Whether the financial markets will ever actively make the world a better place is questionable. What is certain, however, is that the trend here is perhaps moving in the right direction for the first time in history. There has never been so much demand for ecological and social investments. When it comes to choosing funds, private investors are increasingly paying attention to corresponding proofs. And professional investors such as pension funds are committing themselves to comply with appropriate criteria.
This means that an international company can hardly afford not to comply with these standards. But that is exactly what Volkswagen, and to a certain extent other car manufacturers, are facing. After Deka, another German investment company considers delisting VW shares as a sustainable investment, writes Marcel Grzanna. A domino effect is possible, with one financial firm following after the other. The reason is the connections to suppliers in Xinjiang. It can no longer be ruled out that parts and raw materials from the region are produced in conditions that fall under forced labor.
The first day of her China visit was marked by a difficult balancing act for German Foreign Minister Annalena Baerbock. On the one hand, she attended appointments aimed at intercultural exchange and understanding. And she reassured that Germany would have no interest in economic decoupling. So far, so diplomatic. But at the same time, she is trying to counter Emmanuel Macron’s statements and emphasized how important Taiwan’s freedom is to Europe.
This will not make her appointments on Friday any easier. But it is not about her having it easy, the important thing is that she gets the most out of it for Germany. The opening position is a good one. Foreign Minister Qin Gang obligingly meets her halfway and picks her up by train in Tianjin. She will also meet with two diplomatic heavyweights, Vice President Han Zheng and top diplomat Wang Yi.
China’s human rights crimes in Xinjiang are turning into a stress test for the car industry. In early May, the board members of Volkswagen, BMW and Mercedes-Benz will have to face their shareholders at the annual general meetings. Especially at Volkswagen, the issue of supply chains and forced labor will be prominently discussed on 10 May in Berlin.
Among others, the umbrella organization Critical Shareholders will provide its speaking time to the World Uyghur Congress (WUC). Its representative in the German capital, Haiyuer Kuerban, intends to use the few minutes to explain the dramatic situation of the Muslim minority and the high probability of forced labor in VW supply chains to the present shareholders.
Even more unpleasant for company CEO Oliver Blume could be potential questions from fund companies. After Deka recently kicked VW securities out of its sustainability funds because they are “no longer investable” under this designation, other investment companies are also taking a close look at the manufacturer’s share and bond classifications.
Union Investment is reportedly increasingly critical of the positioning of Volkswagen shares in the sustainability segment. The fund company of the DZ Bank, does not want to publicly comment on the China issue before the annual general meeting, but will give a verbal statement on 10 May.
“On the part of Deka, this was a radical step. Obviously, they don’t want to burden their sustainability funds with securities that could raise uncomfortable questions in public,” says finance professor Henry Schaefer, who, among other things, develops and advises on sustainable investment strategies with his consultancy EccoWorks. Given the current nervousness of fund providers, he cannot rule out a domino effect that would also cause other investors to drop VW securities from the sustainable category.
Union Investment is currently investing in Volkswagen via eleven sustainability funds. None of them meet the criteria for the highest sustainability categories according to the EU disclosure regulation anyway. But Volkswagen could even break the bar for funds with the lowest requirements due to the suspicion of forced labor in the supply chains. The US rating agency MSCI had given VW shares a red flag in the social sector last fall, issuing an immediate warning to all investors.
Just how great the risk really is for manufacturers was revealed at the end of last year by a Sheffield Hallam University study. The study identified concrete risk areas in the supply chains and limited the companies’ room to escape responsibility by making vague statements or referring to competition law. In an interview with China.Table, insiders had voiced the assumption that manufacturers like to emphasize their due diligence in public, while in reality, they have no greater interest in what is actually happening in their supply chains.
“Our recommendation to the meeting is: Do not exonerate the board,” says Tilman Massa of the umbrella organization Critical Shareholders, which has been representing corporate-critical positions towards the boards since the 1980s with the collected voting rights of more than 1,000 small shareholders. “Volkswagen does not credibly show that it takes preventive action with its suppliers to avert any suspicion of potential forced labor,” says Massa.
Critical Shareholders not only uses the general meetings to voice their concerns but also seek dialogue with companies in long-term campaign work or cooperate with environmental or human rights NGOs. The intention is to force Volkswagen to address the issue of forced labor repeatedly. In order to lend weight to its interests, the association has now decided to give its speaking time to the WUC.
Critical Shareholders already consider the fact that Union Investment will also publicly comment to be a high level of escalation, precisely because institutional investors have different means to reach the company and could use much more subtle means. “This publicity creates considerable attention for the problem and could also move the state of Lower Saxony, as one of the anchor investors, to ask much more critical questions,” Massa believes.
Nowadays, private and institutional investors are increasingly paying attention to compliance with sustainability standards. They orient themselves along environmental, social and governance (ESG) criteria. This approach is currently changing the capital markets. Companies that do not meet the standards will have a much harder time raising money in the future.
Germany’s Foreign Minister Annalena Baerbock arrived in China on Thursday for her eagerly awaited inaugural visit. In the port city of Tianjin, about 150 kilometers away from Beijing, the German Foreign Minister visited, among other things, a school and the German company Flender, which has been manufacturing wind turbines since 1981.
Tianjin is a gentle start to Baerbock’s difficult trip to China. The politically sensitive talks are set for today, Friday, in Beijing – and these talks are dicey. After all, Baerbock wants to rebalance Germany’s relationship with China. The conflict points are obvious: China’s close ties to Russia in the Ukraine war, the growing tensions over Taiwan, Germany’s economic dependencies, as well as human rights and climate action.
And as if that were not difficult enough, another task unexpectedly emerged: Baerbock has to provide some clarity in China due to the – at the very least – misleading statements by French President Emmanuel Macron on Europe’s position in a possible conflict over Taiwan.
Baerbock immediately addressed this in Tianjin. “Germany and the European Union are economically vulnerable, which means that we cannot be indifferent to the tensions in the Taiwan Strait,” the Foreign Minister said on Thursday. Fifty percent of world trade passes through the Taiwan Strait, 70 percent of all semiconductors, she said. “Free passage is in our economic interest as well,” Baerbock stressed.
“A military escalation in the Taiwan Strait … would be a worst-case scenario globally and affect us as one of the biggest industrial nations in particular,” she added, also referring to Germany. She previously already described this as a “horror scenario”.
The first sign of exchange came from the Chinese leadership: Foreign Minister Qin Gang will meet Baerbock in Tianjin on Friday to personally show the German visitor his hometown. It is a remarkable occurrence that was last bestowed on Angela Merkel when Wen Jiabao traveled to Tianjin with the then-Chancellor in 2012.
But Baerbock also focused on understanding and exchange on Thursday – socially and economically. In Tianjin, she joined the German lessons at the Pasch school “No. 42 High School”. Pasch stands for “Schools: Partners for the Future” and networks more than 2,000 schools worldwide where German is particularly valued.
Economically, Tianjin is of major importance as the largest container port in northern China. Baerbock’s visit to Flender also sends a clear signal for cooperation in climate action and renewables. The company has been manufacturing gearboxes for wind turbines under the “Winergy” brand since 1981.
“For me, it is clear that we have no interest in economic decoupling – this would be difficult to achieve in a globalized world in any case – but we must take a more systematic look at the risks of unilateral dependencies and reduce them, in the sense of de-risking,” said Baerbock.
But things are unlikely to remain quite as harmonious as the start in Tianjin. Qing Gang and Baerbock will take the express train to Beijing. In the Chinese capital, the German Foreign Minister is expected by high-ranking representatives, among them
Above all, China’s continued support for Russia in the Ukraine war and the growing tensions over Taiwan hold potential for conflict.
But Baerbock apparently did not want to wait until Friday. The Foreign Minister was already setting the tone in Tianjin: China has the most influence on Russia, therefore, China must also cooperate in ending this war of aggression, Baerbock said on Thursday.
Things are also likely to get confrontational regarding Taiwan. For as hospitable as China presented itself to Baerbock on Thursday, the leadership in Beijing is behaving harshly when it comes to Taiwan: As the Ministry of Defence in Taipei announced on Thursday, 26 aircraft and 7 ships of the Chinese People’s Liberation Army were sighted near Taiwan. 14 fighter jets crossed the so-called median line, the unofficial border between China and Taiwan.
Earlier, Beijing conducted a three-day major military drill, rehearsing a full-scale naval and airspace blockade of the island. Taiwan’s “Foreign Minister” Joseph Wu (吳釗燮) therefore told the US broadcasting channel CNN that the latest military exercises showed that China was getting “ready to launch a war against Taiwan”.
Fittingly, China announced a short temporary no-fly zone and a sea blockade of an area north of Taiwan on Sunday. Ships were barred from passing through the area between 9 a.m. and 3 p.m. local time because of the risk of falling missile debris. The reason for the missile launch in this sensitive area immediately after Baerbock’s departure initially remained open.
It is up to Baerbock to sort out Germany’s new relationship with China after the trip. Although the triad “partner, competitor and systemic rival” sets the tone, China is paying close attention to the different emphasis between the Chancellery and the Foreign Ministry.
Baerbock is considered to be very China-critical, and an initial draft of a China strategy from the Foreign Office was quite confrontational. This contrasts with Olaf Scholz’s views on China: The Chancellery prefers to emphasize economic cooperation with the People’s Republic. Germany has “dependencies [on China] in some areas that are not healthy,” Baerbock said in Tianjin.
And yet the Foreign Minister is currently expressing a willingness to compromise here as well: “In which direction the needle will swing in the future depends in part on which path China chooses.” The German Foreign Minister knows the magnitude of the task: “For our country, a lot depends on whether we succeed in properly balancing our future relationship with China.” It is a difficult balancing act: China has been Germany’s most important trading partner for several years. But it is also increasingly an actor that wants to reshape the world order according to its own ideas.
China’s People’s Congress approved Beijing’s government reform. Under it, the State Council will include 26 ministries and commissions. Xinhua published the names of the 26 “key officials” on March 12, 2023, including Minister Pan Yue 潘 as the new head of the National Ethnic Affairs Commission of the country’s 55 National Minorities. Although these represent only 8.9 percent of the predominantly Han Chinese population. But Beijing sees them as a threat to the country’s unity, especially in the troubled regions of the Uyghurs, Tibetans and Mongolians. Ethnic aspirations for more political, linguistic, religious or cultural autonomy are resolutely persecuted.
Pan is only the second Han Chinese to head the commission, which was founded 70 years ago. Until 2020, it was exclusively chaired by functionaries of ethnic backgrounds. By appointing Pan, the CP is sending yet another signal. In 2002, Pan, a historian, argued in his doctoral dissertation that millions of Han Chinese from Eastern and Central China should be resettled in Western China by 2050. The title of the 120-page thesis, which can be found on the Internet, was “Exploring the History and Current Situation of Migrant Settlement in Western China” (中国西部移民屯垦的历史与现实研究). In it, he coined the key term “national fusion” (民族融合) – in other words, a policy toward China’s minorities that is embedded in the adaptation of China’s Han Chinese culture and civilization. “We need to formulate a migration strategy with Chinese characteristics as soon as possible.”
Since then, Pan has added further ideas, for example on questions regarding the restriction of autonomy or the Sinicization of minorities. In 2021 he wrote why only the Middle Kingdom could preserve its unity in history: “The background of Chinese civilization is its tianxia spirit (all united under one sky), which transcends ethnic barriers. The history of the nation is one in which this spirit can transcend ethnic self-limitation and create a deep sense of belonging to a ‘Community of Common Destiny’.” (中华文明的底色是打破族群壁垒的天下精神。一部中华民族史是一部 “天下精神 “超越 “族性自限 “的历史，其中饱含着深沉的 “命运共同体 “情感)
All of Pan’s terms now also appear in Xi’s development strategies. Aaron Glasserman, a sinologist and political scientist at the US Princeton University, translates his keyword of intentional merging between Han and minorities as intentional “ethnic fusion”. He has been researching Pan’s work for years, and has read Pan’s thesis. “Pan’s election to the Central Committee suggests that the Xi administration’s hard turn toward assimilationism will likely continue and perhaps intensify,” Glasserman wrote. “If Xi were looking for a lieutenant with the vision and policy entrepreneurship needed to guide and accelerate assimilation in his third term, then he has found one in Pan.”
The CP was in a hurry to promote Pan. As early as June 2022, the Politburo appointed Pan as party secretary of the Minorities Commission. In July, he accompanied CP leader Xi on his inspection trip to Xinjiang. There, Xi demonstrated how little he cared about the human rights allegations from foreign countries. Pan, who in recent years had already demonstrated lineage and patriotism as vice chief of the Communist United Front and director of the Overseas Chinese Affairs Office, was elected a full member of the Central Committee at the 20th Party Congress in October 2022.
This alone would hardly be worth mentioning if he were just another loyalist in Xi’s hand-picked entourage of yes-men. But Pan was once considered – in China and internationally – a beacon of hope for political, social and ecological reform in the People’s Republic, a “green hero” and a “maverick-thinker” in the CP.
His comeback within the Beijing leadership is remarkable – at least at first glance. In 2001, he expressed fundamental criticism of the misguided fear in the CP of religion as “opium for the people”. In 2004, he took a stand against China’s eco-destructive growth trajectory. In doing so, he influenced the views of party leader Jiang Zemin and Hu Jintao – and now also those of Xi.
Pan went into hiatus after his failed attempt, as Vice Minister of the Environment, to force China’s provinces to align their economic planning with a “green GDP”. He maneuvered himself into the political sidelines only briefly, taking over as Party Secretary and Vice Director of the Beijing Central Institute for Socialism (CIS) from 2016 to 2021. There he tinkered with new theories about China’s special socialist path and its “global significance”.
This brought him back to the halls of power. This time as an apologist for the system, which he had, in fact, already been in the past. Pan follows in the footsteps of Xi’s speechwriter and thought leader Wang Huning, who was once also a reform intellectual. Wang made himself so invaluable as an ideology advisor to party leader Xi (and to his two predecessors before him) that Xi brought him on board the Politburo Standing Committee from 2017 onward.
Pan’s long march through the institutions of government bureaucracy began 20 years ago. In March 2003, the People’s Congress promoted him to Vice Director of the then-State Environmental Protection Administration (SEPA), the precursor to China’s first Ministry of the Environment. As Vice Minister, he spectacularly halted 30 major state projects in 2005, including power plants and dams, because their construction began without environmental impact studies. Pan criticized China’s alleged super-growth as a “questionable and dangerous economic miracle“.
The media picked him as their darling. In March 2007, the popular Chinese magazine Vista identified Pan as one of three potential rising stars among the new provincial leaders and ministers. It featured him on its cover with Xi Jinping, at the time party leader of Zhejiang province, and Bo Xilai, CP chief of Chongqing, under the headlines “The Red Families” and “The Struggling History of Three Provincial Leaders.” All three of them were China’s “princelings”. Their fathers and mothers earned merits during Mao’s revolution and then were unjustly persecuted during the Cultural Revolution. Their children suffered along with them. But after their parents were rehabilitated, they rose to prominence. All the while, they remained loyal to Marxism and the system.
Back in 2007, China’s media were still allowed to publish such stories and speculate. Vista even dared to print a full-page cartoon for the cover – with three monkeys as a critical allusion: See no evil. Hear no evil. Speak no evil. It then left it up to the readers to speculate about it.
In its cover story, Vista revealed how Pan Yue became an influential thought leader for the Beijing leadership as early as 1991. At the time, he was vice editor-in-chief of the Youth Newspaper, mouthpiece of the Communist Youth League. Pan reportedly was the main author of a manifesto that was published under the title, “China’s Practical Responses and Strategic Decisions to and After the Sudden Changes in the USSR”.(苏联巨变之后中国的现实应对与战略选择)
Among Pan’s predictions at the time was that someone like Putin would emerge. He speculated “that the future successor to a Gorbachev or Yeltsin will probably be a nationalist or even a Napoleonic dictator. They will use democracy as a cover and nuclear weapons as bargaining chips with the West.” (未来替代戈巴乔夫或叶立钦的人很可能是民族主义者，甚至可能是拿破仑式的独裁者。他们会以民主为外衣，以核武器作为与西方讨价还价的筹码。)
More important to China’s leaders were Pan’s other insights, such as on the survival of the Chinese system, two years after the June 4, 1989, Tiananmen massacre and just before the collapse of the Soviet Union. “What happened in the Soviet Union has great ideological impact on China, but will not lead to great chaos in our country.” However, he added, the party “must learn to creatively appropriate its traditional culture to be able to preserve China’s socialist system … in short, our socialist spiritual civilization should be able to create a brand new culture in a changing world. This requires organically combining socialism, with traditional culture, patriotism and modern spiritual civilization.”
This made Pan Yue an early thought leader for Xi’s contemporary assertions about China’s cultural identity and its supposed more than 5,000 years of continuous civilization. Both, he argued, were reasons for the superiority of Chinese socialism and unique selling points for the party’s rule. The extent to which Xi now echoes Pan Yue’s thoughts became evident in March 2021. In a conversation at the People’s Congress with deputies from China’s Inner Mongolia, Xi, for the first time, publicly demanded the subordination of ethnic culture to China’s traditional Sinocentric national culture. “Cultural identity is the deepest form of identity. It is also the root and soul of ethnic unity and harmony.” National minorities must be educated to “correct views on the state, history, ethnic groups, culture and religion”. (“文化认同是最深层次的认同，是民族团结之根、民族和睦之魂”… 树立正确的国家观、历史观、民族观、文化观、宗教观”。)
Under Xi, however, there is no room for a maverick thinker like Pan. Only for his new role as enforcer of Xi’s version of “forging a sense of community of the Chinese nation” into which ethnic minorities must integrate, Aaron Glasserman writes. “Journalists and China scholars need to grapple with the fact that a celebrated environmentalist is now at the center of one of China’s most notorious policy arenas.” This is Pan’s personal tragedy.
Traversing the deep snow on yakback – in the Taxkorgan Tajik autonomous region in Xinjiang, these three men are riding a yak to go “goat-grabbing”. The tradition with the slightly strange name is a folk sport that was added to Xinjiang’s list of cultural assets in 2009. Riders try to catch a goat skin from the back of their yak – a turbulent sport. Those who fall off land softly but coldly in winter snow.
Whether the financial markets will ever actively make the world a better place is questionable. What is certain, however, is that the trend here is perhaps moving in the right direction for the first time in history. There has never been so much demand for ecological and social investments. When it comes to choosing funds, private investors are increasingly paying attention to corresponding proofs. And professional investors such as pension funds are committing themselves to comply with appropriate criteria.
This means that an international company can hardly afford not to comply with these standards. But that is exactly what Volkswagen, and to a certain extent other car manufacturers, are facing. After Deka, another German investment company considers delisting VW shares as a sustainable investment, writes Marcel Grzanna. A domino effect is possible, with one financial firm following after the other. The reason is the connections to suppliers in Xinjiang. It can no longer be ruled out that parts and raw materials from the region are produced in conditions that fall under forced labor.
The first day of her China visit was marked by a difficult balancing act for German Foreign Minister Annalena Baerbock. On the one hand, she attended appointments aimed at intercultural exchange and understanding. And she reassured that Germany would have no interest in economic decoupling. So far, so diplomatic. But at the same time, she is trying to counter Emmanuel Macron’s statements and emphasized how important Taiwan’s freedom is to Europe.
This will not make her appointments on Friday any easier. But it is not about her having it easy, the important thing is that she gets the most out of it for Germany. The opening position is a good one. Foreign Minister Qin Gang obligingly meets her halfway and picks her up by train in Tianjin. She will also meet with two diplomatic heavyweights, Vice President Han Zheng and top diplomat Wang Yi.
China’s human rights crimes in Xinjiang are turning into a stress test for the car industry. In early May, the board members of Volkswagen, BMW and Mercedes-Benz will have to face their shareholders at the annual general meetings. Especially at Volkswagen, the issue of supply chains and forced labor will be prominently discussed on 10 May in Berlin.
Among others, the umbrella organization Critical Shareholders will provide its speaking time to the World Uyghur Congress (WUC). Its representative in the German capital, Haiyuer Kuerban, intends to use the few minutes to explain the dramatic situation of the Muslim minority and the high probability of forced labor in VW supply chains to the present shareholders.
Even more unpleasant for company CEO Oliver Blume could be potential questions from fund companies. After Deka recently kicked VW securities out of its sustainability funds because they are “no longer investable” under this designation, other investment companies are also taking a close look at the manufacturer’s share and bond classifications.
Union Investment is reportedly increasingly critical of the positioning of Volkswagen shares in the sustainability segment. The fund company of the DZ Bank, does not want to publicly comment on the China issue before the annual general meeting, but will give a verbal statement on 10 May.
“On the part of Deka, this was a radical step. Obviously, they don’t want to burden their sustainability funds with securities that could raise uncomfortable questions in public,” says finance professor Henry Schaefer, who, among other things, develops and advises on sustainable investment strategies with his consultancy EccoWorks. Given the current nervousness of fund providers, he cannot rule out a domino effect that would also cause other investors to drop VW securities from the sustainable category.
Union Investment is currently investing in Volkswagen via eleven sustainability funds. None of them meet the criteria for the highest sustainability categories according to the EU disclosure regulation anyway. But Volkswagen could even break the bar for funds with the lowest requirements due to the suspicion of forced labor in the supply chains. The US rating agency MSCI had given VW shares a red flag in the social sector last fall, issuing an immediate warning to all investors.
Just how great the risk really is for manufacturers was revealed at the end of last year by a Sheffield Hallam University study. The study identified concrete risk areas in the supply chains and limited the companies’ room to escape responsibility by making vague statements or referring to competition law. In an interview with China.Table, insiders had voiced the assumption that manufacturers like to emphasize their due diligence in public, while in reality, they have no greater interest in what is actually happening in their supply chains.
“Our recommendation to the meeting is: Do not exonerate the board,” says Tilman Massa of the umbrella organization Critical Shareholders, which has been representing corporate-critical positions towards the boards since the 1980s with the collected voting rights of more than 1,000 small shareholders. “Volkswagen does not credibly show that it takes preventive action with its suppliers to avert any suspicion of potential forced labor,” says Massa.
Critical Shareholders not only uses the general meetings to voice their concerns but also seek dialogue with companies in long-term campaign work or cooperate with environmental or human rights NGOs. The intention is to force Volkswagen to address the issue of forced labor repeatedly. In order to lend weight to its interests, the association has now decided to give its speaking time to the WUC.
Critical Shareholders already consider the fact that Union Investment will also publicly comment to be a high level of escalation, precisely because institutional investors have different means to reach the company and could use much more subtle means. “This publicity creates considerable attention for the problem and could also move the state of Lower Saxony, as one of the anchor investors, to ask much more critical questions,” Massa believes.
Nowadays, private and institutional investors are increasingly paying attention to compliance with sustainability standards. They orient themselves along environmental, social and governance (ESG) criteria. This approach is currently changing the capital markets. Companies that do not meet the standards will have a much harder time raising money in the future.
Germany’s Foreign Minister Annalena Baerbock arrived in China on Thursday for her eagerly awaited inaugural visit. In the port city of Tianjin, about 150 kilometers away from Beijing, the German Foreign Minister visited, among other things, a school and the German company Flender, which has been manufacturing wind turbines since 1981.
Tianjin is a gentle start to Baerbock’s difficult trip to China. The politically sensitive talks are set for today, Friday, in Beijing – and these talks are dicey. After all, Baerbock wants to rebalance Germany’s relationship with China. The conflict points are obvious: China’s close ties to Russia in the Ukraine war, the growing tensions over Taiwan, Germany’s economic dependencies, as well as human rights and climate action.
And as if that were not difficult enough, another task unexpectedly emerged: Baerbock has to provide some clarity in China due to the – at the very least – misleading statements by French President Emmanuel Macron on Europe’s position in a possible conflict over Taiwan.
Baerbock immediately addressed this in Tianjin. “Germany and the European Union are economically vulnerable, which means that we cannot be indifferent to the tensions in the Taiwan Strait,” the Foreign Minister said on Thursday. Fifty percent of world trade passes through the Taiwan Strait, 70 percent of all semiconductors, she said. “Free passage is in our economic interest as well,” Baerbock stressed.
“A military escalation in the Taiwan Strait … would be a worst-case scenario globally and affect us as one of the biggest industrial nations in particular,” she added, also referring to Germany. She previously already described this as a “horror scenario”.
The first sign of exchange came from the Chinese leadership: Foreign Minister Qin Gang will meet Baerbock in Tianjin on Friday to personally show the German visitor his hometown. It is a remarkable occurrence that was last bestowed on Angela Merkel when Wen Jiabao traveled to Tianjin with the then-Chancellor in 2012.
But Baerbock also focused on understanding and exchange on Thursday – socially and economically. In Tianjin, she joined the German lessons at the Pasch school “No. 42 High School”. Pasch stands for “Schools: Partners for the Future” and networks more than 2,000 schools worldwide where German is particularly valued.
Economically, Tianjin is of major importance as the largest container port in northern China. Baerbock’s visit to Flender also sends a clear signal for cooperation in climate action and renewables. The company has been manufacturing gearboxes for wind turbines under the “Winergy” brand since 1981.
“For me, it is clear that we have no interest in economic decoupling – this would be difficult to achieve in a globalized world in any case – but we must take a more systematic look at the risks of unilateral dependencies and reduce them, in the sense of de-risking,” said Baerbock.
But things are unlikely to remain quite as harmonious as the start in Tianjin. Qing Gang and Baerbock will take the express train to Beijing. In the Chinese capital, the German Foreign Minister is expected by high-ranking representatives, among them
Above all, China’s continued support for Russia in the Ukraine war and the growing tensions over Taiwan hold potential for conflict.
But Baerbock apparently did not want to wait until Friday. The Foreign Minister was already setting the tone in Tianjin: China has the most influence on Russia, therefore, China must also cooperate in ending this war of aggression, Baerbock said on Thursday.
Things are also likely to get confrontational regarding Taiwan. For as hospitable as China presented itself to Baerbock on Thursday, the leadership in Beijing is behaving harshly when it comes to Taiwan: As the Ministry of Defence in Taipei announced on Thursday, 26 aircraft and 7 ships of the Chinese People’s Liberation Army were sighted near Taiwan. 14 fighter jets crossed the so-called median line, the unofficial border between China and Taiwan.
Earlier, Beijing conducted a three-day major military drill, rehearsing a full-scale naval and airspace blockade of the island. Taiwan’s “Foreign Minister” Joseph Wu (吳釗燮) therefore told the US broadcasting channel CNN that the latest military exercises showed that China was getting “ready to launch a war against Taiwan”.
Fittingly, China announced a short temporary no-fly zone and a sea blockade of an area north of Taiwan on Sunday. Ships were barred from passing through the area between 9 a.m. and 3 p.m. local time because of the risk of falling missile debris. The reason for the missile launch in this sensitive area immediately after Baerbock’s departure initially remained open.
It is up to Baerbock to sort out Germany’s new relationship with China after the trip. Although the triad “partner, competitor and systemic rival” sets the tone, China is paying close attention to the different emphasis between the Chancellery and the Foreign Ministry.
Baerbock is considered to be very China-critical, and an initial draft of a China strategy from the Foreign Office was quite confrontational. This contrasts with Olaf Scholz’s views on China: The Chancellery prefers to emphasize economic cooperation with the People’s Republic. Germany has “dependencies [on China] in some areas that are not healthy,” Baerbock said in Tianjin.
And yet the Foreign Minister is currently expressing a willingness to compromise here as well: “In which direction the needle will swing in the future depends in part on which path China chooses.” The German Foreign Minister knows the magnitude of the task: “For our country, a lot depends on whether we succeed in properly balancing our future relationship with China.” It is a difficult balancing act: China has been Germany’s most important trading partner for several years. But it is also increasingly an actor that wants to reshape the world order according to its own ideas.
China’s People’s Congress approved Beijing’s government reform. Under it, the State Council will include 26 ministries and commissions. Xinhua published the names of the 26 “key officials” on March 12, 2023, including Minister Pan Yue 潘 as the new head of the National Ethnic Affairs Commission of the country’s 55 National Minorities. Although these represent only 8.9 percent of the predominantly Han Chinese population. But Beijing sees them as a threat to the country’s unity, especially in the troubled regions of the Uyghurs, Tibetans and Mongolians. Ethnic aspirations for more political, linguistic, religious or cultural autonomy are resolutely persecuted.
Pan is only the second Han Chinese to head the commission, which was founded 70 years ago. Until 2020, it was exclusively chaired by functionaries of ethnic backgrounds. By appointing Pan, the CP is sending yet another signal. In 2002, Pan, a historian, argued in his doctoral dissertation that millions of Han Chinese from Eastern and Central China should be resettled in Western China by 2050. The title of the 120-page thesis, which can be found on the Internet, was “Exploring the History and Current Situation of Migrant Settlement in Western China” (中国西部移民屯垦的历史与现实研究). In it, he coined the key term “national fusion” (民族融合) – in other words, a policy toward China’s minorities that is embedded in the adaptation of China’s Han Chinese culture and civilization. “We need to formulate a migration strategy with Chinese characteristics as soon as possible.”
Since then, Pan has added further ideas, for example on questions regarding the restriction of autonomy or the Sinicization of minorities. In 2021 he wrote why only the Middle Kingdom could preserve its unity in history: “The background of Chinese civilization is its tianxia spirit (all united under one sky), which transcends ethnic barriers. The history of the nation is one in which this spirit can transcend ethnic self-limitation and create a deep sense of belonging to a ‘Community of Common Destiny’.” (中华文明的底色是打破族群壁垒的天下精神。一部中华民族史是一部 “天下精神 “超越 “族性自限 “的历史，其中饱含着深沉的 “命运共同体 “情感)
All of Pan’s terms now also appear in Xi’s development strategies. Aaron Glasserman, a sinologist and political scientist at the US Princeton University, translates his keyword of intentional merging between Han and minorities as intentional “ethnic fusion”. He has been researching Pan’s work for years, and has read Pan’s thesis. “Pan’s election to the Central Committee suggests that the Xi administration’s hard turn toward assimilationism will likely continue and perhaps intensify,” Glasserman wrote. “If Xi were looking for a lieutenant with the vision and policy entrepreneurship needed to guide and accelerate assimilation in his third term, then he has found one in Pan.”
The CP was in a hurry to promote Pan. As early as June 2022, the Politburo appointed Pan as party secretary of the Minorities Commission. In July, he accompanied CP leader Xi on his inspection trip to Xinjiang. There, Xi demonstrated how little he cared about the human rights allegations from foreign countries. Pan, who in recent years had already demonstrated lineage and patriotism as vice chief of the Communist United Front and director of the Overseas Chinese Affairs Office, was elected a full member of the Central Committee at the 20th Party Congress in October 2022.
This alone would hardly be worth mentioning if he were just another loyalist in Xi’s hand-picked entourage of yes-men. But Pan was once considered – in China and internationally – a beacon of hope for political, social and ecological reform in the People’s Republic, a “green hero” and a “maverick-thinker” in the CP.
His comeback within the Beijing leadership is remarkable – at least at first glance. In 2001, he expressed fundamental criticism of the misguided fear in the CP of religion as “opium for the people”. In 2004, he took a stand against China’s eco-destructive growth trajectory. In doing so, he influenced the views of party leader Jiang Zemin and Hu Jintao – and now also those of Xi.
Pan went into hiatus after his failed attempt, as Vice Minister of the Environment, to force China’s provinces to align their economic planning with a “green GDP”. He maneuvered himself into the political sidelines only briefly, taking over as Party Secretary and Vice Director of the Beijing Central Institute for Socialism (CIS) from 2016 to 2021. There he tinkered with new theories about China’s special socialist path and its “global significance”.
This brought him back to the halls of power. This time as an apologist for the system, which he had, in fact, already been in the past. Pan follows in the footsteps of Xi’s speechwriter and thought leader Wang Huning, who was once also a reform intellectual. Wang made himself so invaluable as an ideology advisor to party leader Xi (and to his two predecessors before him) that Xi brought him on board the Politburo Standing Committee from 2017 onward.
Pan’s long march through the institutions of government bureaucracy began 20 years ago. In March 2003, the People’s Congress promoted him to Vice Director of the then-State Environmental Protection Administration (SEPA), the precursor to China’s first Ministry of the Environment. As Vice Minister, he spectacularly halted 30 major state projects in 2005, including power plants and dams, because their construction began without environmental impact studies. Pan criticized China’s alleged super-growth as a “questionable and dangerous economic miracle“.
The media picked him as their darling. In March 2007, the popular Chinese magazine Vista identified Pan as one of three potential rising stars among the new provincial leaders and ministers. It featured him on its cover with Xi Jinping, at the time party leader of Zhejiang province, and Bo Xilai, CP chief of Chongqing, under the headlines “The Red Families” and “The Struggling History of Three Provincial Leaders.” All three of them were China’s “princelings”. Their fathers and mothers earned merits during Mao’s revolution and then were unjustly persecuted during the Cultural Revolution. Their children suffered along with them. But after their parents were rehabilitated, they rose to prominence. All the while, they remained loyal to Marxism and the system.
Back in 2007, China’s media were still allowed to publish such stories and speculate. Vista even dared to print a full-page cartoon for the cover – with three monkeys as a critical allusion: See no evil. Hear no evil. Speak no evil. It then left it up to the readers to speculate about it.
In its cover story, Vista revealed how Pan Yue became an influential thought leader for the Beijing leadership as early as 1991. At the time, he was vice editor-in-chief of the Youth Newspaper, mouthpiece of the Communist Youth League. Pan reportedly was the main author of a manifesto that was published under the title, “China’s Practical Responses and Strategic Decisions to and After the Sudden Changes in the USSR”.(苏联巨变之后中国的现实应对与战略选择)
Among Pan’s predictions at the time was that someone like Putin would emerge. He speculated “that the future successor to a Gorbachev or Yeltsin will probably be a nationalist or even a Napoleonic dictator. They will use democracy as a cover and nuclear weapons as bargaining chips with the West.” (未来替代戈巴乔夫或叶立钦的人很可能是民族主义者，甚至可能是拿破仑式的独裁者。他们会以民主为外衣，以核武器作为与西方讨价还价的筹码。)
More important to China’s leaders were Pan’s other insights, such as on the survival of the Chinese system, two years after the June 4, 1989, Tiananmen massacre and just before the collapse of the Soviet Union. “What happened in the Soviet Union has great ideological impact on China, but will not lead to great chaos in our country.” However, he added, the party “must learn to creatively appropriate its traditional culture to be able to preserve China’s socialist system … in short, our socialist spiritual civilization should be able to create a brand new culture in a changing world. This requires organically combining socialism, with traditional culture, patriotism and modern spiritual civilization.”
This made Pan Yue an early thought leader for Xi’s contemporary assertions about China’s cultural identity and its supposed more than 5,000 years of continuous civilization. Both, he argued, were reasons for the superiority of Chinese socialism and unique selling points for the party’s rule. The extent to which Xi now echoes Pan Yue’s thoughts became evident in March 2021. In a conversation at the People’s Congress with deputies from China’s Inner Mongolia, Xi, for the first time, publicly demanded the subordination of ethnic culture to China’s traditional Sinocentric national culture. “Cultural identity is the deepest form of identity. It is also the root and soul of ethnic unity and harmony.” National minorities must be educated to “correct views on the state, history, ethnic groups, culture and religion”. (“文化认同是最深层次的认同，是民族团结之根、民族和睦之魂”… 树立正确的国家观、历史观、民族观、文化观、宗教观”。)
Under Xi, however, there is no room for a maverick thinker like Pan. Only for his new role as enforcer of Xi’s version of “forging a sense of community of the Chinese nation” into which ethnic minorities must integrate, Aaron Glasserman writes. “Journalists and China scholars need to grapple with the fact that a celebrated environmentalist is now at the center of one of China’s most notorious policy arenas.” This is Pan’s personal tragedy.
Traversing the deep snow on yakback – in the Taxkorgan Tajik autonomous region in Xinjiang, these three men are riding a yak to go “goat-grabbing”. The tradition with the slightly strange name is a folk sport that was added to Xinjiang’s list of cultural assets in 2009. Riders try to catch a goat skin from the back of their yak – a turbulent sport. Those who fall off land softly but coldly in winter snow.
