Table.Briefing: China

USA-China + IPOs + Indo-Pacific + Chips + Johnny Erling

  • Tense atmosphere in Alaska
  • Frigates to the Far East: Western strategies for the Indo-Pacific
  • Record number of IPOs in Hong Kong
  • China begins trial of detained Canadians
  • Chips: SMIC plans billion-dollar factory investment
  • Johnny Erling: Hi, Mom – China’s golden 80s
Dear reader,

The verbal saber-rattling ahead of the US-China talks in Alaska was high. As recently as Wednesday, US Secretary of State Antony Blinken again accused Beijing of undermining human rights in Xinjiang and Hong Kong with “coercion and aggression.” Beijing, in turn, admonished the Biden administration not to interfere in China’s internal affairs. Frank Sieren has the details on how the talks went.

In the South China Sea, however, the saber rattling is no longer just verbal. France held manoeuvres there in early 2021. Germany and the UK are also planning to increase their presence on the ground in order to contain China. Christiane Kühl shows how this fits into Germany’s Indo-Pacific strategy. The EU has also announced a strategy for the region in April.

It may come as a surprise given the COVID-19 pandemic, but 2020 was a boom year on the Hong Kong stock exchange. More than $50 billion was raised in 154 IPOs. The US-China trade war and a new US law also play a role. Gregor Koppenburg and Jörn Petring have the background.

Enjoy the read and have a great weekend,

Your
Nico Beckert
Image of Nico  Beckert

Feature

Tense atmosphere in Alaska

Just how complicated relations between China and the US are is shown by the itinerary of Secretary of State Antony Blinken to the negotiating venue, where he flew back across the American continent from Washington via Japan and South Korea. It would have been easy for the American Secretary of State to travel two hours further to Beijing to make his inaugural visit. Instead, however, Blinken is flying back to Alaska. He thus forces Foreign Minister Wang to take an eight-hour flight and receive him on American soil. So China has to travel to the US, when in fact a new American coming into office wants to introduce himself. In any case, in this diplomatic game, the score is one to zero for Washington.

One to zero for Washington

Blinken, who made his inaugural visits to US allies Japan and South Korea before the Alaska meeting, made it clear even as he departed Seoul yesterday that the US “does not seek conflict”. However, he would always “defend our principles, our people and friends”. For his part, his spokeswoman Jen Plaski stressed in Alaska that they would talk about “difficult issues” and be “candid” about them. These included the treatment of the Muslim minority in Xinjiang, the restrictions on democracy in Hong Kong, the technology conflicts with Huawei, but also trade issues.

Still, there was a willingness to work with countries like Russia and China “when it’s in the interest of the United States to do so”. Those issues, in turn, included climate change, pandemics, and how to convince North Korea to disarm.

Blinken criticizes Beijing’s aggressive behavior

Earlier in Seoul, Blinken himself had been even more outspoken: “We are under no illusions about Beijing’s persistent refusal to abide by its agreements, and we have talked about how Beijing’s aggressive and authoritarian behavior challenges stability, security, and prosperity in the Indo-Pacific,” Blinken said before his departure. The US will “push back on China, if necessary, when it uses coercion or aggressiveness to get its way”. In saying this, Blinken is not adhering to a diplomatic custom of not revealing anything about a third country in talks with host countries.

Blinken is thus showing how difficult relations with China and Asia as a whole are. Because with this statement, he is publicly putting pressure on his ally, South Korean President Moon Jae-in. South Korea tries to maintain very good relations with Beijing and Washington.

South Korea does not take a clear position

Moon was then also only very vague and indirect when it came to criticism in the direction of Beijing after the conversation with Blinken: With the US, “we share the values of democracy and human rights”. At the same time, Moon welcomed the return of “thinking in alliances” and looked forward to “the leadership of the Americans during great crises.”

Zhao Lijian, the spokesman of China’s Foreign Ministry promptly responded to Blinken’s remarks: “There was no room for compromise on issues affecting China’s security, sovereignty and core interests.”

Meanwhile, Cui Tiankai, the Chinese ambassador to Washington, expressed cautious optimism: “Of course, we don’t expect a round of dialogue to resolve all the difficult issues between China and USA,” he said.

He said there were no exaggerated expectations for the meeting. However, he hoped “that a dialogue could be initiated that is open, constructive and realistic.”

While the Chinese foreign minister did not comment on Blinken in the run-up to the meeting, the latter took a detailed position on China not only in Seoul but also in Tokyo. On Japanese television Nippon TV, however, Blinken expressed himself in a differentiated and at the same time decisive manner.

Blinken does not mince words in Japan

Relations with China are “very complex” and have their “adversarial aspects, their competitive aspects, and aspects of cooperation.” In all of these areas, the US must ensure that it “operates from a position of strength”.

The strength is based on alliances and solidarity “because that’s a unique strength we have and China doesn’t: cooperation with like-minded countries”.

But Beijing is also lowering its horns to the first big bullfight in Anchorage. Last Wednesday, Jiang Duan already criticized the human rights situation in USA. COVID-19 would have “cost hundreds of thousands of people their lives”. Add to that racial discrimination, police brutality, and a “diabolical past of genocide”.

Four experienced negotiators in Alaska

The Chinese are meeting an experienced American team: Blinken was already National Security Advisor to Vice President Joe Biden between 2009 and 2013. Jake Sullivan was Deputy Chief of Staff under Secretary of State Hillary Clinton. Among other things, he advised her on the nuclear talks with Iran, during which he was persuaded, in particular by the then German SPD Foreign Minister Frank-Walter Steinmeier and his Chinese counterpart Wang Yi, to work together to convince the American government to lift sanctions on Iran. This was later reversed by US President Donald Trump.

Blinken’s predecessor Pompeo, on the other hand, had only one year of international experience as CIA chief before he became Secretary of State, but no diplomatic experience at all.

Wang Yi, in turn, has been foreign minister for eight years. Politburo member Yang Jiechi is also considered the Chinese politician with the longest experience in dealing with the West. He already studied at the London School of Economics and Political Science during the Cultural Revolution in 1971 and was ambassador to the US for a total of 13 years.

This means that the two teams have known each other for a long time and have been able to achieve results together even in difficult negotiations. In this respect, it can be assumed that unlike Donald Trump the parties involved will act pragmatically.

  • Antony Blinken
  • Geopolitics
  • USA
  • Wang Yi

Frigates to the Far East: Western strategies for the Indo-Pacific

The frigate “Bayern” will set off from Wilhelmshaven for the Far East in August. On the voyage, the ship is to pass through the South China Sea. In February, France had sent a nuclear submarine to the region and held maneuvers there with the US and Japan. Britain plans to send the aircraft carrier HMS Queen Elizabeth to the Indo-Pacific for a few months in late 2021. US warships also regularly operate in the South China Sea, for example, as part of the US Operation Freedom of Navigation. The “Bayern” will stay away from US ships as well as from the twelve-nautical-mile zone around Chinese-controlled islands in the waters. These are cautious first steps in the Indo-Pacific, where the armed forces have not been active so far.

For all its caution, however, the voyage of the “Bayern”, like the deployment of the ships of other nations, signals a greater willingness on the part of Europe to make its presence felt in the region, including jointly. In 2020, Germany – along with France and the Netherlands – presented an Indo-Pacific strategy for the first time. Together with France, Germany wants to develop the planned EU strategy for the Indo-Pacific, according to the paper.

The German Indo-Pacific paper is rather broad: German interests include peace and security, the deepening of regional relations, open shipping routes, free trade, and even climate protection. Specifically, Germany wants to intensify cooperation with the Southeast Asian association of states ASEAN – for example by supporting negotiations on a legally binding code of conduct between China and the ASEAN member states for the South China Sea.

The US has attributed growing importance to the region for years, beginning with the “pivot to Asia” under President Barack Obama. The Trump administration released an Indo-Pacific strategy in 2017 that advocates “free and open sea lanes” and opposes “coercive actions by individual countries” – a phrase that US officials, as well as President Joe Biden, often use in connection with China. Biden is likely to stick to the strategy. He announced a strategic rebalancing of the US presence in East and Southeast Asia – and did not rule out further rearmament.

Defending the ‘rules-based order’ against China

The most important slogan of the strategies is the defense of a “rules-based order” in the region. This includes, for example, the United Nations Convention on the Law of the Sea (UNCLOS). The elephant in the room here is – unnamed – China. Defense Minister Annegret Kramp-Karrenbauer (CDU), however, suggested on Twitter last week that Bundeswehr deployments in the region may well have something to do with containing China. As early as 2019, Kramp-Karrenbauer had stressed in a speech to students at the Bundeswehr University in Munich: “Our allies in the Indo-Pacific region – first and foremost Australia, Japan, and South Korea, but also India – feel increasingly pressured by China’s claim to power. They want a clear sign of solidarity.”

These are by all means new tones. In the past, Germany has tended to look at the Indo-Pacific from a geographical perspective, Helena Legarda, an expert on China’s security and foreign policy at the Mercator Institute for China Studies (MERICS) tells China.Table. “And this region seemed very distant. So there is a new approach in Germany and a new understanding of the importance of this region.

The biggest flashpoint there at the moment is the South China Sea. China claims practically the entire sea. Brunei, Indonesia, Malaysia, the Philippines, and Vietnam also lay claim to overlapping parts of the sea area. All of them are interested, not least in rich fishing grounds and raw material deposits. The US regards Beijing’s territorial claims as illegal and has in the past repeatedly sent warships into the waters, sometimes shadowed by Chinese vessels.

China: no compromise on sovereignty issues

China, meanwhile, is acting with increasing self-confidence in the region and gnawing away at the status quo bit by bit. Beijing is having reefs built into artificial islands and erecting military installations on them. Beijing leaves no doubt that it intends to defend these islets. “China’s new coast guard law gives the coast guard many more powers to enforce China’s territorial claims and allows it to fire on ships in disputed waters,” Legarda says. China counts the South China Sea among its “core interests”.

Legarda doesn’t think China wants to provoke a war. “But it could easily happen in a number of ways – such as accidents, miscalculations, or actions by China that lead to retaliation by others.” The situation is complicated because there is no clear solution. “It is possible that compromises on joint resource exploration or fisheries may be found at some point,” Legarda says. “But when it comes to sovereignty, I don’t see China willing to compromise.”

This also applies to Taiwan. Beijing sees the island as an inseparable part of the People’s Republic of China and has never ruled out reunification by force. The US sells Taipei defensive weapons and regularly sends ships through the Taiwan Strait, most recently the warship “USS John Finn”. US Admiral Philip Davidson, who is responsible for the Asia-Pacific region, even warned of a Chinese attack on Taiwan by 2027.

Beijing fears alliances in the region

The fact that the Europeans are now joining the Americans in the region certainly carries weight from the perspective of the littoral states. “If the Europeans demonstrate their ability and willingness to act as a naval power in the Indo-Pacific, China will have no choice but to change its deployment plans with regard to Taiwan and the South China Sea,” comments Hiroyuki Akita in the Japanese magazine Nikkei Asia, for example. “The Chinese military must assume that Britain, France, and Germany, as well as Japan and Australia, will provide some form of support to US forces in the event of a conflict.” This would raise the decision threshold for Chinese military adventures, Akita believes.

This is precisely the kind of cooperation Beijing, therefore, wants to prevent. “One of Beijing’s biggest concerns is the potential of a coalition of Western states working together to confront China or contain its rise,” Legarda says. “This is one of the reasons why China keeps stressing the strategic independence of the EU.” The militaries of the littoral states – India, Japan, or South Korea – are also stronger than commonly believed, writes Salvatore Babones of the Centre for Independent Studies in Sydney in the US journal Foreign Policy. “The US can provide equipment, technology, or training,” Babones says. “But China’s neighbors can and should take the lead in protecting their own neighborhoods.” So China’s unstoppable advance is by no means a foregone conclusion.

  • Geopolitics
  • India
  • Indo-Pacific

Hong Kong: less democracy, more IPOs

The crackdown on Hong Kong’s democracy movement has hit many Hong Kong citizens hard. Some surveys conclude that hundreds of thousands want to emigrate because of Beijing’s heavy hand, or at least are thinking about it. In contrast, the permanent political quake has not had any negative impact on the Hong Kong stock market so far. On the contrary: Despite the new security law passed last June, Hong Kong’s stock exchange operator HKEX raised more money in 2020 than at any time since 2010, with companies raising $51.3 billion in 154 IPOs.

The management consultancy KPMG assumes that the Asian financial metropolis will also take a “leading position” in new IPOs this year. Companies that want to go public sometimes argue quite differently from the Hong Kong protest movement. That’s because a large proportion of the companies listed on the Hong Kong Stock Exchange are from mainland China. They, in turn, do not see the new security law as a threat but rather as reassurance that they will be able to operate in Hong Kong in stable conditions. They are much more concerned about the uncertainty in China’s relationship with the USA.

China’s successful tech companies, in particular, prefer Hong Kong listings since they are facing increasing distrust in the US. Not only former President Donald Trump’s sharp attacks but also a new law that came into force last December are making the Chinese sit up and take notice.

The Holding Foreign Companies Accountable Act, while written for all foreign companies, takes particular aim at Chinese companies. It requires companies to certify that they are “not owned or controlled by a foreign government”. They are also supposed to open their books to the Securities and Exchange Commission. Otherwise, companies would no longer be listed.

Fear of the USA

The debate about tighter scrutiny of Chinese companies is also booming in the US because of the scandal surrounding Starbucks’ Chinese competitor Luckin Coffee, which admitted to falsifying financial statements last April and was banned from the Nasdaq.

Many observers in China suspect, at the latest since the outbreak of the trade war, that access to the American capital market could soon be over. As a precautionary measure, the New York-listed e-commerce group Alibaba had already found an alternative location in Hong Kong in autumn 2019 and raised $13 billion in a secondary listing.

Most recently, Chinese tech giants Jd.com and NetEase also followed suit with secondary listings. They raised a combined $6.6 billion in Hong Kong. Chinese companies are now thinking twice about taking another risk in New York, which is good news for investment bankers in Hong Kong.

Further IPOs planned

A whole series of further IPOs are also on the horizon for the coming months. At the beginning of March, the Chinese search engine provider Baidu received approval for a secondary listing in Hong Kong, which is expected to raise the equivalent of $3.5 billion. So far, Baidu has only been listed in New York, just like the three largest Chinese EV start-ups Nio, Li Auto, and Xpeng. According to a report by Reuters, this trio also wants to go public in the special administrative region as soon as possible.

But last year, Alibaba subsidiary Ant Group learned painfully that risks also lurk for Chinese companies in Hong Kong. After company founder Jack Ma denounced the deficits of the Chinese financial system in a speech, Beijing unceremoniously canceled what was potentially the biggest IPO of the year at the time. In this respect, Chinese companies do not see Hong Kong as a new paradise but merely as a comparatively safer alternative. Gregor Koppenburg/Joern Petring

  • Alibaba
  • Finance

News

China begins trial of detained Canadians

The trial of two Canadians detained on espionage charges begins today in China. Canada’s Foreign Affairs Minister Marc Garneau said the embassy in Beijing “has been informed that court hearings for Michael Spavor and Michael Kovrig are scheduled to take place on March 19 and 22”. The two Canadians have been detained since December 2018 and were charged with espionage last June. “We believe these detentions are arbitrary and remain deeply concerned about the lack of transparency in these proceedings,” Garneau said. Canadian officials provided consular support to Spavor and Kovrig and their families during “this unacceptable ordeal”, Canada’s foreign minister said.

Chinese authorities accuse Kovrig, a former Canadian diplomat who worked for the International Crisis Group (ICG), of stealing sensitive information in China since 2017. Spavor, a Beijing-based businessman, is accused of providing information to Kovrig.

Observers saw the detention of the two Canadians as retaliation for the earlier arrest in Vancouver of the Huawei Group’s chief financial officer, Meng Wanzhou. She was under a US arrest warrant for allegedly making false statements to banks about selling communications technology to Iran. According to media reports, Meng, whose extradition hearing is currently underway, has been under house arrest in Vancouver since 2018.

The start of Spavor’s trial coincides with a first high-level meeting between the US and Chinese officials in Alaska. ari

  • Geopolitics
  • Michael Kovrig

SMIC plans billion-dollar investment in semiconductor factory

Chinese semiconductor manufacturer Semiconductor Manufacturing International Corporation (SMIC) plans to invest €1.95 billion in a new chip factory, Bloomberg reports. To this end, the company has entered into a joint venture with the city of Shenzhen, which will help finance the factory. Production is expected to start in 2022 and will include 28-nanometer semiconductor chips. This technology is quite old. TSMC of Taiwan already mass produces 5nm chips. 28nm chips are currently still used in car manufacturing, for example.

In its recently released five-year plan, Beijing noted the expansion of its chip industry as a key goal to reduce dependence on outside chipmakers. Under former US President Donald Trump, several Chinese companies, including SMIC, were blacklisted and cut off from US suppliers. That also made it harder to buy machinery to make chips.

According to Bloomberg, the new SMIC fab will also produce silicon wafers – a fundamental raw material in semiconductor manufacturing. According to Chinese industry officials, wafer manufacturing is one of the areas in China’s semiconductor supply chain that has the lowest local production. Overall, China is still very dependent on foreign countries for chips. Last year, only just under 16 percent of chips sold in China were produced nationally. nib

  • SMIC
  • Technology

Column

Hi, Mom – China’s golden 80s

By Johnny Erling
Ein Bild von Johnny Erling aus dem Jahre 2017

China has a new street sweeper. Since the Spring Festival, the feature film “Hi, Mom” (你好, 李焕英) has been clearing the country’s box office. It grossed ¥5.27 billion (about €700 million) in barely five weeks by last Tuesday and is expected to be distributed internationally.

The film starts with a flashback to a severe traffic accident 20 years ago. Its main character Li Huanying is cycling with her daughter Jia Ling in the back seat when they are hit by a truck. The mother dies.

“Hi, Mom” is based on a true story. Daughter Jia Ling was 19 years old when her mother died in an accident in 2001. The stage performer celebrated in China for her sketches and slapstick, not only wrote the script. She also directed and plays herself in the film, which she dedicates to finding her mother’s personality. The flick hit so hard that bootleg copies immediately appeared online. The recordings from cinemas are in miserable sound quality with shadows of spectators flitting through the picture.

A journey into the past

The story tells a trip back in time. Jia Ling literally falls from heaven to earth. She finds herself in 1981 China, posing as a cousin to her mother and becoming her mother’s confidante. Jia wants to improve her life, even tries to set up the still unmarried young worker “with a good match”.

This does not go off without comic complications. Despite its slapstick interludes, the film is too emotional for European tastes. It presses the tear glands with its thickly applied homage to the mother. This makes it a huge success among young Chinese women born in the 1990s and 2000s. The British “Guardian” writes that it strikes a chord with them because it starts a debate about the role of women, about motherhood and parenthood.

The spirit of optimism of the 80s

Success has other fathers. Looking back, “Hi, Mom” awakens nostalgic feelings of the “golden” 80s in parents of millenials, especially in those over 50. Jia falls right into the spirit of optimism after the Cultural Revolution, that from now on, things will be better, freer, and more individual in China and that people are on their way to new shores.

Many inserts tie in with these ideas. People enjoy simple pleasures. Neighbors meet in front of the first privately purchased black-and-white television Jia procures for her mother. She also buys her movie tickets for an arranged date that goes awry. The cinema is showing “Lushanlian”, China’s first film that dares to show a kissing scene. Everything is full of splashes of color, like the mother’s brightly colored dress, which stands out from the crowd of factory workers, who are still dressed in the monochrome “Mao” uniform with their drilled trousers.

A cinema film about the inner escape from propaganda

For young Chinese, to whom Beijing’s shrill propaganda with nationalist undertones instills the idea that they live in a country whose future as a world power is a foregone conclusion, these are alien images. For their parents’ generation, however, the film nostalgia for the 80s, which has become fashionable in recent years. Many are on an inner flight from the insistence with which China’s current leadership is forcing the “new era of socialism under Xi Jinping” on them as “their dream”.

Blogs and WeChat conspicuously ask, “Why do Chinese people think back to the 80s?” (为什么中国人开始怀念八十年代?). Outspoken answers are quickly shared – often in a cat-and-mouse game with censors: “The 1980s was an age of fireworks and poetry, openness and tolerance, full of genuine feelings, and an era of free and unrestricted thought.” Everything was in awakening mode, from art to music to movies to literature. Among the dozens of authors listed are names of writers now officially reviled and ostracized. For example, the poet Beidao, or Fang Fang, who just wrote her “Wuhan Diary”, which is on China’s index.

Three terms would have characterized the 80s: “Young, sincere and innocent.” (年轻、真诚、单纯). There is a lack of that today, criticizes a blogger under the pseudonym Nuipi Mingming, from whose essay flashes a defiant spirit: In his homage to China’s rock star Cui Jian, who became the spiritual youth symbol of the 1980s, he writes: “Compared to the 1980s, our age is dull and boring, becoming more materialistic and utilitarian. People of courage are fewer, realists are increasing. Rebellious spirits diminish. Genuflectors, sycophants and claqueurs increase. Only those who think about it are decreasing in numbers.”

Free thinking? Unwanted!

The 80s are being glorified, objects the critical political scientist Zhang Lifan: “Nostalgic memories won’t bring us back to them.” He often hears intellectuals and people from the 50- to 65-year-old generation exclaiming, “How lucky we were to have lived through that time,” says Michael Kahn-Ackermann, a literary translator and German-Chinese cultural mediator who lives in Nanjing. And in addition, proud words about how they are the last to think for themselves. Beijing has drawn its conclusions from this. The state and the party are concentrating above all on intensifying the ideological education of the young: from kindergarten to university.

The comedic stirring film, which takes as its theme the daughter’s love for her mother, fits – whether intentionally or not – with the nostalgia of many intellectuals for the early days of Chinese reforms and their longings and hopes at the time. Partly because it does, “Hi, Mom” is more than just a box office hit.

  • Culture
  • Film

Dessert

To enjoy an all-you-can-eat sushi menu, dozens of people in Taiwan have had their names changed. The trigger was the advertising campaign of a sushi restaurant chain. It had announced that anyone with “Gui Yu”, the Chinese characters for salmon, in their name would get a meal at the restaurant, where they and five of their friends could eat as much as they wanted. Taiwan’s citizens are allowed to officially change their names up to three times.

China.Table Editors

CHINA.TABLE EDITORIAL OFFICE

Licenses:
    • Tense atmosphere in Alaska
    • Frigates to the Far East: Western strategies for the Indo-Pacific
    • Record number of IPOs in Hong Kong
    • China begins trial of detained Canadians
    • Chips: SMIC plans billion-dollar factory investment
    • Johnny Erling: Hi, Mom – China’s golden 80s
    Dear reader,

    The verbal saber-rattling ahead of the US-China talks in Alaska was high. As recently as Wednesday, US Secretary of State Antony Blinken again accused Beijing of undermining human rights in Xinjiang and Hong Kong with “coercion and aggression.” Beijing, in turn, admonished the Biden administration not to interfere in China’s internal affairs. Frank Sieren has the details on how the talks went.

    In the South China Sea, however, the saber rattling is no longer just verbal. France held manoeuvres there in early 2021. Germany and the UK are also planning to increase their presence on the ground in order to contain China. Christiane Kühl shows how this fits into Germany’s Indo-Pacific strategy. The EU has also announced a strategy for the region in April.

    It may come as a surprise given the COVID-19 pandemic, but 2020 was a boom year on the Hong Kong stock exchange. More than $50 billion was raised in 154 IPOs. The US-China trade war and a new US law also play a role. Gregor Koppenburg and Jörn Petring have the background.

    Enjoy the read and have a great weekend,

    Your
    Nico Beckert
    Image of Nico  Beckert

    Feature

    Tense atmosphere in Alaska

    Just how complicated relations between China and the US are is shown by the itinerary of Secretary of State Antony Blinken to the negotiating venue, where he flew back across the American continent from Washington via Japan and South Korea. It would have been easy for the American Secretary of State to travel two hours further to Beijing to make his inaugural visit. Instead, however, Blinken is flying back to Alaska. He thus forces Foreign Minister Wang to take an eight-hour flight and receive him on American soil. So China has to travel to the US, when in fact a new American coming into office wants to introduce himself. In any case, in this diplomatic game, the score is one to zero for Washington.

    One to zero for Washington

    Blinken, who made his inaugural visits to US allies Japan and South Korea before the Alaska meeting, made it clear even as he departed Seoul yesterday that the US “does not seek conflict”. However, he would always “defend our principles, our people and friends”. For his part, his spokeswoman Jen Plaski stressed in Alaska that they would talk about “difficult issues” and be “candid” about them. These included the treatment of the Muslim minority in Xinjiang, the restrictions on democracy in Hong Kong, the technology conflicts with Huawei, but also trade issues.

    Still, there was a willingness to work with countries like Russia and China “when it’s in the interest of the United States to do so”. Those issues, in turn, included climate change, pandemics, and how to convince North Korea to disarm.

    Blinken criticizes Beijing’s aggressive behavior

    Earlier in Seoul, Blinken himself had been even more outspoken: “We are under no illusions about Beijing’s persistent refusal to abide by its agreements, and we have talked about how Beijing’s aggressive and authoritarian behavior challenges stability, security, and prosperity in the Indo-Pacific,” Blinken said before his departure. The US will “push back on China, if necessary, when it uses coercion or aggressiveness to get its way”. In saying this, Blinken is not adhering to a diplomatic custom of not revealing anything about a third country in talks with host countries.

    Blinken is thus showing how difficult relations with China and Asia as a whole are. Because with this statement, he is publicly putting pressure on his ally, South Korean President Moon Jae-in. South Korea tries to maintain very good relations with Beijing and Washington.

    South Korea does not take a clear position

    Moon was then also only very vague and indirect when it came to criticism in the direction of Beijing after the conversation with Blinken: With the US, “we share the values of democracy and human rights”. At the same time, Moon welcomed the return of “thinking in alliances” and looked forward to “the leadership of the Americans during great crises.”

    Zhao Lijian, the spokesman of China’s Foreign Ministry promptly responded to Blinken’s remarks: “There was no room for compromise on issues affecting China’s security, sovereignty and core interests.”

    Meanwhile, Cui Tiankai, the Chinese ambassador to Washington, expressed cautious optimism: “Of course, we don’t expect a round of dialogue to resolve all the difficult issues between China and USA,” he said.

    He said there were no exaggerated expectations for the meeting. However, he hoped “that a dialogue could be initiated that is open, constructive and realistic.”

    While the Chinese foreign minister did not comment on Blinken in the run-up to the meeting, the latter took a detailed position on China not only in Seoul but also in Tokyo. On Japanese television Nippon TV, however, Blinken expressed himself in a differentiated and at the same time decisive manner.

    Blinken does not mince words in Japan

    Relations with China are “very complex” and have their “adversarial aspects, their competitive aspects, and aspects of cooperation.” In all of these areas, the US must ensure that it “operates from a position of strength”.

    The strength is based on alliances and solidarity “because that’s a unique strength we have and China doesn’t: cooperation with like-minded countries”.

    But Beijing is also lowering its horns to the first big bullfight in Anchorage. Last Wednesday, Jiang Duan already criticized the human rights situation in USA. COVID-19 would have “cost hundreds of thousands of people their lives”. Add to that racial discrimination, police brutality, and a “diabolical past of genocide”.

    Four experienced negotiators in Alaska

    The Chinese are meeting an experienced American team: Blinken was already National Security Advisor to Vice President Joe Biden between 2009 and 2013. Jake Sullivan was Deputy Chief of Staff under Secretary of State Hillary Clinton. Among other things, he advised her on the nuclear talks with Iran, during which he was persuaded, in particular by the then German SPD Foreign Minister Frank-Walter Steinmeier and his Chinese counterpart Wang Yi, to work together to convince the American government to lift sanctions on Iran. This was later reversed by US President Donald Trump.

    Blinken’s predecessor Pompeo, on the other hand, had only one year of international experience as CIA chief before he became Secretary of State, but no diplomatic experience at all.

    Wang Yi, in turn, has been foreign minister for eight years. Politburo member Yang Jiechi is also considered the Chinese politician with the longest experience in dealing with the West. He already studied at the London School of Economics and Political Science during the Cultural Revolution in 1971 and was ambassador to the US for a total of 13 years.

    This means that the two teams have known each other for a long time and have been able to achieve results together even in difficult negotiations. In this respect, it can be assumed that unlike Donald Trump the parties involved will act pragmatically.

    • Antony Blinken
    • Geopolitics
    • USA
    • Wang Yi

    Frigates to the Far East: Western strategies for the Indo-Pacific

    The frigate “Bayern” will set off from Wilhelmshaven for the Far East in August. On the voyage, the ship is to pass through the South China Sea. In February, France had sent a nuclear submarine to the region and held maneuvers there with the US and Japan. Britain plans to send the aircraft carrier HMS Queen Elizabeth to the Indo-Pacific for a few months in late 2021. US warships also regularly operate in the South China Sea, for example, as part of the US Operation Freedom of Navigation. The “Bayern” will stay away from US ships as well as from the twelve-nautical-mile zone around Chinese-controlled islands in the waters. These are cautious first steps in the Indo-Pacific, where the armed forces have not been active so far.

    For all its caution, however, the voyage of the “Bayern”, like the deployment of the ships of other nations, signals a greater willingness on the part of Europe to make its presence felt in the region, including jointly. In 2020, Germany – along with France and the Netherlands – presented an Indo-Pacific strategy for the first time. Together with France, Germany wants to develop the planned EU strategy for the Indo-Pacific, according to the paper.

    The German Indo-Pacific paper is rather broad: German interests include peace and security, the deepening of regional relations, open shipping routes, free trade, and even climate protection. Specifically, Germany wants to intensify cooperation with the Southeast Asian association of states ASEAN – for example by supporting negotiations on a legally binding code of conduct between China and the ASEAN member states for the South China Sea.

    The US has attributed growing importance to the region for years, beginning with the “pivot to Asia” under President Barack Obama. The Trump administration released an Indo-Pacific strategy in 2017 that advocates “free and open sea lanes” and opposes “coercive actions by individual countries” – a phrase that US officials, as well as President Joe Biden, often use in connection with China. Biden is likely to stick to the strategy. He announced a strategic rebalancing of the US presence in East and Southeast Asia – and did not rule out further rearmament.

    Defending the ‘rules-based order’ against China

    The most important slogan of the strategies is the defense of a “rules-based order” in the region. This includes, for example, the United Nations Convention on the Law of the Sea (UNCLOS). The elephant in the room here is – unnamed – China. Defense Minister Annegret Kramp-Karrenbauer (CDU), however, suggested on Twitter last week that Bundeswehr deployments in the region may well have something to do with containing China. As early as 2019, Kramp-Karrenbauer had stressed in a speech to students at the Bundeswehr University in Munich: “Our allies in the Indo-Pacific region – first and foremost Australia, Japan, and South Korea, but also India – feel increasingly pressured by China’s claim to power. They want a clear sign of solidarity.”

    These are by all means new tones. In the past, Germany has tended to look at the Indo-Pacific from a geographical perspective, Helena Legarda, an expert on China’s security and foreign policy at the Mercator Institute for China Studies (MERICS) tells China.Table. “And this region seemed very distant. So there is a new approach in Germany and a new understanding of the importance of this region.

    The biggest flashpoint there at the moment is the South China Sea. China claims practically the entire sea. Brunei, Indonesia, Malaysia, the Philippines, and Vietnam also lay claim to overlapping parts of the sea area. All of them are interested, not least in rich fishing grounds and raw material deposits. The US regards Beijing’s territorial claims as illegal and has in the past repeatedly sent warships into the waters, sometimes shadowed by Chinese vessels.

    China: no compromise on sovereignty issues

    China, meanwhile, is acting with increasing self-confidence in the region and gnawing away at the status quo bit by bit. Beijing is having reefs built into artificial islands and erecting military installations on them. Beijing leaves no doubt that it intends to defend these islets. “China’s new coast guard law gives the coast guard many more powers to enforce China’s territorial claims and allows it to fire on ships in disputed waters,” Legarda says. China counts the South China Sea among its “core interests”.

    Legarda doesn’t think China wants to provoke a war. “But it could easily happen in a number of ways – such as accidents, miscalculations, or actions by China that lead to retaliation by others.” The situation is complicated because there is no clear solution. “It is possible that compromises on joint resource exploration or fisheries may be found at some point,” Legarda says. “But when it comes to sovereignty, I don’t see China willing to compromise.”

    This also applies to Taiwan. Beijing sees the island as an inseparable part of the People’s Republic of China and has never ruled out reunification by force. The US sells Taipei defensive weapons and regularly sends ships through the Taiwan Strait, most recently the warship “USS John Finn”. US Admiral Philip Davidson, who is responsible for the Asia-Pacific region, even warned of a Chinese attack on Taiwan by 2027.

    Beijing fears alliances in the region

    The fact that the Europeans are now joining the Americans in the region certainly carries weight from the perspective of the littoral states. “If the Europeans demonstrate their ability and willingness to act as a naval power in the Indo-Pacific, China will have no choice but to change its deployment plans with regard to Taiwan and the South China Sea,” comments Hiroyuki Akita in the Japanese magazine Nikkei Asia, for example. “The Chinese military must assume that Britain, France, and Germany, as well as Japan and Australia, will provide some form of support to US forces in the event of a conflict.” This would raise the decision threshold for Chinese military adventures, Akita believes.

    This is precisely the kind of cooperation Beijing, therefore, wants to prevent. “One of Beijing’s biggest concerns is the potential of a coalition of Western states working together to confront China or contain its rise,” Legarda says. “This is one of the reasons why China keeps stressing the strategic independence of the EU.” The militaries of the littoral states – India, Japan, or South Korea – are also stronger than commonly believed, writes Salvatore Babones of the Centre for Independent Studies in Sydney in the US journal Foreign Policy. “The US can provide equipment, technology, or training,” Babones says. “But China’s neighbors can and should take the lead in protecting their own neighborhoods.” So China’s unstoppable advance is by no means a foregone conclusion.

    • Geopolitics
    • India
    • Indo-Pacific

    Hong Kong: less democracy, more IPOs

    The crackdown on Hong Kong’s democracy movement has hit many Hong Kong citizens hard. Some surveys conclude that hundreds of thousands want to emigrate because of Beijing’s heavy hand, or at least are thinking about it. In contrast, the permanent political quake has not had any negative impact on the Hong Kong stock market so far. On the contrary: Despite the new security law passed last June, Hong Kong’s stock exchange operator HKEX raised more money in 2020 than at any time since 2010, with companies raising $51.3 billion in 154 IPOs.

    The management consultancy KPMG assumes that the Asian financial metropolis will also take a “leading position” in new IPOs this year. Companies that want to go public sometimes argue quite differently from the Hong Kong protest movement. That’s because a large proportion of the companies listed on the Hong Kong Stock Exchange are from mainland China. They, in turn, do not see the new security law as a threat but rather as reassurance that they will be able to operate in Hong Kong in stable conditions. They are much more concerned about the uncertainty in China’s relationship with the USA.

    China’s successful tech companies, in particular, prefer Hong Kong listings since they are facing increasing distrust in the US. Not only former President Donald Trump’s sharp attacks but also a new law that came into force last December are making the Chinese sit up and take notice.

    The Holding Foreign Companies Accountable Act, while written for all foreign companies, takes particular aim at Chinese companies. It requires companies to certify that they are “not owned or controlled by a foreign government”. They are also supposed to open their books to the Securities and Exchange Commission. Otherwise, companies would no longer be listed.

    Fear of the USA

    The debate about tighter scrutiny of Chinese companies is also booming in the US because of the scandal surrounding Starbucks’ Chinese competitor Luckin Coffee, which admitted to falsifying financial statements last April and was banned from the Nasdaq.

    Many observers in China suspect, at the latest since the outbreak of the trade war, that access to the American capital market could soon be over. As a precautionary measure, the New York-listed e-commerce group Alibaba had already found an alternative location in Hong Kong in autumn 2019 and raised $13 billion in a secondary listing.

    Most recently, Chinese tech giants Jd.com and NetEase also followed suit with secondary listings. They raised a combined $6.6 billion in Hong Kong. Chinese companies are now thinking twice about taking another risk in New York, which is good news for investment bankers in Hong Kong.

    Further IPOs planned

    A whole series of further IPOs are also on the horizon for the coming months. At the beginning of March, the Chinese search engine provider Baidu received approval for a secondary listing in Hong Kong, which is expected to raise the equivalent of $3.5 billion. So far, Baidu has only been listed in New York, just like the three largest Chinese EV start-ups Nio, Li Auto, and Xpeng. According to a report by Reuters, this trio also wants to go public in the special administrative region as soon as possible.

    But last year, Alibaba subsidiary Ant Group learned painfully that risks also lurk for Chinese companies in Hong Kong. After company founder Jack Ma denounced the deficits of the Chinese financial system in a speech, Beijing unceremoniously canceled what was potentially the biggest IPO of the year at the time. In this respect, Chinese companies do not see Hong Kong as a new paradise but merely as a comparatively safer alternative. Gregor Koppenburg/Joern Petring

    • Alibaba
    • Finance

    News

    China begins trial of detained Canadians

    The trial of two Canadians detained on espionage charges begins today in China. Canada’s Foreign Affairs Minister Marc Garneau said the embassy in Beijing “has been informed that court hearings for Michael Spavor and Michael Kovrig are scheduled to take place on March 19 and 22”. The two Canadians have been detained since December 2018 and were charged with espionage last June. “We believe these detentions are arbitrary and remain deeply concerned about the lack of transparency in these proceedings,” Garneau said. Canadian officials provided consular support to Spavor and Kovrig and their families during “this unacceptable ordeal”, Canada’s foreign minister said.

    Chinese authorities accuse Kovrig, a former Canadian diplomat who worked for the International Crisis Group (ICG), of stealing sensitive information in China since 2017. Spavor, a Beijing-based businessman, is accused of providing information to Kovrig.

    Observers saw the detention of the two Canadians as retaliation for the earlier arrest in Vancouver of the Huawei Group’s chief financial officer, Meng Wanzhou. She was under a US arrest warrant for allegedly making false statements to banks about selling communications technology to Iran. According to media reports, Meng, whose extradition hearing is currently underway, has been under house arrest in Vancouver since 2018.

    The start of Spavor’s trial coincides with a first high-level meeting between the US and Chinese officials in Alaska. ari

    • Geopolitics
    • Michael Kovrig

    SMIC plans billion-dollar investment in semiconductor factory

    Chinese semiconductor manufacturer Semiconductor Manufacturing International Corporation (SMIC) plans to invest €1.95 billion in a new chip factory, Bloomberg reports. To this end, the company has entered into a joint venture with the city of Shenzhen, which will help finance the factory. Production is expected to start in 2022 and will include 28-nanometer semiconductor chips. This technology is quite old. TSMC of Taiwan already mass produces 5nm chips. 28nm chips are currently still used in car manufacturing, for example.

    In its recently released five-year plan, Beijing noted the expansion of its chip industry as a key goal to reduce dependence on outside chipmakers. Under former US President Donald Trump, several Chinese companies, including SMIC, were blacklisted and cut off from US suppliers. That also made it harder to buy machinery to make chips.

    According to Bloomberg, the new SMIC fab will also produce silicon wafers – a fundamental raw material in semiconductor manufacturing. According to Chinese industry officials, wafer manufacturing is one of the areas in China’s semiconductor supply chain that has the lowest local production. Overall, China is still very dependent on foreign countries for chips. Last year, only just under 16 percent of chips sold in China were produced nationally. nib

    • SMIC
    • Technology

    Column

    Hi, Mom – China’s golden 80s

    By Johnny Erling
    Ein Bild von Johnny Erling aus dem Jahre 2017

    China has a new street sweeper. Since the Spring Festival, the feature film “Hi, Mom” (你好, 李焕英) has been clearing the country’s box office. It grossed ¥5.27 billion (about €700 million) in barely five weeks by last Tuesday and is expected to be distributed internationally.

    The film starts with a flashback to a severe traffic accident 20 years ago. Its main character Li Huanying is cycling with her daughter Jia Ling in the back seat when they are hit by a truck. The mother dies.

    “Hi, Mom” is based on a true story. Daughter Jia Ling was 19 years old when her mother died in an accident in 2001. The stage performer celebrated in China for her sketches and slapstick, not only wrote the script. She also directed and plays herself in the film, which she dedicates to finding her mother’s personality. The flick hit so hard that bootleg copies immediately appeared online. The recordings from cinemas are in miserable sound quality with shadows of spectators flitting through the picture.

    A journey into the past

    The story tells a trip back in time. Jia Ling literally falls from heaven to earth. She finds herself in 1981 China, posing as a cousin to her mother and becoming her mother’s confidante. Jia wants to improve her life, even tries to set up the still unmarried young worker “with a good match”.

    This does not go off without comic complications. Despite its slapstick interludes, the film is too emotional for European tastes. It presses the tear glands with its thickly applied homage to the mother. This makes it a huge success among young Chinese women born in the 1990s and 2000s. The British “Guardian” writes that it strikes a chord with them because it starts a debate about the role of women, about motherhood and parenthood.

    The spirit of optimism of the 80s

    Success has other fathers. Looking back, “Hi, Mom” awakens nostalgic feelings of the “golden” 80s in parents of millenials, especially in those over 50. Jia falls right into the spirit of optimism after the Cultural Revolution, that from now on, things will be better, freer, and more individual in China and that people are on their way to new shores.

    Many inserts tie in with these ideas. People enjoy simple pleasures. Neighbors meet in front of the first privately purchased black-and-white television Jia procures for her mother. She also buys her movie tickets for an arranged date that goes awry. The cinema is showing “Lushanlian”, China’s first film that dares to show a kissing scene. Everything is full of splashes of color, like the mother’s brightly colored dress, which stands out from the crowd of factory workers, who are still dressed in the monochrome “Mao” uniform with their drilled trousers.

    A cinema film about the inner escape from propaganda

    For young Chinese, to whom Beijing’s shrill propaganda with nationalist undertones instills the idea that they live in a country whose future as a world power is a foregone conclusion, these are alien images. For their parents’ generation, however, the film nostalgia for the 80s, which has become fashionable in recent years. Many are on an inner flight from the insistence with which China’s current leadership is forcing the “new era of socialism under Xi Jinping” on them as “their dream”.

    Blogs and WeChat conspicuously ask, “Why do Chinese people think back to the 80s?” (为什么中国人开始怀念八十年代?). Outspoken answers are quickly shared – often in a cat-and-mouse game with censors: “The 1980s was an age of fireworks and poetry, openness and tolerance, full of genuine feelings, and an era of free and unrestricted thought.” Everything was in awakening mode, from art to music to movies to literature. Among the dozens of authors listed are names of writers now officially reviled and ostracized. For example, the poet Beidao, or Fang Fang, who just wrote her “Wuhan Diary”, which is on China’s index.

    Three terms would have characterized the 80s: “Young, sincere and innocent.” (年轻、真诚、单纯). There is a lack of that today, criticizes a blogger under the pseudonym Nuipi Mingming, from whose essay flashes a defiant spirit: In his homage to China’s rock star Cui Jian, who became the spiritual youth symbol of the 1980s, he writes: “Compared to the 1980s, our age is dull and boring, becoming more materialistic and utilitarian. People of courage are fewer, realists are increasing. Rebellious spirits diminish. Genuflectors, sycophants and claqueurs increase. Only those who think about it are decreasing in numbers.”

    Free thinking? Unwanted!

    The 80s are being glorified, objects the critical political scientist Zhang Lifan: “Nostalgic memories won’t bring us back to them.” He often hears intellectuals and people from the 50- to 65-year-old generation exclaiming, “How lucky we were to have lived through that time,” says Michael Kahn-Ackermann, a literary translator and German-Chinese cultural mediator who lives in Nanjing. And in addition, proud words about how they are the last to think for themselves. Beijing has drawn its conclusions from this. The state and the party are concentrating above all on intensifying the ideological education of the young: from kindergarten to university.

    The comedic stirring film, which takes as its theme the daughter’s love for her mother, fits – whether intentionally or not – with the nostalgia of many intellectuals for the early days of Chinese reforms and their longings and hopes at the time. Partly because it does, “Hi, Mom” is more than just a box office hit.

    • Culture
    • Film

    Dessert

    To enjoy an all-you-can-eat sushi menu, dozens of people in Taiwan have had their names changed. The trigger was the advertising campaign of a sushi restaurant chain. It had announced that anyone with “Gui Yu”, the Chinese characters for salmon, in their name would get a meal at the restaurant, where they and five of their friends could eat as much as they wanted. Taiwan’s citizens are allowed to officially change their names up to three times.

    China.Table Editors

    CHINA.TABLE EDITORIAL OFFICE

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