Table.Briefing: China

VW’s new EV alliance + Interview with Hans Uszkoreit

Dear reader,

Wednesday brought a major shake-up in the automotive community: Volkswagen has acquired a stake in the Chinese EV startup Xpeng. Both partners are planning to jointly develop new electric models. It is well known that VW and other German automakers are lagging behind in China’s electric segment. Now, it seems that the Wolfsburg-based company aims to catch up with the help of its Chinese competitors, as Felix Lee analyzes. Even premium subsidiary Audi is set to form a closer alliance with the Chinese joint venture partner SAIC.

In our interview, we delve into intelligent language models: “In China, there are already more than 80 language models the size of ChatGPT,” says Hans Uszkoreit in conversation with Frank Sieren. The 73-year-old is one of Europe’s leading AI researchers. With his start-up Nyonic, he aims to make Germany a world-class player in AI, working closely with a team from Shanghai. Uszkoreit has a strong connection to China, having served as Chief Scientist of the Artificial Intelligence Technology Center (AITC) in Beijing. His wife, Xu Feiyu, is also a distinguished AI researcher and was recently the head of AI at SAP. Uszkoreit discusses Europe’s prospects in the competition with China and highlights the weaknesses and dangers of applications like ChatGPT.

Meanwhile, regarding the replacement of Foreign Minister Qin Gang in Beijing, there continues to be a chilling silence while his predecessor-successor, Wang Yi, travels the world. On Wednesday, he held his first meetings in his reappointed role as Foreign Minister in Ankara, meeting with his counterpart and President Erdogan. We may never learn what misstep cost Qin his position.

Your
Christiane Kühl
Image of Christiane  Kühl

Feature

After e-disaster: Volkswagen joins forces with Xpeng and SAIC

A turning point for VW: The EV series are slow sellers and Chinese companies are technologically superior in some aspects.

Most automotive market experts had suspected that the Volkswagen Group was facing a tough situation due to poor sales figures. However, this news is likely to make a big impact. Europe’s largest automaker intends to close the gap, particularly in electromobility, by collaborating with Chinese competitors to halt its decline in the world’s largest passenger car market.

The main VW brand will now work together with Chinese EV manufacturer Xpeng on electromobility, software and autonomous driving. The alliance will be strengthened by a nearly 5 percent stake, for which Volkswagen will pay 700 million dollars, as announced by the company after a supervisory board meeting in Wolfsburg on Wednesday.

The initial plan is to jointly develop two electric models for VW’s mid-range segment. These models will be built in Volkswagen’s relatively new factory in Hefei, Anhui Province, in eastern China and are expected to enter the Chinese market in 2026. VW is currently transforming the Hefei site into a new production and development center.

Audi relies on SAIC’s E-platform

In addition to this, the group revealed that its subsidiary Audi has signed a strategic agreement with joint venture partner SAIC. Initially, the collaboration will involve Audi adopting SAIC’s electric platform for the A3 and A4 models. By 2027, Audi aims to have jointly developed an E-platform with SAIC.

One of the issues Audi currently faces is that the EVs based on Audi’s MEB modular electric drive matrix are perceived as poorly connected by Chinese customers. They also charge too slowly and have less power compared to Chinese competitors. Therefore, SAIC will provide support in the coming years before Audi ventures into the Chinese market with a new platform.

The SAIC platform is intended for mid-range models, while Audi plans to build upper-class electric vehicles with its second partner, FAW. It will be the first time that the VW Group sources the core technology of an electric vehicle from Chinese partners.

China: from pupil to master

Both decisions demonstrate how far Chinese EV manufacturers have outpaced their German competitors. And more significantly, it appears that Chinese competition is now unbeatable without assistance from the People’s Republic.

SAIC has been one of Volkswagen’s two major joint venture partners in China since the beginning of their business in the country. However, the Chinese automaker had looked up to the Germans for nearly four decades to learn from them. Now, this relationship has reversed remarkably quickly.

Xpeng is small

VW is still trying to downplay its own weaknesses. “We are not buying technology; we are jointly developing vehicles,” asserts Ralf Brandstaetter, head of Volkswagen China, in a conference call with journalists. However, at least until 2027, buying technology is precisely the plan. It is still uncertain whether the Volkswagen Group will genuinely collaborate with Chinese partners to develop electric platforms in the future. The discussions are ongoing.

Xpeng is one of the many newcomers in the Chinese EV segment, and it is not even the most innovative. Established in 2014, the private company, supported by several internet giants and based in Guangzhou, ranks rather low among automakers. According to the China Passenger Car Association (CPCA), it was only twelfth in terms of EV sales in the first quarter. The company relies more on clever marketing concepts than on its size.

VW finds itself in a niche

Recently, BYD has taken the lead by far. The former battery manufacturer has overtaken Volkswagen as the number one player in the overall market, including conventional combustion engine cars. VW’s strong second position is solely due to its combustion engine cars. In electromobility, VW and Audi are niche players.

In the first half of this year, VW’s EV sales dropped by 1.6 percent to 62,400 cars compared to the same period last year. BYD sells ten times more EVs than VW. As for Audi, it has completely lost ground in the Chinese market for EVs, having sold just over 3,000 battery-powered vehicles in the first quarter.

  • Autoindustrie
  • SAIC

‘The magic potion works’

Hans Uszkoreit is a professor of computer science and veteran of AI research. He has conducted research in China, among other places.

You recently founded a German ChatGPT start-up with a presence in China. What is the objective?

We established the start-up Nyonic in Berlin, with a research team in Shanghai. Our aim is to address two weaknesses of ChatGPT. Current language models are predominantly focused on English and perhaps Chinese. We intend to change that. Additionally, we want to transform ChatGPT into a reliable work tool for specific industries, which it currently isn’t.

What is missing for that transformation?

ChatGPT needs to provide precise and up-to-date answers, for instance, in aiding automobile development and manufacturing. The current ChatGPT is still at a high school or bachelor’s level. We must elevate it to the standard of automotive engineers. The machine needs to achieve both technical and business reliability; otherwise, it will remain a mere toy.

But why different languages? English is a global language, and Chinese is heading in that direction.

Much European knowledge is not yet available in English, but only in various European languages. Additionally, AI systems should bring the same benefits to users worldwide. Language diversity is a significant step for ChatGPT and crucial for a multipolar world. The majority of the world is multilingual. The US can afford Anglo-centric technology, and China can afford China-focused technology. However, the majority of the world, including Southeast Asia, Africa, and Europe, relies on covering numerous languages and cultures.

Why do you take on this effort? At 73 years old, you are already at retirement age. You are and remain a pioneer in European AI. You could relax.

Everyone on our team, regardless of age, wants to be part of the biggest AI revolution of our lifetime. Additionally, we wish for Europe not to be left behind by the US and China this time. Europe possesses many intelligent individuals, and numerous innovations have come from here. But then we repeatedly failed. China already has more than 80 language models similar to ChatGPT, while the EU only has three. In Germany, there’s only one, which is not yet among the best. We aim to change that.

What about the Chinese who work on this with you?

Most of them, like our CEO Dong Han, are bilingual or multilingual, thus have a natural interest in multilingual AI. Many Chinese models are designed solely for use in China. Some of our experts studied in Germany or other European countries, where they learned about multilingual language technology. But we also recruited top engineers from Google because they want to contribute to our project.

The topic of artificial intelligence is not new. You have been working on it for over 30 years. What’s different about ChatGPT that has sparked so much excitement now?

The system has achieved something we call understanding, similar to humans. It’s defined differently for the machine since it lacks our holistic worldview and doesn’t adapt its knowledge based on user input. But the effect is the same: The machine responds as if it truly comprehends the inputs.

But wasn’t that already the case before?

Yes and no. There were systems that could play chess, enable autonomous driving, do demand forecasting and calculations, translate, compose music and more. Each system needed to be trained with data from its specific domain. It learned from hundreds of thousands, sometimes millions of examples, on how to behave. It’s a bit like training a dog, rewarding it for eating what it should and correcting it when it shouldn’t. The dog eventually learned without knowing what meat, cake or bones are…

… but it has only handled small, trivial tasks.

That’s not much different in previous machine learning. For language AI, it means learning many individual facts, words and terms. Now, with the Transformer technology on which the new AI is based, it can better understand contexts and learn actual meaning from them. It’s like learning about the world outside in a dark hut without windows through thousands of books and the internet. Initially, you only learn words like sun, tree, flowers or car. Over time, you gather so much information that you can depict the outside world more precisely. The sun rises and sets, clouds can cover it, casting shadows. Some flowers follow the sun. The Transformer technology learns to navigate in this world, which increasingly resembles ours but isn’t exactly the same. As a result, the machine can now solve tasks in this world it was never trained for. That’s the significant step of the Transformer technology on which ChatGPT is based, as the name suggests: Generative Pretrained Transformer.

Can you explain this with an example?

I can ask the machine to summarize text about the functions of a car for a ten-year-old. It has never done this before, but it knows what summarizing means and that ten-year-olds use a different language than forty-year-olds. The machine has already written many texts for ten-year-olds, gradually learning how to construct sentences, which words to use, and which ones are too difficult. It describes how a car functions using words a ten-year-old would understand.

Even the average adult would find that challenging.

Yes, although they instantly understand what a car is and the machines have only approximated the image of a car in many small steps. The wonder is that the machine can do it, even though it learned only from plain texts. It learned words, then phrases, then whole sentences, and then complete texts we feed it. All in context, allowing it to create entirely new, meaningful and even sophisticated texts from words and phrases.

So, progress now comes from training the language models rather than new algorithms.

Absolutely. Recent advancements came from data and training, not from new algorithms. Google and Baidu employ more complex algorithms than OpenAI. I try to explain this to policymakers repeatedly. They keep urging us to program algorithms more precisely to prevent “wrong” opinions from forming. However, that’s not the fault of algorithms. The machine must deal with the versatility and contradictions of what it has learned from a vast array of text data. As a result, it sometimes arrives at different conclusions than desired. Often, these conclusions are closer to reality than what some wish for and, thus, considered “wrong”. It’s now about the quantity of text data, the mix, and the way I train the system, but no longer about algorithms.

What are ChatGPT’s remaining weaknesses?

Although ChatGPT is exceptionally intelligent, it still exhibits surprising knowledge gaps that it occasionally fills with imagination. We cannot fully rely on its knowledge and judgment yet.

Will the next version fix these issues?

You might be surprised to learn that there’s currently no reliable method to train the machine to get exactly what I want. It’s all still trial and error, more of an art than a science. There’s no curriculum; I simply feed data into giant tubes and see what happens. We don’t truly know what the machine is doing in the process. When the results come, we say: Well learned, but dear machine, you shouldn’t believe everything you’ve read. And don’t say everything you believe. Then we specifically feed data to correct or improve the machine’s behavior and see what happens.

Is it that straightforward?

Training the machine, feeding it data, is incredibly costly. It costs several million each time. Therefore, we can’t simply try out ten variations. As a result, I don’t really know how good my method truly is because I have relatively few comparisons.

So, it’s possible that we’re blindly following a winding path uphill because we can’t find the cable car.

Yes, and this trial-and-error process isn’t easy to accept for someone seeking reliable, ever-improving methods. Part of what we’re doing is still alchemy. I’m concocting the magic potion. The magic potion works. I can pass on this knowledge, but I don’t know why, only how it works. I only partly understand the side effects. At the same time, we’re talking about machines that could pass a bar exam and work as certified lawyers.

What has surprised you the most in the current development?

Many of my colleagues and I were convinced that the Transformer model would also need to learn incrementally, like humans, and slowly improve through more and better training data. We were amazed when researchers employed brute force, setting more than 100 billion parameters and fed the machine hundreds of billions of words. The system didn’t collapse, as we had feared, nor did it produce nonsense only. We were all baffled.

The machine is already so powerful that it can process very long texts in one step. This is entirely different from humans, who process text incrementally, word by word and sentence by sentence. Often, in the middle of a sentence, humans can predict how it will continue.

Hans Uszkoreit, 73, has worked in Germany, the US and China as a university professor, research manager, industry advisor, and co-founder of several start-ups. He is considered one of Europe’s leading AI researchers. Uszkoreit is the scientific director at the German Research Center for Artificial Intelligence (DFKI). He initiated and coordinated German and international research collaborations and led several renowned European projects. Uszkoreit has authored over 250 international publications. Recently, he co-founded the Berlin-based ChatGPT-like start-up “nyonic” together with a research team in Shanghai.

Uszkoreit has strong ties to China: He served as the Chief Scientist of the Artificial Intelligence Technology Center (AITC) in Beijing. His wife, Xu Feiyu, is also a prominent AI researcher and was previously the head of AI at SAP.

Read the second part of the interview here, which discusses whether a malevolent AI could become dangerous or if the greatest risk still comes from humans.

  • Artificial intelligence
  • Human Rights
  • Society
  • Technology

News

Wang Yi meets Erdogan in Ankara

China’s reappointed Foreign Minister, Wang Yi, wasted no time and embarked on a major trip just a day after his reappointment. Following the meeting of the BRICS foreign ministers in Johannesburg, he traveled to Türkiye on Wednesday. In Johannesburg on Tuesday, Wang called for joint efforts to address global security challenges. On Wednesday, now back in the formal role of Foreign Minister, he met with Recep Tayyip Erdogan in Ankara, as well as with his counterpart Hakan Fidan.

According to the state broadcaster CGTN, after Wang’s meeting with Erdogan, Türkiye is ready to maintain communication and coordination with China on international and regional issues, such as the “Ukraine crisis”. Ankara also rejects NATO’s attempts to expand its influence in the Indo-Pacific region. Furthermore, Türkiye is willing to intensify high-level exchanges with China, strengthen the synergy between Türkiye’s Middle Corridor initiative and China-proposed Belt and Road Initiative, and deepen cooperation in the fields of trade, energy and tourism”.

Reuters reported that Wang and Fidan also discussed the situation in Ukraine. Both conversations likely revolved around the grain agreement, with Ankara being the main mediator of the recently canceled Russian agreement for exporting Ukrainian grain via the Black Sea. However, specific details on this matter were not immediately available.

Meanwhile, Beijing remains silent on the reasons for the replacement of the former Foreign Minister, Qin Gang. “I have no additional information,” said a spokesperson for the Foreign Ministry on Wednesday when asked about Qin. The spokesperson mentioned that all the information could be found in state media. On the Ministry’s website, all references to Qin’s existence have already been removed. However, as of Wednesday, his name could still be found on other government websites, as reported by AFP. ck

Taiwan conducts invasion defense drill at airport

Black Hawk helicopters simulate Chinese invasion forces

Taiwan’s armed forces have conducted a maneuver to fend off air attacks on the country’s largest international airport. The exercise on Wednesday is part of the annual Han Kuang military exercises. According to the Financial Times, these annual military drills have recently faced criticism from military analysts, who view them as mere demonstrations and call for more authentic tests involving real attack scenarios. Wednesday’s exercises mark a step towards this transformation, the newspaper says.

The drills were intended to test the military’s cross-sector coordination and emergency response capabilities under the pressure of a potential Chinese invasion, as reported by CNN, citing Taiwan’s Ministry of National Defense.

During the exercise, a formation of Black Hawk helicopters landed at Taiwan Taoyuan Airport, located about 30 km west of the capital, Taipei. Each helicopter deployed six soldiers with machine guns, simulating a Chinese invasion force. The Black Hawks were escorted by a group of Apache attack helicopters that engaged ground-based defenders. After a half-hour battle, the defending forces gained the upper hand and restored control. Firefighters also practiced extinguishing simulated fires.

In other parts of the country, Taiwan’s military canceled some of the multi-day Han Kuang exercises due to the approaching Typhoon Doksuri. The first rainbands from the typhoon reached Taiwan on Wednesday. ck

Macron’s Indo-Pacific trip

French President Emmanuel Macron aims to leave a European footprint during his trip to the Indo-Pacific region to counter Chinese influence. Media reports indicate that on Thursday, Macron is expected to visit Papua New Guinea, with a stopover in the island republic of Vanuatu. In May, Papua New Guinea signed a security pact with the United States and is negotiating a similar agreement with Australia. According to the Élysée, Macron will offer infrastructure projects to the country and propose a partnership to protect forests and mangroves while ensuring job opportunities in Papua New Guinea. Additionally, the President will visit a French patrol ship in the area.

The Élysée emphasized in advance that the trip is not specifically directed against China. Instead, regional powers are encouraged to diversify their partnerships beyond Beijing and Washington. A presidential staffer was quoted as saying that Macron considered the trip necessary due to “new, more intense threats” to security, institutions, and the environment in the region.

Macron aims to increase European presence in the region. France is one of the few EU countries with a concrete and independent Indo-Pacific strategy, partly due to French territory in New Caledonia located in the South Pacific. During his visit to New Caledonia earlier this week, domestic issues dominated the agenda, with the territory having held three referendums on independence since 2018. The visit highlighted the inequality between the French overseas territories and mainland Europe.

The EU has presented its own Indo-Pacific strategy. At a summit meeting between the EU and foreign ministers from the region, however, there was some exasperation recently because some of the European ministries preferred to send lower-ranking representatives to the meeting instead of department heads. ari

Fijian prime minister cancels China trip

Fijian Prime Minister Sitiveni Rabuka canceled his planned visit to China due to an accident. He explained in a video on Twitter that he stumbled while looking at his smartphone and fell down the stairs. Rabuka posted the video, expecting “many speculations” after the announcement of his accident. He expressed hope for another invitation in the future.

This is not the first time Rabuka has declined a visit to Beijing. In April, Chinese Vice Foreign Minister Ma Zhaoxu visited Fiji for talks with the government. At that time, Rabuka sent his deputy to the meeting with Ma, and the Suva government stated that Rabuka was on leave due to mourning a deceased close family member.

China and the US have recently intensified their competition for the favor of countries in the strategically important South Pacific. At one point, the newly appointed Prime Minister of Fiji seemed to be getting closer to Beijing. However, a month later, he canceled cooperation with China in police training, stating, “Our system of democracy and justice is different”. rtr/fpe

  • Geopolitics

Chengdu imposes partial ban on Teslas

The Chinese megacity of Chengdu has imposed a partial restriction on Tesla vehicles as the city prepares for the visit of President Xi Jinping to mark the beginning of the World University Games on Friday. Bloomberg reports this based on information from sources familiar with the matter.

Additionally, a video circulated on Chinese social media, as reported by Bloomberg, showing a Tesla driver being denied access to an event venue in the city, which is home to 21 million residents. In the now-unavailable clip, a traffic officer explained that he was following an official order for the Games. Xi Jinping will attend the opening ceremony and receive Indonesian President Joko Widodo, among others. Other traffic restrictions will be in place in Chengdu during the event, which will last until Aug. 8, including the closure of some roads to civilian motorists.

In recent years, Tesla EVs have occasionally been barred from entering Chinese military complexes and residential areas. In the summer of 2022, Teslas were not allowed to operate in Beidaihe, a beach resort east of the capital, Beijing, where the Communist Party leadership holds an annual meeting behind closed doors. The bans were justified on the grounds that cameras installed in the vehicles could collect sensitive data. Tesla CEO Elon Musk has repeatedly assured that Teslas do not engage in spying in China or anywhere else, and he stated that the company would be shut down if such activities were discovered. fpe

Heads

Sandra Heep educates tomorrow’s China experts

Sandra Heep is heading the program “Applied Business Languages and International Business Management” with a focus on China at the University of Bremen.

At Bremen University of Applied Sciences, Prof. Dr. Sandra Heep holds a unique position as the sole professor specializing in China. For several years, she has been leading the program “Applied Business Languages and International Business Management” with a focus on China, as well as overseeing the China Center on campus. Her expertise covers a broad range of subjects, including China’s economic system, its role in the global economy, its political system and its foreign policy.

Heep is content with this diverse role as the head of the China Center, where she advises stakeholders from politics and business on China-specific issues. “Having a broad understanding helps me keep the bigger picture in mind, rather than just focusing on specialized knowledge,” she explains.

More China savviness beyond sinology

However, as the program director, Heep faces the challenge of educating students to become experts on a country that is becoming increasingly repressive internally and more aggressive externally. “It’s not easy to inspire young people to pursue a China-focused study despite the political developments,” she admits. One solution she sees is to promote China savviness outside of sinology, for example, in political science and economics, as well as through accessible programs in schools. “Germany already has a shortage of China experts, and this problem will worsen in the coming years. We urgently need to find new ways to ignite young people’s interest in engaging with China and learning the Chinese language.”

Heep knows the hesitant approach to China from her own biography. The Chinese language had always fascinated her. At the beginning of her philosophy studies at the University of Bonn, she sat in on sinology lectures. But after a few weeks, she dropped it and concentrated on her minor subjects of political science and psychology. “At that time, I couldn’t imagine going to China for a longer period of time,” she recalls. And why learn a language she wouldn’t use?

Advisor position in the finance ministry

However, China never completely left her mind. With a scholarship, Heep went to the University of Nanjing after her basic studies, learned Chinese and traveled the country. Back in Germany, she completed her philosophy studies in Berlin. In her political science dissertation, she examined whether China’s state-guided financial system was compatible with exercising power in the international financial system.

She subsequently worked as a guest researcher and scientific staff, including at the Institute of World Economics and Politics of the Chinese Academy of Social Sciences in Beijing and held a position as head of the program “Economic Policy and Financial System” at the Merics Institute. Before being appointed to Bremen in 2018, Heep spent two years advising the German Ministry of Finance in the G20 project for cooperation with China: “In retrospect, it was one of the most crucial periods in my career because it allowed me to become familiar with the workings of the federal government and gain valuable insights for policy advising.”

Influenced by her philosophy studies, Heep places particular importance on conceptual clarity in her research on China. Currently, she is investigating the increasing politicization of the Chinese economic system and whether, given the Communist Party’s growing focus on national security, political control and ideology, this system can still be understood as capitalist. Svenja Napp

  • Science

Executive Moves

Alexander Will returns to Beijing to take up the post of Senior Director Product Management E-Mobility at VW China. Will has ten years of experience in the automotive industry with the Volkswagen Group in Germany and China. Most recently, he spent almost three years in Wolfsburg as Senior Director Electric & Connected Modules.

Zhou Jiangyon, the former party leader of Hangzhou city, was sentenced to life imprisonment for corruption. Officially, he received a suspended death sentence, which is generally not carried out. Zhou allegedly collected the equivalent of about $25 million in bribes in exchange for land use rights and project contracts, among other things.

Is something changing in your organization? Let us know at heads@table.media!

Dessert

Under strict supervision, Yuan Meng is escorted to his aircraft in a transport box. The first panda born in France is leaving Paris, where he was raised at the Beauval Zoo, heading for China, the home of his parents. Hundreds of visitors and zoo staff bid him “Bon Voyage” and wish him the best of luck for his next mission: In Chengdu, in the southwestern Chinese province of Sichuan, Yuan Meng will be taken to a reproduction center where he will contribute to the conservation of his species.

China.Table editorial office

CHINA.TABLE EDITORIAL OFFICE

Licenses:
    Dear reader,

    Wednesday brought a major shake-up in the automotive community: Volkswagen has acquired a stake in the Chinese EV startup Xpeng. Both partners are planning to jointly develop new electric models. It is well known that VW and other German automakers are lagging behind in China’s electric segment. Now, it seems that the Wolfsburg-based company aims to catch up with the help of its Chinese competitors, as Felix Lee analyzes. Even premium subsidiary Audi is set to form a closer alliance with the Chinese joint venture partner SAIC.

    In our interview, we delve into intelligent language models: “In China, there are already more than 80 language models the size of ChatGPT,” says Hans Uszkoreit in conversation with Frank Sieren. The 73-year-old is one of Europe’s leading AI researchers. With his start-up Nyonic, he aims to make Germany a world-class player in AI, working closely with a team from Shanghai. Uszkoreit has a strong connection to China, having served as Chief Scientist of the Artificial Intelligence Technology Center (AITC) in Beijing. His wife, Xu Feiyu, is also a distinguished AI researcher and was recently the head of AI at SAP. Uszkoreit discusses Europe’s prospects in the competition with China and highlights the weaknesses and dangers of applications like ChatGPT.

    Meanwhile, regarding the replacement of Foreign Minister Qin Gang in Beijing, there continues to be a chilling silence while his predecessor-successor, Wang Yi, travels the world. On Wednesday, he held his first meetings in his reappointed role as Foreign Minister in Ankara, meeting with his counterpart and President Erdogan. We may never learn what misstep cost Qin his position.

    Your
    Christiane Kühl
    Image of Christiane  Kühl

    Feature

    After e-disaster: Volkswagen joins forces with Xpeng and SAIC

    A turning point for VW: The EV series are slow sellers and Chinese companies are technologically superior in some aspects.

    Most automotive market experts had suspected that the Volkswagen Group was facing a tough situation due to poor sales figures. However, this news is likely to make a big impact. Europe’s largest automaker intends to close the gap, particularly in electromobility, by collaborating with Chinese competitors to halt its decline in the world’s largest passenger car market.

    The main VW brand will now work together with Chinese EV manufacturer Xpeng on electromobility, software and autonomous driving. The alliance will be strengthened by a nearly 5 percent stake, for which Volkswagen will pay 700 million dollars, as announced by the company after a supervisory board meeting in Wolfsburg on Wednesday.

    The initial plan is to jointly develop two electric models for VW’s mid-range segment. These models will be built in Volkswagen’s relatively new factory in Hefei, Anhui Province, in eastern China and are expected to enter the Chinese market in 2026. VW is currently transforming the Hefei site into a new production and development center.

    Audi relies on SAIC’s E-platform

    In addition to this, the group revealed that its subsidiary Audi has signed a strategic agreement with joint venture partner SAIC. Initially, the collaboration will involve Audi adopting SAIC’s electric platform for the A3 and A4 models. By 2027, Audi aims to have jointly developed an E-platform with SAIC.

    One of the issues Audi currently faces is that the EVs based on Audi’s MEB modular electric drive matrix are perceived as poorly connected by Chinese customers. They also charge too slowly and have less power compared to Chinese competitors. Therefore, SAIC will provide support in the coming years before Audi ventures into the Chinese market with a new platform.

    The SAIC platform is intended for mid-range models, while Audi plans to build upper-class electric vehicles with its second partner, FAW. It will be the first time that the VW Group sources the core technology of an electric vehicle from Chinese partners.

    China: from pupil to master

    Both decisions demonstrate how far Chinese EV manufacturers have outpaced their German competitors. And more significantly, it appears that Chinese competition is now unbeatable without assistance from the People’s Republic.

    SAIC has been one of Volkswagen’s two major joint venture partners in China since the beginning of their business in the country. However, the Chinese automaker had looked up to the Germans for nearly four decades to learn from them. Now, this relationship has reversed remarkably quickly.

    Xpeng is small

    VW is still trying to downplay its own weaknesses. “We are not buying technology; we are jointly developing vehicles,” asserts Ralf Brandstaetter, head of Volkswagen China, in a conference call with journalists. However, at least until 2027, buying technology is precisely the plan. It is still uncertain whether the Volkswagen Group will genuinely collaborate with Chinese partners to develop electric platforms in the future. The discussions are ongoing.

    Xpeng is one of the many newcomers in the Chinese EV segment, and it is not even the most innovative. Established in 2014, the private company, supported by several internet giants and based in Guangzhou, ranks rather low among automakers. According to the China Passenger Car Association (CPCA), it was only twelfth in terms of EV sales in the first quarter. The company relies more on clever marketing concepts than on its size.

    VW finds itself in a niche

    Recently, BYD has taken the lead by far. The former battery manufacturer has overtaken Volkswagen as the number one player in the overall market, including conventional combustion engine cars. VW’s strong second position is solely due to its combustion engine cars. In electromobility, VW and Audi are niche players.

    In the first half of this year, VW’s EV sales dropped by 1.6 percent to 62,400 cars compared to the same period last year. BYD sells ten times more EVs than VW. As for Audi, it has completely lost ground in the Chinese market for EVs, having sold just over 3,000 battery-powered vehicles in the first quarter.

    • Autoindustrie
    • SAIC

    ‘The magic potion works’

    Hans Uszkoreit is a professor of computer science and veteran of AI research. He has conducted research in China, among other places.

    You recently founded a German ChatGPT start-up with a presence in China. What is the objective?

    We established the start-up Nyonic in Berlin, with a research team in Shanghai. Our aim is to address two weaknesses of ChatGPT. Current language models are predominantly focused on English and perhaps Chinese. We intend to change that. Additionally, we want to transform ChatGPT into a reliable work tool for specific industries, which it currently isn’t.

    What is missing for that transformation?

    ChatGPT needs to provide precise and up-to-date answers, for instance, in aiding automobile development and manufacturing. The current ChatGPT is still at a high school or bachelor’s level. We must elevate it to the standard of automotive engineers. The machine needs to achieve both technical and business reliability; otherwise, it will remain a mere toy.

    But why different languages? English is a global language, and Chinese is heading in that direction.

    Much European knowledge is not yet available in English, but only in various European languages. Additionally, AI systems should bring the same benefits to users worldwide. Language diversity is a significant step for ChatGPT and crucial for a multipolar world. The majority of the world is multilingual. The US can afford Anglo-centric technology, and China can afford China-focused technology. However, the majority of the world, including Southeast Asia, Africa, and Europe, relies on covering numerous languages and cultures.

    Why do you take on this effort? At 73 years old, you are already at retirement age. You are and remain a pioneer in European AI. You could relax.

    Everyone on our team, regardless of age, wants to be part of the biggest AI revolution of our lifetime. Additionally, we wish for Europe not to be left behind by the US and China this time. Europe possesses many intelligent individuals, and numerous innovations have come from here. But then we repeatedly failed. China already has more than 80 language models similar to ChatGPT, while the EU only has three. In Germany, there’s only one, which is not yet among the best. We aim to change that.

    What about the Chinese who work on this with you?

    Most of them, like our CEO Dong Han, are bilingual or multilingual, thus have a natural interest in multilingual AI. Many Chinese models are designed solely for use in China. Some of our experts studied in Germany or other European countries, where they learned about multilingual language technology. But we also recruited top engineers from Google because they want to contribute to our project.

    The topic of artificial intelligence is not new. You have been working on it for over 30 years. What’s different about ChatGPT that has sparked so much excitement now?

    The system has achieved something we call understanding, similar to humans. It’s defined differently for the machine since it lacks our holistic worldview and doesn’t adapt its knowledge based on user input. But the effect is the same: The machine responds as if it truly comprehends the inputs.

    But wasn’t that already the case before?

    Yes and no. There were systems that could play chess, enable autonomous driving, do demand forecasting and calculations, translate, compose music and more. Each system needed to be trained with data from its specific domain. It learned from hundreds of thousands, sometimes millions of examples, on how to behave. It’s a bit like training a dog, rewarding it for eating what it should and correcting it when it shouldn’t. The dog eventually learned without knowing what meat, cake or bones are…

    … but it has only handled small, trivial tasks.

    That’s not much different in previous machine learning. For language AI, it means learning many individual facts, words and terms. Now, with the Transformer technology on which the new AI is based, it can better understand contexts and learn actual meaning from them. It’s like learning about the world outside in a dark hut without windows through thousands of books and the internet. Initially, you only learn words like sun, tree, flowers or car. Over time, you gather so much information that you can depict the outside world more precisely. The sun rises and sets, clouds can cover it, casting shadows. Some flowers follow the sun. The Transformer technology learns to navigate in this world, which increasingly resembles ours but isn’t exactly the same. As a result, the machine can now solve tasks in this world it was never trained for. That’s the significant step of the Transformer technology on which ChatGPT is based, as the name suggests: Generative Pretrained Transformer.

    Can you explain this with an example?

    I can ask the machine to summarize text about the functions of a car for a ten-year-old. It has never done this before, but it knows what summarizing means and that ten-year-olds use a different language than forty-year-olds. The machine has already written many texts for ten-year-olds, gradually learning how to construct sentences, which words to use, and which ones are too difficult. It describes how a car functions using words a ten-year-old would understand.

    Even the average adult would find that challenging.

    Yes, although they instantly understand what a car is and the machines have only approximated the image of a car in many small steps. The wonder is that the machine can do it, even though it learned only from plain texts. It learned words, then phrases, then whole sentences, and then complete texts we feed it. All in context, allowing it to create entirely new, meaningful and even sophisticated texts from words and phrases.

    So, progress now comes from training the language models rather than new algorithms.

    Absolutely. Recent advancements came from data and training, not from new algorithms. Google and Baidu employ more complex algorithms than OpenAI. I try to explain this to policymakers repeatedly. They keep urging us to program algorithms more precisely to prevent “wrong” opinions from forming. However, that’s not the fault of algorithms. The machine must deal with the versatility and contradictions of what it has learned from a vast array of text data. As a result, it sometimes arrives at different conclusions than desired. Often, these conclusions are closer to reality than what some wish for and, thus, considered “wrong”. It’s now about the quantity of text data, the mix, and the way I train the system, but no longer about algorithms.

    What are ChatGPT’s remaining weaknesses?

    Although ChatGPT is exceptionally intelligent, it still exhibits surprising knowledge gaps that it occasionally fills with imagination. We cannot fully rely on its knowledge and judgment yet.

    Will the next version fix these issues?

    You might be surprised to learn that there’s currently no reliable method to train the machine to get exactly what I want. It’s all still trial and error, more of an art than a science. There’s no curriculum; I simply feed data into giant tubes and see what happens. We don’t truly know what the machine is doing in the process. When the results come, we say: Well learned, but dear machine, you shouldn’t believe everything you’ve read. And don’t say everything you believe. Then we specifically feed data to correct or improve the machine’s behavior and see what happens.

    Is it that straightforward?

    Training the machine, feeding it data, is incredibly costly. It costs several million each time. Therefore, we can’t simply try out ten variations. As a result, I don’t really know how good my method truly is because I have relatively few comparisons.

    So, it’s possible that we’re blindly following a winding path uphill because we can’t find the cable car.

    Yes, and this trial-and-error process isn’t easy to accept for someone seeking reliable, ever-improving methods. Part of what we’re doing is still alchemy. I’m concocting the magic potion. The magic potion works. I can pass on this knowledge, but I don’t know why, only how it works. I only partly understand the side effects. At the same time, we’re talking about machines that could pass a bar exam and work as certified lawyers.

    What has surprised you the most in the current development?

    Many of my colleagues and I were convinced that the Transformer model would also need to learn incrementally, like humans, and slowly improve through more and better training data. We were amazed when researchers employed brute force, setting more than 100 billion parameters and fed the machine hundreds of billions of words. The system didn’t collapse, as we had feared, nor did it produce nonsense only. We were all baffled.

    The machine is already so powerful that it can process very long texts in one step. This is entirely different from humans, who process text incrementally, word by word and sentence by sentence. Often, in the middle of a sentence, humans can predict how it will continue.

    Hans Uszkoreit, 73, has worked in Germany, the US and China as a university professor, research manager, industry advisor, and co-founder of several start-ups. He is considered one of Europe’s leading AI researchers. Uszkoreit is the scientific director at the German Research Center for Artificial Intelligence (DFKI). He initiated and coordinated German and international research collaborations and led several renowned European projects. Uszkoreit has authored over 250 international publications. Recently, he co-founded the Berlin-based ChatGPT-like start-up “nyonic” together with a research team in Shanghai.

    Uszkoreit has strong ties to China: He served as the Chief Scientist of the Artificial Intelligence Technology Center (AITC) in Beijing. His wife, Xu Feiyu, is also a prominent AI researcher and was previously the head of AI at SAP.

    Read the second part of the interview here, which discusses whether a malevolent AI could become dangerous or if the greatest risk still comes from humans.

    • Artificial intelligence
    • Human Rights
    • Society
    • Technology

    News

    Wang Yi meets Erdogan in Ankara

    China’s reappointed Foreign Minister, Wang Yi, wasted no time and embarked on a major trip just a day after his reappointment. Following the meeting of the BRICS foreign ministers in Johannesburg, he traveled to Türkiye on Wednesday. In Johannesburg on Tuesday, Wang called for joint efforts to address global security challenges. On Wednesday, now back in the formal role of Foreign Minister, he met with Recep Tayyip Erdogan in Ankara, as well as with his counterpart Hakan Fidan.

    According to the state broadcaster CGTN, after Wang’s meeting with Erdogan, Türkiye is ready to maintain communication and coordination with China on international and regional issues, such as the “Ukraine crisis”. Ankara also rejects NATO’s attempts to expand its influence in the Indo-Pacific region. Furthermore, Türkiye is willing to intensify high-level exchanges with China, strengthen the synergy between Türkiye’s Middle Corridor initiative and China-proposed Belt and Road Initiative, and deepen cooperation in the fields of trade, energy and tourism”.

    Reuters reported that Wang and Fidan also discussed the situation in Ukraine. Both conversations likely revolved around the grain agreement, with Ankara being the main mediator of the recently canceled Russian agreement for exporting Ukrainian grain via the Black Sea. However, specific details on this matter were not immediately available.

    Meanwhile, Beijing remains silent on the reasons for the replacement of the former Foreign Minister, Qin Gang. “I have no additional information,” said a spokesperson for the Foreign Ministry on Wednesday when asked about Qin. The spokesperson mentioned that all the information could be found in state media. On the Ministry’s website, all references to Qin’s existence have already been removed. However, as of Wednesday, his name could still be found on other government websites, as reported by AFP. ck

    Taiwan conducts invasion defense drill at airport

    Black Hawk helicopters simulate Chinese invasion forces

    Taiwan’s armed forces have conducted a maneuver to fend off air attacks on the country’s largest international airport. The exercise on Wednesday is part of the annual Han Kuang military exercises. According to the Financial Times, these annual military drills have recently faced criticism from military analysts, who view them as mere demonstrations and call for more authentic tests involving real attack scenarios. Wednesday’s exercises mark a step towards this transformation, the newspaper says.

    The drills were intended to test the military’s cross-sector coordination and emergency response capabilities under the pressure of a potential Chinese invasion, as reported by CNN, citing Taiwan’s Ministry of National Defense.

    During the exercise, a formation of Black Hawk helicopters landed at Taiwan Taoyuan Airport, located about 30 km west of the capital, Taipei. Each helicopter deployed six soldiers with machine guns, simulating a Chinese invasion force. The Black Hawks were escorted by a group of Apache attack helicopters that engaged ground-based defenders. After a half-hour battle, the defending forces gained the upper hand and restored control. Firefighters also practiced extinguishing simulated fires.

    In other parts of the country, Taiwan’s military canceled some of the multi-day Han Kuang exercises due to the approaching Typhoon Doksuri. The first rainbands from the typhoon reached Taiwan on Wednesday. ck

    Macron’s Indo-Pacific trip

    French President Emmanuel Macron aims to leave a European footprint during his trip to the Indo-Pacific region to counter Chinese influence. Media reports indicate that on Thursday, Macron is expected to visit Papua New Guinea, with a stopover in the island republic of Vanuatu. In May, Papua New Guinea signed a security pact with the United States and is negotiating a similar agreement with Australia. According to the Élysée, Macron will offer infrastructure projects to the country and propose a partnership to protect forests and mangroves while ensuring job opportunities in Papua New Guinea. Additionally, the President will visit a French patrol ship in the area.

    The Élysée emphasized in advance that the trip is not specifically directed against China. Instead, regional powers are encouraged to diversify their partnerships beyond Beijing and Washington. A presidential staffer was quoted as saying that Macron considered the trip necessary due to “new, more intense threats” to security, institutions, and the environment in the region.

    Macron aims to increase European presence in the region. France is one of the few EU countries with a concrete and independent Indo-Pacific strategy, partly due to French territory in New Caledonia located in the South Pacific. During his visit to New Caledonia earlier this week, domestic issues dominated the agenda, with the territory having held three referendums on independence since 2018. The visit highlighted the inequality between the French overseas territories and mainland Europe.

    The EU has presented its own Indo-Pacific strategy. At a summit meeting between the EU and foreign ministers from the region, however, there was some exasperation recently because some of the European ministries preferred to send lower-ranking representatives to the meeting instead of department heads. ari

    Fijian prime minister cancels China trip

    Fijian Prime Minister Sitiveni Rabuka canceled his planned visit to China due to an accident. He explained in a video on Twitter that he stumbled while looking at his smartphone and fell down the stairs. Rabuka posted the video, expecting “many speculations” after the announcement of his accident. He expressed hope for another invitation in the future.

    This is not the first time Rabuka has declined a visit to Beijing. In April, Chinese Vice Foreign Minister Ma Zhaoxu visited Fiji for talks with the government. At that time, Rabuka sent his deputy to the meeting with Ma, and the Suva government stated that Rabuka was on leave due to mourning a deceased close family member.

    China and the US have recently intensified their competition for the favor of countries in the strategically important South Pacific. At one point, the newly appointed Prime Minister of Fiji seemed to be getting closer to Beijing. However, a month later, he canceled cooperation with China in police training, stating, “Our system of democracy and justice is different”. rtr/fpe

    • Geopolitics

    Chengdu imposes partial ban on Teslas

    The Chinese megacity of Chengdu has imposed a partial restriction on Tesla vehicles as the city prepares for the visit of President Xi Jinping to mark the beginning of the World University Games on Friday. Bloomberg reports this based on information from sources familiar with the matter.

    Additionally, a video circulated on Chinese social media, as reported by Bloomberg, showing a Tesla driver being denied access to an event venue in the city, which is home to 21 million residents. In the now-unavailable clip, a traffic officer explained that he was following an official order for the Games. Xi Jinping will attend the opening ceremony and receive Indonesian President Joko Widodo, among others. Other traffic restrictions will be in place in Chengdu during the event, which will last until Aug. 8, including the closure of some roads to civilian motorists.

    In recent years, Tesla EVs have occasionally been barred from entering Chinese military complexes and residential areas. In the summer of 2022, Teslas were not allowed to operate in Beidaihe, a beach resort east of the capital, Beijing, where the Communist Party leadership holds an annual meeting behind closed doors. The bans were justified on the grounds that cameras installed in the vehicles could collect sensitive data. Tesla CEO Elon Musk has repeatedly assured that Teslas do not engage in spying in China or anywhere else, and he stated that the company would be shut down if such activities were discovered. fpe

    Heads

    Sandra Heep educates tomorrow’s China experts

    Sandra Heep is heading the program “Applied Business Languages and International Business Management” with a focus on China at the University of Bremen.

    At Bremen University of Applied Sciences, Prof. Dr. Sandra Heep holds a unique position as the sole professor specializing in China. For several years, she has been leading the program “Applied Business Languages and International Business Management” with a focus on China, as well as overseeing the China Center on campus. Her expertise covers a broad range of subjects, including China’s economic system, its role in the global economy, its political system and its foreign policy.

    Heep is content with this diverse role as the head of the China Center, where she advises stakeholders from politics and business on China-specific issues. “Having a broad understanding helps me keep the bigger picture in mind, rather than just focusing on specialized knowledge,” she explains.

    More China savviness beyond sinology

    However, as the program director, Heep faces the challenge of educating students to become experts on a country that is becoming increasingly repressive internally and more aggressive externally. “It’s not easy to inspire young people to pursue a China-focused study despite the political developments,” she admits. One solution she sees is to promote China savviness outside of sinology, for example, in political science and economics, as well as through accessible programs in schools. “Germany already has a shortage of China experts, and this problem will worsen in the coming years. We urgently need to find new ways to ignite young people’s interest in engaging with China and learning the Chinese language.”

    Heep knows the hesitant approach to China from her own biography. The Chinese language had always fascinated her. At the beginning of her philosophy studies at the University of Bonn, she sat in on sinology lectures. But after a few weeks, she dropped it and concentrated on her minor subjects of political science and psychology. “At that time, I couldn’t imagine going to China for a longer period of time,” she recalls. And why learn a language she wouldn’t use?

    Advisor position in the finance ministry

    However, China never completely left her mind. With a scholarship, Heep went to the University of Nanjing after her basic studies, learned Chinese and traveled the country. Back in Germany, she completed her philosophy studies in Berlin. In her political science dissertation, she examined whether China’s state-guided financial system was compatible with exercising power in the international financial system.

    She subsequently worked as a guest researcher and scientific staff, including at the Institute of World Economics and Politics of the Chinese Academy of Social Sciences in Beijing and held a position as head of the program “Economic Policy and Financial System” at the Merics Institute. Before being appointed to Bremen in 2018, Heep spent two years advising the German Ministry of Finance in the G20 project for cooperation with China: “In retrospect, it was one of the most crucial periods in my career because it allowed me to become familiar with the workings of the federal government and gain valuable insights for policy advising.”

    Influenced by her philosophy studies, Heep places particular importance on conceptual clarity in her research on China. Currently, she is investigating the increasing politicization of the Chinese economic system and whether, given the Communist Party’s growing focus on national security, political control and ideology, this system can still be understood as capitalist. Svenja Napp

    • Science

    Executive Moves

    Alexander Will returns to Beijing to take up the post of Senior Director Product Management E-Mobility at VW China. Will has ten years of experience in the automotive industry with the Volkswagen Group in Germany and China. Most recently, he spent almost three years in Wolfsburg as Senior Director Electric & Connected Modules.

    Zhou Jiangyon, the former party leader of Hangzhou city, was sentenced to life imprisonment for corruption. Officially, he received a suspended death sentence, which is generally not carried out. Zhou allegedly collected the equivalent of about $25 million in bribes in exchange for land use rights and project contracts, among other things.

    Is something changing in your organization? Let us know at heads@table.media!

    Dessert

    Under strict supervision, Yuan Meng is escorted to his aircraft in a transport box. The first panda born in France is leaving Paris, where he was raised at the Beauval Zoo, heading for China, the home of his parents. Hundreds of visitors and zoo staff bid him “Bon Voyage” and wish him the best of luck for his next mission: In Chengdu, in the southwestern Chinese province of Sichuan, Yuan Meng will be taken to a reproduction center where he will contribute to the conservation of his species.

    China.Table editorial office

    CHINA.TABLE EDITORIAL OFFICE

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