High subsidies for the domestic industry, coupled with painful tariffs on Chinese products: The United States is pursuing a tough industrial policy to arm its cleantech companies against competition from the People’s Republic. The special tariff package Joe Biden announced on Tuesday packs a punch. Washington now plugs one remaining loophole for an ultra-modern type of solar product.
Closing off is effective, but it creates a dilemma between protecting domestic industries on the one side and the prerequisites for the US energy transition on the other, writes Christiane Kuehl in her analysis. After all, low-cost products from China can accelerate the transformation.
While Europe and Germany face the same challenge, the US tariffs add another difficulty. Surplus Chinese cleantech products could be diverted to the EU, further intensifying the price war there.
On the one side, barriers are growing – on the other, a much-vaunted, borderless partnership is flourishing. Vladimir Putin visits Xi Jinping in Beijing. It is clear: The connection is strategic and long-term. On the first day of Putin’s visit, the two leaders assured each other that they wanted to work together against the “destructive and hostile” pressure from the US.
Putin also praised China’s attempts to negotiate peace in Ukraine, while Xi assured Russia that he would support its core interests. Since this Thursday at the latest, the intensity of the relationship between China and Russia leaves no doubts – both in trade and strategy, writes Michael Radunski.
Your Julia Fiedler
Feature
Photovoltaics: How Biden plugs the last loopholes for Chinese solar imports
Workers install bifacial solar modules of a photovoltaic system in the desert of Ningxia province. The modules can generate electricity on both sides.
In the shadow of the big special tariff announcement earlier this week, the US has now also plugged a previously duty-free loophole for China’s solar companies. On Thursday, the Office of the President in Washington announced that the tariff exemptions for bifacial solar panels that have been in place for two years will soon be terminated. These panels, which can generate electricity on both sides, were still a niche product at the time.
Within a short time, however, they have become one of the most important technologies for large utility-scale photovoltaic projects, especially on open spaces. This is because bifacial – i.e., two-sided – modules can capture the sun from any direction with the help of mobile supports. This makes them attractive for domestic US producers, which the White House now wants to protect better.
In parallel, the Ministry of Finance announced plans to facilitate subsidy applications from solar project developers for the use of locally manufactured products. The Inflation Reduction Act (IRA) stipulates that at least 40 percent of a project’s costs must be spent on US-made products. Previously, project developers had to painstakingly calculate their expected costs. Now, there will be a standardized procedure.
Biden focuses on protecting the domestic cleantech sector
It is becoming clear that President Joe Biden’s administration is going all out in the US election campaign to protect the cleantech sector, which has only recently been discovered as a growth driver. The sector already receives billions in subsidies from the IRA, but in view of the oversupply from China’s huge capacities, Washington believes this is not enough.
According to Tuesday’s tariff package, the government will double the tariff on solar cells to 50 percent. Tariffs on Chinese electric cars will be raised to 100 percent, on semiconductors to 50 percent and on EV lithium-ion batteries to 25 percent. The Ministry of Commerce in Beijing immediately demanded that the US stop the measure. Otherwise, “China will take resolute measures to safeguard its own rights and interests.”
“China’s industrial capacity and exports in certain sectors are now so large, they can undermine the viability of investments in the US and other countries,” White House national economic adviser Lael Brainard said on Thursday. “China is now simply too big to play by its own rules.” It doesn’t look like there will be an amicable solution.
The US also closes detours via Southeast Asia
Finally, Biden also wants to lift a tariff exemption for solar modules manufactured by Chinese companies in Malaysia, Cambodia, Thailand and Vietnam. Several Chinese solar companies are relocating to these countries in order to circumvent, for example, the US import bans on products from forced labor in Xinjiang, a powerhouse of the Chinese solar industry. Export companies across the entire supply chain are currently gradually withdrawing from there.
However, China dominates the entire solar supply chain – just as it does for electric batteries, for example. And so, Chinese companies in Malaysia or Vietnam continue to source their raw materials and preliminary products from the People’s Republic, such as polysilicon or wafers. For wafers, China has a global market share of over 97 percent, meaning that even US solar manufacturers, who are now protected by special tariffs, are dependent on Chinese suppliers in order to be able to manufacture at all. In other words, it’s complicated.
Incidentally, Biden introduced the temporary exemption for the four countries in Southeast Asia two years ago at the request of domestic US project developers who did not want to do without cheap imports. This reveals the same conflict within the US sector as in Europe: Here, too, the downstream industry firmly rejects higher EU tariffs, while solar module and solar system manufacturers plead with Brussels for subsidies, tariffs, or other aid. They again have to expect low or even negative margins in 2024.
Conflict in the US solar industry is similar to the EU
Plant manufacturers and installers benefit from the fact that they can buy high-quality, low-cost products from the People’s Republic and sell them at attractive prices. And for many private households, in particular, China’s solar modules have made their own photovoltaic system on the roof affordable. This is why distributors fear, and not entirely without good reason, that rising prices could cause the flourishing market to collapse.
It is a classic dilemma between the necessary transformation and the protection of domestic industries. Subsidies are expensive, while tariffs may bring money into the coffers – but in the case of the cleantech industry, they jeopardize the overarching goal of the energy transition or at least make it more expensive. Brussels is still weighing up the options and has so far only had individual cases investigated for unauthorized subsidies. Biden, on the other hand, is now focusing on both at once: high subsidies for his own industry and high tariffs against unwelcome competition, which even comes from his main geopolitical rival.
German associations reject special tariffs
This makes the EU the only major player that neither pays large subsidies nor imposes high tariffs. The new US tariffs and Thursday’s smaller measures come at an unfortunate time for manufacturers in Europe and Germany, as even more Chinese cleantech products could be diverted to the EU – which would further increase price pressure. Nevertheless, German politicians and business representatives have already warned the EU not to copy the USA when it comes to special tariffs. The losers would be the market participants, consumers and companies alike, said Dirk Jandura, President of the Federation of German Wholesale, Foreign Trade and Services (BGA).
Duties
Geopolitics
Inflation Reduction Act
Subsidies
Trade
Trade war
Zwangsarbeit
Translation missing.
Putin and Xi: How China and Russia strategically position themselves against the West
Xi and Putin in front of flag-waving children at Thursday’s official arrival ceremony outside the Great Hall of the People.
This visit leaves no room for doubt – and is also a slap in the face for all those who still hope to break a rational China away from warmongering Russia. China and Russia are firmly united. When Vladimir Putin met with China’s President in Beijing on Thursday, he praised the “unprecedentedly high level of the strategic partnership” between China and Russia. Although Xi no longer refers to the much-cited “borderless partnership,” the multitude of agreements signed points precisely to this borderlessness.
On the first day of Putin’s two-day visit to China, it became clear that this relationship is strategic, profound, and long-term. It has long been more than a mere bilateral partnership. Xi and Putin have the world firmly in their sights: They sharply criticize the US-led West while courting the so-called Global South.
Xi and Putin reject a rules-based order
The following formulation from Putin and Xi’s joint statement should be closely read: Hegemonic and power-political states oppose fairness and justice and are trying to replace and undermine the recognized international order based on international law with a “rules-based order.” China and Russia are thus explicitly against a rules-based order – 基于规则的秩序. It is not just the formulation of all Western states, but their fundamental conviction on which a just world should be based.
Putin and Xi assured each other that they wanted to work together against the “destructive and hostile” pressure from the United States. In their joint statement, they criticized the US for expanding its military presence worldwide. Among other things, they mentioned American plans to station ground-based short- and medium-range missiles in the Asia-Pacific region and Europe, as well as the AUKUS alliance with the UK and Australia. These are “extremely destabilizing steps, which pose a direct threat to the security of Russia and China,” the statement said.
Together against the hostile course of the US
Therefore, China and Russia will continue to coordinate and strengthen their cooperation to “counter Washington’s destructive and hostile course towards the so-called ‘dual containment’ of our countries,” the statement said.
“What is interesting is the part where they criticize the considerations to confiscate Russian state assets,” Alexander Gabuev, Director of the Carnegie Russia Eurasia Center, told Table.Briefings. The background to this are ideas in the West to hand over some of Russia’s frozen state assets to Ukraine. It is a clear signal to the EU.
The two leaders see Sino-Russian relations as contrasting the hostile USA. Putin emphasized that their partnership was “one of the stabilizing factors in the international arena.”
Ukraine – China supports Russia’s core interests
Ukraine is also a topic of the talks – but not in the way that Western politicians and diplomats might have hoped. Putin particularly praised Chinese efforts to negotiate peace with Ukraine, calling them “objective and unbiased.” That is remarkable. Officially, China is indeed neutral. Yet Chinese customs data, American intelligence information, and evidence from the battlefields in Ukraine show how much China supports the Russian war machine.
Xi, in turn, assured Putin that China would firmly support Russia in matters that affect its core interests – and Putin’s obsession with Ukraine is nothing less. According to Xi, a solution would have to respect legitimate security concerns – one of Putin’s justifications for the Russian attack. The aim is to create a new, balanced, effective and sustainable security architecture, said Xi.
Borderless agreements
Since this Thursday at the latest, there can no longer be any doubt about the intensity of the relationship between China and Russia – neither in depth nor breadth. The two countries want to work together even more closely in several areas, including
Aviation,
Military,
Automotive engineering,
Banking and insurance,
Energy, nuclear power, renewable energies,
Currency area,
Transport, logistics and port cooperation,
Education and culture,
Science and technology,
in the Arctic,
chemical industry and raw materials extraction.
The sheer number of agreements and the many areas covered show that China and Russia are working hard to become more resistant to Western sanctions.
Another noteworthy aspect is the military dimension. In addition to increased cooperation, Xi and Putin have expressed their support for a kind of buffer zone between nuclear powers and other military alliances. According to their joint statement, the “expansion of military alliances and coalitions and the creation of military bridgeheads directly on the borders of other nuclear powers” should be avoided. With this wording, Xi and Putin have probably made it clear that they firmly reject the idea of Ukraine joining NATO.
Events
May 22, 2024; 8:30 a.m. Beijing time European Union Chamber of Commerce, Executive Breakfast (in Nanjing):Understanding China’s Data Security Regulations and Cross-Border Data Transfer for SME Manufacturing CompaniesMore
May 23, 2024; 10 a.m. CEST (4 p.m. Beijing time) EU SME Center, Webinar:Taking Part in Trade Fairs in ChinaMore
May 23, 2024; 10:30 a.m. CEST (4:30 p.m. Beijing time) Dezan Shira & Associates, Webinar:Swiss China Business Academy (2023-2024): Manpower and Employment RegulationsMore
May 24, 2024; 6:30 p.m. sinokultur Zurich, sinokultur im Salon (in Zurich):Hong Kong cross-disciplinary artist and artist-curator Wong Chi-yungMore
News
Taiwan: Why Germany launches a new dialogue platform
The German government will not establish official diplomatic contacts with Taiwan in the future either. However, there are already plans to intensify dialogue with Taiwan. The German Institute Taipei and the Taipei Representation in Berlin, the respective unofficial “embassies,” have jointly founded a new dialogue platform for civil society exchange.
Foreign Minister Annalena Baerbock appointed Green politician and outgoing EU MEP Reinhard Buetikofer as German co-chair; on the Taiwanese side, former sociology professor Chung-Hwa Ku from National Chengchi Universitywill take over as co-chair. The dialogue platform will consist of up to twelve members per side and will meet once a year, alternating between Germany and Taiwan.
The first meeting was held in Berlin on Tuesday and Wednesday. The main topic was the “resilience of democracy” as well as the “sustainable economic transformation and the digital society,” as Bütikofer announced. He said the atmosphere was “lively and great.” The relationship with China was explicitly not the center of attention. Rather, it was about recognizing Taiwan on its own merits and “not just through the lens of what this means for the relationship with China,” Buetikofer said.
The German government and China have had a similar format since 2005, but it has significantly lost importance in recent years as relations have deteriorated. The Chinese embassy did not immediately respond to the event. However, the Chinese Foreign Ministry had repeatedly warned Europeans, including the German government, “not to play with fire on the Taiwan question.” flee
Geopolitik
Forced labor: Which industry Biden is now targeting
Even more import restrictions: The US has blacklisted 26 Chinese textile companies on suspicion of forced labor, banning the import of products from these companies. According to AFP news agency, the Department of Homeland Security in Washington announced that the companies in question source their cotton from the province of Xinjiang, once predominantly inhabited by Uyghurs, where the Uyghurs and other Muslim minorities are systematically oppressed.
This brings the number of companies banned from exporting their goods to the US to 65. According to the Department of Homeland Security, it is one of the largest additions to the list to date. In 2021, the US passed a law banning the import of goods from Xinjiang that are suspected to have been produced using forced labor. flee
Zwangsarbeit
Chips: How quotas are to boost local production
The Chinese Ministry of Industry and Information Technology has called on car manufacturers to source a quarter of their chips from local manufacturers by 2025. This reports Nikkei Asia. However, these directives are not binding. Instead, a bonus or credit system is intended to create incentives. China also wants to increasingly domestically source other components for electric cars, such as electronic control units, displays, thermal and charging supply systems.
Thanks to the increasing number of electronic features in cars, chips are seen as an important growth area. According to the research institute Yole Group, the market could almost double from just under 40 billion euros in 2022 to 78 billion euros in 2028. However, while a third of all cars worldwide are sold in China and the market share of Chinese EV manufacturers in the overall market is rising sharply, local chip manufacturers only account for 10 percent of semiconductors so far.
High-tech chips are hard to replace
According to Antonia Hmaidi, senior analyst at think tank Merics, it is unlikely that Chinese manufacturers will completely replace foreign chips for the time being. When it comes to functions such as braking systems, it is difficult to simply replace established international suppliers. But for certain types of semiconductors, the expert believes that Chinese manufacturers could probably gain market share. Many of the chips used in cars do not require state-of-the-art manufacturing tools and technologies.
“For electric vehicles, the sector does not yet have established supply chains, which means that now is a good time to enter the market,” says Hmaidi. “With electric cars, we are seeing a complete transformation of the supply chain. Chinese companies see electric cars as smartphones on wheels, so they believe many of the skills and components that work for smartphones are also suitable for electric cars.”
The new guidelines come as tensions between China and the US grow over a range of measures, including tariffs and export bans in the tech and automotive sectors. This week, the US announced tariffs of 100 percent on Chinese EVs. According to a Reuters report, Washington plans to impose tariffs of 25 percent on synthetic graphite this month. Semiconductors produced in China are to be subject to tariffs of 50 percent in 2025. jul
Handelsstreit
Siemens: Why its digital division in China is weighing on earnings
Weak demand and competition in China are causing Siemens’ flagship Digital Industries division to struggle longer and harder than expected. It will take until well into the second half of the year for clients there to clear their warehouses and place more new orders again, said CEO Roland Busch. Sectors such as the solar industry and electric cars are suffering from overcapacity. In addition, the important export-driven markets in Europe, such as Germany, are only recovering very slowly.
The German technology group failed to meet expectations in the second quarter of the 2023/24 fiscal year (January to March). For the year as a whole, revenue is more likely to increase by four percent than eight percent, said CFO Ralf Thomas. This means that the Group missed analysts’ revenue and profit expectations in the second quarter for the first time in a while, although Thomas had already warned of the problems at Digital Industries in March.
In the otherwise highly successful Digital Industries division, whose core business is factory automation, Siemens now expects a sales decline of four to eight percent and significantly weaker margins in the 2023/24 fiscal year. In the second quarter, sales and orders at Digital Industries slumped by more than a tenth, while operating profit fell by as much as 41 percent. Things are getting better, but not as quickly as hoped, said Busch.
The cheaper local competition is also a problem for Siemens in China: “There are some aggressive suppliers.” However, the market for automation technology is intact. The announced US punitive tariffs against China, including those on electric cars, chips, and medical products, are “not helping really,” noted CFO Thomas. He said the continued flourishing business with construction and infrastructure technology (Smart Infrastructure) should largely compensate for the decline in Digital Industries this year. rtr
Wettbewerb
China Perspective
Censorship in the mind: Why Chinese opinion polls can’t be trusted
As in many other countries, public opinion in China today is polarized and, to a certain extent, divided. Naturally, people here argue about different issues than in the West.
A great many Chinese blame the United States for the troubles the country has. Meanwhile, there are also people who attribute China’s fundamental problems to the one-party rule, and these people are not rare. Talks about an invasion of Taiwan have a myriad of loud supporters; at the same time, voices claiming indifference about whether the island goes independent or not could also find echoes. Some even forecast an inevitable disintegration of China because of the deep hatred sowed in regions inhabited by ethnic minorities such as Xinjiang.
There are also Chinese championing values that seem to contradict each other. For example, some label themselves as “patriotic feminists” or “nationalist LGBT supporters.” But the Chinese authorities – the ultimate sponsor of patriotism and nationalism in China – detest both feminism and LGBT rights supporters.
Dissent finds a way despite suppression
It is well-known that all forms of media and publications in China are heavily censored. Information and comments disliked by the government will almost never get published or, if they do, will be quickly deleted. Those who dare to post the “illegal information and comments” risk facing punishments ranging from being banned on social media platforms to being thrown into prison.
However, brave souls do exist. Pitifully enough for the Chinese government, its massive body of cyber police and technologically ever more sophisticated censoring system are still not able to guarantee what they call a full “clear public opinion environment.”
In extreme cases, the censoring robots stopped functioning, and public anger in cyberspace was so enormous that it seemed to have paralyzed the human censors as well. This happened when Li Wenliang, the ophthalmologist in Wuhan admonished in person by the police for alerting about COVID-19, died of the disease in early 2020, largely because of insufficient protection for medical professionals. In private conversions, particularly among people trusting each other, dissident views could be heard even in small towns in remote provinces.
Reliable opinion polls are hardly possible
However, unlike in Western countries, good quantitative estimates of the distribution of different opinions in China are impossible to obtain because credible surveys of public opinion with political implications cannot be conducted.
Having grown up in an environment in which real free speech was never allowed, the vast majority of Chinese have already acquired the deep-seated habit of self-censoring. When speaking with people they can’t trust completely; they would automatically avoid politically incorrect expressions (in the Chinese context) or, even better, just repeat the wording they learned from official television.
Control of free speech was somewhat relaxed in some periods between 1980 and 2013, but questioning the one-party rule and direct criticism of top leaders was never tolerated.
Government rules have always limited the business of public opinion surveys. Even without the rules, with the increasingly harsher treatment of dissidents and ever-enhancing speech surveillance and censoring systems in the past decade, soliciting citizens’ real thoughts on political and social issues is impossible.
Worthless surveys that can be safely ignored
However, surveys have still been generated, not only by government-sponsored institutions, but also by researchers from outside of China, usually partnering organizations in China. The first type is clearly a part of the usual propaganda. The second type could be conducted out of limited understanding of the Chinese habit of self-censorship, or for reasons that are difficult for others to know.
Last year, two scholars at the National University of Singapore and Canada’s University of British Columbia, respectively, published a survey on Chinese opinion on (un)peaceful reunification with Taiwan. Although the survey was based only on answers from 1800 participants, it caught the attention of quite some China observers. How could they possibly get real thoughts from the respondents on this sensitive issue?
Early on, a 2003 – 2016 survey commissioned by Harvard University’s Kennedy School of Government on Chinese people’s satisfaction with the Chinese government was also very problematic. Some key information about the research, particularly the methodology, and measures ensuring the opinions’ authenticity, was held back. Yet the report was still often cited by some China observers.
Without reliable surveys, people wishing to penetrate the opaque minds of Chinese people can only rely on researchers and journalists with solid, substantial experience in China. But even these people are not all good.
KP Chinas
Executive Moves
Dorothea Mertes has taken over the position of Director of Business Development at AHK Greater China. Her previous employers include the Bundesverband mittelstaendische Wirtschaft and NDE Germany.
Nikolai von Janczewski has been Teamlead China Infotainment Stack at Porsche since May. The economist with a tech background has been working for the premium car manufacturer for four years.
Is something changing in your organization? Let us know at heads@table.media!
Dessert
“City of Eternal Spring” – there is a reason why Kunming carries this title. The capital of the south-west Chinese province of Yunnan is located on a plateau and the climate is mild all year round.
Flower lovers will get their money’s worth, as there is always a splendor of blossoms to marvel at somewhere. However, this gigantic bougainvillea is also a unique sight for the locals.
High subsidies for the domestic industry, coupled with painful tariffs on Chinese products: The United States is pursuing a tough industrial policy to arm its cleantech companies against competition from the People’s Republic. The special tariff package Joe Biden announced on Tuesday packs a punch. Washington now plugs one remaining loophole for an ultra-modern type of solar product.
Closing off is effective, but it creates a dilemma between protecting domestic industries on the one side and the prerequisites for the US energy transition on the other, writes Christiane Kuehl in her analysis. After all, low-cost products from China can accelerate the transformation.
While Europe and Germany face the same challenge, the US tariffs add another difficulty. Surplus Chinese cleantech products could be diverted to the EU, further intensifying the price war there.
On the one side, barriers are growing – on the other, a much-vaunted, borderless partnership is flourishing. Vladimir Putin visits Xi Jinping in Beijing. It is clear: The connection is strategic and long-term. On the first day of Putin’s visit, the two leaders assured each other that they wanted to work together against the “destructive and hostile” pressure from the US.
Putin also praised China’s attempts to negotiate peace in Ukraine, while Xi assured Russia that he would support its core interests. Since this Thursday at the latest, the intensity of the relationship between China and Russia leaves no doubts – both in trade and strategy, writes Michael Radunski.
Your Julia Fiedler
Feature
Photovoltaics: How Biden plugs the last loopholes for Chinese solar imports
Workers install bifacial solar modules of a photovoltaic system in the desert of Ningxia province. The modules can generate electricity on both sides.
In the shadow of the big special tariff announcement earlier this week, the US has now also plugged a previously duty-free loophole for China’s solar companies. On Thursday, the Office of the President in Washington announced that the tariff exemptions for bifacial solar panels that have been in place for two years will soon be terminated. These panels, which can generate electricity on both sides, were still a niche product at the time.
Within a short time, however, they have become one of the most important technologies for large utility-scale photovoltaic projects, especially on open spaces. This is because bifacial – i.e., two-sided – modules can capture the sun from any direction with the help of mobile supports. This makes them attractive for domestic US producers, which the White House now wants to protect better.
In parallel, the Ministry of Finance announced plans to facilitate subsidy applications from solar project developers for the use of locally manufactured products. The Inflation Reduction Act (IRA) stipulates that at least 40 percent of a project’s costs must be spent on US-made products. Previously, project developers had to painstakingly calculate their expected costs. Now, there will be a standardized procedure.
Biden focuses on protecting the domestic cleantech sector
It is becoming clear that President Joe Biden’s administration is going all out in the US election campaign to protect the cleantech sector, which has only recently been discovered as a growth driver. The sector already receives billions in subsidies from the IRA, but in view of the oversupply from China’s huge capacities, Washington believes this is not enough.
According to Tuesday’s tariff package, the government will double the tariff on solar cells to 50 percent. Tariffs on Chinese electric cars will be raised to 100 percent, on semiconductors to 50 percent and on EV lithium-ion batteries to 25 percent. The Ministry of Commerce in Beijing immediately demanded that the US stop the measure. Otherwise, “China will take resolute measures to safeguard its own rights and interests.”
“China’s industrial capacity and exports in certain sectors are now so large, they can undermine the viability of investments in the US and other countries,” White House national economic adviser Lael Brainard said on Thursday. “China is now simply too big to play by its own rules.” It doesn’t look like there will be an amicable solution.
The US also closes detours via Southeast Asia
Finally, Biden also wants to lift a tariff exemption for solar modules manufactured by Chinese companies in Malaysia, Cambodia, Thailand and Vietnam. Several Chinese solar companies are relocating to these countries in order to circumvent, for example, the US import bans on products from forced labor in Xinjiang, a powerhouse of the Chinese solar industry. Export companies across the entire supply chain are currently gradually withdrawing from there.
However, China dominates the entire solar supply chain – just as it does for electric batteries, for example. And so, Chinese companies in Malaysia or Vietnam continue to source their raw materials and preliminary products from the People’s Republic, such as polysilicon or wafers. For wafers, China has a global market share of over 97 percent, meaning that even US solar manufacturers, who are now protected by special tariffs, are dependent on Chinese suppliers in order to be able to manufacture at all. In other words, it’s complicated.
Incidentally, Biden introduced the temporary exemption for the four countries in Southeast Asia two years ago at the request of domestic US project developers who did not want to do without cheap imports. This reveals the same conflict within the US sector as in Europe: Here, too, the downstream industry firmly rejects higher EU tariffs, while solar module and solar system manufacturers plead with Brussels for subsidies, tariffs, or other aid. They again have to expect low or even negative margins in 2024.
Conflict in the US solar industry is similar to the EU
Plant manufacturers and installers benefit from the fact that they can buy high-quality, low-cost products from the People’s Republic and sell them at attractive prices. And for many private households, in particular, China’s solar modules have made their own photovoltaic system on the roof affordable. This is why distributors fear, and not entirely without good reason, that rising prices could cause the flourishing market to collapse.
It is a classic dilemma between the necessary transformation and the protection of domestic industries. Subsidies are expensive, while tariffs may bring money into the coffers – but in the case of the cleantech industry, they jeopardize the overarching goal of the energy transition or at least make it more expensive. Brussels is still weighing up the options and has so far only had individual cases investigated for unauthorized subsidies. Biden, on the other hand, is now focusing on both at once: high subsidies for his own industry and high tariffs against unwelcome competition, which even comes from his main geopolitical rival.
German associations reject special tariffs
This makes the EU the only major player that neither pays large subsidies nor imposes high tariffs. The new US tariffs and Thursday’s smaller measures come at an unfortunate time for manufacturers in Europe and Germany, as even more Chinese cleantech products could be diverted to the EU – which would further increase price pressure. Nevertheless, German politicians and business representatives have already warned the EU not to copy the USA when it comes to special tariffs. The losers would be the market participants, consumers and companies alike, said Dirk Jandura, President of the Federation of German Wholesale, Foreign Trade and Services (BGA).
Duties
Geopolitics
Inflation Reduction Act
Subsidies
Trade
Trade war
Zwangsarbeit
Translation missing.
Putin and Xi: How China and Russia strategically position themselves against the West
Xi and Putin in front of flag-waving children at Thursday’s official arrival ceremony outside the Great Hall of the People.
This visit leaves no room for doubt – and is also a slap in the face for all those who still hope to break a rational China away from warmongering Russia. China and Russia are firmly united. When Vladimir Putin met with China’s President in Beijing on Thursday, he praised the “unprecedentedly high level of the strategic partnership” between China and Russia. Although Xi no longer refers to the much-cited “borderless partnership,” the multitude of agreements signed points precisely to this borderlessness.
On the first day of Putin’s two-day visit to China, it became clear that this relationship is strategic, profound, and long-term. It has long been more than a mere bilateral partnership. Xi and Putin have the world firmly in their sights: They sharply criticize the US-led West while courting the so-called Global South.
Xi and Putin reject a rules-based order
The following formulation from Putin and Xi’s joint statement should be closely read: Hegemonic and power-political states oppose fairness and justice and are trying to replace and undermine the recognized international order based on international law with a “rules-based order.” China and Russia are thus explicitly against a rules-based order – 基于规则的秩序. It is not just the formulation of all Western states, but their fundamental conviction on which a just world should be based.
Putin and Xi assured each other that they wanted to work together against the “destructive and hostile” pressure from the United States. In their joint statement, they criticized the US for expanding its military presence worldwide. Among other things, they mentioned American plans to station ground-based short- and medium-range missiles in the Asia-Pacific region and Europe, as well as the AUKUS alliance with the UK and Australia. These are “extremely destabilizing steps, which pose a direct threat to the security of Russia and China,” the statement said.
Together against the hostile course of the US
Therefore, China and Russia will continue to coordinate and strengthen their cooperation to “counter Washington’s destructive and hostile course towards the so-called ‘dual containment’ of our countries,” the statement said.
“What is interesting is the part where they criticize the considerations to confiscate Russian state assets,” Alexander Gabuev, Director of the Carnegie Russia Eurasia Center, told Table.Briefings. The background to this are ideas in the West to hand over some of Russia’s frozen state assets to Ukraine. It is a clear signal to the EU.
The two leaders see Sino-Russian relations as contrasting the hostile USA. Putin emphasized that their partnership was “one of the stabilizing factors in the international arena.”
Ukraine – China supports Russia’s core interests
Ukraine is also a topic of the talks – but not in the way that Western politicians and diplomats might have hoped. Putin particularly praised Chinese efforts to negotiate peace with Ukraine, calling them “objective and unbiased.” That is remarkable. Officially, China is indeed neutral. Yet Chinese customs data, American intelligence information, and evidence from the battlefields in Ukraine show how much China supports the Russian war machine.
Xi, in turn, assured Putin that China would firmly support Russia in matters that affect its core interests – and Putin’s obsession with Ukraine is nothing less. According to Xi, a solution would have to respect legitimate security concerns – one of Putin’s justifications for the Russian attack. The aim is to create a new, balanced, effective and sustainable security architecture, said Xi.
Borderless agreements
Since this Thursday at the latest, there can no longer be any doubt about the intensity of the relationship between China and Russia – neither in depth nor breadth. The two countries want to work together even more closely in several areas, including
Aviation,
Military,
Automotive engineering,
Banking and insurance,
Energy, nuclear power, renewable energies,
Currency area,
Transport, logistics and port cooperation,
Education and culture,
Science and technology,
in the Arctic,
chemical industry and raw materials extraction.
The sheer number of agreements and the many areas covered show that China and Russia are working hard to become more resistant to Western sanctions.
Another noteworthy aspect is the military dimension. In addition to increased cooperation, Xi and Putin have expressed their support for a kind of buffer zone between nuclear powers and other military alliances. According to their joint statement, the “expansion of military alliances and coalitions and the creation of military bridgeheads directly on the borders of other nuclear powers” should be avoided. With this wording, Xi and Putin have probably made it clear that they firmly reject the idea of Ukraine joining NATO.
Events
May 22, 2024; 8:30 a.m. Beijing time European Union Chamber of Commerce, Executive Breakfast (in Nanjing):Understanding China’s Data Security Regulations and Cross-Border Data Transfer for SME Manufacturing CompaniesMore
May 23, 2024; 10 a.m. CEST (4 p.m. Beijing time) EU SME Center, Webinar:Taking Part in Trade Fairs in ChinaMore
May 23, 2024; 10:30 a.m. CEST (4:30 p.m. Beijing time) Dezan Shira & Associates, Webinar:Swiss China Business Academy (2023-2024): Manpower and Employment RegulationsMore
May 24, 2024; 6:30 p.m. sinokultur Zurich, sinokultur im Salon (in Zurich):Hong Kong cross-disciplinary artist and artist-curator Wong Chi-yungMore
News
Taiwan: Why Germany launches a new dialogue platform
The German government will not establish official diplomatic contacts with Taiwan in the future either. However, there are already plans to intensify dialogue with Taiwan. The German Institute Taipei and the Taipei Representation in Berlin, the respective unofficial “embassies,” have jointly founded a new dialogue platform for civil society exchange.
Foreign Minister Annalena Baerbock appointed Green politician and outgoing EU MEP Reinhard Buetikofer as German co-chair; on the Taiwanese side, former sociology professor Chung-Hwa Ku from National Chengchi Universitywill take over as co-chair. The dialogue platform will consist of up to twelve members per side and will meet once a year, alternating between Germany and Taiwan.
The first meeting was held in Berlin on Tuesday and Wednesday. The main topic was the “resilience of democracy” as well as the “sustainable economic transformation and the digital society,” as Bütikofer announced. He said the atmosphere was “lively and great.” The relationship with China was explicitly not the center of attention. Rather, it was about recognizing Taiwan on its own merits and “not just through the lens of what this means for the relationship with China,” Buetikofer said.
The German government and China have had a similar format since 2005, but it has significantly lost importance in recent years as relations have deteriorated. The Chinese embassy did not immediately respond to the event. However, the Chinese Foreign Ministry had repeatedly warned Europeans, including the German government, “not to play with fire on the Taiwan question.” flee
Geopolitik
Forced labor: Which industry Biden is now targeting
Even more import restrictions: The US has blacklisted 26 Chinese textile companies on suspicion of forced labor, banning the import of products from these companies. According to AFP news agency, the Department of Homeland Security in Washington announced that the companies in question source their cotton from the province of Xinjiang, once predominantly inhabited by Uyghurs, where the Uyghurs and other Muslim minorities are systematically oppressed.
This brings the number of companies banned from exporting their goods to the US to 65. According to the Department of Homeland Security, it is one of the largest additions to the list to date. In 2021, the US passed a law banning the import of goods from Xinjiang that are suspected to have been produced using forced labor. flee
Zwangsarbeit
Chips: How quotas are to boost local production
The Chinese Ministry of Industry and Information Technology has called on car manufacturers to source a quarter of their chips from local manufacturers by 2025. This reports Nikkei Asia. However, these directives are not binding. Instead, a bonus or credit system is intended to create incentives. China also wants to increasingly domestically source other components for electric cars, such as electronic control units, displays, thermal and charging supply systems.
Thanks to the increasing number of electronic features in cars, chips are seen as an important growth area. According to the research institute Yole Group, the market could almost double from just under 40 billion euros in 2022 to 78 billion euros in 2028. However, while a third of all cars worldwide are sold in China and the market share of Chinese EV manufacturers in the overall market is rising sharply, local chip manufacturers only account for 10 percent of semiconductors so far.
High-tech chips are hard to replace
According to Antonia Hmaidi, senior analyst at think tank Merics, it is unlikely that Chinese manufacturers will completely replace foreign chips for the time being. When it comes to functions such as braking systems, it is difficult to simply replace established international suppliers. But for certain types of semiconductors, the expert believes that Chinese manufacturers could probably gain market share. Many of the chips used in cars do not require state-of-the-art manufacturing tools and technologies.
“For electric vehicles, the sector does not yet have established supply chains, which means that now is a good time to enter the market,” says Hmaidi. “With electric cars, we are seeing a complete transformation of the supply chain. Chinese companies see electric cars as smartphones on wheels, so they believe many of the skills and components that work for smartphones are also suitable for electric cars.”
The new guidelines come as tensions between China and the US grow over a range of measures, including tariffs and export bans in the tech and automotive sectors. This week, the US announced tariffs of 100 percent on Chinese EVs. According to a Reuters report, Washington plans to impose tariffs of 25 percent on synthetic graphite this month. Semiconductors produced in China are to be subject to tariffs of 50 percent in 2025. jul
Handelsstreit
Siemens: Why its digital division in China is weighing on earnings
Weak demand and competition in China are causing Siemens’ flagship Digital Industries division to struggle longer and harder than expected. It will take until well into the second half of the year for clients there to clear their warehouses and place more new orders again, said CEO Roland Busch. Sectors such as the solar industry and electric cars are suffering from overcapacity. In addition, the important export-driven markets in Europe, such as Germany, are only recovering very slowly.
The German technology group failed to meet expectations in the second quarter of the 2023/24 fiscal year (January to March). For the year as a whole, revenue is more likely to increase by four percent than eight percent, said CFO Ralf Thomas. This means that the Group missed analysts’ revenue and profit expectations in the second quarter for the first time in a while, although Thomas had already warned of the problems at Digital Industries in March.
In the otherwise highly successful Digital Industries division, whose core business is factory automation, Siemens now expects a sales decline of four to eight percent and significantly weaker margins in the 2023/24 fiscal year. In the second quarter, sales and orders at Digital Industries slumped by more than a tenth, while operating profit fell by as much as 41 percent. Things are getting better, but not as quickly as hoped, said Busch.
The cheaper local competition is also a problem for Siemens in China: “There are some aggressive suppliers.” However, the market for automation technology is intact. The announced US punitive tariffs against China, including those on electric cars, chips, and medical products, are “not helping really,” noted CFO Thomas. He said the continued flourishing business with construction and infrastructure technology (Smart Infrastructure) should largely compensate for the decline in Digital Industries this year. rtr
Wettbewerb
China Perspective
Censorship in the mind: Why Chinese opinion polls can’t be trusted
As in many other countries, public opinion in China today is polarized and, to a certain extent, divided. Naturally, people here argue about different issues than in the West.
A great many Chinese blame the United States for the troubles the country has. Meanwhile, there are also people who attribute China’s fundamental problems to the one-party rule, and these people are not rare. Talks about an invasion of Taiwan have a myriad of loud supporters; at the same time, voices claiming indifference about whether the island goes independent or not could also find echoes. Some even forecast an inevitable disintegration of China because of the deep hatred sowed in regions inhabited by ethnic minorities such as Xinjiang.
There are also Chinese championing values that seem to contradict each other. For example, some label themselves as “patriotic feminists” or “nationalist LGBT supporters.” But the Chinese authorities – the ultimate sponsor of patriotism and nationalism in China – detest both feminism and LGBT rights supporters.
Dissent finds a way despite suppression
It is well-known that all forms of media and publications in China are heavily censored. Information and comments disliked by the government will almost never get published or, if they do, will be quickly deleted. Those who dare to post the “illegal information and comments” risk facing punishments ranging from being banned on social media platforms to being thrown into prison.
However, brave souls do exist. Pitifully enough for the Chinese government, its massive body of cyber police and technologically ever more sophisticated censoring system are still not able to guarantee what they call a full “clear public opinion environment.”
In extreme cases, the censoring robots stopped functioning, and public anger in cyberspace was so enormous that it seemed to have paralyzed the human censors as well. This happened when Li Wenliang, the ophthalmologist in Wuhan admonished in person by the police for alerting about COVID-19, died of the disease in early 2020, largely because of insufficient protection for medical professionals. In private conversions, particularly among people trusting each other, dissident views could be heard even in small towns in remote provinces.
Reliable opinion polls are hardly possible
However, unlike in Western countries, good quantitative estimates of the distribution of different opinions in China are impossible to obtain because credible surveys of public opinion with political implications cannot be conducted.
Having grown up in an environment in which real free speech was never allowed, the vast majority of Chinese have already acquired the deep-seated habit of self-censoring. When speaking with people they can’t trust completely; they would automatically avoid politically incorrect expressions (in the Chinese context) or, even better, just repeat the wording they learned from official television.
Control of free speech was somewhat relaxed in some periods between 1980 and 2013, but questioning the one-party rule and direct criticism of top leaders was never tolerated.
Government rules have always limited the business of public opinion surveys. Even without the rules, with the increasingly harsher treatment of dissidents and ever-enhancing speech surveillance and censoring systems in the past decade, soliciting citizens’ real thoughts on political and social issues is impossible.
Worthless surveys that can be safely ignored
However, surveys have still been generated, not only by government-sponsored institutions, but also by researchers from outside of China, usually partnering organizations in China. The first type is clearly a part of the usual propaganda. The second type could be conducted out of limited understanding of the Chinese habit of self-censorship, or for reasons that are difficult for others to know.
Last year, two scholars at the National University of Singapore and Canada’s University of British Columbia, respectively, published a survey on Chinese opinion on (un)peaceful reunification with Taiwan. Although the survey was based only on answers from 1800 participants, it caught the attention of quite some China observers. How could they possibly get real thoughts from the respondents on this sensitive issue?
Early on, a 2003 – 2016 survey commissioned by Harvard University’s Kennedy School of Government on Chinese people’s satisfaction with the Chinese government was also very problematic. Some key information about the research, particularly the methodology, and measures ensuring the opinions’ authenticity, was held back. Yet the report was still often cited by some China observers.
Without reliable surveys, people wishing to penetrate the opaque minds of Chinese people can only rely on researchers and journalists with solid, substantial experience in China. But even these people are not all good.
KP Chinas
Executive Moves
Dorothea Mertes has taken over the position of Director of Business Development at AHK Greater China. Her previous employers include the Bundesverband mittelstaendische Wirtschaft and NDE Germany.
Nikolai von Janczewski has been Teamlead China Infotainment Stack at Porsche since May. The economist with a tech background has been working for the premium car manufacturer for four years.
Is something changing in your organization? Let us know at heads@table.media!
Dessert
“City of Eternal Spring” – there is a reason why Kunming carries this title. The capital of the south-west Chinese province of Yunnan is located on a plateau and the climate is mild all year round.
Flower lovers will get their money’s worth, as there is always a splendor of blossoms to marvel at somewhere. However, this gigantic bougainvillea is also a unique sight for the locals.
