Turpan is a low point. Geographically, that is, because the Turpan Depression in western Xinjiang drops to 155 meters below sea level in some places. This makes it the third lowest point on Earth after the Dead Sea and the Sea of Galilee. Volkswagen operates a test track for cars in Turpan to test them under extremely hot and dry conditions. The ground temperature in the sand can reach more than 82 degrees.
The extreme conditions in Turpan were also faced by the Uyghur workers who built the test track for SAIC and VW. And they did so involuntarily. They were forced to participate in the construction as part of a state transfer program. This is evidenced by research conducted by the scholar Adrian Zenz. Turpan is, therefore, not only a geographical low point but also a moral one.
At least Volkswagen is now considering withdrawing from Xinjiang, which has long been demanded. Meanwhile, the investment firm Union Investment no longer considers the company investable in its sustainable retail funds and is taking action, writes Marcel Grzanna in his Feature on the backgrounds and current developments.
At the end of the briefing, you will find an Opinion on this topic by Adrian Zenz and Rushan Abbas. In their detailed analysis, the two scholars discuss the audit commissioned by VW last year to rid itself of allegations of forced labor. They speak of a “moral and methodological bankruptcy”.
More encouraging are the developments in China regarding the expansion of renewable energies. The capacities of solar and wind power are growing, as are other forms of renewable energy generation. However, China faces the same problems as we do here: Wind and sun blow and shine as they please – sometimes more, sometimes less. Therefore, electricity must be stored during peak times to be available during calm periods. Christiane Kuehl takes a look at how China is trying to accelerate the expansion of energy storage in her Feature.
Volkswagen is facing increasing pressure due to its joint venture in Xinjiang. On Wednesday, the company’s headquarters in Wolfsburg announced that they are already in talks with joint venture partner SAIC regarding the future direction of business activities in the Xinjiang province – a veiled statement that could imply a potential departure from the region.
Volkswagen is responding to new findings indicating a direct connection between a subsidiary of the joint venture and the state’s forced labor system. The Handelsblatt received information suggesting that transferred Uyghur workers were employed in the construction of a test track in Turpan, in the Xinjiang autonomous region. Transferred workers are Uyghurs who are distributed throughout the country as needed under a state transfer program, involuntarily affecting an estimated 80,000 individuals between 2017 and 2019.
China researcher Adrian Zenz, whose work underpins critical reports by the United Nations on the situation in Xinjiang, confirmed this suspicion with his research. This revelation forces Volkswagen to admit, after many years of denial, that one of its partners in the People’s Republic was actively involved in the suppression of Uyghurs.
The Union Investment fund company has already taken action. The accusations against Volkswagen have now reached a new dimension. “Therefore, Volkswagen is no longer investable for our sustainable mutual funds,” commented Janne Werning, head of sustainability.
Last week, chemical company BASF announced its withdrawal from Xinjiang after the connection between joint venture partner Markor and state-orchestrated human rights abuses was exposed. Renata Alt (FDP), chairwoman of the Human Rights Committee in the German Bundestag, subsequently demanded the withdrawal of all German companies from Xinjiang in an interview with Table.Media.
Uyghur representatives reacted with outrage on Wednesday. “It is unbearable that a globally renowned company like VW has become involved in such practices. Months have passed, and what have we seen? Half-hearted attempts to conceal the truth with a dubious audit – a maneuver that has now been completely exposed,” said Haiyuer Kuerban, Berlin director of the World Uyghur Congress (WUC).
Kuerban referred to the much-criticized audit of the Volkswagen factory in Urumqi, operated by the company with SAIC, which found no connections to state transfer programs. “Volkswagen has tried to deceive us, but the new reports clearly show: These so-called audits were nothing but a farce. Mere whitewashing that does not in the least do justice to the real conditions and the suffering behind them.”
The contract for the construction of the test track was signed in Berlin in 2014. The track went into operation in 2019. Responsible for this was a company called Xinjiang Test Track Project, established by the state-owned China Railway Fourth Bureau Group. The Xinjiang Test Track Project published reports indicating that Uyghurs from the transfer program were employed in 2017 and 2018 and that it was involved in so-called “home visits” (Fanghuiju).
Home visits are part of the state’s strategy, involving close collaboration between security agencies and companies. Uyghurs are visited in their homes to pressure them and break any resistance to being included in the transfer program.
“The documents clearly indicate that this track was built with Uyghur forced labor,” said Zenz in an interview with Table.Media. This was evidenced, among other things, by photos of Uyghur workers in military clothing. Zenz says it is not unusual for reports on state transfer programs to be disseminated by companies or media in China. On the contrary, this was meant to demonstrate precise compliance with state requirements. However, transparency has decreased in recent years amid growing criticism.
The documents Zenz reviewed primarily date from 2017 to 2019. “Decisions to build the test site by SAIC Volkswagen Automotive Co., Ltd. were made in direct connection with the establishment of the joint venture plant in Urumqi in 2013, long before the site opened in 2019,” Volkswagen wrote in its statement.
Of course, VW states, the company takes reports on the situation in the region very seriously. Although no Volkswagen managers sit on the committees of the operator responsible for the test track, they are in constant exchange on these issues with the joint venture partner and the operator. “So far, we have not received any evidence of human rights violations.”
According to the company, only vehicles from the Chinese joint venture, intended for the local market, are currently being tested on the test track in Turpan. Currently, only three employees are working there, all of whom are employed by the joint venture SAIC Volkswagen and are not members of any minority group.
Every country needs a nationwide energy storage system for the efficient use of renewable energies. In China, such storage facilities are particularly needed due to the rapid expansion of solar and wind power capacities. For example, some provinces and cities cannot connect new solar projects to the grid because the capacity is insufficient.
According to the National Energy Administration (NEA), 2023 saw the highest number of installations to date:
The combined total capacity is 1,050 GW, only 150 GW below the target of 1,200 GW set for 2030. Analysts at Trivium China expect China to reach this target by the end of 2024.
However, having capacities is one thing, and electricity generation is another. China needs better infrastructure to efficiently utilize the vast solar and wind farms, with energy storage being a central element. The construction of these storage facilities is underway, according to China expert Lauri Myllyvirta from the Centre for Research on Energy and Clean Air in Helsinki.
Grid-connected storage systems can absorb surplus generated electricity and feed it back into the grid when needed. They prevent wind and solar power plants from being shut down when the grid is overloaded and can provide electricity when neither the sun is shining, nor the wind is blowing.
According to Myllyvirta, electricity demand in the People’s Republic currently stands at over 1,000 GW, peaking at 1,300 GW. China already has over 300 GW of storage capacity in operation, under construction, or contractually agreed upon. About two-thirds of this capacity are pumped storage power plants, with the rest being battery storage. “The expansion of electricity storage is the most underappreciated development in the energy sector in China.” In addition to the agreed projects, more storage facilities are already in the planning stages.
Forecasts from the China Energy Storage Alliance (CNESA), however, are much more cautious. It expects new energy storage capacity of 97 GW by 2027, with an annual growth rate of 49.3 percent, as reported by Caixin.
“More storage will significantly reduce China’s dependence on coal and gas power for meeting peak demands,” believes Myllyvirta. “They enable solar and wind energy to account for a much larger share of total electricity generation than would be possible without storage.”
By mid-2023, the share of non-fossil installed capacity exceeded 50 percent for the first time, including wind, solar, hydropower, nuclear power, geothermal and others. However, due to the weather-dependent fluctuating utilization, coal still leads in electricity generation in China. Coal-fired power is still given priority in many parts of China when it comes to grid access. This is another challenge for the energy transition.
So far, pumped storage power plants have been favored in China because they are relatively simple. When wind and solar generate more electricity than needed, surplus energy is used to pump water from a lower to a higher reservoir, storing it there. When there is demand for electricity, this water is released into the lower reservoir, passing through turbines that generate electricity. China has been testing pumped storage for years, including in the vicinity of the 2022 Winter Olympics in Beijing.
Battery storage is more technically complex and currently relies mainly on lithium-ion batteries in China. Since the spring of 2023, global lithium prices have been falling, reducing the costs of installing battery storage and driving forward its development.
The government is also directly pushing for the construction of storage systems. China requires all renewable energy projects to allocate a certain proportion of their funds to building their energy storage systems. Most energy storage systems are built by state-owned companies, including power producers and grid operators, according to Caixin, citing a manager at a large foreign oil and gas company. For grid operators, building energy storage is an important means of avoiding inefficient overinvestment in grid infrastructure and regulating energy distribution more effectively.
“However, the government mandate also drives up costs, such as for additional land acquisition and the construction of facilities themselves,” the magazine writes. If a renewable project has to guarantee a storage facility equivalent to 10 percent of its installed capacity and with a duration of two hours, the internal rate of return for this project drops by one percentage point, it quoted a source at a large state-owned utility.
“The expansion of battery storage is currently driven more by regulations requiring storage installation in solar and wind projects than by economic incentives,” says Lauri Myllyvirta. “To make optimal use of existing storage and expand the market, electricity market reforms are necessary.” There is a “lack of mature business models that can provide developers and builders with long-term returns,” Caixin also notes.
There are initial solutions for introducing more market economy into the system. Several months ago, the National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) proposed in a document, according to Caixin, that qualified energy storage projects should become independent service providers. They could offer support and rent storage capacities to utility companies.
However, this has not yet been officially adopted. By 2060, China aims to be carbon neutral and source 80 percent of its energy from clean sources. By then, the storage system must be in place.
German direct investments in China have reached a record level despite calls for greater diversification. This is according to calculations by the German Economic Institute (IW) based on figures from the Bundesbank. In 2023, direct investments increased by more than four percent, totaling 11.9 billion euros.
The share of the People’s Republic, including Hong Kong, in all foreign direct investments of the German economy thus rose to 10.3 percent. This is also due to the fact that German direct investments abroad decreased from nearly 170 billion to 116 billion euros – against the trend of growing investments in China.
“This is a new record high – after already high values in the two previous years,” said IW expert Juergen Matthes. German companies invested just as much new money in China from 2021 to 2023 as they did in the years between 2015 and 2020. Meanwhile, the German government is encouraging companies to pursue a de-risking strategy towards the People’s Republic and to diversify their investments more broadly.
Overall, the IW sees a divided picture. “On the one hand, there are the new investments in China overall, which are financed solely from profits generated there,” said Matthes. “On the other hand, there have obviously been movements away from China in recent years.” This is shown by the negative values for the “other components,” among which equity capital usually plays a special role. A previous IW study with data up to 2022 showed that in recent years, more equity investments in China have been reduced than newly built up through money flows from Germany.
While the Bundesbank’s figures do not allow for a more detailed insight, it can be assumed “that there continues to be a division between a few large companies and the majority of SMEs,” said Matthes. Other studies and anecdotal evidence support the thesis that some SMEs are reducing their engagement in China or even withdrawing entirely. jul/rtr
The Chinese EV giant BYD is in talks with Mexican authorities regarding the construction of a plant. This was reported by Nikkei Asia, citing statements from Zhou Zou, BYD’s Mexico chief. The company has commissioned a feasibility study and is discussing potential locations for the plant and other conditions with local authorities. According to Nikkei’s report, potential locations include Nuevo León in the north or the Bajío region in central Mexico. The Yucatan Peninsula is also being considered.
For BYD, Mexico is highly appealing not only as a market but also for strategic reasons. Production in Mexico provides access to the US automotive market, which imposes a 25 percent tariff on Chinese brands. However, under the USMCA trade agreement, tariffs can be avoided if more than 75 percent of the vehicle is produced in one of the participating countries: the USA, Mexico or Canada. Besides BYD, MG and Chery are also pursuing this strategy.
According to a report from Bloomberg, Chinese suppliers are following the lead of automakers. In 2023, 33 Chinese suppliers were already registered in Mexico, with 18 of them exporting auto parts worth a total of one billion euros to the USA. This marked a 15 percent increase compared to the previous year. jul
According to the news agency AP, two Chinese fishermen drowned during a chase with the Taiwanese coast guard. Their boat had illegally entered Taiwanese waters off the island of Kinmen, the Taiwanese coast guard announced on Wednesday. When the coast guard appeared, the individuals on the boat attempted to flee, resulting in the boat capsizing. Four fishermen fell into the water. AP reports that two could not be revived, while the other two survived and were in good condition.
The Kinmen island group belongs to Taiwan but is only a few kilometers from the Chinese mainland. The Chinese metropolis of Xiamen is visible from Kinmen with the naked eye.
Beijing’s leadership referred to the incident as a “malicious incident” and demanded an investigation. They accused the Taiwanese government of “forcibly inspecting Chinese fishing vessels under all sorts of pretexts and using violent and dangerous methods against Chinese fishermen”. flee
Indonesia has named two Chinese citizens as suspects in the fire that killed 21 people at a nickel smelter on Sulawesi Island. The fire broke out on Dec. 24 at a smelting facility operated by Indonesia Tsingshan Stainless Steel (ITSS) in the Indonesia Morowali Industrial Park. ITSS is a subsidiary of the Chinese Tsingshan Group, the world’s largest nickel producer.
According to a police spokesperson, the two men are accused of negligence, although specific details of the allegations were not provided. One of the suspects was a furnace supervisor at another facility in the industrial park, temporarily assigned to ITSS at the time of the incident. The other suspect was employed by another company in the same industrial park.
In recent years, Indonesia has become the world’s largest nickel producer, largely due to significant investments from Chinese corporations. The Tsingshan Group led the construction of the Morowali Industrial Park, where around a dozen smelters are now operational. In the same region, Jiangsu Delong Nickel Industry Co. established the Virtue Dragon Nickel Industrial Park, which produces nickel and stainless steel. Nickel is a crucial component of EV batteries; Indonesia banned nickel exports in 2014, prompting China and other investors to engage in local nickel processing.
The Indonesian Ministry of Labor is conducting a separate investigation into the fire. According to Minister Ida Fauziyah, there are strong indications that a violation of safety regulations led to the fire. The sector has experienced several fatal industrial accidents in recent years.
China is one of Indonesia’s most important trading partners. Therefore, the future of relations with Beijing was a significant issue in the campaign for today’s presidential election. ck
In December 2023, Volkswagen published an audit of its much-criticized joint venture factory in Xinjiang. The region operates the largest system of state-imposed forced labor in the world today. Unsurprisingly, the report claimed to absolve the firm from exposure to forced labor.
Recent evidence suggests that Volkswagen is directly involved in Uyghur forced labor. Newly released evidence this week shows that the Volkswagen-SAIC test track in Turpan was built by a subsidiary of the China Railway Engineering Corporation (CREC). Furthermore, CREC reports explicitly state that the project employed excess and transferred Uyghur labor during the peak of mass internments in 2017 and 2018.
The audit ostensibly followed the SA8000 standard, which seeks to assess child and forced labor, discrimination, physical or psychological punishment, working hours, and incomes. That sounds impressive-until one realizes that no visible sign of coercion was ever expected to be found at the factory. First, the whole purpose of the reeducation camps is to teach Uyghurs unquestioning obedience to the state. As one Uyghur put it: “If the government tells you to go work, you go.” Second, coercion occurs primarily during recruitment, training, and transfer, and is much less visible at workplaces.
The audit was performed by Löning Human Rights and Responsible Business, an entity founded by Markus Löning, Germany’s human rights commissioner between 2010 and 2013. However, neither Volkswagen nor Löning published an actual audit report; the company merely posted an unsigned document containing quotes by Markus Löning without his signature or company letterhead.
The reason for this awkward presentation of audit results soon became clear. In a stunning turn of events, on Dec. 7, the Löning company posted a statement on its LinkedIn account in which the entire staff disavowed the audit. The statement noted that besides Mr. Löning and Christian Ewert, “no other team member from Löning participated in, supported or backed this project.”
The audit’s methodology sheds significant doubts on the findings. Volkswagen had disclosed that the “actual audit” was conducted by two Chinese lawyers, who were merely “accompanied on site” by Löning staff.
Internal state documents confirm that poverty alleviation and reeducation work is subject to strict secrecy. This, of course, is why experts and reputable auditing firms agree that audits in Xinjiang are both impractical and unethical. Volkswagen further confirmed that the audit did not even attempt to review staff résumés, meaning that the company could not evaluate what Uyghur employees went through prior to joining Volkswagen. Löning employees have since conceded that their firm is not actually accredited to conduct SA8000 audits.
In July this year, Rushan Abbas, a co-author of this article, met with Markus Löning at his firm’s office in Berlin, alongside Uyghur activists Abdulhakim Idris and Haiyuer Kuerban. They detailed the omnipresence of state-imposed forced labor in Xinjiang, including at the SAIC-Volkswagen factory. Löning listened and nodded in apparent agreement. He was visibly moved at the sight of a photograph of Gulshan Abbas, Rushan’s sister, a retired medical doctor serving an arbitrary 20-year prison sentence.
Afterwards, Mr. Kuerban offered Mr. Löning a list of companies affiliated with the Xinjiang Production and Construction Corps (XPCC), a paramilitary settler-colonial entity implicated in Uyghur forced labor. Mr. Löning replied, noting that such external evidence was increasingly important. He conceded that China’s new counterespionage law was rendering investigations into supply chains increasingly difficult.
As a result, Rushan Abbas came to believe that Löning shared their commitment to uphold human dignity and to end forced labor in the region. After all, they were speaking to a former human rights commissioner. Sadly, she was proven wrong.
The Volkswagen-Löning audit represents a declaration of moral and methodological bankruptcy. By using the reputation of a former human rights official to whitewash its presence in the midst of the largest incarceration of an ethno-religious group since the Holocaust, the Volkswagen-Löning audit may go down in history as one of the more hideous examples of the fallacy of Germany’s Wandel durch Handel (change through trade) model of near-unconditional engagement with autocratic regimes.
Rushan Abbas is a Uyghur-American human rights activist advocating for Uyghur rights and the Xinjiang Uyghur Autonomous Region. In 2017, she founded the organization “Campaign for Uyghurs.” In 2022, the Campaign for Uyghurs, along with the Uyghur Human Rights Project, was nominated for the Nobel Peace Prize.
Adrian Zenz is a Senior Fellow and Director for China Studies at the Victims of Communism Memorial Foundation, Washington, D.C. He has played a leading role in analyzing leaked Chinese government documents, including the “China Cables,” the “Karakax List,” the “Xinjiang Papers,” and the “Xinjiang Police Files.”
The text is an abridged version of an article in Foreign Policy.
Victoria Mio is a portfolio manager at the investment company Janus Henderson and Head of Equities Greater China. She is based in Singapore. Previously, Mio spent 14 years at Robeco as Chief Investment Officer for China and Co-Head of Asia Pacific Equities.
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New Year’s snack for tiger cub: At the Kunming Zoo in Yunnan, even the animals celebrate the beginning of the Year of the Dragon. The little predator seems to enjoy it. Whether the fruit decoration is also eaten, however, is questionable.
Turpan is a low point. Geographically, that is, because the Turpan Depression in western Xinjiang drops to 155 meters below sea level in some places. This makes it the third lowest point on Earth after the Dead Sea and the Sea of Galilee. Volkswagen operates a test track for cars in Turpan to test them under extremely hot and dry conditions. The ground temperature in the sand can reach more than 82 degrees.
The extreme conditions in Turpan were also faced by the Uyghur workers who built the test track for SAIC and VW. And they did so involuntarily. They were forced to participate in the construction as part of a state transfer program. This is evidenced by research conducted by the scholar Adrian Zenz. Turpan is, therefore, not only a geographical low point but also a moral one.
At least Volkswagen is now considering withdrawing from Xinjiang, which has long been demanded. Meanwhile, the investment firm Union Investment no longer considers the company investable in its sustainable retail funds and is taking action, writes Marcel Grzanna in his Feature on the backgrounds and current developments.
At the end of the briefing, you will find an Opinion on this topic by Adrian Zenz and Rushan Abbas. In their detailed analysis, the two scholars discuss the audit commissioned by VW last year to rid itself of allegations of forced labor. They speak of a “moral and methodological bankruptcy”.
More encouraging are the developments in China regarding the expansion of renewable energies. The capacities of solar and wind power are growing, as are other forms of renewable energy generation. However, China faces the same problems as we do here: Wind and sun blow and shine as they please – sometimes more, sometimes less. Therefore, electricity must be stored during peak times to be available during calm periods. Christiane Kuehl takes a look at how China is trying to accelerate the expansion of energy storage in her Feature.
Volkswagen is facing increasing pressure due to its joint venture in Xinjiang. On Wednesday, the company’s headquarters in Wolfsburg announced that they are already in talks with joint venture partner SAIC regarding the future direction of business activities in the Xinjiang province – a veiled statement that could imply a potential departure from the region.
Volkswagen is responding to new findings indicating a direct connection between a subsidiary of the joint venture and the state’s forced labor system. The Handelsblatt received information suggesting that transferred Uyghur workers were employed in the construction of a test track in Turpan, in the Xinjiang autonomous region. Transferred workers are Uyghurs who are distributed throughout the country as needed under a state transfer program, involuntarily affecting an estimated 80,000 individuals between 2017 and 2019.
China researcher Adrian Zenz, whose work underpins critical reports by the United Nations on the situation in Xinjiang, confirmed this suspicion with his research. This revelation forces Volkswagen to admit, after many years of denial, that one of its partners in the People’s Republic was actively involved in the suppression of Uyghurs.
The Union Investment fund company has already taken action. The accusations against Volkswagen have now reached a new dimension. “Therefore, Volkswagen is no longer investable for our sustainable mutual funds,” commented Janne Werning, head of sustainability.
Last week, chemical company BASF announced its withdrawal from Xinjiang after the connection between joint venture partner Markor and state-orchestrated human rights abuses was exposed. Renata Alt (FDP), chairwoman of the Human Rights Committee in the German Bundestag, subsequently demanded the withdrawal of all German companies from Xinjiang in an interview with Table.Media.
Uyghur representatives reacted with outrage on Wednesday. “It is unbearable that a globally renowned company like VW has become involved in such practices. Months have passed, and what have we seen? Half-hearted attempts to conceal the truth with a dubious audit – a maneuver that has now been completely exposed,” said Haiyuer Kuerban, Berlin director of the World Uyghur Congress (WUC).
Kuerban referred to the much-criticized audit of the Volkswagen factory in Urumqi, operated by the company with SAIC, which found no connections to state transfer programs. “Volkswagen has tried to deceive us, but the new reports clearly show: These so-called audits were nothing but a farce. Mere whitewashing that does not in the least do justice to the real conditions and the suffering behind them.”
The contract for the construction of the test track was signed in Berlin in 2014. The track went into operation in 2019. Responsible for this was a company called Xinjiang Test Track Project, established by the state-owned China Railway Fourth Bureau Group. The Xinjiang Test Track Project published reports indicating that Uyghurs from the transfer program were employed in 2017 and 2018 and that it was involved in so-called “home visits” (Fanghuiju).
Home visits are part of the state’s strategy, involving close collaboration between security agencies and companies. Uyghurs are visited in their homes to pressure them and break any resistance to being included in the transfer program.
“The documents clearly indicate that this track was built with Uyghur forced labor,” said Zenz in an interview with Table.Media. This was evidenced, among other things, by photos of Uyghur workers in military clothing. Zenz says it is not unusual for reports on state transfer programs to be disseminated by companies or media in China. On the contrary, this was meant to demonstrate precise compliance with state requirements. However, transparency has decreased in recent years amid growing criticism.
The documents Zenz reviewed primarily date from 2017 to 2019. “Decisions to build the test site by SAIC Volkswagen Automotive Co., Ltd. were made in direct connection with the establishment of the joint venture plant in Urumqi in 2013, long before the site opened in 2019,” Volkswagen wrote in its statement.
Of course, VW states, the company takes reports on the situation in the region very seriously. Although no Volkswagen managers sit on the committees of the operator responsible for the test track, they are in constant exchange on these issues with the joint venture partner and the operator. “So far, we have not received any evidence of human rights violations.”
According to the company, only vehicles from the Chinese joint venture, intended for the local market, are currently being tested on the test track in Turpan. Currently, only three employees are working there, all of whom are employed by the joint venture SAIC Volkswagen and are not members of any minority group.
Every country needs a nationwide energy storage system for the efficient use of renewable energies. In China, such storage facilities are particularly needed due to the rapid expansion of solar and wind power capacities. For example, some provinces and cities cannot connect new solar projects to the grid because the capacity is insufficient.
According to the National Energy Administration (NEA), 2023 saw the highest number of installations to date:
The combined total capacity is 1,050 GW, only 150 GW below the target of 1,200 GW set for 2030. Analysts at Trivium China expect China to reach this target by the end of 2024.
However, having capacities is one thing, and electricity generation is another. China needs better infrastructure to efficiently utilize the vast solar and wind farms, with energy storage being a central element. The construction of these storage facilities is underway, according to China expert Lauri Myllyvirta from the Centre for Research on Energy and Clean Air in Helsinki.
Grid-connected storage systems can absorb surplus generated electricity and feed it back into the grid when needed. They prevent wind and solar power plants from being shut down when the grid is overloaded and can provide electricity when neither the sun is shining, nor the wind is blowing.
According to Myllyvirta, electricity demand in the People’s Republic currently stands at over 1,000 GW, peaking at 1,300 GW. China already has over 300 GW of storage capacity in operation, under construction, or contractually agreed upon. About two-thirds of this capacity are pumped storage power plants, with the rest being battery storage. “The expansion of electricity storage is the most underappreciated development in the energy sector in China.” In addition to the agreed projects, more storage facilities are already in the planning stages.
Forecasts from the China Energy Storage Alliance (CNESA), however, are much more cautious. It expects new energy storage capacity of 97 GW by 2027, with an annual growth rate of 49.3 percent, as reported by Caixin.
“More storage will significantly reduce China’s dependence on coal and gas power for meeting peak demands,” believes Myllyvirta. “They enable solar and wind energy to account for a much larger share of total electricity generation than would be possible without storage.”
By mid-2023, the share of non-fossil installed capacity exceeded 50 percent for the first time, including wind, solar, hydropower, nuclear power, geothermal and others. However, due to the weather-dependent fluctuating utilization, coal still leads in electricity generation in China. Coal-fired power is still given priority in many parts of China when it comes to grid access. This is another challenge for the energy transition.
So far, pumped storage power plants have been favored in China because they are relatively simple. When wind and solar generate more electricity than needed, surplus energy is used to pump water from a lower to a higher reservoir, storing it there. When there is demand for electricity, this water is released into the lower reservoir, passing through turbines that generate electricity. China has been testing pumped storage for years, including in the vicinity of the 2022 Winter Olympics in Beijing.
Battery storage is more technically complex and currently relies mainly on lithium-ion batteries in China. Since the spring of 2023, global lithium prices have been falling, reducing the costs of installing battery storage and driving forward its development.
The government is also directly pushing for the construction of storage systems. China requires all renewable energy projects to allocate a certain proportion of their funds to building their energy storage systems. Most energy storage systems are built by state-owned companies, including power producers and grid operators, according to Caixin, citing a manager at a large foreign oil and gas company. For grid operators, building energy storage is an important means of avoiding inefficient overinvestment in grid infrastructure and regulating energy distribution more effectively.
“However, the government mandate also drives up costs, such as for additional land acquisition and the construction of facilities themselves,” the magazine writes. If a renewable project has to guarantee a storage facility equivalent to 10 percent of its installed capacity and with a duration of two hours, the internal rate of return for this project drops by one percentage point, it quoted a source at a large state-owned utility.
“The expansion of battery storage is currently driven more by regulations requiring storage installation in solar and wind projects than by economic incentives,” says Lauri Myllyvirta. “To make optimal use of existing storage and expand the market, electricity market reforms are necessary.” There is a “lack of mature business models that can provide developers and builders with long-term returns,” Caixin also notes.
There are initial solutions for introducing more market economy into the system. Several months ago, the National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) proposed in a document, according to Caixin, that qualified energy storage projects should become independent service providers. They could offer support and rent storage capacities to utility companies.
However, this has not yet been officially adopted. By 2060, China aims to be carbon neutral and source 80 percent of its energy from clean sources. By then, the storage system must be in place.
German direct investments in China have reached a record level despite calls for greater diversification. This is according to calculations by the German Economic Institute (IW) based on figures from the Bundesbank. In 2023, direct investments increased by more than four percent, totaling 11.9 billion euros.
The share of the People’s Republic, including Hong Kong, in all foreign direct investments of the German economy thus rose to 10.3 percent. This is also due to the fact that German direct investments abroad decreased from nearly 170 billion to 116 billion euros – against the trend of growing investments in China.
“This is a new record high – after already high values in the two previous years,” said IW expert Juergen Matthes. German companies invested just as much new money in China from 2021 to 2023 as they did in the years between 2015 and 2020. Meanwhile, the German government is encouraging companies to pursue a de-risking strategy towards the People’s Republic and to diversify their investments more broadly.
Overall, the IW sees a divided picture. “On the one hand, there are the new investments in China overall, which are financed solely from profits generated there,” said Matthes. “On the other hand, there have obviously been movements away from China in recent years.” This is shown by the negative values for the “other components,” among which equity capital usually plays a special role. A previous IW study with data up to 2022 showed that in recent years, more equity investments in China have been reduced than newly built up through money flows from Germany.
While the Bundesbank’s figures do not allow for a more detailed insight, it can be assumed “that there continues to be a division between a few large companies and the majority of SMEs,” said Matthes. Other studies and anecdotal evidence support the thesis that some SMEs are reducing their engagement in China or even withdrawing entirely. jul/rtr
The Chinese EV giant BYD is in talks with Mexican authorities regarding the construction of a plant. This was reported by Nikkei Asia, citing statements from Zhou Zou, BYD’s Mexico chief. The company has commissioned a feasibility study and is discussing potential locations for the plant and other conditions with local authorities. According to Nikkei’s report, potential locations include Nuevo León in the north or the Bajío region in central Mexico. The Yucatan Peninsula is also being considered.
For BYD, Mexico is highly appealing not only as a market but also for strategic reasons. Production in Mexico provides access to the US automotive market, which imposes a 25 percent tariff on Chinese brands. However, under the USMCA trade agreement, tariffs can be avoided if more than 75 percent of the vehicle is produced in one of the participating countries: the USA, Mexico or Canada. Besides BYD, MG and Chery are also pursuing this strategy.
According to a report from Bloomberg, Chinese suppliers are following the lead of automakers. In 2023, 33 Chinese suppliers were already registered in Mexico, with 18 of them exporting auto parts worth a total of one billion euros to the USA. This marked a 15 percent increase compared to the previous year. jul
According to the news agency AP, two Chinese fishermen drowned during a chase with the Taiwanese coast guard. Their boat had illegally entered Taiwanese waters off the island of Kinmen, the Taiwanese coast guard announced on Wednesday. When the coast guard appeared, the individuals on the boat attempted to flee, resulting in the boat capsizing. Four fishermen fell into the water. AP reports that two could not be revived, while the other two survived and were in good condition.
The Kinmen island group belongs to Taiwan but is only a few kilometers from the Chinese mainland. The Chinese metropolis of Xiamen is visible from Kinmen with the naked eye.
Beijing’s leadership referred to the incident as a “malicious incident” and demanded an investigation. They accused the Taiwanese government of “forcibly inspecting Chinese fishing vessels under all sorts of pretexts and using violent and dangerous methods against Chinese fishermen”. flee
Indonesia has named two Chinese citizens as suspects in the fire that killed 21 people at a nickel smelter on Sulawesi Island. The fire broke out on Dec. 24 at a smelting facility operated by Indonesia Tsingshan Stainless Steel (ITSS) in the Indonesia Morowali Industrial Park. ITSS is a subsidiary of the Chinese Tsingshan Group, the world’s largest nickel producer.
According to a police spokesperson, the two men are accused of negligence, although specific details of the allegations were not provided. One of the suspects was a furnace supervisor at another facility in the industrial park, temporarily assigned to ITSS at the time of the incident. The other suspect was employed by another company in the same industrial park.
In recent years, Indonesia has become the world’s largest nickel producer, largely due to significant investments from Chinese corporations. The Tsingshan Group led the construction of the Morowali Industrial Park, where around a dozen smelters are now operational. In the same region, Jiangsu Delong Nickel Industry Co. established the Virtue Dragon Nickel Industrial Park, which produces nickel and stainless steel. Nickel is a crucial component of EV batteries; Indonesia banned nickel exports in 2014, prompting China and other investors to engage in local nickel processing.
The Indonesian Ministry of Labor is conducting a separate investigation into the fire. According to Minister Ida Fauziyah, there are strong indications that a violation of safety regulations led to the fire. The sector has experienced several fatal industrial accidents in recent years.
China is one of Indonesia’s most important trading partners. Therefore, the future of relations with Beijing was a significant issue in the campaign for today’s presidential election. ck
In December 2023, Volkswagen published an audit of its much-criticized joint venture factory in Xinjiang. The region operates the largest system of state-imposed forced labor in the world today. Unsurprisingly, the report claimed to absolve the firm from exposure to forced labor.
Recent evidence suggests that Volkswagen is directly involved in Uyghur forced labor. Newly released evidence this week shows that the Volkswagen-SAIC test track in Turpan was built by a subsidiary of the China Railway Engineering Corporation (CREC). Furthermore, CREC reports explicitly state that the project employed excess and transferred Uyghur labor during the peak of mass internments in 2017 and 2018.
The audit ostensibly followed the SA8000 standard, which seeks to assess child and forced labor, discrimination, physical or psychological punishment, working hours, and incomes. That sounds impressive-until one realizes that no visible sign of coercion was ever expected to be found at the factory. First, the whole purpose of the reeducation camps is to teach Uyghurs unquestioning obedience to the state. As one Uyghur put it: “If the government tells you to go work, you go.” Second, coercion occurs primarily during recruitment, training, and transfer, and is much less visible at workplaces.
The audit was performed by Löning Human Rights and Responsible Business, an entity founded by Markus Löning, Germany’s human rights commissioner between 2010 and 2013. However, neither Volkswagen nor Löning published an actual audit report; the company merely posted an unsigned document containing quotes by Markus Löning without his signature or company letterhead.
The reason for this awkward presentation of audit results soon became clear. In a stunning turn of events, on Dec. 7, the Löning company posted a statement on its LinkedIn account in which the entire staff disavowed the audit. The statement noted that besides Mr. Löning and Christian Ewert, “no other team member from Löning participated in, supported or backed this project.”
The audit’s methodology sheds significant doubts on the findings. Volkswagen had disclosed that the “actual audit” was conducted by two Chinese lawyers, who were merely “accompanied on site” by Löning staff.
Internal state documents confirm that poverty alleviation and reeducation work is subject to strict secrecy. This, of course, is why experts and reputable auditing firms agree that audits in Xinjiang are both impractical and unethical. Volkswagen further confirmed that the audit did not even attempt to review staff résumés, meaning that the company could not evaluate what Uyghur employees went through prior to joining Volkswagen. Löning employees have since conceded that their firm is not actually accredited to conduct SA8000 audits.
In July this year, Rushan Abbas, a co-author of this article, met with Markus Löning at his firm’s office in Berlin, alongside Uyghur activists Abdulhakim Idris and Haiyuer Kuerban. They detailed the omnipresence of state-imposed forced labor in Xinjiang, including at the SAIC-Volkswagen factory. Löning listened and nodded in apparent agreement. He was visibly moved at the sight of a photograph of Gulshan Abbas, Rushan’s sister, a retired medical doctor serving an arbitrary 20-year prison sentence.
Afterwards, Mr. Kuerban offered Mr. Löning a list of companies affiliated with the Xinjiang Production and Construction Corps (XPCC), a paramilitary settler-colonial entity implicated in Uyghur forced labor. Mr. Löning replied, noting that such external evidence was increasingly important. He conceded that China’s new counterespionage law was rendering investigations into supply chains increasingly difficult.
As a result, Rushan Abbas came to believe that Löning shared their commitment to uphold human dignity and to end forced labor in the region. After all, they were speaking to a former human rights commissioner. Sadly, she was proven wrong.
The Volkswagen-Löning audit represents a declaration of moral and methodological bankruptcy. By using the reputation of a former human rights official to whitewash its presence in the midst of the largest incarceration of an ethno-religious group since the Holocaust, the Volkswagen-Löning audit may go down in history as one of the more hideous examples of the fallacy of Germany’s Wandel durch Handel (change through trade) model of near-unconditional engagement with autocratic regimes.
Rushan Abbas is a Uyghur-American human rights activist advocating for Uyghur rights and the Xinjiang Uyghur Autonomous Region. In 2017, she founded the organization “Campaign for Uyghurs.” In 2022, the Campaign for Uyghurs, along with the Uyghur Human Rights Project, was nominated for the Nobel Peace Prize.
Adrian Zenz is a Senior Fellow and Director for China Studies at the Victims of Communism Memorial Foundation, Washington, D.C. He has played a leading role in analyzing leaked Chinese government documents, including the “China Cables,” the “Karakax List,” the “Xinjiang Papers,” and the “Xinjiang Police Files.”
The text is an abridged version of an article in Foreign Policy.
Victoria Mio is a portfolio manager at the investment company Janus Henderson and Head of Equities Greater China. She is based in Singapore. Previously, Mio spent 14 years at Robeco as Chief Investment Officer for China and Co-Head of Asia Pacific Equities.
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New Year’s snack for tiger cub: At the Kunming Zoo in Yunnan, even the animals celebrate the beginning of the Year of the Dragon. The little predator seems to enjoy it. Whether the fruit decoration is also eaten, however, is questionable.