year for a plenary meeting: a Plenum. Each Central Committee serves for the five years between two party congresses. Currently, the 20th Central Committee is in office.

The seven plenums of each Central Committee are each loosely assigned a meaning. The 3rd Plenum traditionally focuses on the economy. Expectations for an economic reform program are therefore high. There is an almost magical belief that a 3rd Plenum is associated with a market economy, openness and the unleashing of forces. The contradiction between expectations and actual policy is obvious and is apparently also being discussed in China.

Indication 1: the Caixin commentary

A superficial sign of this is an article in the business portal Caixin, available in English and Chinese in slightly different versions. Though it indirectly criticizes Xi, the text has been online uncensored for a week and a half. The expectation would actually have been that such an article would be impossible in Xi’s system or quickly deleted.

The lengthy opinion piece mainly focuses on the 3rd Plenum of the Central Committee in 2013. Xi’s rule was still young, and in 60 articles, the Central Committee had set out to give the market a more significant role.

The key takeaways from the Caixin article:

  • There is a “temperature difference” between the reform expectations and what has actually happened in recent years.
  • Given an aging population, declining growth and a weak labor market, strong reforms are overdue. These reforms must not “only exist on paper,” as has been the case so far. This means more market forces and decentralization.
  • This includes cutting red tape and a better distribution of powers.

The criticism of Xi is hardly hidden. A “distribution of powers” across more shoulders is the opposite of what is happening. Xi alone is chairman of all commissions in which power is increasingly concentrated.

Remarkably, the Chinese version contains the quote: “The Yangzi and the Yellow River will not flow backward 长江黄河不会倒流.” It is a quote from Li Keqiang and refers to the reforms in China. Social media posts with this quote were censored after Li’s death because political reforms came to a standstill under Xi and were even rolled back. Mentioning this quote is an open provocation to the censors.

Indication 2: the timing

The 3rd Plenary Session often meets in November. Not this time, half a month has already passed and there is still no sign of the summit. Apparently, Xi needs more time to prepare the votes in his interests.

This also indicates that not everything is going as smoothly as it looks from the outside. The talk is that the Plenum could be held in December – or even in January. The next Politburo meeting at which the Plenum could be convened will take place in late November.

Xi wants growth, but also control

Economic policy is a crucial factor in China. As is well known, the CP defines and legitimizes itself through development and achieving prosperity. However, China’s economy is currently experiencing a structural crisis. For this reason, it is questionable whether Xi will allow deregulation.

This is exemplified by the resolutions passed at the Central Financial Work Conference earlier this month. In it, Xi focuses control over the financial sector on himself. There is no sign of freeing the market forces.

Economic contradictions under Xi

Therefore, the possible discussions about future economic policy are probably rooted in a real dilemma between different goals.

  • Xi wants control over as many aspects of the state as possible. This includes the economy. However, he has the highest degree of control in a command economy with a decisive role for state-owned enterprises and many regulations.
  • By contrast, supporters of a liberal economic policy – including many Chinese economists – see a solution to the crisis in market forces. This involves many private actors making independent decisions about utilizing capital and the best strategy for their business. This approach is generally considered more efficient since the state cannot know everything.

Market forces are wrongly regarded as a panacea

However, there is a risk that supporters of a liberal economic policy overestimate the short-term effect of unleashing market forces. Their generation’s experience is that a phase of upswing and incredible growth in prosperity immediately followed liberal reforms such as those under Deng Xiaoping and Zhu Rongji.

However, China still had a lot of development potential at the time, which could easily be tapped into. Processes and technologies from developed countries could be transferred with great effect; after all, modernization in China was many decades too late. Many business models and industries were untapped. Whoever came first made their way.

Added to this was the release of enormous capital, which triggered a new boom in 2009, especially in times of global economic weakness. However, these stimulants are no longer effective today; they have worn off.

Xi does not want a wildfire

On the one hand, the private sector already has a significant role; more initiative alone will not change as much as it did 20 or 40 years ago. In fact, many young people seem to be waiting for others to provide them with jobs.

On the other hand, the capital-driven development model focusing on infrastructure and construction only works up to a certain point: until everything a society needs has been built.

Perhaps Xi does not want new growth based on borrowed money because he realizes that this time, he will have to bear the consequences himself. After all, he has secured power for life. If he ignites a debt-financed wildfire, he will have to personally sweep up the ashes later.

  • Economy
  • KP Chinas
  • Xi Jinping

Interview

‘The USA was needlessly provocative about its Taiwan policy’

Die China-Expertin Meredith Oyen blickt im Gespräch mit Michael Radunski durchaus kritisch auf Bidens Taiwan-Politik.
Editor Michael Radunski in conversation with Meredith Oyen from the University of Maryland.

Xi Jinping and Joe Biden met last week; one of the topics discussed was the technology sanctions Washington has imposed on China. Is the US trying to stop China’s rise?

I’m not sure the US is trying to stop China’s rise. There is an ebb and flow to the extent to which US interests are aligned with China. We have had periods where we were strategic partners in various issues. Then there were times when we were strategic competitors. Now we are in a moment where we have a lot of disagreement. That probably gives the impression that when the US does things in its own interest, it might be aimed at China.  

So a false impression?

There are certainly people in the US who think it is an important policy to stop China’s rise. But most people are just concerned about particular things like the Belt and Road Initiative or China’s outreach within the global South. In general, I do not think that there is a China policy that says: Let’s keep China down.  

Nonetheless, US-China relations are at a new low – and many people around the world are concerned because of that. 

Indeed, it’s hard not to be pessimistic right now because we’ve had a really sharp downturn. I’m somebody who lived in China during the happy years and it’s a little shocking how different it feels compared to the early 2000s. Some already say we are in a new state of Cold War with China. I don’t like that analogy because I think it draws out too much from the Soviet-US conflict and that’s not helpful. 

How big is the danger of a military conflict?  

I don’t think that the United States and China want to fight a war with each other. There’s a recognition that that would be catastrophic and everyone would lose. We still have things in common. The biggest danger to me is the danger of an accident or a miscommunication that escalates.  

Some in China believe that the time is ripe to bring Taiwan home.

There have been times of increased heat before. We’ve seen at least three Taiwan Strait crises since the 1950s. But yes, today is different. The heat around the Taiwan issue increased dramatically. China has a military that is reaching parity with the United States and is capable of making an assault like never before. This is a moment where we can’t just assume that the United States is so much superior militarily that China wouldn’t dare.  

So it’s China’s fault?

Not at all. The US also has its share of blame as it has undertaken a number of policies which China has viewed as very provocative in terms of how the US relates to Taiwan. China has responded to that provocation with its own provocations and done some things that have been dangerous. I think that the United States has been in some cases needlessly provocative or needlessly confusing about its Taiwan policy.  

In what sense?

My understanding is that for most people in Taiwan the choice right now is to keep the status quo and not move too far in either direction. At this point I think the US has created a lot of confusion about whether we are deviating from the one-China policy – and that’s not productive.

Why?

China takes advantage of this. Whenever Beijing needs to rile up the masses in support of something, they simply can point to the United States supporting Taiwan. It’s an instant winner for Beijing. I think we could do a much better job that would instantly feel less provocative, even if we continue to have certain kinds of contact with Taiwan.  

Xi Jinping claims that the US is encircling and containing China. And we certainly see US military patrols around the Chinese coast and in the South China Sea. Just imagine there would be so many Chinese ships around the US coast.  

We have. Chinese ships do sail on occasion near US held territories in Alaska. That does happen the other way. The thing is that China is a signatory to the UN Law of the Sea, which says sailing in international waters is allowed, also freedom-of-navigation-voyages in the South China Sea.

The USA regularly conducts such Freedom of Navigation’ missions. To what end?

The reason the US is doing that is simple, it’s one of only a few countries capable of doing it. China’s claims are not uncontested in the South China Sea. And the United States is in a position to continue to reinforce the idea that there is freedom of navigation there.  

You have a very critical view of US policy. What could China do to prevent further escalation?

Dialing back the sort of near misses would be very helpful. Also engaging in military-to-military dialogs. The tendency of China to respond to anything related to Taiwan with such a heavy hand is not helpful. Beijing also could take a step back and choose not to escalate. We’ve seen that in the past. But in the last few years, China has been flying further and further over the centerline of the Taiwan Strait. It creates a greater likelihood of an accident that could escalate.  

And the USA?

As China’s economy is struggling, the US and China could make some strategic decisions about tariffs. There are industries that the United States is pursuing to have back on US shores, which is logical and makes sense. But we don’t have to continue on with the full extent of the tariffs that launched the trade war.  

Some in China are hoping that a Republican president will take office again after the election, turning the US more inward and giving China more breathing room. A fair bet?

I wouldn’t run this risk. The United States might turn more inward with this American First policy. But you also run the risk of amplifying the voices that are quick to blame China for everything and that see China as the center of evil in the world.  

So despite all the tensions, is this a good time to approach each other?

I think that we have a better shot under a Democratic president to negotiate for some of these things necessary to stabilize the relationship. But President Biden has not helped the situation with all of his gaffes on Taiwan. There has to be somebody within the Biden administration who’s willing to both rein in that talk and also reaffirm the one-China policy. I think that without that, you’re not going to have a good outcome there either.  

Meredith Oyen is a historian specializing in relations between the US and China. She is a professor at the University of Maryland.

  • Geopolitik

News

Muslim foreign ministers travel to Beijing for Middle East talks

China will receive several foreign ministers from Arab and Islamic countries on Monday and Tuesday. The Foreign Ministry announced on Sunday that the meeting will discuss a solution to the Israeli-Palestinian conflict and the guarantee of civil defense. This is another move by Beijing to position itself as a mediator in the Gaza war, while simultaneously demonstrating its closeness to the Arab-Islamic side of the conflict. There is still no information about contacts between Chinese mediators and Israel.

Foreign ministers from Saudi Arabia, Jordan, Egypt, Indonesia, Palestine and the secretaries-general of the Arab League and the Organisation of Islamic Cooperation are expected in Beijing. They will then travel on to the capitals of the other permanent members of the UN Security Council. It is a sign that these states see China on their side. As far as is known, Iran’s foreign minister will not be part of the delegation. Iran supports Hamas and the Lebanese Hezbollah militia, which is hostile to Israel. According to Reuters, however, Iran is not considering directly entering the war. ck

  • Geopolitics

No agreement between Taiwan’s KMT and TPP on the candidate issue

The opposition from the conservative Kuomintang (KMT) and the Taiwan People’s Party (TPP) could not agree on a joint candidate for January’s presidential election. The two parties had actually wanted to reach an agreement based on poll results and member surveys. They planned to announce the result at a press conference. The parties explained they were unable to agree on the procedure.

Both parties assured that they would continue talks on finding a joint candidate. They must have resolved their differences by Friday, as this is the registration deadline for candidates.

The incumbent Vice President, William Lai, from the Democratic Progressive Party (DPP), intends to succeed President Tsai Ing-wen, who can no longer run for election after eight years in office. Lai is currently leading in the polls. But should the KMT and the TPP agree on a joint candidate after all, the election race could become tough for Lai. The KMT, in particular, stands for a more pro-China policy than the DPP. The TPP also favors a more dialogue-oriented policy toward the People’s Republic. flee

Many EVs at Guangzhou Auto Show

The HiPhi brand presents its “hypercar” in Guangzhou – it has 1,300 hp and accelerates to 100 km/h in two seconds.

China’s second-largest motor show kicked off in Guangzhou on Friday. Domestic and foreign car manufacturers present 1,132 vehicles at the Guangzhou Auto Show, 469 of which are electric models (NEV). 119 of the EVs belong to foreign brands. This shows that EVs are continuing their advance on the Chinese car market.

In October, monthly NEV sales approached the million mark with 956,000 cars. According to the car manufacturers’ association CAAM, monthly sales were 34 percent higher compared to October 2022.

The brands presented these new models worldwide for the first time at the Guangzhou trade fair:

  • Market leader BYD presented its latest answer to the Tesla Model Y. Its name is Sea Lion 07 – a medium-sized e-crossover designed by Wolfgang Josef Egger, former chief designer of the Audi Group.
  • Geely’s EV brand Zeekr presented its first mid-range electric saloon for the volume segment. Based on an 800-volt platform, the Zeekr 007 will be available for a price starting at 229,900 yuan (29,000 euros). Zeekr currently sells three premium models.
  • Li Auto presented a new seven-seater van called Mega. According to Technode, the car boasts the world’s fastest charging speed. It has a range of up to 500 kilometers per charge using CATL’s next-generation Qilin batteries – with a charging time of 12 minutes. The car costs a whopping 600,000 yuan (76,000 euros) and will be launched in February 2024.
  • VW partner Xpeng is asking just under two-thirds of this price (388,000 yuan/49,000 euros) for its new family van called X9, which is scheduled for market launch in January 2024.

The new electric brand HiPhi also presented the prototype of its so-called “hypercar” with 960 kilowatts of power and innovative technology, which the manufacturer claims accelerates to 100 kilometers per hour in two seconds and reaches speeds of 300 kilometers per hour. The vehicle is set to roll off the production line in small numbers from 2025. The manufacturer behind HiPhi is Human Horizons from Shanghai. ck

  • Autoindustrie
  • CAAM
  • Electromobility

German mechanical engineering company pessimistic

Only one in ten German mechanical engineering companies in China still rate its current business situation as good. This was the result of the latest business survey conducted by the German Engineering Federation (VDMA). According to a report by the German Press Agency, 43 percent described their situation as poor and 47 percent as satisfactory. On average, companies expect sales to stagnate this year. They complain about underutilized capacities and a lack of new orders.

“This is the worst sentiment we have registered since the survey began in 2016. The year 2023, actually a year of opening and normalization, poses enormous challenges for our local companies,” said Claudia Barkowsky, Managing Director of the VDMA in China. However, companies expect a four percent average sales growth in 2024. There is hope that China will remain a growth market in the medium and long term. ck

Alibaba will not outsource its cloud division

Alibaba has decided not to spin off its cloud division as planned and float it separately on the stock exchange. The reason for the U-turn is the uncertainty caused by US export restrictions on advanced computer chips, Alibaba announced. Alibaba founder Jack Ma remains “very positive” about the group’s situation, the South China Morning Post learned from Ma’s office. The founder will continue to hold Alibaba shares in the future.

According to CEO Eddie Wu Yongming, Alibaba Group Holding will now focus on three priorities: Technology-driven internet platform businesses and AI-driven technologies, as well as building global trading networks. In his first conference call with analysts since the changes in the company’s leadership in September, Wu said the company intends to drive growth in the coming decade.

According to Jon Withaar, Asia expert at Pictet Asset Management, Alibaba’s decision was a surprise. “The shelving is a surprise and makes us wonder if there are issues behind the scenes that we aren’t aware of.” The IPO of the cloud division was supposed to be part of the biggest reorganization in Alibaba’s history. In spring, the group announced plans to split into six independent units. Alibaba itself would act as a holding company. The cloud division was considered particularly valuable, and its IPO was expected to raise billions. Although the segment will not go public for the time being, it will continue to operate independently, emphasized Alibaba co-founder Joseph Tsai. ck/rtr

  • Alibaba
  • Technology

Heads

Gerd Boesken – Taiwan’s friend in Hamburg

Gerd Boesken has been President of the Hamburg Taiwan friendship association “Bambusrunde” for 27 years.

Gerd Boesken heard about Taiwan for the first time in a Dominican monastery in Warburg, Westphalia. Over the years, Gerd, a six-year-old altar boy at the time, repeatedly met a missionary there who told him about Taiwan and the “poor heathen children” there. When he started his studies, Boesken traveled to Taiwan for the first time for a language course. “Back then, I grew up in Taiwan, with Taiwan and in discussions with this missionary,” says Boesken today. Although he has left the Catholic Church behind him, his enthusiasm for Taiwan has remained. Today, he carries on this enthusiasm as president of a Hamburg-based group of Taiwan friends called “Bambusrunde.”

The Hamburg association has been around since 1969, and its 230 members seek to strengthen relations between Germany and Taiwan – culturally, economically and socially. To this end, they organize regular meetings with party politicians, members of the Senate and the Taiwan representative office in Berlin. Boesken has been the association’s president for 27 years. “Our members are very active,” he says. This is also due to the nature of the association’s events: “Everything is very personal here – we enjoy singing and eating together.” In April, 13 members traveled to Taiwan together.

At university, Boesken researched temples and popular theaters in Taiwan. “As academics who might ask unpleasant questions, we were not particularly welcome there in times of martial law,” he recalls. “A lot of resistance energy broke out in the popular theaters. Not everyone liked the fact that we took a close look at this at the time.”

Taiwan is less a profession than a private passion

Today, Boesken works mainly as a translator, interpreter or consultant for German companies looking for access to Asian markets. However, Taiwan is not part of his business. “My business focus has always been outside Taiwan,” says Boesken, who holds a PhD in Sinology.

He speaks all the more passionately about Taiwan and the island of Formosa: “When the Bambusrunde was founded almost 60 years ago, Taiwan was known in Germany as the beautiful island where canned products for Hawaiian toast were made.” A lot has changed since then; Taiwan has become an important economic partner for Germany. The current German government was the first to include support for Taiwan as a like-minded partner in its coalition agreement.

However, Boesken would like to see more. “For forty years, Taiwan has regularly applied to be an observer and non-voting member of the World Health Organisation (WHO) – the People’s Republic prevents this,” says Boesken. “We are calling on the German government to ensure that Taiwan is also represented in UN organizations.” Germany should not underestimate the importance of the island state: “The Western community of states is always on the lookout for like-minded countries. Of all the East Asian states, Taiwan’s position is closest to Germany’s.” Svenja Schlicht

  • Sinology
  • Taiwan

Executive Moves

Majka Patuzzi is now Senior Market Consultant ISPO China at Messe Muenchen. This is the China offshoot of the trade fair for sporting goods and sports fashion. Patuzzi has been in charge of China-related trade fair activities for many years.

Laura von Baross has been Head of China & International Communications in the healthcare division of the chemical and pharmaceutical manufacturer Merck since September. She was previously responsible for strategic communications for the Life Science division.

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

Dessert

The winter sports season has begun, and so has figure skating: Here, China’s Peng Cheng and Lei Wang perform their short program in pairs skating at the Grand Prix in Espoo, Finland.

China.table editorial team

CHINA.TABLE EDITORIAL OFFICE

Licenses:
    Dear reader,

    The late fall one year after a Chinese Communist Party congress is always the time of the so-called 3rd Plenary Session of the Central Committee. Between the National Congresses, which only meet every five years, the entire Central Committee only convenes around seven times; each of the numbered plenary sessions, therefore, only takes place every five years. In the CP calendar, the 3rd Plenary Session is traditionally the one at which the party sets the future course of economic policy: more opening or more control? Strengthening private companies or state-owned enterprises?

    The upcoming 3rd Plenary Session is overdue, as Finn Mayer-Kuckuk explains. The fact that no date has yet been set signals that head of state and party leader Xi Jinping must balance the party’s internal ideas on reforms.

    Meanwhile, the relationship between China and the US has been in the spotlight since the summit between Xi and US President Joe Biden. The hope is that the two superpowers will finally manage to stabilize their difficult relations. Michael Radunski spoke with US historian Meredith Oyen about what mistakes both sides have made. And what the USA can do better.

    Your
    Christiane Kühl
    Image of Christiane  Kühl

    Feature

    Waiting and hoping for the 3rd Plenary: reform debate under Xi

    It is currently completely unclear to the outside world to what extent debates are still ongoing inside the Chinese Communist Party. Even experts can only speculate. The events surrounding the upcoming 3rd Plenary Session of the Central Committee now indicate more disagreement about economic policy than it appears, at least in the ranks under ruler Xi Jinping.

    The focus is on economic policy. The party leadership traditionally sets the economic direction at third plenums. Exactly ten years ago, at the 3rd Plenum in 2013, Xi agreed to a reform program, which, however, he did not implement out of a thirst for control. Now, accusations are being raised that he is squandering opportunities to dynamize the economy. After all, China’s growth is currently slowing down.

    The myth of the 3rd Plenum

    The CP Central Committee consists of 205 of the most powerful cadres from across the country and forms the party’s core. As a rule, they convene at least once a year for a plenary meeting: a Plenum. Each Central Committee serves for the five years between two party congresses. Currently, the 20th Central Committee is in office.

    The seven plenums of each Central Committee are each loosely assigned a meaning. The 3rd Plenum traditionally focuses on the economy. Expectations for an economic reform program are therefore high. There is an almost magical belief that a 3rd Plenum is associated with a market economy, openness and the unleashing of forces. The contradiction between expectations and actual policy is obvious and is apparently also being discussed in China.

    Indication 1: the Caixin commentary

    A superficial sign of this is an article in the business portal Caixin, available in English and Chinese in slightly different versions. Though it indirectly criticizes Xi, the text has been online uncensored for a week and a half. The expectation would actually have been that such an article would be impossible in Xi’s system or quickly deleted.

    The lengthy opinion piece mainly focuses on the 3rd Plenum of the Central Committee in 2013. Xi’s rule was still young, and in 60 articles, the Central Committee had set out to give the market a more significant role.

    The key takeaways from the Caixin article:

    • There is a “temperature difference” between the reform expectations and what has actually happened in recent years.
    • Given an aging population, declining growth and a weak labor market, strong reforms are overdue. These reforms must not “only exist on paper,” as has been the case so far. This means more market forces and decentralization.
    • This includes cutting red tape and a better distribution of powers.

    The criticism of Xi is hardly hidden. A “distribution of powers” across more shoulders is the opposite of what is happening. Xi alone is chairman of all commissions in which power is increasingly concentrated.

    Remarkably, the Chinese version contains the quote: “The Yangzi and the Yellow River will not flow backward 长江黄河不会倒流.” It is a quote from Li Keqiang and refers to the reforms in China. Social media posts with this quote were censored after Li’s death because political reforms came to a standstill under Xi and were even rolled back. Mentioning this quote is an open provocation to the censors.

    Indication 2: the timing

    The 3rd Plenary Session often meets in November. Not this time, half a month has already passed and there is still no sign of the summit. Apparently, Xi needs more time to prepare the votes in his interests.

    This also indicates that not everything is going as smoothly as it looks from the outside. The talk is that the Plenum could be held in December – or even in January. The next Politburo meeting at which the Plenum could be convened will take place in late November.

    Xi wants growth, but also control

    Economic policy is a crucial factor in China. As is well known, the CP defines and legitimizes itself through development and achieving prosperity. However, China’s economy is currently experiencing a structural crisis. For this reason, it is questionable whether Xi will allow deregulation.

    This is exemplified by the resolutions passed at the Central Financial Work Conference earlier this month. In it, Xi focuses control over the financial sector on himself. There is no sign of freeing the market forces.

    Economic contradictions under Xi

    Therefore, the possible discussions about future economic policy are probably rooted in a real dilemma between different goals.

    • Xi wants control over as many aspects of the state as possible. This includes the economy. However, he has the highest degree of control in a command economy with a decisive role for state-owned enterprises and many regulations.
    • By contrast, supporters of a liberal economic policy – including many Chinese economists – see a solution to the crisis in market forces. This involves many private actors making independent decisions about utilizing capital and the best strategy for their business. This approach is generally considered more efficient since the state cannot know everything.

    Market forces are wrongly regarded as a panacea

    However, there is a risk that supporters of a liberal economic policy overestimate the short-term effect of unleashing market forces. Their generation’s experience is that a phase of upswing and incredible growth in prosperity immediately followed liberal reforms such as those under Deng Xiaoping and Zhu Rongji.

    However, China still had a lot of development potential at the time, which could easily be tapped into. Processes and technologies from developed countries could be transferred with great effect; after all, modernization in China was many decades too late. Many business models and industries were untapped. Whoever came first made their way.

    Added to this was the release of enormous capital, which triggered a new boom in 2009, especially in times of global economic weakness. However, these stimulants are no longer effective today; they have worn off.

    Xi does not want a wildfire

    On the one hand, the private sector already has a significant role; more initiative alone will not change as much as it did 20 or 40 years ago. In fact, many young people seem to be waiting for others to provide them with jobs.

    On the other hand, the capital-driven development model focusing on infrastructure and construction only works up to a certain point: until everything a society needs has been built.

    Perhaps Xi does not want new growth based on borrowed money because he realizes that this time, he will have to bear the consequences himself. After all, he has secured power for life. If he ignites a debt-financed wildfire, he will have to personally sweep up the ashes later.

    • Economy
    • KP Chinas
    • Xi Jinping

    Interview

    ‘The USA was needlessly provocative about its Taiwan policy’

    Die China-Expertin Meredith Oyen blickt im Gespräch mit Michael Radunski durchaus kritisch auf Bidens Taiwan-Politik.
    Editor Michael Radunski in conversation with Meredith Oyen from the University of Maryland.

    Xi Jinping and Joe Biden met last week; one of the topics discussed was the technology sanctions Washington has imposed on China. Is the US trying to stop China’s rise?

    I’m not sure the US is trying to stop China’s rise. There is an ebb and flow to the extent to which US interests are aligned with China. We have had periods where we were strategic partners in various issues. Then there were times when we were strategic competitors. Now we are in a moment where we have a lot of disagreement. That probably gives the impression that when the US does things in its own interest, it might be aimed at China.  

    So a false impression?

    There are certainly people in the US who think it is an important policy to stop China’s rise. But most people are just concerned about particular things like the Belt and Road Initiative or China’s outreach within the global South. In general, I do not think that there is a China policy that says: Let’s keep China down.  

    Nonetheless, US-China relations are at a new low – and many people around the world are concerned because of that. 

    Indeed, it’s hard not to be pessimistic right now because we’ve had a really sharp downturn. I’m somebody who lived in China during the happy years and it’s a little shocking how different it feels compared to the early 2000s. Some already say we are in a new state of Cold War with China. I don’t like that analogy because I think it draws out too much from the Soviet-US conflict and that’s not helpful. 

    How big is the danger of a military conflict?  

    I don’t think that the United States and China want to fight a war with each other. There’s a recognition that that would be catastrophic and everyone would lose. We still have things in common. The biggest danger to me is the danger of an accident or a miscommunication that escalates.  

    Some in China believe that the time is ripe to bring Taiwan home.

    There have been times of increased heat before. We’ve seen at least three Taiwan Strait crises since the 1950s. But yes, today is different. The heat around the Taiwan issue increased dramatically. China has a military that is reaching parity with the United States and is capable of making an assault like never before. This is a moment where we can’t just assume that the United States is so much superior militarily that China wouldn’t dare.  

    So it’s China’s fault?

    Not at all. The US also has its share of blame as it has undertaken a number of policies which China has viewed as very provocative in terms of how the US relates to Taiwan. China has responded to that provocation with its own provocations and done some things that have been dangerous. I think that the United States has been in some cases needlessly provocative or needlessly confusing about its Taiwan policy.  

    In what sense?

    My understanding is that for most people in Taiwan the choice right now is to keep the status quo and not move too far in either direction. At this point I think the US has created a lot of confusion about whether we are deviating from the one-China policy – and that’s not productive.

    Why?

    China takes advantage of this. Whenever Beijing needs to rile up the masses in support of something, they simply can point to the United States supporting Taiwan. It’s an instant winner for Beijing. I think we could do a much better job that would instantly feel less provocative, even if we continue to have certain kinds of contact with Taiwan.  

    Xi Jinping claims that the US is encircling and containing China. And we certainly see US military patrols around the Chinese coast and in the South China Sea. Just imagine there would be so many Chinese ships around the US coast.  

    We have. Chinese ships do sail on occasion near US held territories in Alaska. That does happen the other way. The thing is that China is a signatory to the UN Law of the Sea, which says sailing in international waters is allowed, also freedom-of-navigation-voyages in the South China Sea.

    The USA regularly conducts such Freedom of Navigation’ missions. To what end?

    The reason the US is doing that is simple, it’s one of only a few countries capable of doing it. China’s claims are not uncontested in the South China Sea. And the United States is in a position to continue to reinforce the idea that there is freedom of navigation there.  

    You have a very critical view of US policy. What could China do to prevent further escalation?

    Dialing back the sort of near misses would be very helpful. Also engaging in military-to-military dialogs. The tendency of China to respond to anything related to Taiwan with such a heavy hand is not helpful. Beijing also could take a step back and choose not to escalate. We’ve seen that in the past. But in the last few years, China has been flying further and further over the centerline of the Taiwan Strait. It creates a greater likelihood of an accident that could escalate.  

    And the USA?

    As China’s economy is struggling, the US and China could make some strategic decisions about tariffs. There are industries that the United States is pursuing to have back on US shores, which is logical and makes sense. But we don’t have to continue on with the full extent of the tariffs that launched the trade war.  

    Some in China are hoping that a Republican president will take office again after the election, turning the US more inward and giving China more breathing room. A fair bet?

    I wouldn’t run this risk. The United States might turn more inward with this American First policy. But you also run the risk of amplifying the voices that are quick to blame China for everything and that see China as the center of evil in the world.  

    So despite all the tensions, is this a good time to approach each other?

    I think that we have a better shot under a Democratic president to negotiate for some of these things necessary to stabilize the relationship. But President Biden has not helped the situation with all of his gaffes on Taiwan. There has to be somebody within the Biden administration who’s willing to both rein in that talk and also reaffirm the one-China policy. I think that without that, you’re not going to have a good outcome there either.  

    Meredith Oyen is a historian specializing in relations between the US and China. She is a professor at the University of Maryland.

    • Geopolitik

    News

    Muslim foreign ministers travel to Beijing for Middle East talks

    China will receive several foreign ministers from Arab and Islamic countries on Monday and Tuesday. The Foreign Ministry announced on Sunday that the meeting will discuss a solution to the Israeli-Palestinian conflict and the guarantee of civil defense. This is another move by Beijing to position itself as a mediator in the Gaza war, while simultaneously demonstrating its closeness to the Arab-Islamic side of the conflict. There is still no information about contacts between Chinese mediators and Israel.

    Foreign ministers from Saudi Arabia, Jordan, Egypt, Indonesia, Palestine and the secretaries-general of the Arab League and the Organisation of Islamic Cooperation are expected in Beijing. They will then travel on to the capitals of the other permanent members of the UN Security Council. It is a sign that these states see China on their side. As far as is known, Iran’s foreign minister will not be part of the delegation. Iran supports Hamas and the Lebanese Hezbollah militia, which is hostile to Israel. According to Reuters, however, Iran is not considering directly entering the war. ck

    • Geopolitics

    No agreement between Taiwan’s KMT and TPP on the candidate issue

    The opposition from the conservative Kuomintang (KMT) and the Taiwan People’s Party (TPP) could not agree on a joint candidate for January’s presidential election. The two parties had actually wanted to reach an agreement based on poll results and member surveys. They planned to announce the result at a press conference. The parties explained they were unable to agree on the procedure.

    Both parties assured that they would continue talks on finding a joint candidate. They must have resolved their differences by Friday, as this is the registration deadline for candidates.

    The incumbent Vice President, William Lai, from the Democratic Progressive Party (DPP), intends to succeed President Tsai Ing-wen, who can no longer run for election after eight years in office. Lai is currently leading in the polls. But should the KMT and the TPP agree on a joint candidate after all, the election race could become tough for Lai. The KMT, in particular, stands for a more pro-China policy than the DPP. The TPP also favors a more dialogue-oriented policy toward the People’s Republic. flee

    Many EVs at Guangzhou Auto Show

    The HiPhi brand presents its “hypercar” in Guangzhou – it has 1,300 hp and accelerates to 100 km/h in two seconds.

    China’s second-largest motor show kicked off in Guangzhou on Friday. Domestic and foreign car manufacturers present 1,132 vehicles at the Guangzhou Auto Show, 469 of which are electric models (NEV). 119 of the EVs belong to foreign brands. This shows that EVs are continuing their advance on the Chinese car market.

    In October, monthly NEV sales approached the million mark with 956,000 cars. According to the car manufacturers’ association CAAM, monthly sales were 34 percent higher compared to October 2022.

    The brands presented these new models worldwide for the first time at the Guangzhou trade fair:

    • Market leader BYD presented its latest answer to the Tesla Model Y. Its name is Sea Lion 07 – a medium-sized e-crossover designed by Wolfgang Josef Egger, former chief designer of the Audi Group.
    • Geely’s EV brand Zeekr presented its first mid-range electric saloon for the volume segment. Based on an 800-volt platform, the Zeekr 007 will be available for a price starting at 229,900 yuan (29,000 euros). Zeekr currently sells three premium models.
    • Li Auto presented a new seven-seater van called Mega. According to Technode, the car boasts the world’s fastest charging speed. It has a range of up to 500 kilometers per charge using CATL’s next-generation Qilin batteries – with a charging time of 12 minutes. The car costs a whopping 600,000 yuan (76,000 euros) and will be launched in February 2024.
    • VW partner Xpeng is asking just under two-thirds of this price (388,000 yuan/49,000 euros) for its new family van called X9, which is scheduled for market launch in January 2024.

    The new electric brand HiPhi also presented the prototype of its so-called “hypercar” with 960 kilowatts of power and innovative technology, which the manufacturer claims accelerates to 100 kilometers per hour in two seconds and reaches speeds of 300 kilometers per hour. The vehicle is set to roll off the production line in small numbers from 2025. The manufacturer behind HiPhi is Human Horizons from Shanghai. ck

    • Autoindustrie
    • CAAM
    • Electromobility

    German mechanical engineering company pessimistic

    Only one in ten German mechanical engineering companies in China still rate its current business situation as good. This was the result of the latest business survey conducted by the German Engineering Federation (VDMA). According to a report by the German Press Agency, 43 percent described their situation as poor and 47 percent as satisfactory. On average, companies expect sales to stagnate this year. They complain about underutilized capacities and a lack of new orders.

    “This is the worst sentiment we have registered since the survey began in 2016. The year 2023, actually a year of opening and normalization, poses enormous challenges for our local companies,” said Claudia Barkowsky, Managing Director of the VDMA in China. However, companies expect a four percent average sales growth in 2024. There is hope that China will remain a growth market in the medium and long term. ck

    Alibaba will not outsource its cloud division

    Alibaba has decided not to spin off its cloud division as planned and float it separately on the stock exchange. The reason for the U-turn is the uncertainty caused by US export restrictions on advanced computer chips, Alibaba announced. Alibaba founder Jack Ma remains “very positive” about the group’s situation, the South China Morning Post learned from Ma’s office. The founder will continue to hold Alibaba shares in the future.

    According to CEO Eddie Wu Yongming, Alibaba Group Holding will now focus on three priorities: Technology-driven internet platform businesses and AI-driven technologies, as well as building global trading networks. In his first conference call with analysts since the changes in the company’s leadership in September, Wu said the company intends to drive growth in the coming decade.

    According to Jon Withaar, Asia expert at Pictet Asset Management, Alibaba’s decision was a surprise. “The shelving is a surprise and makes us wonder if there are issues behind the scenes that we aren’t aware of.” The IPO of the cloud division was supposed to be part of the biggest reorganization in Alibaba’s history. In spring, the group announced plans to split into six independent units. Alibaba itself would act as a holding company. The cloud division was considered particularly valuable, and its IPO was expected to raise billions. Although the segment will not go public for the time being, it will continue to operate independently, emphasized Alibaba co-founder Joseph Tsai. ck/rtr

    • Alibaba
    • Technology

    Heads

    Gerd Boesken – Taiwan’s friend in Hamburg

    Gerd Boesken has been President of the Hamburg Taiwan friendship association “Bambusrunde” for 27 years.

    Gerd Boesken heard about Taiwan for the first time in a Dominican monastery in Warburg, Westphalia. Over the years, Gerd, a six-year-old altar boy at the time, repeatedly met a missionary there who told him about Taiwan and the “poor heathen children” there. When he started his studies, Boesken traveled to Taiwan for the first time for a language course. “Back then, I grew up in Taiwan, with Taiwan and in discussions with this missionary,” says Boesken today. Although he has left the Catholic Church behind him, his enthusiasm for Taiwan has remained. Today, he carries on this enthusiasm as president of a Hamburg-based group of Taiwan friends called “Bambusrunde.”

    The Hamburg association has been around since 1969, and its 230 members seek to strengthen relations between Germany and Taiwan – culturally, economically and socially. To this end, they organize regular meetings with party politicians, members of the Senate and the Taiwan representative office in Berlin. Boesken has been the association’s president for 27 years. “Our members are very active,” he says. This is also due to the nature of the association’s events: “Everything is very personal here – we enjoy singing and eating together.” In April, 13 members traveled to Taiwan together.

    At university, Boesken researched temples and popular theaters in Taiwan. “As academics who might ask unpleasant questions, we were not particularly welcome there in times of martial law,” he recalls. “A lot of resistance energy broke out in the popular theaters. Not everyone liked the fact that we took a close look at this at the time.”

    Taiwan is less a profession than a private passion

    Today, Boesken works mainly as a translator, interpreter or consultant for German companies looking for access to Asian markets. However, Taiwan is not part of his business. “My business focus has always been outside Taiwan,” says Boesken, who holds a PhD in Sinology.

    He speaks all the more passionately about Taiwan and the island of Formosa: “When the Bambusrunde was founded almost 60 years ago, Taiwan was known in Germany as the beautiful island where canned products for Hawaiian toast were made.” A lot has changed since then; Taiwan has become an important economic partner for Germany. The current German government was the first to include support for Taiwan as a like-minded partner in its coalition agreement.

    However, Boesken would like to see more. “For forty years, Taiwan has regularly applied to be an observer and non-voting member of the World Health Organisation (WHO) – the People’s Republic prevents this,” says Boesken. “We are calling on the German government to ensure that Taiwan is also represented in UN organizations.” Germany should not underestimate the importance of the island state: “The Western community of states is always on the lookout for like-minded countries. Of all the East Asian states, Taiwan’s position is closest to Germany’s.” Svenja Schlicht

    • Sinology
    • Taiwan

    Executive Moves

    Majka Patuzzi is now Senior Market Consultant ISPO China at Messe Muenchen. This is the China offshoot of the trade fair for sporting goods and sports fashion. Patuzzi has been in charge of China-related trade fair activities for many years.

    Laura von Baross has been Head of China & International Communications in the healthcare division of the chemical and pharmaceutical manufacturer Merck since September. She was previously responsible for strategic communications for the Life Science division.

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

    Dessert

    The winter sports season has begun, and so has figure skating: Here, China’s Peng Cheng and Lei Wang perform their short program in pairs skating at the Grand Prix in Espoo, Finland.

    China.table editorial team

    CHINA.TABLE EDITORIAL OFFICE

    Licenses:

      Sign up now and continue reading immediately

      No credit card details required. No automatic renewal.

      Sie haben bereits das Table.Briefing Abonnement?

      Anmelden und weiterlesen