Table.Briefing: China

US diplomacy beats EU + Key labs for innovation

  • The US stays in touch with China – the EU falls behind
  • How the government steers the innovations of the future
  • VW CEO Diess: ‘Most of the bonus comes from China’
  • Ifo sees dangerous raw materials dependence
  • Because of human rights: China’s international reputation suffers
  • Authorities expect news floods in July and August
  • Xi embarks on Hong Kong visit
  • Profile: Thomas Hoellmann sees cultures of ethnic minorities at risk
Dear reader,

Dialog with China must not be allowed to break off despite everything” – this mantra is currently being repeated non-stop in foreign policy circles, and this is also reflected here in China.Table. But how successful is the EU in keeping channels to Beijing open after the sanctions battle of 2021 and the failed video summit of 2022? US officials and politicians have been more adept at organizing face-to-face offline meetings with their Chinese counterparts in recent months, analyzes Frank Sieren. The Americans keep exchanges going despite harsh words from Washington, while the EU keeps getting in its own way.

However, this is also owed to the EU’s structure. European foreign policy is still bogged down between the member states and Brussels. But the EU must become more active toward China if it wants to live up to its claim to representation, says Sieren. If it doesn’t, it will lose the credibility it has just painstakingly built up.

China strives to become the world leader in technology – this is also something we hear time and again. Today, Ning Wang sheds light on a concrete policy mechanism Beijing applies to work toward this goal. Research policy pools resources into single, exceptional laboratories designed to deliver results quickly. Funding often pursues practical policy goals such as armaments or energy security. But basic research is also gaining momentum. These “key labs” form the focal point for the next catch-up stage.

Your
Finn Mayer-Kuckuk
Image of Finn  Mayer-Kuckuk

Feature

The US courts China – while the EU pouts

Yang Jiechi and Jake Sullivan in conversation (March 2022 in Rome).

This visit is indicative of a new constellation in the newly forming world order: On June 13, US National Security Advisor Jake Sullivan met with his direct counterpart, Yang Jiechi. Yang is the architect of Chinese foreign policy in the Politburo. Sullivan and Yang met in Luxembourg: in the middle of Europe, within a stone’s throw of Brussels.

Yang, on the other hand, had not scheduled a stop with EU representatives. They did not want to. Meanwhile, a White House spokesman described the Luxembourg talks as “candid, substantive, and productive”. In the process, Sullivan stressed “the importance of maintaining open lines of communication to manage competition between our two countries”. The White House even raised the prospect of a summit between President Xi Jinping and US President Joe Biden in the coming months.

Meanwhile, cold silence reigns in Brussels toward China. Only Nicolas Chapuis, the departing EU ambassador to Beijing, is now coming out of the woodwork: He told Bloomberg that two high-level meetings will be held in the coming weeks. But while that is still an unclear plan, the US has long since created facts and reactivated its China contacts. Beijing, in turn, is responding to this initiative with increased receptiveness to talks.

But at the very least, it would have made sense to talk to Yang, China’s most important foreign policy expert. Yang was ambassador to the United States when China became a member of the World Trade Organization (WTO) in 2001. He served as Foreign Minister from 2007 to 2013. Since then, he has headed the CP’s Central Commission for Foreign Affairs as a Politburo member.

Regular exchange between USA and China

Even the Covid risk has not dissuaded Yang from exchanging ideas with his US counterpart. In fact, Yang and Sullivan meet regularly. Back in March 2021, they clashed at a foreign ministers’ summit in Alaska, where Foreign Ministers Antony Blinken and Wang Yi also met for the first time. The meeting was heated and confrontational. Still, communication has increased ever since – despite Covid and mutual sanctions. A year later, they were already sitting together in Rome in harmony.

Other US foreign policy officials also seek to make contact. John Kerry, Joe Biden’s climate envoy, even visited China twice in 2021, in April and September. A third visit is planned. Kerry, a former Secretary of State, also did not just talk about climate during the visit, but paved the way for exchanges in other policy areas. Beijing gave Kerry high credit for the offer of talks. He was allowed to enter the country without quarantine. Nowadays, that is probably the highest honor China can offer a visitor. His Chinese interlocutors instead quarantined themselves afterward. Deputy Secretary of State Wendy Sherman, who visited China in July 2021, was received just as pragmatically.

Brussels obviously does not consider such direct high-level talks to be necessary, especially since the EU imposed sanctions on China in March 2021 over Xinjiang and Hong Kong, and Beijing responded with counter-sanctions. Because Brussels not only ignored Yang Jiechi. Earlier it ignored Chinese Minister of Defense Wei Fenghe, who visited Serbia, North Macedonia, Hungary and Greece at the end of March 2021. Brussels had no time for him, although sanctions were already in the air.

Brussels has no time for Chinese representatives

Meanwhile, Minister of Defense Wei and his US counterpart Lloyd Austin met in June for in-depth talks at the Shangri-La Dialogue of Asian defense ministers in Singapore (China.Table reported). EU Foreign Affairs Commissioner Borrell was also supposed to attend. However, he canceled because he tested positive for Covid. Instead of sending another commissioner to represent him, he sent Gunnar Wiegand, the Managing Director for Asia Pacific of the European External Action Service (EEAS). This meant the EU was not represented at the ministerial level at the talks.

At least Beijing’s European envoy Wu Hongbo was received in May by Enrique Mora, the Deputy Secretary-General of the European External Action Service in Brussels. In November, a delegation led by Wan Gang, a former minister of science who remains highly influential to this day, traveled to Europe for talks. He was accompanied by the leading expert on Germany amongst Chinese diplomats, the former ambassador Shi Mingde. So far, there has been no comparable counter-initiative from Brussels.

Meanwhile, the strategy between Washington and Beijing is to get the exchange back on track: The aim of the United States is “ensuring that each side understand one another’s intentions, understands priorities,” one of Sullivan’s top diplomats explained recently. “This is critical to avoiding potential miscommunication, misinterpretation, reducing risk. All these things I think are critical for, you know, managing the relationship in a healthy and responsible way.”

Borrell, on the other hand, has yet to do more than make mere announcements: “The EU has been too naïve in our relations with China. We have to build realistic relations with China to defend our values and interests.” Or: “China will increase its global role. We have to engage with China to achieve our global objectives, based on our interests and values.” So far, barely anything has happened. Back in March, Borrell still suggested that China should mediate in the Ukraine war (China.Table reported). In April, he called the EU-China summit a “dialogue of the deaf“. At least the strategic dialogue between Wang and Borrell took place via video link took place on September 29, (China.Table reported).

Sobering results and criticism of Brussels

The bottom line is sobering: At the ministerial level, let alone above it, there have been no direct, personal offline contacts between Brussels and Beijing since the 2019 EU-China Summit three years ago. Back then, Premier Li Keqiang was received by Donald Tusk and Jean-Claude Juncker. Covid alone cannot be the reason, as the face-to-face meetings of US representatives with their Chinese counterparts have shown.

Neither European Council President Charles Michel nor Commission President Ursula von der Leyen, nor any of their commissioners, not even Foreign Affairs Representative Josep Borrell, have met their Chinese counterparts in person in office to date, while US security advisors, foreign ministers and defense ministers have long since held personal meetings. While Biden and Xi have also yet to meet in person, they nevertheless know each other very well from the time when they were both vice presidents of their respective countries. Under these circumstances, it is no surprise that talks between Washington and China are progressing well, while the EU-China online summit in April 2022 even ended without a joint declaration.

In the meantime, criticism of Brussels is also being voiced from usually quite level-headed countries such as the Netherlands. Cutting ties with China would not “help anyone in Hong Kong or the Uighurs,” Prime Minister Mark Rutte said recently. “This is one of the reasons I believe the EU should be more of a geopolitical powerhouse, that we have to develop our own policies toward China, in close connection with the US.” That is an idea also shared by the French and the Germans.

Meanwhile, word of the EU’s lack of leadership is slowly spreading in Asia. This spring’s annual Southeast Asia survey by the ISEAS Yusof Ishak Institute in Singapore found that only 16 percent of Southeast Asian elites still believe the EU shows leadership in upholding the rules-based world order and international law. In 2021, it was still 32 percent.

  • Diplomacy
  • EEAS
  • EU
  • Geopolitics
  • Jake Sullivan
  • Sanctions
  • USA
  • Yang Jiechi

Leading the world with key laboratories

A circuit board with car chips from AI specialist Horizon Robotics in Beijing.

China has been catching up in many technology fields for decades and has already become an innovation driver in some sectors. In the 14th Five-Year Plan (2021-2025), the Chinese government has set itself very ambitious yet clear goals. It wants to establish a more innovation-based economy and become the global leader in science and technology by 2050. By 2025, R&D spending alone is expected to increase by seven percent annually. Since the turn of the millennium, spending as a percentage of economic output has already almost tripled (China.Table reported).

To develop new technologies, the People’s Republic has set up a system of so-called State Key Labs (SKL) (国家重点实验室). They are designed to help China’s economy become more independent from the rest of the world. Funded by the government, they form the foundation for innovation in the defense and industrial sectors. This is the conclusion of a recent briefing by the Center for Security and Emerging Technology (CEST) at Georgetown University.

These labs are “conducting cutting-edge basic and applied research, attracting and training domestic and foreign talent, and promoting global academic exchanges,” the authors write. Many of the key labs are located at China’s universities. Tsinghua University in Beijing alone has 13 labs.

The state exerts influence on the laboratories

Philipp Boeing of the ZEW-Leibniz Centre for European Economic Research sees a turnaround in the current Five-Year Plan. The government is once again becoming more involved, even though the Party had taken a different path in the meantime and loosened its grip. “In the planned economy period, the state research labs and research centers were the centers of innovation,” Boeing says. But in the late 1990s to mid-2000s, many of the state institutes were privatized, the ZEW researcher says. The research institutions were supposed to “align themselves more closely with the market and thus become more profitable.”

But the labs have since returned to more government influence. “Together with small and medium-sized private companies and universities, the key labs are increasingly conducting mission-driven research,” says Boeing. Government-owned businesses provide capital and also “set direction” for the labs. But government contracts are not driven solely by market signals. Rather, they also serve political goals.

In aerospace technology, for example, China builds satellites that serve research purposes on the one hand. On the other hand, space technology naturally also serves military goals. And Beijing aspires to catch up with the space nations Russia and the USA (China.Table reported). Last year, the tech city of Shenzhen tendered up to ¥300 million (€45 million) in incentives for any project related to the development of satellites and related industrial applications.

A network of 515 key laboratories spans the country

According to state media, there are now more than 515 key laboratories. Some of them are operated by semi-private companies. Hundreds of laboratories, however, report directly to ministries, like the Ministry of Education. Their research fields range from biology, chemistry, engineering, geosciences and physics to communication technologies, for example. Tens of thousands of researchers work in these laboratories. Figures were last published in 2016. At that time, there were already 35,000 employees.

China’s investment in research and development is also intended to attract foreign companies and benefit domestic start-ups. Innovation clusters are intended to facilitate the exchange of new developments and ideas. A good example is the Zhongguancun Science Park in northwestern Beijing. Over the past two decades, so many tech startups have been founded there that the park is considered China’s Silicon Valley. According to a Harvard Business School study, Zhongguancun is the world’s second-largest technology center in terms of venture funding and concentration of “unicorns,” startups with a valuation of more than a billion dollars.

Research for the goals of the Party

But that is only one side of the coin. Partly because market incentives and the private innovation environment are not enough, the state is intervening again, as Boeing’s research shows. That is why the government provides incentives in the form of subsidies, for example, to steer research activities into areas where new priorities are being set.

In 2014, when the Ministry of Science and Technology designated a number of research fields, these were mainly areas such as

  • agricultural biotechnology,
  • nuclear energy,
  • Technologies to help save power,
  • biomedicine, and
  • aerospace equipment.

” Here, one can already assume that these will also be priorities in the future, where economic returns will have a secondary character and other national security policy issues will be weighted more heavily,” Boeing assesses the situation.

  • Research
  • Science
  • Technology

News

VW CEO: partners inform us about human rights

Volkswagen CEO Herbert Diess warns against a confrontational course against China. The German government’s basic attitude toward the People’s Republic worries him, Diess told German magazine Der Spiegel in an interview published on Thursday. “We need even more dialogue,” the VW chief demanded. “The Chinese leadership is also able to deal with tough European positions – but one should talk about it – and one should understand the economic impact.”

If Germany were to decouple itself from the People’s Republic, according to the VW CEO, there would be much less growth, prosperity and employment. “In this country, it is extremely underestimated how much our prosperity is co-financed by China.” Of the developers in Germany, half work for customers in China, Diess said. And, “I always tell my executives: A large part of your bonus is earned in China.” The VW boss hopes for “a further opening of China.” The People’s Republic will “also continue to develop positively in terms of its value system,” Diess said.

When asked about the VW plant in Xinjiang, Diess assured that he is briefed several times a year by his joint venture partner about the working conditions. He has not yet been there himself. The partner is the state-owned company SAIC. Volkswagen is the market leader in China. Diess remains confident that the People’s Republic will remain the engine of growth, despite the recent Covid lockdowns and the economic slowdown in China. rtr/nib

  • Autoindustrie

Ifo: Reduce raw material dependence on China

Batteries, robotics, renewable energies: Germany is dependent on imports of raw materials for many key technologies, according to an Ifo study – often from individual supplier countries such as China. “Urgent action is needed for crisis-proof supply chains for nine critical minerals,” concluded Lisandra Flach, Head of the Ifo Center for International Economics, from the study published by her economic research institute on Thursday. These are

  • Cobalt,
  • boron,
  • silicon,
  • graphite,
  • magnesium,
  • lithium,
  • niobium,
  • rare earth elements and
  • titanium.

“More supply sources are needed here to make supply chains more resilient,” the expert said. Supply chain disruptions are particularly problematic for the raw materials mentioned, according to the study. The reason: Alternative sources could only be developed in the long term. This is a lesson learned from recent supply shortages in the wake of the Covid pandemic and crises such as the Ukraine war.

For seven of the nine particularly critical raw materials, China is reported to be one of the largest suppliers on the world market – in some cases in a market-dominating position. This would speak in favor of rapidly strengthening existing trade relationships with other countries, including Thailand and Vietnam for rare earth elements, as well as Argentina, Brazil, the United States and Australia for other critical raw materials. Measures are needed for more resilient supply chains for the majority of the 23 critical commodities examined in the study, said foreign trade expert Flach.

The Association of German Chambers of Industry and Commerce (DIHK) sees potential in improved EU-wide coordination, both in strategies for better distribution of raw materials within the EU and in common trade policy with the outside world. “Many EU members have potential in critical raw materials,” said DIHK head of foreign trade Volker Treier. “Here, the development and processing of raw materials within the EU must be expanded.” In addition, he said, the EU must quickly use trade and investment agreements to help companies tap new and sustainable sources of raw materials worldwide. The agreements with the Mercosur countries in South America, but also Indonesia and India, are particularly relevant in this regard and should be concluded quickly. rtr

  • Rare earths
  • Raw materials
  • Trade

International reputation suffers

China’s international reputation suffers as a result of its poor human rights record. That is the finding of a new Pew Research Centre survey of nearly 25,000 people in 19 countries. In most countries, negative opinions of China have increased, as the South China Morning Post reports.

The People’s Republic’s poor human rights record is cited as the main reason. It would lower China’s reputation abroad more than concerns about Chinese military power, economic competition and China’s involvement in each respondent’s country. Nearly 80 percent of respondents also said China’s human rights policies are a “serious or very serious problem” for their countries. Increasing military power and aggressive economic policies were seen as severe or very severe problems by 72 and 66 percent, respectively.

Just at the end of May, a data leak revealed human rights violations in the Xinjiang province. The so-called Xinjiang Police Files reveal torture and poor detention conditions of Uyghurs in internment camps. They prove the direct involvement of the Communist Party’s power circle in the internment of countless Uyghurs (China.Table reported). German citizens also express concern about the human rights situation. More than 70 percent of respondents believe Germany should ban Chinese imports if forced labor is suspected, according to a survey commissioned by China.Table (China.Table reported). nib

  • Civil Society
  • Human Rights
  • Xinjiang

More extreme weather expected for July and August

China’s authorities expect more heavy rains with flooding in July and August. In recent weeks, hundreds of thousands of people in the south and east of the country have been evacuated due to flooding. “It is predicted that from July to August, there will be more extreme weather events in China, and regional flood conditions and drought conditions will be heavier than usual,” said Yao Wenguang, director of the Department of Flood and Drought Disaster Prevention of the Ministry of Water Resources.

According to Yao, droughts will spread in the north of the country, especially in the provinces of Henan, Inner Mongolia, Shaanxi and Gansu. The government would do its utmost to ensure the safe supply of drinking water and the need for water to irrigate agricultural land.

Yao did not specify whether heat waves are expected to continue. In recent weeks, persistent heat in Shandong, Henan and Hebei had pushed the power grid to its breaking point as air conditioners ran at full blast. Extreme weather events are currently making headlines around the world: Floods in China, India and Bangladesh, heat waves in South Asia, Europe and the United States. Scientists and experts point to climate change as the culprit. It makes heat waves and heavy rain more likely and more extreme. nib

  • Climate
  • Environment
  • Flooding
  • Storm

Xi arrives in Hong Kong

On Thursday, head of state Xi Jinping praised the “one country, two systems” concept as a success and described it as “vibrant”. The statement came during a greeting to the city’s citizens shortly after he arrived for the celebrations of the return to China on Friday (China.Table reported). It is the first time Xi has visited Hong Kong since 2017 and the first time he has left Mainland China since the pandemic broke out. Together with his wife Peng Liyuan, he crossed the border via a high-speed train from Shenzhen.

On Thursday evening, Xi attended a banquet for departing Chief Executive Carrie Lam. On Friday, he will deliver a keynote speech on the status of the financial metropolis and preside over the inauguration of new Chief Executive John Lee.

“One country, two systems” is generally considered a failure. Lee is a former police officer and has already announced his intention to keep civil rights activists quiet in Hong Kong (China.Table reported). The “two systems” originally meant a socialist economic order on the Mainland and a capitalist economy and “way of life” in Hong Kong. However, in a broader sense, the term also encompasses an authoritarian government on the Mainland and the rule-of-law constitution in Hong Kong. fin

  • Chinese Communist Party
  • Civil Society
  • Hongkong
  • Human Rights
  • Xi Jinping

Profile

Thomas Hoellmann – ‘Multiculturalism is at risk’

Thomas O. Hoellmann is a sinologist and professor at Ludwig Maximilian University in Munich. He has been President of the Bavarian Academy of Sciences and Humanities since January 2017.

Shortly before finishing his A-levels, Thomas Höllmann started to become interested in China. He originally planned to study art, but as his enthusiasm for Chinese art grew, so did his interest in Chinese history. “In the early 1970s, the Cultural Revolution in China still had a high potential for attention,” says Hoellmann.

He enrolled in sinology at Munich University. The course was very popular at the time, but the dropout rate was more than 95 percent. Hoellmann was one of the few students who stayed on to complete his master’s degree – and even longer. He earned his Ph.D. at the age of 29, and his habilitation four years later.

Research on the Tsou minority

Hoellmann first traveled to Asia when he was already in the middle of his Sinology studies: “I spent my third and fourth semesters at Furen University in Taiwan”. There, he deepened his language skills in Mandarin. “But I regret to this day that I don’t know any of the regional dialects.”

In the late years of his studies, further stays followed, during which he studied the Tsou, an ethnic minority in the central mountainous region of the island. “This then also led to my dissertation,” Hoellmann recounts. About 6,000 people belong to the Tsou minority; they are the seventh-largest indigenous group in Taiwan. The earliest records about them date back to the 17th century, to the time of the Dutch occupation.

From the 1980s until the outbreak of the pandemic, Hoellmann traveled frequently to China, including as a visiting professor. He maintains close ties to Beijing, to Peking University and the Academy of Social Sciences there. However, the oasis towns in Xinjiang have a special place in his heart: “This is where my vision of the Silk Road was brought to life.” His recently published book, “China und die Seidenstraße” (China and the Silk Road), reconstructs the significance of the world-famous trade route and vividly describes what globalization meant throughout around two millennia.

Concern about China’s multiculturalism

Since 2017, Hoellmann has been President of the Bavarian Academy of Sciences and Humanities, heading a staff of nearly 500, employed at several institutes and in more than 50 projects. “What I particularly appreciate about my position is the opportunity to initiate and supervise longer-term basic research in a wide range of subjects,” he says.

Hoellmann is currently looking at China with concern. “The fascinating multiculturalism in the country – which for me is more like a continent – currently seems very at risk to me.” The traditions of ethnic and religious minorities are less protected and cultivated than they were a few years ago, he says. “It’s not the coexistence of cultures that is being prioritized by politicians, but the adaptation to the values of the majority of the population.” Svenja Napp

  • Research
  • Science

Executive Moves

Tobias Frenz has been appointed by Munich Re as Head of its Singapore office. Frenz looks back on a 20-year career with the reinsurer. He previously worked in client services and management in Germany, the United Arab Emirates, Malaysia, and Singapore.

Kian Hoe Tan has been appointed Managing Director and Head of finance by Hong Kong Exchanges and Clearing (HKEX). HKEX is an exchange operator and maintains a number of equity, commodity, fixed income and foreign exchange markets in Asia.

Dessert

Do you recognize it? Our dessert today shows Shanghai in 1871. The photos were developed in 1981 from negatives dating back to 1871.

China.Table editorial office

CHINA.TABLE EDITORIAL OFFICE

Licenses:
    • The US stays in touch with China – the EU falls behind
    • How the government steers the innovations of the future
    • VW CEO Diess: ‘Most of the bonus comes from China’
    • Ifo sees dangerous raw materials dependence
    • Because of human rights: China’s international reputation suffers
    • Authorities expect news floods in July and August
    • Xi embarks on Hong Kong visit
    • Profile: Thomas Hoellmann sees cultures of ethnic minorities at risk
    Dear reader,

    Dialog with China must not be allowed to break off despite everything” – this mantra is currently being repeated non-stop in foreign policy circles, and this is also reflected here in China.Table. But how successful is the EU in keeping channels to Beijing open after the sanctions battle of 2021 and the failed video summit of 2022? US officials and politicians have been more adept at organizing face-to-face offline meetings with their Chinese counterparts in recent months, analyzes Frank Sieren. The Americans keep exchanges going despite harsh words from Washington, while the EU keeps getting in its own way.

    However, this is also owed to the EU’s structure. European foreign policy is still bogged down between the member states and Brussels. But the EU must become more active toward China if it wants to live up to its claim to representation, says Sieren. If it doesn’t, it will lose the credibility it has just painstakingly built up.

    China strives to become the world leader in technology – this is also something we hear time and again. Today, Ning Wang sheds light on a concrete policy mechanism Beijing applies to work toward this goal. Research policy pools resources into single, exceptional laboratories designed to deliver results quickly. Funding often pursues practical policy goals such as armaments or energy security. But basic research is also gaining momentum. These “key labs” form the focal point for the next catch-up stage.

    Your
    Finn Mayer-Kuckuk
    Image of Finn  Mayer-Kuckuk

    Feature

    The US courts China – while the EU pouts

    Yang Jiechi and Jake Sullivan in conversation (March 2022 in Rome).

    This visit is indicative of a new constellation in the newly forming world order: On June 13, US National Security Advisor Jake Sullivan met with his direct counterpart, Yang Jiechi. Yang is the architect of Chinese foreign policy in the Politburo. Sullivan and Yang met in Luxembourg: in the middle of Europe, within a stone’s throw of Brussels.

    Yang, on the other hand, had not scheduled a stop with EU representatives. They did not want to. Meanwhile, a White House spokesman described the Luxembourg talks as “candid, substantive, and productive”. In the process, Sullivan stressed “the importance of maintaining open lines of communication to manage competition between our two countries”. The White House even raised the prospect of a summit between President Xi Jinping and US President Joe Biden in the coming months.

    Meanwhile, cold silence reigns in Brussels toward China. Only Nicolas Chapuis, the departing EU ambassador to Beijing, is now coming out of the woodwork: He told Bloomberg that two high-level meetings will be held in the coming weeks. But while that is still an unclear plan, the US has long since created facts and reactivated its China contacts. Beijing, in turn, is responding to this initiative with increased receptiveness to talks.

    But at the very least, it would have made sense to talk to Yang, China’s most important foreign policy expert. Yang was ambassador to the United States when China became a member of the World Trade Organization (WTO) in 2001. He served as Foreign Minister from 2007 to 2013. Since then, he has headed the CP’s Central Commission for Foreign Affairs as a Politburo member.

    Regular exchange between USA and China

    Even the Covid risk has not dissuaded Yang from exchanging ideas with his US counterpart. In fact, Yang and Sullivan meet regularly. Back in March 2021, they clashed at a foreign ministers’ summit in Alaska, where Foreign Ministers Antony Blinken and Wang Yi also met for the first time. The meeting was heated and confrontational. Still, communication has increased ever since – despite Covid and mutual sanctions. A year later, they were already sitting together in Rome in harmony.

    Other US foreign policy officials also seek to make contact. John Kerry, Joe Biden’s climate envoy, even visited China twice in 2021, in April and September. A third visit is planned. Kerry, a former Secretary of State, also did not just talk about climate during the visit, but paved the way for exchanges in other policy areas. Beijing gave Kerry high credit for the offer of talks. He was allowed to enter the country without quarantine. Nowadays, that is probably the highest honor China can offer a visitor. His Chinese interlocutors instead quarantined themselves afterward. Deputy Secretary of State Wendy Sherman, who visited China in July 2021, was received just as pragmatically.

    Brussels obviously does not consider such direct high-level talks to be necessary, especially since the EU imposed sanctions on China in March 2021 over Xinjiang and Hong Kong, and Beijing responded with counter-sanctions. Because Brussels not only ignored Yang Jiechi. Earlier it ignored Chinese Minister of Defense Wei Fenghe, who visited Serbia, North Macedonia, Hungary and Greece at the end of March 2021. Brussels had no time for him, although sanctions were already in the air.

    Brussels has no time for Chinese representatives

    Meanwhile, Minister of Defense Wei and his US counterpart Lloyd Austin met in June for in-depth talks at the Shangri-La Dialogue of Asian defense ministers in Singapore (China.Table reported). EU Foreign Affairs Commissioner Borrell was also supposed to attend. However, he canceled because he tested positive for Covid. Instead of sending another commissioner to represent him, he sent Gunnar Wiegand, the Managing Director for Asia Pacific of the European External Action Service (EEAS). This meant the EU was not represented at the ministerial level at the talks.

    At least Beijing’s European envoy Wu Hongbo was received in May by Enrique Mora, the Deputy Secretary-General of the European External Action Service in Brussels. In November, a delegation led by Wan Gang, a former minister of science who remains highly influential to this day, traveled to Europe for talks. He was accompanied by the leading expert on Germany amongst Chinese diplomats, the former ambassador Shi Mingde. So far, there has been no comparable counter-initiative from Brussels.

    Meanwhile, the strategy between Washington and Beijing is to get the exchange back on track: The aim of the United States is “ensuring that each side understand one another’s intentions, understands priorities,” one of Sullivan’s top diplomats explained recently. “This is critical to avoiding potential miscommunication, misinterpretation, reducing risk. All these things I think are critical for, you know, managing the relationship in a healthy and responsible way.”

    Borrell, on the other hand, has yet to do more than make mere announcements: “The EU has been too naïve in our relations with China. We have to build realistic relations with China to defend our values and interests.” Or: “China will increase its global role. We have to engage with China to achieve our global objectives, based on our interests and values.” So far, barely anything has happened. Back in March, Borrell still suggested that China should mediate in the Ukraine war (China.Table reported). In April, he called the EU-China summit a “dialogue of the deaf“. At least the strategic dialogue between Wang and Borrell took place via video link took place on September 29, (China.Table reported).

    Sobering results and criticism of Brussels

    The bottom line is sobering: At the ministerial level, let alone above it, there have been no direct, personal offline contacts between Brussels and Beijing since the 2019 EU-China Summit three years ago. Back then, Premier Li Keqiang was received by Donald Tusk and Jean-Claude Juncker. Covid alone cannot be the reason, as the face-to-face meetings of US representatives with their Chinese counterparts have shown.

    Neither European Council President Charles Michel nor Commission President Ursula von der Leyen, nor any of their commissioners, not even Foreign Affairs Representative Josep Borrell, have met their Chinese counterparts in person in office to date, while US security advisors, foreign ministers and defense ministers have long since held personal meetings. While Biden and Xi have also yet to meet in person, they nevertheless know each other very well from the time when they were both vice presidents of their respective countries. Under these circumstances, it is no surprise that talks between Washington and China are progressing well, while the EU-China online summit in April 2022 even ended without a joint declaration.

    In the meantime, criticism of Brussels is also being voiced from usually quite level-headed countries such as the Netherlands. Cutting ties with China would not “help anyone in Hong Kong or the Uighurs,” Prime Minister Mark Rutte said recently. “This is one of the reasons I believe the EU should be more of a geopolitical powerhouse, that we have to develop our own policies toward China, in close connection with the US.” That is an idea also shared by the French and the Germans.

    Meanwhile, word of the EU’s lack of leadership is slowly spreading in Asia. This spring’s annual Southeast Asia survey by the ISEAS Yusof Ishak Institute in Singapore found that only 16 percent of Southeast Asian elites still believe the EU shows leadership in upholding the rules-based world order and international law. In 2021, it was still 32 percent.

    • Diplomacy
    • EEAS
    • EU
    • Geopolitics
    • Jake Sullivan
    • Sanctions
    • USA
    • Yang Jiechi

    Leading the world with key laboratories

    A circuit board with car chips from AI specialist Horizon Robotics in Beijing.

    China has been catching up in many technology fields for decades and has already become an innovation driver in some sectors. In the 14th Five-Year Plan (2021-2025), the Chinese government has set itself very ambitious yet clear goals. It wants to establish a more innovation-based economy and become the global leader in science and technology by 2050. By 2025, R&D spending alone is expected to increase by seven percent annually. Since the turn of the millennium, spending as a percentage of economic output has already almost tripled (China.Table reported).

    To develop new technologies, the People’s Republic has set up a system of so-called State Key Labs (SKL) (国家重点实验室). They are designed to help China’s economy become more independent from the rest of the world. Funded by the government, they form the foundation for innovation in the defense and industrial sectors. This is the conclusion of a recent briefing by the Center for Security and Emerging Technology (CEST) at Georgetown University.

    These labs are “conducting cutting-edge basic and applied research, attracting and training domestic and foreign talent, and promoting global academic exchanges,” the authors write. Many of the key labs are located at China’s universities. Tsinghua University in Beijing alone has 13 labs.

    The state exerts influence on the laboratories

    Philipp Boeing of the ZEW-Leibniz Centre for European Economic Research sees a turnaround in the current Five-Year Plan. The government is once again becoming more involved, even though the Party had taken a different path in the meantime and loosened its grip. “In the planned economy period, the state research labs and research centers were the centers of innovation,” Boeing says. But in the late 1990s to mid-2000s, many of the state institutes were privatized, the ZEW researcher says. The research institutions were supposed to “align themselves more closely with the market and thus become more profitable.”

    But the labs have since returned to more government influence. “Together with small and medium-sized private companies and universities, the key labs are increasingly conducting mission-driven research,” says Boeing. Government-owned businesses provide capital and also “set direction” for the labs. But government contracts are not driven solely by market signals. Rather, they also serve political goals.

    In aerospace technology, for example, China builds satellites that serve research purposes on the one hand. On the other hand, space technology naturally also serves military goals. And Beijing aspires to catch up with the space nations Russia and the USA (China.Table reported). Last year, the tech city of Shenzhen tendered up to ¥300 million (€45 million) in incentives for any project related to the development of satellites and related industrial applications.

    A network of 515 key laboratories spans the country

    According to state media, there are now more than 515 key laboratories. Some of them are operated by semi-private companies. Hundreds of laboratories, however, report directly to ministries, like the Ministry of Education. Their research fields range from biology, chemistry, engineering, geosciences and physics to communication technologies, for example. Tens of thousands of researchers work in these laboratories. Figures were last published in 2016. At that time, there were already 35,000 employees.

    China’s investment in research and development is also intended to attract foreign companies and benefit domestic start-ups. Innovation clusters are intended to facilitate the exchange of new developments and ideas. A good example is the Zhongguancun Science Park in northwestern Beijing. Over the past two decades, so many tech startups have been founded there that the park is considered China’s Silicon Valley. According to a Harvard Business School study, Zhongguancun is the world’s second-largest technology center in terms of venture funding and concentration of “unicorns,” startups with a valuation of more than a billion dollars.

    Research for the goals of the Party

    But that is only one side of the coin. Partly because market incentives and the private innovation environment are not enough, the state is intervening again, as Boeing’s research shows. That is why the government provides incentives in the form of subsidies, for example, to steer research activities into areas where new priorities are being set.

    In 2014, when the Ministry of Science and Technology designated a number of research fields, these were mainly areas such as

    • agricultural biotechnology,
    • nuclear energy,
    • Technologies to help save power,
    • biomedicine, and
    • aerospace equipment.

    ” Here, one can already assume that these will also be priorities in the future, where economic returns will have a secondary character and other national security policy issues will be weighted more heavily,” Boeing assesses the situation.

    • Research
    • Science
    • Technology

    News

    VW CEO: partners inform us about human rights

    Volkswagen CEO Herbert Diess warns against a confrontational course against China. The German government’s basic attitude toward the People’s Republic worries him, Diess told German magazine Der Spiegel in an interview published on Thursday. “We need even more dialogue,” the VW chief demanded. “The Chinese leadership is also able to deal with tough European positions – but one should talk about it – and one should understand the economic impact.”

    If Germany were to decouple itself from the People’s Republic, according to the VW CEO, there would be much less growth, prosperity and employment. “In this country, it is extremely underestimated how much our prosperity is co-financed by China.” Of the developers in Germany, half work for customers in China, Diess said. And, “I always tell my executives: A large part of your bonus is earned in China.” The VW boss hopes for “a further opening of China.” The People’s Republic will “also continue to develop positively in terms of its value system,” Diess said.

    When asked about the VW plant in Xinjiang, Diess assured that he is briefed several times a year by his joint venture partner about the working conditions. He has not yet been there himself. The partner is the state-owned company SAIC. Volkswagen is the market leader in China. Diess remains confident that the People’s Republic will remain the engine of growth, despite the recent Covid lockdowns and the economic slowdown in China. rtr/nib

    • Autoindustrie

    Ifo: Reduce raw material dependence on China

    Batteries, robotics, renewable energies: Germany is dependent on imports of raw materials for many key technologies, according to an Ifo study – often from individual supplier countries such as China. “Urgent action is needed for crisis-proof supply chains for nine critical minerals,” concluded Lisandra Flach, Head of the Ifo Center for International Economics, from the study published by her economic research institute on Thursday. These are

    • Cobalt,
    • boron,
    • silicon,
    • graphite,
    • magnesium,
    • lithium,
    • niobium,
    • rare earth elements and
    • titanium.

    “More supply sources are needed here to make supply chains more resilient,” the expert said. Supply chain disruptions are particularly problematic for the raw materials mentioned, according to the study. The reason: Alternative sources could only be developed in the long term. This is a lesson learned from recent supply shortages in the wake of the Covid pandemic and crises such as the Ukraine war.

    For seven of the nine particularly critical raw materials, China is reported to be one of the largest suppliers on the world market – in some cases in a market-dominating position. This would speak in favor of rapidly strengthening existing trade relationships with other countries, including Thailand and Vietnam for rare earth elements, as well as Argentina, Brazil, the United States and Australia for other critical raw materials. Measures are needed for more resilient supply chains for the majority of the 23 critical commodities examined in the study, said foreign trade expert Flach.

    The Association of German Chambers of Industry and Commerce (DIHK) sees potential in improved EU-wide coordination, both in strategies for better distribution of raw materials within the EU and in common trade policy with the outside world. “Many EU members have potential in critical raw materials,” said DIHK head of foreign trade Volker Treier. “Here, the development and processing of raw materials within the EU must be expanded.” In addition, he said, the EU must quickly use trade and investment agreements to help companies tap new and sustainable sources of raw materials worldwide. The agreements with the Mercosur countries in South America, but also Indonesia and India, are particularly relevant in this regard and should be concluded quickly. rtr

    • Rare earths
    • Raw materials
    • Trade

    International reputation suffers

    China’s international reputation suffers as a result of its poor human rights record. That is the finding of a new Pew Research Centre survey of nearly 25,000 people in 19 countries. In most countries, negative opinions of China have increased, as the South China Morning Post reports.

    The People’s Republic’s poor human rights record is cited as the main reason. It would lower China’s reputation abroad more than concerns about Chinese military power, economic competition and China’s involvement in each respondent’s country. Nearly 80 percent of respondents also said China’s human rights policies are a “serious or very serious problem” for their countries. Increasing military power and aggressive economic policies were seen as severe or very severe problems by 72 and 66 percent, respectively.

    Just at the end of May, a data leak revealed human rights violations in the Xinjiang province. The so-called Xinjiang Police Files reveal torture and poor detention conditions of Uyghurs in internment camps. They prove the direct involvement of the Communist Party’s power circle in the internment of countless Uyghurs (China.Table reported). German citizens also express concern about the human rights situation. More than 70 percent of respondents believe Germany should ban Chinese imports if forced labor is suspected, according to a survey commissioned by China.Table (China.Table reported). nib

    • Civil Society
    • Human Rights
    • Xinjiang

    More extreme weather expected for July and August

    China’s authorities expect more heavy rains with flooding in July and August. In recent weeks, hundreds of thousands of people in the south and east of the country have been evacuated due to flooding. “It is predicted that from July to August, there will be more extreme weather events in China, and regional flood conditions and drought conditions will be heavier than usual,” said Yao Wenguang, director of the Department of Flood and Drought Disaster Prevention of the Ministry of Water Resources.

    According to Yao, droughts will spread in the north of the country, especially in the provinces of Henan, Inner Mongolia, Shaanxi and Gansu. The government would do its utmost to ensure the safe supply of drinking water and the need for water to irrigate agricultural land.

    Yao did not specify whether heat waves are expected to continue. In recent weeks, persistent heat in Shandong, Henan and Hebei had pushed the power grid to its breaking point as air conditioners ran at full blast. Extreme weather events are currently making headlines around the world: Floods in China, India and Bangladesh, heat waves in South Asia, Europe and the United States. Scientists and experts point to climate change as the culprit. It makes heat waves and heavy rain more likely and more extreme. nib

    • Climate
    • Environment
    • Flooding
    • Storm

    Xi arrives in Hong Kong

    On Thursday, head of state Xi Jinping praised the “one country, two systems” concept as a success and described it as “vibrant”. The statement came during a greeting to the city’s citizens shortly after he arrived for the celebrations of the return to China on Friday (China.Table reported). It is the first time Xi has visited Hong Kong since 2017 and the first time he has left Mainland China since the pandemic broke out. Together with his wife Peng Liyuan, he crossed the border via a high-speed train from Shenzhen.

    On Thursday evening, Xi attended a banquet for departing Chief Executive Carrie Lam. On Friday, he will deliver a keynote speech on the status of the financial metropolis and preside over the inauguration of new Chief Executive John Lee.

    “One country, two systems” is generally considered a failure. Lee is a former police officer and has already announced his intention to keep civil rights activists quiet in Hong Kong (China.Table reported). The “two systems” originally meant a socialist economic order on the Mainland and a capitalist economy and “way of life” in Hong Kong. However, in a broader sense, the term also encompasses an authoritarian government on the Mainland and the rule-of-law constitution in Hong Kong. fin

    • Chinese Communist Party
    • Civil Society
    • Hongkong
    • Human Rights
    • Xi Jinping

    Profile

    Thomas Hoellmann – ‘Multiculturalism is at risk’

    Thomas O. Hoellmann is a sinologist and professor at Ludwig Maximilian University in Munich. He has been President of the Bavarian Academy of Sciences and Humanities since January 2017.

    Shortly before finishing his A-levels, Thomas Höllmann started to become interested in China. He originally planned to study art, but as his enthusiasm for Chinese art grew, so did his interest in Chinese history. “In the early 1970s, the Cultural Revolution in China still had a high potential for attention,” says Hoellmann.

    He enrolled in sinology at Munich University. The course was very popular at the time, but the dropout rate was more than 95 percent. Hoellmann was one of the few students who stayed on to complete his master’s degree – and even longer. He earned his Ph.D. at the age of 29, and his habilitation four years later.

    Research on the Tsou minority

    Hoellmann first traveled to Asia when he was already in the middle of his Sinology studies: “I spent my third and fourth semesters at Furen University in Taiwan”. There, he deepened his language skills in Mandarin. “But I regret to this day that I don’t know any of the regional dialects.”

    In the late years of his studies, further stays followed, during which he studied the Tsou, an ethnic minority in the central mountainous region of the island. “This then also led to my dissertation,” Hoellmann recounts. About 6,000 people belong to the Tsou minority; they are the seventh-largest indigenous group in Taiwan. The earliest records about them date back to the 17th century, to the time of the Dutch occupation.

    From the 1980s until the outbreak of the pandemic, Hoellmann traveled frequently to China, including as a visiting professor. He maintains close ties to Beijing, to Peking University and the Academy of Social Sciences there. However, the oasis towns in Xinjiang have a special place in his heart: “This is where my vision of the Silk Road was brought to life.” His recently published book, “China und die Seidenstraße” (China and the Silk Road), reconstructs the significance of the world-famous trade route and vividly describes what globalization meant throughout around two millennia.

    Concern about China’s multiculturalism

    Since 2017, Hoellmann has been President of the Bavarian Academy of Sciences and Humanities, heading a staff of nearly 500, employed at several institutes and in more than 50 projects. “What I particularly appreciate about my position is the opportunity to initiate and supervise longer-term basic research in a wide range of subjects,” he says.

    Hoellmann is currently looking at China with concern. “The fascinating multiculturalism in the country – which for me is more like a continent – currently seems very at risk to me.” The traditions of ethnic and religious minorities are less protected and cultivated than they were a few years ago, he says. “It’s not the coexistence of cultures that is being prioritized by politicians, but the adaptation to the values of the majority of the population.” Svenja Napp

    • Research
    • Science

    Executive Moves

    Tobias Frenz has been appointed by Munich Re as Head of its Singapore office. Frenz looks back on a 20-year career with the reinsurer. He previously worked in client services and management in Germany, the United Arab Emirates, Malaysia, and Singapore.

    Kian Hoe Tan has been appointed Managing Director and Head of finance by Hong Kong Exchanges and Clearing (HKEX). HKEX is an exchange operator and maintains a number of equity, commodity, fixed income and foreign exchange markets in Asia.

    Dessert

    Do you recognize it? Our dessert today shows Shanghai in 1871. The photos were developed in 1981 from negatives dating back to 1871.

    China.Table editorial office

    CHINA.TABLE EDITORIAL OFFICE

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