Table.Briefing: China

Wuttke interview part 2 + Upheaval in the passenger car industry

  • Wuttke: ‘China needs our expertise’
  • China’s car market becomes more electric
  • Germany less dependent than believed
  • Patten congratulates Hong Kong refugees
  • Mars rover still asleep
  • Flash flood at Sanmenxia Dam
  • Heads: Liu Hongqiao – shaped by climate debate
Dear reader,

Joerg Wuttke certainly no longer needs any introduction in China circles. Thanks to his 35 years in China, the president of the EU Chamber of Commerce has fascinating insights into China’s economy and policies. In the second part of Finn Mayer-Kuckuk and Felix Lee’s interview with Wuttke, he takes a rather optimistic view of the future.

While Xi Jinping exclusively appointed loyal yes-men, European companies will continue to be heard, says Wuttke. Regarding the likely new Premier Li Qiang, Wuttke notes, “As Shanghai’s party secretary, he knows where business tax revenue comes from, and foreigners are very far out in front.”

For the European Supply Chain Act, Wuttke recommends an offensive approach: “If there is no human rights problem – where is the problem in proving that there is no problem?” Wuttke even goes so far as to suggest that it would be appropriate for companies to leave China should Beijing refuse to allow independent audits of supply chains.

If you missed the first part of the interview, you can find it here.

In our second analysis, Christian Domke-Seidel looks at the Chinese automotive market. Because the sector is not only of crucial importance to Germany. In mainland China, one in six jobs is directly dependent on the automotive industry. And the prosperity of individual regions stands and falls with it. This makes the news that sales are once again booming all the more encouraging for employees. But not for everyone. Our author sees the end of the combustion engine approaching.

Your
Michael Radunski
Image of Michael  Radunski

Feature

‘The party has lost the nimbus of infallibility’

Jörg Wuttke, Chief Representative of BASF and President of the EU Chamber of Commerce in China.

The past Year of the Tiger was a terrible year for China’s economy. How are EU companies faring at the moment?

2022 was indeed a low point. The development over the year was alarming and came as a surprise because we had a very good year in 2021. But then the lockdown in Shanghai happened. After that, we mainly struggled to survive. Logistics and production were extremely inhibited. The rest of the year, too, the zero-tolerance policy struck again and again in different places. Towards the end of the year, it was almost impossible to move around in China.

And then followed on December 7 the sudden opening?

It was almost a relief when the measures were lifted and Omicron took over China. The opening has led to clarity and China is now making huge steps toward herd immunity. We can once again operate factories without a closed loop and without the terror of having employees quarantined over and over again. The fear of stepping out into the open is finally gone.

Xi Jinping personally held on to zero-Covid for so long. Could such lone decisions with enormous consequences not happen again?

It cannot be ruled out that a completely ideology-driven action will happen again, which will then constrict us once more. At the moment, however, I don’t see that coming. The party has realized that it lost the nimbus of infallibility for the time being. And I hope that this will also result in a greater willingness to communicate.

In the past, as a representative of EU business, you were an important interlocutor for the government, and it took your recommendations seriously. Has that changed now thanks to Xi’s political style and during the Covid years?

No. In fact, I believe that public outreach by the Chamber is even more noticeable. We were invited by high authorities to point out the negative effects of the zero-tolerance policy. From this, I gather that these stakeholders hoped to indirectly spread our message and display it as effectively as possible. The conclusion that can be drawn from this is that there obviously continue to be different factions with different views within the party and the government. In December in particular, there was active communication not only with us from the EU Chamber of Commerce, but also with those of the Germans, Americans and Japanese.

Since the last Party Congress, with the appointment of nothing but loyal yes-men to the Politburo Standing Committee, is there any faction left at all as an alternative contact? Characters like Li Keqiang, Liu He or Hu Chunhua will soon be gone.

Our known contacts will indeed be replaced by people we don’t know that well yet. Liu He was always a shining figure for us. He positioned himself as a reformer in 2012, and we came to know him as someone who understood us. We also had a good connection with Vice Premier Hu Chunhua, who has also always supported our causes. These politicians were aware that we, as European business, are part of an ecosystem, with the expertise that China needs.

Will the new leadership be aware of how important foreign companies are for their own development?

That remains to be seen. The new premier – it will probably be Li Qiang – already has a sense for the importance of foreign technology from his Shanghai experience. As party secretary of Shanghai, he knows where the business tax revenue comes from, and foreigners are very far out in front. Whether he can push through the ideological echo chamber of the party with this is another story.

Conversely, Europe is viewing the partnership with China more and more critically. The upcoming European Supply Chain Act is expected to require a high degree of proof of the origin of components and raw materials.

As a business, we must ensure that human rights are not violated in any way. And we should do our utmost to have supply chains examined, even in sensitive areas such as the textile sector in China. There is no objection to that in principle. The only question is, how far can we take this in practice now? How deep will we reach into the chain of suppliers, and their suppliers? And do I, as a European company, even have the option of carrying out inspections there? That is why we are also talking to the Chinese government to ensure credible audits are carried out there. These would have to be conducted by independent companies in China that are given the appropriate insight. Only then can we continue to create jobs in China.

And if China refuses independent audits?

If we can’t do that, the companies and sectors in question will have to withdraw from China.

The Chinese side could also say: If you come up with such strange laws, that is your problem.

This should not actually be the case, because the Chinese side itself claims that there is no forced labor. So it should be easy to verify that. This is what I always tell our Chinese interlocutors: If there is no human rights problem, where is the problem in proving that there is no problem?

We journalists would also like to take a look at what’s going on there.

Indeed, China needs to help us fill a toolbox that we can use to fulfill our international obligations. At the same time, we must take care not to make the supply chain law too complicated. This could lead to a situation in which only the big players are able to operate in China because the small players would no longer have the means to comply with the requirements.

Textiles are one thing because there are many alternatives. The situation is more complicated for German solar imports from China. If the importers have to prove that no silicon from Xinjiang is used in the panels, the German energy transition will have a problem.

The question should be: Was the silicon mined under normal circumstances or under inhumane conditions? The companies must then disclose who their suppliers in China are, who extracts the raw materials and how they are extracted. This will bring transparency into the process. I am certain of that.

Unfortunately, transparency is not a Chinese strength.

All the more reason to insist on it. We don’t have to make ourselves smaller than we are.

Joerg Wuttke has been living in China for 35 years now and knows both the economy and the political system like no other. The chief representative of BASF has been president of the EU Chamber of Commerce three times. He will not run for this office again in the next elections in May.

The first part of the interview can be found here.

  • Autoindustrie

The end of the combustion engine draws near

Car sales in China are booming – but only in the EV segment.

The Chinese car market has recovered. In terms of unit sales, the Covid crisis, lockdowns and chip shortages have long been forgotten. In 2022, passenger car sales amounted to 23.6 million vehicles, according to the China Association of Automobile Manufacturers (CAAM). For this year, it forecasts a three percent increase to 24.3 million. By comparison, 2017 was the record year in the People’s Republic with 24.7 million passenger cars sold.

But these good figures have a catch. It is a market with two speeds. While new energy vehicles (NEVs) are booming, manufacturers of conventional cars are begging for government aid. At the same time, high-priced models are currently not in demand.

The internal combustion market is shrinking

To be exact, there are two Chinese car markets. Passenger cars with gasoline engines are sold on one of them. Of these, 16.7 million were sold last year. The second is the NEV market. In other words, vehicles with hybrid or pure battery drive. Here, a total of 6.9 million were newly registered in 2022 – twice as many as in the year before. In addition to advancements in battery technology, increasing supply and falling prices, government incentives are likely to have been a key reason for this. However, they expired at the start of 2023.

Nevertheless, the China Passenger Car Association (CPCA) expects the market for NEVs to grow by around 30 percent to approximately 8.4 million vehicles in 2023. Market observers share this assessment. If both projections are correct – the overall market growth to 24.7 million and the increase in NEVs by 30 percent – the market for vehicles with internal combustion engines will shrink to 16.3 million units.

However, there are differing calculations. Zhong Yongwei chairs China EV 100, a state-backed interest group of NEV manufacturers. Zhong expects a total of ten million NEVs sold in 2023. However, while growth in this sector seems to be certain, rating agency Fitch, for example, believes three percent growth for the market as a whole is exaggerated. Fitch does not believe that China’s overall passenger car market will grow in the coming year. If these two scenarios were to occur (stagnating overall market, but just under ten million NEVs sold), this would mean a slump in the market for classic internal combustion vehicles to 14.3 million.

Economic constraints increase pressure

A challenging overall economic situation could further cloud the outlook for the Chinese car market. In 2022, China’s economy grew slower than the global economy for the first time in forty years. This had consequences for the car market: As early as December 2022, for example, sales of diesel and gasoline vehicles slumped by 25.3 percent. “Premium electric vehicle makers are struggling to maintain their growth momentum this year because Chinese drivers don’t want to buy expensive vehicles,” Eric Ha analyzed in the South China Morning Post newspaper. He is a senior manager at consulting firm Suolei.

In addition, the first provinces have announced a ban on the sale of classic internal combustion vehicles. The island province of Hainan in the south, with a population of 9.3 million, will no longer allow the sale of such cars after 2030. The island is likely to be merely the first province with a corresponding ban. Hybrid vehicles are also coming under pressure. Since the beginning of the year, their owners are no longer eligible for a free license plate in Shanghai.

Provinces continue to incentivize car purchase

Zhu Huarong, chairman of the state-owned Chongqing Changan Automobile, is well aware that pressure is growing. At the World New Energy Vehicle Congress, he proposed that the Communist Party should work with the industry to set a deadline for the nationwide phase-out of the internal combustion engine. At the same time, he called for measures to help automakers transition to EV manufacturing.

The provinces play a crucial role in the support of the automotive industry. In mainland China, one in six jobs is directly dependent on the automotive industry. The prosperity of individual regions stands and falls with it. Accordingly, local governments are keen to keep local production going.

Although the nationwide purchase premiums for NEVs expired at the beginning of the year, individual provinces have introduced their own premiums: For example, anyone buying a NEV in Guangdong between May and June will receive the equivalent of €1,370. Half as much is still offered to buyers of classic internal combustion vehicles.

  • Autoindustrie
  • CAAM

News

Germany not so dependent on China after all

A new study by the Institute of the German Economic Institute (IW) in Cologne shows that Germany’s economic dependence on China is mostly overestimated. “Overall, China is significant as a supplier and buyer of intermediate inputs for German industry on average, but not to an overwhelming extent,” the researchers write in the still unpublished study. The newspaper “Handelsblatt” first reported on it.

The study’s key finding:

  • Overall, Germany is not as dependent on China as is often believed.
  • There are exceptions, like the electrical industry, which is much more dependent on Chinese imports than other German industries.
  • Germany is also not overly dependent on China as a buyer of intermediate inputs.
  • With 90,000 jobs, the mechanical engineering sector is the most dependent on exports to the People’s Republic.

The study examined two aspects: First, the dependence of German industry on Chinese intermediate inputs compared to corresponding supplies from the rest of the world. Second, the extent to which the manufacturing sector relies on China as a sales market for its intermediate inputs. rad

  • Germany
  • Trade

Patten predicts end of dictatorship

Archive photo: Chris Patten receives the folded British national flag in 1997 at the return of the crown colony of Hong Kong to China.

Hong Kong’s last governor, Chris Patten, had some words of encouragement for the city’s residents in a New Year’s Greetings. In his video message, the politician predicted the end of the authoritarian rule of the Communist Party. “What always happens to dictatorships and the things they do is they disappear sooner or later into the rearview mirror of history. And so I think what Hong Kong represents, the values it represents, and will last a lot longer than any dictatorship anywhere, including in Beijing,” Patten said.

The 78-year-old also explicitly extended his greetings to Hong Kong citizens who had fled into political exile in the recent past. Patten praised the social contribution they would make in their new adopted hometowns. He expressed sadness that they had to leave the city “because of the comprehensive assault on Hong Kong’s freedom by Beijing.” grz

  • Chinese New Year
  • Civil Society
  • Hongkong

Zhurong fights for survival

Picture from better days: Zhurong on Mars in 2021.

The Mars rover Zhurong is causing concern for the Chinese space agency. Contrary to plans, the vehicle has still not woken up from its planned hibernation. Zhurong should have resumed operations a month ago, but so far it failed to send a signal back to Earth.

The rolling research robot should have reactivated itself on its own at the end of last year after it had already been shut down in May for the duration of the Martian winter. The plan of engineers had envisaged that the increasing solar radiation would have sufficiently charged the solar modules of the rover by then.

Its silence could be caused by dusty solar panels that can no longer generate enough energy. The Americans had made similar experiences on earlier missions. A delayed revival of the rover is nevertheless not ruled out. It is possible that the modules just need more time than planned.

Zhurong landed on Earth’s neighboring planet in May 2021. Since then, the craft has traveled a distance of around two kilometers and conducted numerous scientific experiments. Among other things, the robot found traces of former waterholes. During its first Martian winter, the vehicle remained active. Only when the solar modules began to gather dust did the scientists decide to give it a rest. grz

  • Aerospace

Accident at the Sanmenxia Dam

A bathing accident in the Yellow River has left two dead and seven missing. On New Year’s Day, numerous people were caught off guard by rapidly rising water levels below the Sanmenxia Dam in the border region between the provinces of Shanxi and Henan. Within a few minutes, the water level had risen by almost two meters. Eight people were reportedly rescued from the water.

The search for the missing people continued on Monday. At this point, it was still unclear why the water rose so quickly. Locks on the dam were reportedly not opened, Chinese media reported. Rather, security fences that should have prevented access to a popular section of the beach were said to have been torn down. The responsible authorities have launched an investigation into the accident.

The Sanmenxia Dam was completed in 1960. Its construction was intended to prevent flooding of the Yellow River, but at the same time caused tributaries to regularly overflow their banks. grz

  • Henan
  • Shanxi
  • Society

Heads

Liu Hongqiao – deciphering the climate issue

Liu Hongqiao examines China’s role in climate and environmental issues.

Climate sinner or model student? The question is not that easy to answer, says Liu Hongqiao. “China is turning its head – that is a positive trend,” explains the political advisor on climate issues. The important thing for her is the significance of this transformation: “China going net-zero by 2060 could prevent a further 0.2-0.3C of global warming.” China, she says, is pledged to make the transition that Europeans completed over 200 years in 60 years. “That is a very tight schedule;” says Liu. But probably not tight enough to meet the two-degree target, she predicts.

If every country emitted as much per capita as China, the planet would heat up much faster than planned. The biggest crux is China’s energy and industrial sector, which still heavily relies on coal. “This is the result of 50 years of business as usual,” Liu explains.

Climate change accelerates desertification in northern China

She alludes to the time when economic growth was a top priority in China. Liu studied communications in Beijing from 2007 and remembers her moment of ecological epiphany: From her dormitory, she looked to the north at a city bathed in yellow. Beijing was engulfed in a huge sandstorm. A problem caused by increasing desertification in northern China, further exacerbated by climate change.

The relevance of the issue rapidly increased in China. Sandstorms, air pollution or poor water quality affected people’s everyday lives, and more and more people were talking about it. This was also because the world kept asking critical questions before the 2008 Olympics in Beijing. The social debates motivated Liu to do some research – first as an investigative journalist at Southern Metropolis Daily, and later at Caixin and China Water Risk.

Stronger censorship and pressure on civil society

Liu recalls that at that time, environmental journalism in particular still enjoyed relatively great freedom. Scientists collected data, NGOs networked actors, and journalists reported. This was possible because not all government bodies and officials pursued the same interests, Liu explains. “This opened up a window for us to tell a story to make a difference.”

But that soon came to an end, says Liu, who won many prizes for her work and received a great deal of attention. Censorship became stronger and civil society groups came under pressure. For journalists, the loss of professional freedom also became an existential economic issue.

Deciphering the complexity of correlations

Important resources for understanding China’s ecological transformation are now missing. What is being lost, she says, are human-centered stories. “Analyzing data and talking to politicians is not enough!” Because Liu actually wants to know what’s happening to people who work in coal mining and will soon lose their jobs. Or with those who are affected by air pollution.

Nowadays, Liu can only answer these questions indirectly. The Jiangxi-born journalist went to Paris in 2017 for a master’s degree and decided to stay. With her newsletter Shuang Tan, she now focuses on China’s climate policy. Western media, she criticizes, struggle to increase their reporting capacity on China, let alone on the cross-cutting topic of China and climate change. “We cannot afford that, because we need China in the fight against climate change.” Jonathan-Kaspar Lehrer

  • Civil Society
  • Climate
  • Climate protection

Executive Moves

Liu Weiliang has been appointed chairman of Zhenro Properties Group. The company made the announcement on the Hong Kong Stock Exchange. Liu, 38, joined the real estate group in 2016 and succeeds company founder Huang Xianzhi.

Is something changing in your organization? Why not let us know at heads@table.media!

Dessert

China’s growing importance in the world became clear over the weekend. Many cities around the world held official celebrations to mark the arrival of the new year in the lunar calendar, as seen here in front of Milan’s Arc de Triomphe.

Correction

Correction

Our article yesterday, “China builds Africa’s first spaceport,” claimed that Djibouti’s international borrowing costs could rise to $266 billion. The real number is $266 million.

China.Table editorial office

CHINA.TABLE EDITORIAL OFFICE

Licenses:
    • Wuttke: ‘China needs our expertise’
    • China’s car market becomes more electric
    • Germany less dependent than believed
    • Patten congratulates Hong Kong refugees
    • Mars rover still asleep
    • Flash flood at Sanmenxia Dam
    • Heads: Liu Hongqiao – shaped by climate debate
    Dear reader,

    Joerg Wuttke certainly no longer needs any introduction in China circles. Thanks to his 35 years in China, the president of the EU Chamber of Commerce has fascinating insights into China’s economy and policies. In the second part of Finn Mayer-Kuckuk and Felix Lee’s interview with Wuttke, he takes a rather optimistic view of the future.

    While Xi Jinping exclusively appointed loyal yes-men, European companies will continue to be heard, says Wuttke. Regarding the likely new Premier Li Qiang, Wuttke notes, “As Shanghai’s party secretary, he knows where business tax revenue comes from, and foreigners are very far out in front.”

    For the European Supply Chain Act, Wuttke recommends an offensive approach: “If there is no human rights problem – where is the problem in proving that there is no problem?” Wuttke even goes so far as to suggest that it would be appropriate for companies to leave China should Beijing refuse to allow independent audits of supply chains.

    If you missed the first part of the interview, you can find it here.

    In our second analysis, Christian Domke-Seidel looks at the Chinese automotive market. Because the sector is not only of crucial importance to Germany. In mainland China, one in six jobs is directly dependent on the automotive industry. And the prosperity of individual regions stands and falls with it. This makes the news that sales are once again booming all the more encouraging for employees. But not for everyone. Our author sees the end of the combustion engine approaching.

    Your
    Michael Radunski
    Image of Michael  Radunski

    Feature

    ‘The party has lost the nimbus of infallibility’

    Jörg Wuttke, Chief Representative of BASF and President of the EU Chamber of Commerce in China.

    The past Year of the Tiger was a terrible year for China’s economy. How are EU companies faring at the moment?

    2022 was indeed a low point. The development over the year was alarming and came as a surprise because we had a very good year in 2021. But then the lockdown in Shanghai happened. After that, we mainly struggled to survive. Logistics and production were extremely inhibited. The rest of the year, too, the zero-tolerance policy struck again and again in different places. Towards the end of the year, it was almost impossible to move around in China.

    And then followed on December 7 the sudden opening?

    It was almost a relief when the measures were lifted and Omicron took over China. The opening has led to clarity and China is now making huge steps toward herd immunity. We can once again operate factories without a closed loop and without the terror of having employees quarantined over and over again. The fear of stepping out into the open is finally gone.

    Xi Jinping personally held on to zero-Covid for so long. Could such lone decisions with enormous consequences not happen again?

    It cannot be ruled out that a completely ideology-driven action will happen again, which will then constrict us once more. At the moment, however, I don’t see that coming. The party has realized that it lost the nimbus of infallibility for the time being. And I hope that this will also result in a greater willingness to communicate.

    In the past, as a representative of EU business, you were an important interlocutor for the government, and it took your recommendations seriously. Has that changed now thanks to Xi’s political style and during the Covid years?

    No. In fact, I believe that public outreach by the Chamber is even more noticeable. We were invited by high authorities to point out the negative effects of the zero-tolerance policy. From this, I gather that these stakeholders hoped to indirectly spread our message and display it as effectively as possible. The conclusion that can be drawn from this is that there obviously continue to be different factions with different views within the party and the government. In December in particular, there was active communication not only with us from the EU Chamber of Commerce, but also with those of the Germans, Americans and Japanese.

    Since the last Party Congress, with the appointment of nothing but loyal yes-men to the Politburo Standing Committee, is there any faction left at all as an alternative contact? Characters like Li Keqiang, Liu He or Hu Chunhua will soon be gone.

    Our known contacts will indeed be replaced by people we don’t know that well yet. Liu He was always a shining figure for us. He positioned himself as a reformer in 2012, and we came to know him as someone who understood us. We also had a good connection with Vice Premier Hu Chunhua, who has also always supported our causes. These politicians were aware that we, as European business, are part of an ecosystem, with the expertise that China needs.

    Will the new leadership be aware of how important foreign companies are for their own development?

    That remains to be seen. The new premier – it will probably be Li Qiang – already has a sense for the importance of foreign technology from his Shanghai experience. As party secretary of Shanghai, he knows where the business tax revenue comes from, and foreigners are very far out in front. Whether he can push through the ideological echo chamber of the party with this is another story.

    Conversely, Europe is viewing the partnership with China more and more critically. The upcoming European Supply Chain Act is expected to require a high degree of proof of the origin of components and raw materials.

    As a business, we must ensure that human rights are not violated in any way. And we should do our utmost to have supply chains examined, even in sensitive areas such as the textile sector in China. There is no objection to that in principle. The only question is, how far can we take this in practice now? How deep will we reach into the chain of suppliers, and their suppliers? And do I, as a European company, even have the option of carrying out inspections there? That is why we are also talking to the Chinese government to ensure credible audits are carried out there. These would have to be conducted by independent companies in China that are given the appropriate insight. Only then can we continue to create jobs in China.

    And if China refuses independent audits?

    If we can’t do that, the companies and sectors in question will have to withdraw from China.

    The Chinese side could also say: If you come up with such strange laws, that is your problem.

    This should not actually be the case, because the Chinese side itself claims that there is no forced labor. So it should be easy to verify that. This is what I always tell our Chinese interlocutors: If there is no human rights problem, where is the problem in proving that there is no problem?

    We journalists would also like to take a look at what’s going on there.

    Indeed, China needs to help us fill a toolbox that we can use to fulfill our international obligations. At the same time, we must take care not to make the supply chain law too complicated. This could lead to a situation in which only the big players are able to operate in China because the small players would no longer have the means to comply with the requirements.

    Textiles are one thing because there are many alternatives. The situation is more complicated for German solar imports from China. If the importers have to prove that no silicon from Xinjiang is used in the panels, the German energy transition will have a problem.

    The question should be: Was the silicon mined under normal circumstances or under inhumane conditions? The companies must then disclose who their suppliers in China are, who extracts the raw materials and how they are extracted. This will bring transparency into the process. I am certain of that.

    Unfortunately, transparency is not a Chinese strength.

    All the more reason to insist on it. We don’t have to make ourselves smaller than we are.

    Joerg Wuttke has been living in China for 35 years now and knows both the economy and the political system like no other. The chief representative of BASF has been president of the EU Chamber of Commerce three times. He will not run for this office again in the next elections in May.

    The first part of the interview can be found here.

    • Autoindustrie

    The end of the combustion engine draws near

    Car sales in China are booming – but only in the EV segment.

    The Chinese car market has recovered. In terms of unit sales, the Covid crisis, lockdowns and chip shortages have long been forgotten. In 2022, passenger car sales amounted to 23.6 million vehicles, according to the China Association of Automobile Manufacturers (CAAM). For this year, it forecasts a three percent increase to 24.3 million. By comparison, 2017 was the record year in the People’s Republic with 24.7 million passenger cars sold.

    But these good figures have a catch. It is a market with two speeds. While new energy vehicles (NEVs) are booming, manufacturers of conventional cars are begging for government aid. At the same time, high-priced models are currently not in demand.

    The internal combustion market is shrinking

    To be exact, there are two Chinese car markets. Passenger cars with gasoline engines are sold on one of them. Of these, 16.7 million were sold last year. The second is the NEV market. In other words, vehicles with hybrid or pure battery drive. Here, a total of 6.9 million were newly registered in 2022 – twice as many as in the year before. In addition to advancements in battery technology, increasing supply and falling prices, government incentives are likely to have been a key reason for this. However, they expired at the start of 2023.

    Nevertheless, the China Passenger Car Association (CPCA) expects the market for NEVs to grow by around 30 percent to approximately 8.4 million vehicles in 2023. Market observers share this assessment. If both projections are correct – the overall market growth to 24.7 million and the increase in NEVs by 30 percent – the market for vehicles with internal combustion engines will shrink to 16.3 million units.

    However, there are differing calculations. Zhong Yongwei chairs China EV 100, a state-backed interest group of NEV manufacturers. Zhong expects a total of ten million NEVs sold in 2023. However, while growth in this sector seems to be certain, rating agency Fitch, for example, believes three percent growth for the market as a whole is exaggerated. Fitch does not believe that China’s overall passenger car market will grow in the coming year. If these two scenarios were to occur (stagnating overall market, but just under ten million NEVs sold), this would mean a slump in the market for classic internal combustion vehicles to 14.3 million.

    Economic constraints increase pressure

    A challenging overall economic situation could further cloud the outlook for the Chinese car market. In 2022, China’s economy grew slower than the global economy for the first time in forty years. This had consequences for the car market: As early as December 2022, for example, sales of diesel and gasoline vehicles slumped by 25.3 percent. “Premium electric vehicle makers are struggling to maintain their growth momentum this year because Chinese drivers don’t want to buy expensive vehicles,” Eric Ha analyzed in the South China Morning Post newspaper. He is a senior manager at consulting firm Suolei.

    In addition, the first provinces have announced a ban on the sale of classic internal combustion vehicles. The island province of Hainan in the south, with a population of 9.3 million, will no longer allow the sale of such cars after 2030. The island is likely to be merely the first province with a corresponding ban. Hybrid vehicles are also coming under pressure. Since the beginning of the year, their owners are no longer eligible for a free license plate in Shanghai.

    Provinces continue to incentivize car purchase

    Zhu Huarong, chairman of the state-owned Chongqing Changan Automobile, is well aware that pressure is growing. At the World New Energy Vehicle Congress, he proposed that the Communist Party should work with the industry to set a deadline for the nationwide phase-out of the internal combustion engine. At the same time, he called for measures to help automakers transition to EV manufacturing.

    The provinces play a crucial role in the support of the automotive industry. In mainland China, one in six jobs is directly dependent on the automotive industry. The prosperity of individual regions stands and falls with it. Accordingly, local governments are keen to keep local production going.

    Although the nationwide purchase premiums for NEVs expired at the beginning of the year, individual provinces have introduced their own premiums: For example, anyone buying a NEV in Guangdong between May and June will receive the equivalent of €1,370. Half as much is still offered to buyers of classic internal combustion vehicles.

    • Autoindustrie
    • CAAM

    News

    Germany not so dependent on China after all

    A new study by the Institute of the German Economic Institute (IW) in Cologne shows that Germany’s economic dependence on China is mostly overestimated. “Overall, China is significant as a supplier and buyer of intermediate inputs for German industry on average, but not to an overwhelming extent,” the researchers write in the still unpublished study. The newspaper “Handelsblatt” first reported on it.

    The study’s key finding:

    • Overall, Germany is not as dependent on China as is often believed.
    • There are exceptions, like the electrical industry, which is much more dependent on Chinese imports than other German industries.
    • Germany is also not overly dependent on China as a buyer of intermediate inputs.
    • With 90,000 jobs, the mechanical engineering sector is the most dependent on exports to the People’s Republic.

    The study examined two aspects: First, the dependence of German industry on Chinese intermediate inputs compared to corresponding supplies from the rest of the world. Second, the extent to which the manufacturing sector relies on China as a sales market for its intermediate inputs. rad

    • Germany
    • Trade

    Patten predicts end of dictatorship

    Archive photo: Chris Patten receives the folded British national flag in 1997 at the return of the crown colony of Hong Kong to China.

    Hong Kong’s last governor, Chris Patten, had some words of encouragement for the city’s residents in a New Year’s Greetings. In his video message, the politician predicted the end of the authoritarian rule of the Communist Party. “What always happens to dictatorships and the things they do is they disappear sooner or later into the rearview mirror of history. And so I think what Hong Kong represents, the values it represents, and will last a lot longer than any dictatorship anywhere, including in Beijing,” Patten said.

    The 78-year-old also explicitly extended his greetings to Hong Kong citizens who had fled into political exile in the recent past. Patten praised the social contribution they would make in their new adopted hometowns. He expressed sadness that they had to leave the city “because of the comprehensive assault on Hong Kong’s freedom by Beijing.” grz

    • Chinese New Year
    • Civil Society
    • Hongkong

    Zhurong fights for survival

    Picture from better days: Zhurong on Mars in 2021.

    The Mars rover Zhurong is causing concern for the Chinese space agency. Contrary to plans, the vehicle has still not woken up from its planned hibernation. Zhurong should have resumed operations a month ago, but so far it failed to send a signal back to Earth.

    The rolling research robot should have reactivated itself on its own at the end of last year after it had already been shut down in May for the duration of the Martian winter. The plan of engineers had envisaged that the increasing solar radiation would have sufficiently charged the solar modules of the rover by then.

    Its silence could be caused by dusty solar panels that can no longer generate enough energy. The Americans had made similar experiences on earlier missions. A delayed revival of the rover is nevertheless not ruled out. It is possible that the modules just need more time than planned.

    Zhurong landed on Earth’s neighboring planet in May 2021. Since then, the craft has traveled a distance of around two kilometers and conducted numerous scientific experiments. Among other things, the robot found traces of former waterholes. During its first Martian winter, the vehicle remained active. Only when the solar modules began to gather dust did the scientists decide to give it a rest. grz

    • Aerospace

    Accident at the Sanmenxia Dam

    A bathing accident in the Yellow River has left two dead and seven missing. On New Year’s Day, numerous people were caught off guard by rapidly rising water levels below the Sanmenxia Dam in the border region between the provinces of Shanxi and Henan. Within a few minutes, the water level had risen by almost two meters. Eight people were reportedly rescued from the water.

    The search for the missing people continued on Monday. At this point, it was still unclear why the water rose so quickly. Locks on the dam were reportedly not opened, Chinese media reported. Rather, security fences that should have prevented access to a popular section of the beach were said to have been torn down. The responsible authorities have launched an investigation into the accident.

    The Sanmenxia Dam was completed in 1960. Its construction was intended to prevent flooding of the Yellow River, but at the same time caused tributaries to regularly overflow their banks. grz

    • Henan
    • Shanxi
    • Society

    Heads

    Liu Hongqiao – deciphering the climate issue

    Liu Hongqiao examines China’s role in climate and environmental issues.

    Climate sinner or model student? The question is not that easy to answer, says Liu Hongqiao. “China is turning its head – that is a positive trend,” explains the political advisor on climate issues. The important thing for her is the significance of this transformation: “China going net-zero by 2060 could prevent a further 0.2-0.3C of global warming.” China, she says, is pledged to make the transition that Europeans completed over 200 years in 60 years. “That is a very tight schedule;” says Liu. But probably not tight enough to meet the two-degree target, she predicts.

    If every country emitted as much per capita as China, the planet would heat up much faster than planned. The biggest crux is China’s energy and industrial sector, which still heavily relies on coal. “This is the result of 50 years of business as usual,” Liu explains.

    Climate change accelerates desertification in northern China

    She alludes to the time when economic growth was a top priority in China. Liu studied communications in Beijing from 2007 and remembers her moment of ecological epiphany: From her dormitory, she looked to the north at a city bathed in yellow. Beijing was engulfed in a huge sandstorm. A problem caused by increasing desertification in northern China, further exacerbated by climate change.

    The relevance of the issue rapidly increased in China. Sandstorms, air pollution or poor water quality affected people’s everyday lives, and more and more people were talking about it. This was also because the world kept asking critical questions before the 2008 Olympics in Beijing. The social debates motivated Liu to do some research – first as an investigative journalist at Southern Metropolis Daily, and later at Caixin and China Water Risk.

    Stronger censorship and pressure on civil society

    Liu recalls that at that time, environmental journalism in particular still enjoyed relatively great freedom. Scientists collected data, NGOs networked actors, and journalists reported. This was possible because not all government bodies and officials pursued the same interests, Liu explains. “This opened up a window for us to tell a story to make a difference.”

    But that soon came to an end, says Liu, who won many prizes for her work and received a great deal of attention. Censorship became stronger and civil society groups came under pressure. For journalists, the loss of professional freedom also became an existential economic issue.

    Deciphering the complexity of correlations

    Important resources for understanding China’s ecological transformation are now missing. What is being lost, she says, are human-centered stories. “Analyzing data and talking to politicians is not enough!” Because Liu actually wants to know what’s happening to people who work in coal mining and will soon lose their jobs. Or with those who are affected by air pollution.

    Nowadays, Liu can only answer these questions indirectly. The Jiangxi-born journalist went to Paris in 2017 for a master’s degree and decided to stay. With her newsletter Shuang Tan, she now focuses on China’s climate policy. Western media, she criticizes, struggle to increase their reporting capacity on China, let alone on the cross-cutting topic of China and climate change. “We cannot afford that, because we need China in the fight against climate change.” Jonathan-Kaspar Lehrer

    • Civil Society
    • Climate
    • Climate protection

    Executive Moves

    Liu Weiliang has been appointed chairman of Zhenro Properties Group. The company made the announcement on the Hong Kong Stock Exchange. Liu, 38, joined the real estate group in 2016 and succeeds company founder Huang Xianzhi.

    Is something changing in your organization? Why not let us know at heads@table.media!

    Dessert

    China’s growing importance in the world became clear over the weekend. Many cities around the world held official celebrations to mark the arrival of the new year in the lunar calendar, as seen here in front of Milan’s Arc de Triomphe.

    Correction

    Correction

    Our article yesterday, “China builds Africa’s first spaceport,” claimed that Djibouti’s international borrowing costs could rise to $266 billion. The real number is $266 million.

    China.Table editorial office

    CHINA.TABLE EDITORIAL OFFICE

    Licenses:

      Sign up now and continue reading immediately

      No credit card details required. No automatic renewal.

      Sie haben bereits das Table.Briefing Abonnement?

      Anmelden und weiterlesen