Covid halts VW production + Media balancing act over Ukraine
Covid situation intensifies – factories at a standstill
State media avoid the taboo word ‘war’
Top Chinese and US diplomats meet
Stock prices in free fall
Coal production to increase by 300 million tons
EU gets new public procurement law
State-owned enterprises are to invest in Xinjiang
Hong Kong threatens imprisonment under security law
Opinion: Ukraine is Beijing’s central quandary
Dear reader,
Until now, China’s zero-covid strategy has been considered highly successful. With strict lockdowns, large-scale mass testing, and digital tracing, it seemed like the government in Beijing could keep Covid under control. But as recent developments in Hong Kong have indicated, Covid is now spreading to the mainland, with the number of new infections rising rapidly across the country.
Companies like Volkswagen or iPhone supplier Foxconn were forced to halt their production. At first, only for the next few days. But if the Covid numbers continue to rise, it might be the end of China’s zero Covid strategy, our team in Beijing predicts. And that’s not all: China’s new growth target, and ultimately, international trade could be thrown into severe turmoil as a result.
Meanwhile, the war in Ukraine rages on. While any critical reports on the invasion have been made punishable in Russia, we look at how the People’s Republic is reporting on the behavior of its “strategic partner”. Julia Weibel reveals how China’s state media manage to turn a Russian invasion into a US “blood debt” to China. And once again, China’s Internet users display remarkable creativity. With imaginative play-on-words, they manage to express their sympathy and concern.
Your Michael Radunski
Feature
Covid outbreaks: VW has to stop production
The FAW-Volkswagen plant in Changchun will remain closed over the coming days.
For the longest time, it looked as if China could keep Covid out thanks to its strict safety measures. Even when the far more contagious Omicron variant was first found in Chinese cities at the beginning of January, authorities initially managed to contain the outbreaks. But now 19 regions are simultaneously reporting new outbreaks. And with Changchun in the north and Shenzhen in the far south, two metropolises that are important for the economy have been placed under lockdown.
This also affects Volkswagen: The group is forced to temporarily halt production at three of its plants due to the lockdown in Changchun. The plants, which are jointly operated with the Chinese partner FAW, are to remain closed till Wednesday by order of the authorities, explained a VW spokeswoman in Beijing. A VW plant, an Audi plant and a components plant are affected.
According to the spokeswoman, the closure does not automatically mean that fewer vehicles will be built. The stoppages could be compensated later, for example with extra shifts, if there is no prolonged production shutdown. However, the exact definition of the term “prolonged” remained unclear.
Production stop at Foxconn in Shenzhen
In the meantime, Apple’s partner Foxconn also suspended production at its manufacturing plant in Shenzhen. This is where iPhones are manufactured, among other things. Taiwanese parent company Hon Hai announced in Taipei on Monday that production lines at other plants are being adjusted to minimize the potential impact of the disruption. How long production will be suspended depends on the authorities’ instructions. The government of the 17-million-metropolis had imposed a one-week lockdown the day before. All residents are to be tested during this period.
Both Changchun and Shenzhen hope that they can return to normalcy as soon as possible. The strategy is clear: The entire population is to stay at home and will be tested several times within a few days. Infected individuals will be sent to hospitals for isolation. This is how the outbreaks are to be brought under control. Should the number of infections continue to rise at the current pace, however, it will become difficult to trace every single infection and to send all contacts into quarantine in each case, even in China.
Dramatic situation in Hong Kong
Hong Kong has shown how quickly this can happen. The Chinese special administrative region also follows a strict zero-corona policy, which successfully brought every outbreak back under control until early this year. But the Hong Kong authorities’ tracing and isolation approach did not stand a chance against Omicron (China.Table reported). Tens of thousands of new cases are now registered every day. The government is completely overwhelmed.
German business representatives in China point out that companies have learned over the past two years and have adapted to lockdown situations. However, the situation would become extremely difficult if not just individual cities, but multiple regions and important economic centers had to go into lockdown at the same time (China.Table reported). Such a scenario could already be on the horizon, which then would severely hit the global economy.
Economic growth at risk?
The hope was that China’s economic growth could actually help the global economy to mitigate the impact of the Ukraine crisis to some extent. After all, the government announced a highly ambitious growth target of 5.5 percent at the Beijing People’s Congress last week (China.Table reported). A target that is significantly higher than the growth projections of many economists.
Could Covid now throw a spanner in the leadership’s works? For now, it appears too early to paint such a horror scenario. There is at least a slight sign of relief: At the beginning of the week, the number of nationwide infections declined for the first time in days. While 3100 infections were still reported on Sunday, only 2125 local infections were reported on Monday. If there is no exponential increase, and Shenzhen and Changchun return to normal life from their mass test lockdowns in the next few days, this could provide further relief. But if the numbers continue to rise, China is in for a tough couple of weeks. Joern Petring/Gregor Koppenburg
Coronavirus
Health
Volkswagen
How China’s Media reports about Russia’s Invasion
On the international stage, China presents itself as a diplomatic mediator these days. At the same time, the Chinese leadership is officially sticking to its “strategic partnership” with Russia. A “tightrope walking act,” as Cora Francisca Jungbluth of the Bertelsmann Stiftung writes in today’s China.Table opinion piece.
That is why state-run and semi-official media in the People’s Republic hardly report about the suffering of the Ukrainian people, the resistance of the Ukrainian forces, or the acts of solidarity of European countries. Well aware of the power of words, state media avoid the term “war”.
The people’s newspaper Renmin Ribao (人民日报), Zhongguowang (中国网) or Xinhua (新华网) exclusively refer to the “Russian-Ukrainian conflict” (俄乌冲突) or the “situation in Ukraine” (乌克兰局势). Coverage of developments in Eastern Europe predominantly revolves around the progress of negotiations between Russia and Ukraine (俄乌外长在土耳其安塔利亚举行会晤) or the situation on the Russian financial market (俄央行采取措施稳定金融市场).
In contrast, other events have dominated China’s headlines recently. The 5th session of the 13th National Committee of the Chinese People’s Political Consultative Conference (CPPCC; 政协第十三届全国委员会), followed by reports on the closing ceremony of the Paralympics last Sunday in Beijing’s Bird’s Nest.
Still, the generally nationalist-oriented website Gunacha.cn (观察者), mentions a “Russia-Ukraine war” (俄乌战争) once. John Mearsheimer uses it in a guest editorial seeking answers to the question of who caused the war (谁引发了俄乌战争). He eventually found it with NATO, which thus caused a war in the readers’ perception, not a conflict.
Impulsive reference to the NATO bombs in Belgrade in 1999
China’s debate about the invasion of Ukraine is mostly trying to find a culprit. In the process, historical wounds are referenced. Primarily: During the Yugoslav war in 1999, the Chinese embassy in Belgrade was bombed by NATO as part of “Operation Allied Force.” On February 24, 2022, all Chinese media reflexively reminded the public of the five NATO bombs that had killed 3 people and wounded another 21, all the while international media coverage was focused on Russia’s invasion of Ukraine.
When Washington reminded the Chinese government a few weeks ago that the People’s Republic had an obligation to put Russia in its place, the Chinese Foreign Ministry reacted piqued. Spokeswoman Hua Chunying created the hashtag “The US is in no position to tell China off” (#美方来告诉中方怎么做#). She thus created a “trending topic” on the Chinese social network Weibo. Under the hashtag #北约至今还欠中国一笔血债#, she even referred to the United States’ “blood debt” that it would still owe to China since 1999.
With this historical example, the Chinese leadership suggests US complicity in developments in Eastern Europe and shifts “the narrative from Beijing’s responsibility to Washington’s irresponsibility.” The posts received 1.2 million hits in China.
Anyone who dares to speak out too loudly against the war online runs the risk of coming across as “pro-American”. Corresponding slogans spin this correlation via social media. “If you are against the war, you must also be against the USA.” Or, “If you are against the war but not against the Americans, you are up to no good” (反战不反美，心里都有鬼). The implied accusation: One cannot condemn the Ukraine war without condemning wars with American participation.
However, the Ukraine war fueled a key question about the future for many Chinese users: the fate of Taiwan. At the end of February, the search word “Taiwan” was entered into Chinese search engines about as often as “Russia-Ukraine conflict,” and discussions about similarities and differences between Ukraine and Taiwan increased on social media (今日乌克兰，明日台湾?).
State television sees hope for Taiwan in ‘reunification’
Many see the Russian invasion as a wake-up call to all citizens of the island nation that the situation could quickly become extremely serious. Others still see it as a warning to the People’s Republic about how the West could influence conflicts and provide military support. In response to the ongoing debates, Chinese state television CCTV launched the hashtag #台湾的前途希望在于实现国家统一#: “Hope for Taiwan’s future lies in the realization of national reunification.”
The Chinese Foreign Ministry stressed via hashtag that the situation in Ukraine was not comparable to that in Taiwan (#台湾问题同乌克兰问题没有任何可比性#). Meanwhile, a picture spreads on social media showing a pig named “Taiwan” watching the slaughter of another named “Ukraine” over a fence.
The creativity of the Chinese is remarkable, as this social event has also given rise to a new idiom. The expression “无心工作” describes the state of “not feeling like working”. In the similar-sounding play-on-words “乌心工作”, the first character was changed for the character for “Ukraine”. This is how Chinese netizens express their concerns about the situation in Ukraine: they “can’t concentrate on work because of the Russia-Ukraine crisis”.
One number that could serve as confirmation: Weibo’s #关注俄乌局势最新进展# topic page, which provides updates on the latest events in Ukraine, has already received more than two billion hits on February 24, 2022. Julia Weibel
Geopolitics
Russia
Taiwan
Ukraine
News
Yang meets with Sullivan in Rome
China’s top diplomat Yang Jiechi met with US National Security Adviser Jake Sullivan in Rome on Monday. The White House released only a short memo on Monday evening, stating that both officials raised “substantial discussion of Russia’s war against Ukraine.” China’s state broadcaster CCTV also kept it to a brief report stating that the meeting had taken place.
On unofficial channels, the US government revealed that the meeting had not only lasted seven hours, but that the intensity of the discussion had also been appropriate to the serious crisis. Although the meeting had already been planned for a long time, current events had given it a completely different character. Sullivan had straightforwardly addressed US concerns about possible Chinese assistance to Russia.
Shortly before, Sullivan had warnedthat China would have to expect severe “consequences” should Russia be assisted in circumventing Western sanctions. Experts agree that China will not dare to break Western sanctions too openly. Nevertheless, both countries have options that could significantly weaken the impact of sanctions on Russia’s financial and real economy (ChinaTable reported). Reuters reported on Monday, citing anonymous US officials, that the US is using the meeting to lay out possible punitive measures should China indeed help Russia with its war on Ukraine.
Meanwhile, China’s Foreign Ministry denied media reports on Monday that Moscow had asked Beijing for military assistance. “The US has been maliciously spreading disinformation targeting China,” Foreign Ministry spokesman Zhao Lijian said in Beijing. In February, another Chinese Foreign Ministry spokeswoman had already commented on China’s possible military assistance. “I believe that as a strong country, Russia doesn’t need China or other countries to provide weapons to it,” Hua Chunying said in February.
European Union spokeswoman Nabila Massrali said Brussels had “no evidence” that Russia had asked China for military assistance. “We cannot confirm or deny any allegations that Russia asked for assistance from China,” Massrali added that no EU officials would meet with Yang during his visit. rad
Geopolitics
Russia
Ukraine
USA
Sell-off of Chinese stocks
China shares on the Hong Kong Stock Exchange experienced a brutal crash on Monday. The stock market index, the Hang Seng China Enterprises Index, closed down 7.2 percent below the previous day’s value. This is the biggest drop since the 2008 crisis. The index includes share certificates of mainland Chinese companies listed in Hong Kong. The Hang Seng Tech Index also plunged by 11 percent.
Meanwhile, Chinese stocks listed in the United States are also in free fall. Within a year, they have lost three-quarters of their valuation. The war in Ukraine is raising concerns among investors about rising commodity prices and wider political turmoil. But that is not all. Far more important for the big losses is the ongoing trade war between China, the US, and internal Chinese regulation (China.Table reported). Among the most notable losers is online retailer Alibaba. fin
Finance
Hongkong
Stock Exchange
Ukraine
300 million tons more coal
China plans to massively expand its coal mining. This is part of the government’s plan to drastically reduce its dependence on imports. However, this step would make it almost impossible to achieve its short-term climate protection measures.
As the National Development and Reform Commission (NDRC) told officials in the major mining regions last week, domestic production capacity is to be increased by about 300 million tons. It also announced plans to build a national stockpile of 620 million tons of coal. This was reported by Bloomberg, citing individuals familiar with the matter.
Due to the Russian invasion of Ukraine, coal prices are currently rising to record highs on international markets. However, the now planned increase in production would not only reduce China’s dependence on imports (China.Table reported). This step also highlights the government’s great concern for national energy security. To prevent disruptions to economic growth, it is apparently prepared to continue to rely on fossil fuels – even at the expense of its own climate goals.
Coal, the single most polluting fossil fuel, is of great importance to China: The People’s Republic produces and consumes more than half of the global supply and thus accounts for the largest share of coal-related emissions. Yet China had announced its intention to gradually reduce its coal consumption starting in mid-2025.
The production increase now planned is divided into two parts: 150 million tons of capacity is to be generated by new, modernized operations; the remaining 150 million tons, on the other hand, will come from open pits and some previously closed mines. According to the NDRC, daily production is expected to average around 12.6 million tons. That would be above the previous record level set last fall, when shortages led to widespread industrial power outages. rad
Coal power
Energy
NDRC
Trade
Brussels opposes cheap bids
After more than ten years of negotiations, European institutions in Brussels have agreed on new public procurement legislation that is intended, among other things, to eliminate Chinese low-cost bids. This was confirmed on Monday evening by Daniel Caspary (CDU), the MEP responsible in the EU Parliament, on Twitter. The International Procurement Instrument (IPI) is intended to ensure that cheap bids from third countries such as China receive a price premium in public tenders. The IPI also offers the option of completely excluding Chinese bids from tendering processes in the EU “provided that the third country concerned refuses in negotiations with the European Commission to open up its public procurement market to EU suppliers to the same extent as the EU does for third-country suppliers,” Caspary explained. This means that if European companies are not allowed to participate to the same extent in tenders in the People’s Republic, Chinese companies in Europe can also be excluded.
The European Parliament, the EU Commission and the EU Council had struggled for years to reach an agreement on IPI. “Today’s trilateral agreement is a breakthrough and corrects a situation that has existed for far too long. In public procurement procedures in the EU, suppliers from third countries, for example, China, regularly get prestigious contracts in the EU with artificially cheap bids,” said CDU European politician Caspary. He cited metro tunnels in Stockholm and the Pelješac Bridge in Croatia as examples. The chairman of the Trade Committee in the EU Parliament, Bernd Lange, also welcomed the agreement. “Our agreement enables the EU to take more decisive action against discrimination against European companies abroad. The message is clear: fair market access is not a one-way street but must be reciprocal,” said Lange. ari
EU
State-owned enterprises invest in Xinjiang
Beijing is taking its state-owned enterprises to task for contributing more to the economic promotion of the Xinjiang Autonomous Province. The upcoming Five-Year Plan envisions 38 investment projects by eleven state-owned enterprises. The volume is expected to be close to $100 billion. The agreements were reached last week on the sidelines of the National People’s Congress in Beijing.
Companies include heavyweights such as China National Petroleum Corp, China Petroleum and Chemical Corp, and State Grid Corp of China. In addition to oil and coal, companies in the renewable energy, engineering and infrastructure sectors are also expected to invest in Xinjiang.
The central government in Beijing sees the economic development of the region in the northwest of the People’s Republic as the key argument for its claim that the human rights situation in Xinjiang has improved drastically. However, it does not include its human rights violations against the Muslim minorities in this assessment (China.Table reported).
Primarily, Uyghurs in Xinjiang are victims of radical birth control, which numerous democratic governments, parliaments, and politicians have labeled as genocide (China.Table reported). It is estimated that between 1 million and 1.5 million individuals are held in internment camps throughout Xinjiang. This is supported by government documents, satellite imagery, and witness testimony. grz
Xinjiang
Hong Kong threatens to detain British activist
The authorities in Hong Kong are once again making use of the extraterritorial reach of the National Security Act. Police are threatening the co-founder of the online portal Hong Kong Watch, Benedict Rogers, with several years in prison should he return to the city. The authorities argue with alleged violations of the National Security Law, which since 2020 has allowed political dissent to be prosecuted almost arbitrarily.
Rogers is a UK citizen and founder of the UK Conservative Party Human Rights Commission. In November 2017, he co-founded Hong Kong Watch after being refused entry to the former British Crown Colony a month earlier. Authorities in the city, where he had lived between 1997 and 2002, now charge him with “colluding with foreign forces,” one of four offenses under the National Security Act.
The police statement says that Rogers, as the responsible representative, has to ensure that the website hongkongwatch.orgis taken offline within 72 hours. Otherwise, he could face a fine of HK$100,000 (about €11,600) or the aforementioned prison sentence of up to three years. The organization has already announced that it will not comply with the demand. In any case, Hong Kong Watch is blocked in the city and cannot be accessed without a VPN tunnel.
Rogers is not the first foreigner outside Hong Kong to be threatened with prosecution by the city’s authorities under the Security Law. Early last year, investigations were launched against four Danish parliamentarians for aiding the escape of a Hong Kong opposition member to Europe (China.Table reported). grz
Civil Society
Hongkong
Opinion
China’s diplomatic balancing act in the Ukraine conflict
By Cora Francisca Jungbluth, Bertelsmann Stiftung
Cora Francisca Jungbluth, Senior Expert International Trade and Investment at the Bertelsmann Stiftung.
The war between Russia and Ukraine comes at a time that could not be worse for China: The Olympic Winter Games were shadowed by Covid-19 and did not bring a similar soft-power effect as the Summer Games did in 2008. China’s economy is under pressure due to the pandemic, the unsolved problems in the property sector, and the long-known downsides of China’s heavily export-biased growth model. And ahead of this year’s key political event, the 20th Party Congress, China’s leadership needs stability above all – social, political, economic, national, and international stability. Russia’s war, which China plays down by referring to it as the “Ukraine Situation (乌克兰局势),” makes it more difficult to maintain this stability.
Even though it seems that senior Chinese leaders or even Xi Jinping himself may have had some knowledge about Russia’s imperial plans, it is hard to believe that they were fully aware of the extent of what was going to happen. Maybe China even underestimated how far Russia would really go and now has no intention of extending its friendship as an ally in a war.
China and Russia: no full-fledged ‘alliance of autocracies’ for now
Things looked different one month ago. After Xi Jinping and Vladimir Putin met on February 4th in Beijing during the opening ceremony of the Winter Games announced a “friendship with no limits” and “no forbidden areas of cooperation,” one could have expected an “alliance of autocracies” even fit for war. Instead of fully and openly supporting Russia in its self-waged war, however, China has committed itself to equivocation: The Chinese leadership has repeatedly emphasized territorial integrity and respect for sovereignty, as enshrined in the UN charter, as the principles of China’s foreign policy, explicitly including Ukraine. When the United Nations Security Council issued a resolution against Russia, China did not join its “friend’s” veto as a permanent member but abstained, showing that their friendship indeed has its limits. On the sidelines of the National People’s Congress, Chinese foreign minister Wang Yi made this point very clear, even drawing an analogy to Russia’s situation in Europe: “The real goal of the US Indo-Pacific strategy is to establish an Indo-Pacific version of NATO […].”
While committing to the UN charter regarding national sovereignty, China simultaneously displays a high level of understanding for Russian security concerns in Europe, especially its fears of NATO at its doorstep. China sees itself faced with a similar situation in the Indo-Pacific with more and more Western countries adopting national strategies for this region, the goal of which China suspects to be containment – just as Russia claims to be the case with NATO’s Eastern enlargement.
China, therefore, sees Russia as an important geopolitical partner against the US-dominated world order. The war will not change this in the long run. Still, in the short term, it adds reservation to the Sino-Russian relationship, even as Wang Yi called it “rock-solid” at his annual press conference on the sidelines of the NPC meeting.
China is treading on ever thinner ice in its relationship with the ‘West‘
After closely and sometimes incredulously watching China’s diplomatic juggling act during the Ukraine crisis over the past weeks, the West is getting increasingly impatient. Every time one thinks one hears China take a clear position in Russia’s favor (or not) in Chinese official’s statements on the “Ukraine situation,” it slips away through some side door, leaving open multiple interpretations of the stance China may or may not take in the end. The oxymoron “pro-Russian neutrality” has been used by some observers to describe this tactic.
While Russia certainly is important for China from a geopolitical point of view, China has little to gain from Russia in economic terms. Russia mainly offers raw materials, which are important, yes, but not impossible to substitute and certainly have no unique selling point. From an economic perspective, the West, with its intense trade relations with China and its partially more difficult-to-substitute technologies, is critical for China. The US and EU alone (the core of the West) make up 25 percent of China’s trade volume, dwarfing Russia, at below three percent. As for inward FDI, they were among the top-5 origins of investment in the same year at slightly above five percent of the total.
Despite talks and attempts of decoupling, China is still, at least to some degree, dependent on its economic relations with the West to access foreign capital and specific know-how for its green and digital transformation, to sell its still abundant export goods to customers with high purchasing power and sustain much needed economic growth and stability. In short, China cannot allow a severe blow to its relationship with the West in the run-up to the 20th Party Congress later this year – and certainly not for Russia, no matter how full-bodied the Joint Declaration may sound.
Is there a ‘face-saving’ way out of the Ukraine crisis for China?
China’s dithering in the Ukraine crisis has already done some damage to its international image and will certainly overshadow Chinese attempts to take on a more active role. The longer the war continues with all its brutality and cruelty, the harder it gets for China to continue this diplomatic tightrope walking act. Moreover, economically speaking, China could easily end up on the losing side in this war, as the impact on the world economy and global supply chains, and thus for China, could be severe.
For the time being, a way for China to get out of the “Ukraine situation” in an, at least halfway, face-saving way seems to be to finally put into practice the “constructive role” it has repeatedly promised. Acting not so much as a direct mediator between the two sides, but rather by actually throwing its full economic weight on the scale vis-à-vis Russia and thus increasing the pressure on the latter to end the war or at least negotiate a reliable ceasefire. By doing this, China might still be able to actually play the role it claims for itself in the 21st century: that of a global superpower willing to live up to the responsibilities that come along with this role. China might even repair some of the damage inflicted upon its international reputation. At the time of finalizing this text, however, it does not seem that China is at this point – yet.
Jeffrey Pan will join insurer Swiss Re as the new CEO Greater China. Pan joins from AIG, where he most recently served as Managing Director of AIG International Consulting for 17 years. He will take up his post in Shanghai on April 11.
Yu Xiangrong is the new chief China economist for US bank Citigroup. He will be responsible for research and analysis on Chinese economic policy, reporting to Johanna Chua, Head of Asia-Pacific economics.
Dessert
The Olympic bubble in Beijing has been gradually deflated since yesterday. After the end of the Paralympics on Sunday, athletes from all over the world have left the Chinese capital. For the numerous helpers, the so-called volunteers, however, the isolation under the five rings will not end for another two weeks. Because of China’s zero-covid strategy, they will not be allowed to return to their normal life for the time being.
Covid situation intensifies – factories at a standstill
State media avoid the taboo word ‘war’
Top Chinese and US diplomats meet
Stock prices in free fall
Coal production to increase by 300 million tons
EU gets new public procurement law
State-owned enterprises are to invest in Xinjiang
Hong Kong threatens imprisonment under security law
Opinion: Ukraine is Beijing’s central quandary
Dear reader,
Until now, China’s zero-covid strategy has been considered highly successful. With strict lockdowns, large-scale mass testing, and digital tracing, it seemed like the government in Beijing could keep Covid under control. But as recent developments in Hong Kong have indicated, Covid is now spreading to the mainland, with the number of new infections rising rapidly across the country.
Companies like Volkswagen or iPhone supplier Foxconn were forced to halt their production. At first, only for the next few days. But if the Covid numbers continue to rise, it might be the end of China’s zero Covid strategy, our team in Beijing predicts. And that’s not all: China’s new growth target, and ultimately, international trade could be thrown into severe turmoil as a result.
Meanwhile, the war in Ukraine rages on. While any critical reports on the invasion have been made punishable in Russia, we look at how the People’s Republic is reporting on the behavior of its “strategic partner”. Julia Weibel reveals how China’s state media manage to turn a Russian invasion into a US “blood debt” to China. And once again, China’s Internet users display remarkable creativity. With imaginative play-on-words, they manage to express their sympathy and concern.
Your Michael Radunski
Feature
Covid outbreaks: VW has to stop production
The FAW-Volkswagen plant in Changchun will remain closed over the coming days.
For the longest time, it looked as if China could keep Covid out thanks to its strict safety measures. Even when the far more contagious Omicron variant was first found in Chinese cities at the beginning of January, authorities initially managed to contain the outbreaks. But now 19 regions are simultaneously reporting new outbreaks. And with Changchun in the north and Shenzhen in the far south, two metropolises that are important for the economy have been placed under lockdown.
This also affects Volkswagen: The group is forced to temporarily halt production at three of its plants due to the lockdown in Changchun. The plants, which are jointly operated with the Chinese partner FAW, are to remain closed till Wednesday by order of the authorities, explained a VW spokeswoman in Beijing. A VW plant, an Audi plant and a components plant are affected.
According to the spokeswoman, the closure does not automatically mean that fewer vehicles will be built. The stoppages could be compensated later, for example with extra shifts, if there is no prolonged production shutdown. However, the exact definition of the term “prolonged” remained unclear.
Production stop at Foxconn in Shenzhen
In the meantime, Apple’s partner Foxconn also suspended production at its manufacturing plant in Shenzhen. This is where iPhones are manufactured, among other things. Taiwanese parent company Hon Hai announced in Taipei on Monday that production lines at other plants are being adjusted to minimize the potential impact of the disruption. How long production will be suspended depends on the authorities’ instructions. The government of the 17-million-metropolis had imposed a one-week lockdown the day before. All residents are to be tested during this period.
Both Changchun and Shenzhen hope that they can return to normalcy as soon as possible. The strategy is clear: The entire population is to stay at home and will be tested several times within a few days. Infected individuals will be sent to hospitals for isolation. This is how the outbreaks are to be brought under control. Should the number of infections continue to rise at the current pace, however, it will become difficult to trace every single infection and to send all contacts into quarantine in each case, even in China.
Dramatic situation in Hong Kong
Hong Kong has shown how quickly this can happen. The Chinese special administrative region also follows a strict zero-corona policy, which successfully brought every outbreak back under control until early this year. But the Hong Kong authorities’ tracing and isolation approach did not stand a chance against Omicron (China.Table reported). Tens of thousands of new cases are now registered every day. The government is completely overwhelmed.
German business representatives in China point out that companies have learned over the past two years and have adapted to lockdown situations. However, the situation would become extremely difficult if not just individual cities, but multiple regions and important economic centers had to go into lockdown at the same time (China.Table reported). Such a scenario could already be on the horizon, which then would severely hit the global economy.
Economic growth at risk?
The hope was that China’s economic growth could actually help the global economy to mitigate the impact of the Ukraine crisis to some extent. After all, the government announced a highly ambitious growth target of 5.5 percent at the Beijing People’s Congress last week (China.Table reported). A target that is significantly higher than the growth projections of many economists.
Could Covid now throw a spanner in the leadership’s works? For now, it appears too early to paint such a horror scenario. There is at least a slight sign of relief: At the beginning of the week, the number of nationwide infections declined for the first time in days. While 3100 infections were still reported on Sunday, only 2125 local infections were reported on Monday. If there is no exponential increase, and Shenzhen and Changchun return to normal life from their mass test lockdowns in the next few days, this could provide further relief. But if the numbers continue to rise, China is in for a tough couple of weeks. Joern Petring/Gregor Koppenburg
Coronavirus
Health
Volkswagen
How China’s Media reports about Russia’s Invasion
On the international stage, China presents itself as a diplomatic mediator these days. At the same time, the Chinese leadership is officially sticking to its “strategic partnership” with Russia. A “tightrope walking act,” as Cora Francisca Jungbluth of the Bertelsmann Stiftung writes in today’s China.Table opinion piece.
That is why state-run and semi-official media in the People’s Republic hardly report about the suffering of the Ukrainian people, the resistance of the Ukrainian forces, or the acts of solidarity of European countries. Well aware of the power of words, state media avoid the term “war”.
The people’s newspaper Renmin Ribao (人民日报), Zhongguowang (中国网) or Xinhua (新华网) exclusively refer to the “Russian-Ukrainian conflict” (俄乌冲突) or the “situation in Ukraine” (乌克兰局势). Coverage of developments in Eastern Europe predominantly revolves around the progress of negotiations between Russia and Ukraine (俄乌外长在土耳其安塔利亚举行会晤) or the situation on the Russian financial market (俄央行采取措施稳定金融市场).
In contrast, other events have dominated China’s headlines recently. The 5th session of the 13th National Committee of the Chinese People’s Political Consultative Conference (CPPCC; 政协第十三届全国委员会), followed by reports on the closing ceremony of the Paralympics last Sunday in Beijing’s Bird’s Nest.
Still, the generally nationalist-oriented website Gunacha.cn (观察者), mentions a “Russia-Ukraine war” (俄乌战争) once. John Mearsheimer uses it in a guest editorial seeking answers to the question of who caused the war (谁引发了俄乌战争). He eventually found it with NATO, which thus caused a war in the readers’ perception, not a conflict.
Impulsive reference to the NATO bombs in Belgrade in 1999
China’s debate about the invasion of Ukraine is mostly trying to find a culprit. In the process, historical wounds are referenced. Primarily: During the Yugoslav war in 1999, the Chinese embassy in Belgrade was bombed by NATO as part of “Operation Allied Force.” On February 24, 2022, all Chinese media reflexively reminded the public of the five NATO bombs that had killed 3 people and wounded another 21, all the while international media coverage was focused on Russia’s invasion of Ukraine.
When Washington reminded the Chinese government a few weeks ago that the People’s Republic had an obligation to put Russia in its place, the Chinese Foreign Ministry reacted piqued. Spokeswoman Hua Chunying created the hashtag “The US is in no position to tell China off” (#美方来告诉中方怎么做#). She thus created a “trending topic” on the Chinese social network Weibo. Under the hashtag #北约至今还欠中国一笔血债#, she even referred to the United States’ “blood debt” that it would still owe to China since 1999.
With this historical example, the Chinese leadership suggests US complicity in developments in Eastern Europe and shifts “the narrative from Beijing’s responsibility to Washington’s irresponsibility.” The posts received 1.2 million hits in China.
Anyone who dares to speak out too loudly against the war online runs the risk of coming across as “pro-American”. Corresponding slogans spin this correlation via social media. “If you are against the war, you must also be against the USA.” Or, “If you are against the war but not against the Americans, you are up to no good” (反战不反美，心里都有鬼). The implied accusation: One cannot condemn the Ukraine war without condemning wars with American participation.
However, the Ukraine war fueled a key question about the future for many Chinese users: the fate of Taiwan. At the end of February, the search word “Taiwan” was entered into Chinese search engines about as often as “Russia-Ukraine conflict,” and discussions about similarities and differences between Ukraine and Taiwan increased on social media (今日乌克兰，明日台湾?).
State television sees hope for Taiwan in ‘reunification’
Many see the Russian invasion as a wake-up call to all citizens of the island nation that the situation could quickly become extremely serious. Others still see it as a warning to the People’s Republic about how the West could influence conflicts and provide military support. In response to the ongoing debates, Chinese state television CCTV launched the hashtag #台湾的前途希望在于实现国家统一#: “Hope for Taiwan’s future lies in the realization of national reunification.”
The Chinese Foreign Ministry stressed via hashtag that the situation in Ukraine was not comparable to that in Taiwan (#台湾问题同乌克兰问题没有任何可比性#). Meanwhile, a picture spreads on social media showing a pig named “Taiwan” watching the slaughter of another named “Ukraine” over a fence.
The creativity of the Chinese is remarkable, as this social event has also given rise to a new idiom. The expression “无心工作” describes the state of “not feeling like working”. In the similar-sounding play-on-words “乌心工作”, the first character was changed for the character for “Ukraine”. This is how Chinese netizens express their concerns about the situation in Ukraine: they “can’t concentrate on work because of the Russia-Ukraine crisis”.
One number that could serve as confirmation: Weibo’s #关注俄乌局势最新进展# topic page, which provides updates on the latest events in Ukraine, has already received more than two billion hits on February 24, 2022. Julia Weibel
Geopolitics
Russia
Taiwan
Ukraine
News
Yang meets with Sullivan in Rome
China’s top diplomat Yang Jiechi met with US National Security Adviser Jake Sullivan in Rome on Monday. The White House released only a short memo on Monday evening, stating that both officials raised “substantial discussion of Russia’s war against Ukraine.” China’s state broadcaster CCTV also kept it to a brief report stating that the meeting had taken place.
On unofficial channels, the US government revealed that the meeting had not only lasted seven hours, but that the intensity of the discussion had also been appropriate to the serious crisis. Although the meeting had already been planned for a long time, current events had given it a completely different character. Sullivan had straightforwardly addressed US concerns about possible Chinese assistance to Russia.
Shortly before, Sullivan had warnedthat China would have to expect severe “consequences” should Russia be assisted in circumventing Western sanctions. Experts agree that China will not dare to break Western sanctions too openly. Nevertheless, both countries have options that could significantly weaken the impact of sanctions on Russia’s financial and real economy (ChinaTable reported). Reuters reported on Monday, citing anonymous US officials, that the US is using the meeting to lay out possible punitive measures should China indeed help Russia with its war on Ukraine.
Meanwhile, China’s Foreign Ministry denied media reports on Monday that Moscow had asked Beijing for military assistance. “The US has been maliciously spreading disinformation targeting China,” Foreign Ministry spokesman Zhao Lijian said in Beijing. In February, another Chinese Foreign Ministry spokeswoman had already commented on China’s possible military assistance. “I believe that as a strong country, Russia doesn’t need China or other countries to provide weapons to it,” Hua Chunying said in February.
European Union spokeswoman Nabila Massrali said Brussels had “no evidence” that Russia had asked China for military assistance. “We cannot confirm or deny any allegations that Russia asked for assistance from China,” Massrali added that no EU officials would meet with Yang during his visit. rad
Geopolitics
Russia
Ukraine
USA
Sell-off of Chinese stocks
China shares on the Hong Kong Stock Exchange experienced a brutal crash on Monday. The stock market index, the Hang Seng China Enterprises Index, closed down 7.2 percent below the previous day’s value. This is the biggest drop since the 2008 crisis. The index includes share certificates of mainland Chinese companies listed in Hong Kong. The Hang Seng Tech Index also plunged by 11 percent.
Meanwhile, Chinese stocks listed in the United States are also in free fall. Within a year, they have lost three-quarters of their valuation. The war in Ukraine is raising concerns among investors about rising commodity prices and wider political turmoil. But that is not all. Far more important for the big losses is the ongoing trade war between China, the US, and internal Chinese regulation (China.Table reported). Among the most notable losers is online retailer Alibaba. fin
Finance
Hongkong
Stock Exchange
Ukraine
300 million tons more coal
China plans to massively expand its coal mining. This is part of the government’s plan to drastically reduce its dependence on imports. However, this step would make it almost impossible to achieve its short-term climate protection measures.
As the National Development and Reform Commission (NDRC) told officials in the major mining regions last week, domestic production capacity is to be increased by about 300 million tons. It also announced plans to build a national stockpile of 620 million tons of coal. This was reported by Bloomberg, citing individuals familiar with the matter.
Due to the Russian invasion of Ukraine, coal prices are currently rising to record highs on international markets. However, the now planned increase in production would not only reduce China’s dependence on imports (China.Table reported). This step also highlights the government’s great concern for national energy security. To prevent disruptions to economic growth, it is apparently prepared to continue to rely on fossil fuels – even at the expense of its own climate goals.
Coal, the single most polluting fossil fuel, is of great importance to China: The People’s Republic produces and consumes more than half of the global supply and thus accounts for the largest share of coal-related emissions. Yet China had announced its intention to gradually reduce its coal consumption starting in mid-2025.
The production increase now planned is divided into two parts: 150 million tons of capacity is to be generated by new, modernized operations; the remaining 150 million tons, on the other hand, will come from open pits and some previously closed mines. According to the NDRC, daily production is expected to average around 12.6 million tons. That would be above the previous record level set last fall, when shortages led to widespread industrial power outages. rad
Coal power
Energy
NDRC
Trade
Brussels opposes cheap bids
After more than ten years of negotiations, European institutions in Brussels have agreed on new public procurement legislation that is intended, among other things, to eliminate Chinese low-cost bids. This was confirmed on Monday evening by Daniel Caspary (CDU), the MEP responsible in the EU Parliament, on Twitter. The International Procurement Instrument (IPI) is intended to ensure that cheap bids from third countries such as China receive a price premium in public tenders. The IPI also offers the option of completely excluding Chinese bids from tendering processes in the EU “provided that the third country concerned refuses in negotiations with the European Commission to open up its public procurement market to EU suppliers to the same extent as the EU does for third-country suppliers,” Caspary explained. This means that if European companies are not allowed to participate to the same extent in tenders in the People’s Republic, Chinese companies in Europe can also be excluded.
The European Parliament, the EU Commission and the EU Council had struggled for years to reach an agreement on IPI. “Today’s trilateral agreement is a breakthrough and corrects a situation that has existed for far too long. In public procurement procedures in the EU, suppliers from third countries, for example, China, regularly get prestigious contracts in the EU with artificially cheap bids,” said CDU European politician Caspary. He cited metro tunnels in Stockholm and the Pelješac Bridge in Croatia as examples. The chairman of the Trade Committee in the EU Parliament, Bernd Lange, also welcomed the agreement. “Our agreement enables the EU to take more decisive action against discrimination against European companies abroad. The message is clear: fair market access is not a one-way street but must be reciprocal,” said Lange. ari
EU
State-owned enterprises invest in Xinjiang
Beijing is taking its state-owned enterprises to task for contributing more to the economic promotion of the Xinjiang Autonomous Province. The upcoming Five-Year Plan envisions 38 investment projects by eleven state-owned enterprises. The volume is expected to be close to $100 billion. The agreements were reached last week on the sidelines of the National People’s Congress in Beijing.
Companies include heavyweights such as China National Petroleum Corp, China Petroleum and Chemical Corp, and State Grid Corp of China. In addition to oil and coal, companies in the renewable energy, engineering and infrastructure sectors are also expected to invest in Xinjiang.
The central government in Beijing sees the economic development of the region in the northwest of the People’s Republic as the key argument for its claim that the human rights situation in Xinjiang has improved drastically. However, it does not include its human rights violations against the Muslim minorities in this assessment (China.Table reported).
Primarily, Uyghurs in Xinjiang are victims of radical birth control, which numerous democratic governments, parliaments, and politicians have labeled as genocide (China.Table reported). It is estimated that between 1 million and 1.5 million individuals are held in internment camps throughout Xinjiang. This is supported by government documents, satellite imagery, and witness testimony. grz
Xinjiang
Hong Kong threatens to detain British activist
The authorities in Hong Kong are once again making use of the extraterritorial reach of the National Security Act. Police are threatening the co-founder of the online portal Hong Kong Watch, Benedict Rogers, with several years in prison should he return to the city. The authorities argue with alleged violations of the National Security Law, which since 2020 has allowed political dissent to be prosecuted almost arbitrarily.
Rogers is a UK citizen and founder of the UK Conservative Party Human Rights Commission. In November 2017, he co-founded Hong Kong Watch after being refused entry to the former British Crown Colony a month earlier. Authorities in the city, where he had lived between 1997 and 2002, now charge him with “colluding with foreign forces,” one of four offenses under the National Security Act.
The police statement says that Rogers, as the responsible representative, has to ensure that the website hongkongwatch.orgis taken offline within 72 hours. Otherwise, he could face a fine of HK$100,000 (about €11,600) or the aforementioned prison sentence of up to three years. The organization has already announced that it will not comply with the demand. In any case, Hong Kong Watch is blocked in the city and cannot be accessed without a VPN tunnel.
Rogers is not the first foreigner outside Hong Kong to be threatened with prosecution by the city’s authorities under the Security Law. Early last year, investigations were launched against four Danish parliamentarians for aiding the escape of a Hong Kong opposition member to Europe (China.Table reported). grz
Civil Society
Hongkong
Opinion
China’s diplomatic balancing act in the Ukraine conflict
By Cora Francisca Jungbluth, Bertelsmann Stiftung
Cora Francisca Jungbluth, Senior Expert International Trade and Investment at the Bertelsmann Stiftung.
The war between Russia and Ukraine comes at a time that could not be worse for China: The Olympic Winter Games were shadowed by Covid-19 and did not bring a similar soft-power effect as the Summer Games did in 2008. China’s economy is under pressure due to the pandemic, the unsolved problems in the property sector, and the long-known downsides of China’s heavily export-biased growth model. And ahead of this year’s key political event, the 20th Party Congress, China’s leadership needs stability above all – social, political, economic, national, and international stability. Russia’s war, which China plays down by referring to it as the “Ukraine Situation (乌克兰局势),” makes it more difficult to maintain this stability.
Even though it seems that senior Chinese leaders or even Xi Jinping himself may have had some knowledge about Russia’s imperial plans, it is hard to believe that they were fully aware of the extent of what was going to happen. Maybe China even underestimated how far Russia would really go and now has no intention of extending its friendship as an ally in a war.
China and Russia: no full-fledged ‘alliance of autocracies’ for now
Things looked different one month ago. After Xi Jinping and Vladimir Putin met on February 4th in Beijing during the opening ceremony of the Winter Games announced a “friendship with no limits” and “no forbidden areas of cooperation,” one could have expected an “alliance of autocracies” even fit for war. Instead of fully and openly supporting Russia in its self-waged war, however, China has committed itself to equivocation: The Chinese leadership has repeatedly emphasized territorial integrity and respect for sovereignty, as enshrined in the UN charter, as the principles of China’s foreign policy, explicitly including Ukraine. When the United Nations Security Council issued a resolution against Russia, China did not join its “friend’s” veto as a permanent member but abstained, showing that their friendship indeed has its limits. On the sidelines of the National People’s Congress, Chinese foreign minister Wang Yi made this point very clear, even drawing an analogy to Russia’s situation in Europe: “The real goal of the US Indo-Pacific strategy is to establish an Indo-Pacific version of NATO […].”
While committing to the UN charter regarding national sovereignty, China simultaneously displays a high level of understanding for Russian security concerns in Europe, especially its fears of NATO at its doorstep. China sees itself faced with a similar situation in the Indo-Pacific with more and more Western countries adopting national strategies for this region, the goal of which China suspects to be containment – just as Russia claims to be the case with NATO’s Eastern enlargement.
China, therefore, sees Russia as an important geopolitical partner against the US-dominated world order. The war will not change this in the long run. Still, in the short term, it adds reservation to the Sino-Russian relationship, even as Wang Yi called it “rock-solid” at his annual press conference on the sidelines of the NPC meeting.
China is treading on ever thinner ice in its relationship with the ‘West‘
After closely and sometimes incredulously watching China’s diplomatic juggling act during the Ukraine crisis over the past weeks, the West is getting increasingly impatient. Every time one thinks one hears China take a clear position in Russia’s favor (or not) in Chinese official’s statements on the “Ukraine situation,” it slips away through some side door, leaving open multiple interpretations of the stance China may or may not take in the end. The oxymoron “pro-Russian neutrality” has been used by some observers to describe this tactic.
While Russia certainly is important for China from a geopolitical point of view, China has little to gain from Russia in economic terms. Russia mainly offers raw materials, which are important, yes, but not impossible to substitute and certainly have no unique selling point. From an economic perspective, the West, with its intense trade relations with China and its partially more difficult-to-substitute technologies, is critical for China. The US and EU alone (the core of the West) make up 25 percent of China’s trade volume, dwarfing Russia, at below three percent. As for inward FDI, they were among the top-5 origins of investment in the same year at slightly above five percent of the total.
Despite talks and attempts of decoupling, China is still, at least to some degree, dependent on its economic relations with the West to access foreign capital and specific know-how for its green and digital transformation, to sell its still abundant export goods to customers with high purchasing power and sustain much needed economic growth and stability. In short, China cannot allow a severe blow to its relationship with the West in the run-up to the 20th Party Congress later this year – and certainly not for Russia, no matter how full-bodied the Joint Declaration may sound.
Is there a ‘face-saving’ way out of the Ukraine crisis for China?
China’s dithering in the Ukraine crisis has already done some damage to its international image and will certainly overshadow Chinese attempts to take on a more active role. The longer the war continues with all its brutality and cruelty, the harder it gets for China to continue this diplomatic tightrope walking act. Moreover, economically speaking, China could easily end up on the losing side in this war, as the impact on the world economy and global supply chains, and thus for China, could be severe.
For the time being, a way for China to get out of the “Ukraine situation” in an, at least halfway, face-saving way seems to be to finally put into practice the “constructive role” it has repeatedly promised. Acting not so much as a direct mediator between the two sides, but rather by actually throwing its full economic weight on the scale vis-à-vis Russia and thus increasing the pressure on the latter to end the war or at least negotiate a reliable ceasefire. By doing this, China might still be able to actually play the role it claims for itself in the 21st century: that of a global superpower willing to live up to the responsibilities that come along with this role. China might even repair some of the damage inflicted upon its international reputation. At the time of finalizing this text, however, it does not seem that China is at this point – yet.
Jeffrey Pan will join insurer Swiss Re as the new CEO Greater China. Pan joins from AIG, where he most recently served as Managing Director of AIG International Consulting for 17 years. He will take up his post in Shanghai on April 11.
Yu Xiangrong is the new chief China economist for US bank Citigroup. He will be responsible for research and analysis on Chinese economic policy, reporting to Johanna Chua, Head of Asia-Pacific economics.
Dessert
The Olympic bubble in Beijing has been gradually deflated since yesterday. After the end of the Paralympics on Sunday, athletes from all over the world have left the Chinese capital. For the numerous helpers, the so-called volunteers, however, the isolation under the five rings will not end for another two weeks. Because of China’s zero-covid strategy, they will not be allowed to return to their normal life for the time being.
