China is the gym of the global economy. Its market size and fierce competition have been a test for companies for many years: If you can survive here, you can make it anywhere. But are German companies – faced with a second Trump administration and uncertain German policy – ready for this gym? My colleague Julia Fiedler put these and many other questions to the BDI representative in China, Elisa Hörhager, on the sidelines of the Xceleration Days.
The German Chamber of Foreign Trade is hosting the community event for the third time. More than 1,000 German and Chinese business representatives come together in Beijing to exchange ideas on future economic cooperation. Today, we are reporting exclusively from the event. On the one hand, the meeting highlights the similarities between the two sides. On the other hand, Germany’s security policy and economic interests are coming together, as Julia Fiedler explains based on speeches by the distinguished participants.
Finally, our “China Perspective” column shows that China’s youth are nowhere near as obedient as Beijing would like them to be. From Halloween costumes and mass bicycle trips to reactions following the car rampage in Zhuhai, several symptoms of a society in turmoil can be observed.
Have an informed start to the day!
The German Chamber of Foreign Trade invited more than 1,000 German and Chinese company representatives to the 3. Xceleration Days. The venue was a gigantic former steel mill. The Chamber brought in high-ranking representatives from Chinese politics as speakers and organized 15 events over three days. The aim: networking, gathering ideas, boosting confidence.
However, just one week after the US election, the uncertain political climate was omnipresent, and with it, the challenges for Sino-German cooperation. Hong Simen, Vice Mayor of the capital, and Vice Minister of Commerce Li Fei emphasized how hard the Ministry of Commerce is working to strengthen cooperation between the two sides. Ambassador Patricia Flor, on the other hand, struck a critical note shortly after her welcome address.
Flor emphasized that Germany needs to protect its industry and economy in China and called for better access to public tenders and easier cross-border data transfer. Flor also drew the hosts’ attention to Chinese cyber operations and attacks against critical infrastructure in Germany. The Chinese representatives reacted with indignation. Attendees from the Chinese Ministry of Commerce left the room immediately after the speech.
Some guests may have wondered whether this was really necessary. Clearly addressing issues in relations with the second-largest economy is enshrined in the German government’s China strategy. However, participants criticized what they saw as an unnecessarily politicized business event. Meanwhile, the Ministry of Commerce seems to seek closer cooperation with European companies. In talks with several participants, the tenor was that China sees an opportune moment to bind Europe more closely to itself in order to cushion the impact of growing tensions with the United States.
Meanwhile, the situation on the German side is apparently different. It was rumored at the conference that the Ministry of Economic Affairs objected to the event. In response to a corresponding question from Table.Briefings, the ministry emphasized the necessity of de-risking, but stressed that this type of diversification does not automatically mean decoupling. According to the ministry, the German government’s China strategy is not aimed at ruling out future economic cooperation between German and Chinese companies.
Amid the geopolitical tensions, supply chain risks are now a relevant issue on both sides. While many German companies opt for an “in China for China” strategy in order to mitigate international shocks, their Chinese partners are growing uncertain. For their part, they are setting a diversification process in motion.
“De-risking is also happening among Chinese customers,” Gang Yang, President of Trumpf Group China, told Table.Briefings. “Very loyal customers, for whom we used to be the only high-tech supplier in-house, are suddenly also qualifying local suppliers with a greater willingness to take risks.” In some cases, companies put a lot of effort into qualifying local companies, says Gang, and even accept inefficiencies in return. “Chinese companies are very worried that they will suddenly no longer be able to deliver due to a sanction or other trade-restricting mechanism.”
For most, the competitive environment in China has become tougher. “More and more companies have reported that their main competitors are now technologically on the same level as them. This used to be a tiny percentage, and it is increasing every year,” confirms Clas Neumann, Chairman of the German Chamber of Commerce in East China.
The same goes for the chemical industry. André Rittermeier is Head of Group Innovation & Sustainability APAC at Covestro, one of the world’s leading manufacturers of high-quality polymer materials, which is also represented in China. Rittermeier has been in China for six years and observed that local companies have become stronger not only in areas that require less expertise but also in highly specialized industries.
This means that innovation is becoming increasingly important. “With the incredibly fast innovation cycles in China, you have to regularly launch new products in order to stay ahead. Covestro is represented in the high-end segment and therefore needs to differentiate itself even more from the market.” However, the competitive pressure must also be put into perspective. “Anyone who has grown up in China has lived in a very high growth environment for 30 years. It was all about filling the market, there was enough room for everyone. Now that growth is slowing down, real competition is starting, in other words, cut-throat competition for market share. But we are used to this competition in Germany.”
How do you rate the Chinese economic stimulus package?
The assumption that there would be a reaction to the election result in the US did not come to pass. The Chinese government sticks to its tightly controlled narrative of continuity and stability and is following through with the measures announced weeks ago. Beijing only wants to make the gradual adjustments that are necessary for the transition from infrastructure and property-driven growth to industry-led growth. The “new productive forces,” that is, rapid scientific and technological innovation and the modernization of traditional industries, continue to be crucial.
How do German companies in China feel about the stimulus?
German companies have been massively suffering from price competition in China for some time now, for example in the mechanical engineering and automotive sectors. Many companies had hoped that the government would stimulate domestic consumption. Some had even expected a “Chinese bazooka,” which the recently announced measures are not. On the contrary, the expectation is that consumption will not increase significantly.
How do companies deal with this?
They continue to prepare for difficult years ahead, especially with growing trade tensions between the US and China following the outcome of the US election. However, China remains an important market, especially for companies that have invested in China. Over the next few years, the real estate crisis must be resolved and structural reforms tackled. Important reforms have already been announced in the Third Plenum, including the real estate tax. This will be painful for consumers. What is certain is that China is facing urgent structural challenges that necessitate transforming the economy.
How has the business environment in China developed?
Competition is getting tougher. Some products from Chinese competitors are much cheaper, yet the quality is adequate. This is nothing new, but it is a trend that is becoming increasingly apparent. This means that companies will increasingly consider localizing and producing in China for China, meaning manufacturing products specifically for the Chinese market at lower prices that differ in quality from their German counterparts. Subsidies play a central role here, as does the question of the framework conditions for foreign companies. The Chinese government still has much to do to ensure fair competition and equal market access.
How important is In China for China for German companies?
Due to the size of the market and the fierce competition, China is the gym for German companies. If you can survive here, you can survive anywhere. I would even dare to say that China is a greenhouse. Innovations are created here, and there is so much technological lead in certain areas that we can use for ourselves in Germany, for example, in autonomous driving or the development of electromobility.
Are all German companies ready for this gym?
That is the key question. I hear from Chinese companies that buy from German suppliers that they still value the German quality advantage. Such Chinese companies can convincingly explain to their customers why their end product is more expensive but also lasts longer. Made in Germany still carries weight in China. The only question is how much longer it will last. We compete with China’s state-dominated economic system. How and in which areas do we strategically secure our leading positions? Defensive instruments to safeguard against market distortion are certainly part of the solution. However, to counter Chinese advantages in costs and technology and create incentives for Europe as a production base, we need to improve our competitiveness.
How is that supposed to work?
The key to this is to fully utilize the strength of the European market. This includes using trade policy instruments and creating incentives for welcome Chinese investments in the EU. The anti-subsidy tariffs on EVs from China mean both sides are back at the negotiating table. In light of the US election result, China is listening even closer. Now is the time to act confidently and united, and pursue our European interests just as strategically as the Chinese do. Then, we will have the chance to push through important demands for fair competitive conditions vis-à-vis China.
Elisa Hörhager has worked in Beijing, Berlin and Brussels for the Federal Foreign Office on economic and China-related matters. Since August 1, 2024, she has headed the representation of the Federation of German Industries (BDI) in Beijing.
November 18, 2024; 2 p.m. CET (9 p.m. Beijing time)
SOAS China Institute, Webinar: The Chinese Cultural Revolution discourse in Ming Pao More
November 18, 2024; 11:30 a.m. EST
Harvard Fairbank Center, on-site lecture: 冷战史研究与档案的开放和利用 More
November 18, 2024; 6 p.m. CET (November 19, 1 a.m. Beijing time)
Harvard Fairbank Center, Webinar: Daniel Kritenbrink, “America’s Future in East Asia” More
November 20, 2024; 9 a.m. CET (4 p.m. Beijing time)
Dezan Shira & Associates Webinar: Cost Control Series: Reshape Your Business Cost Structure for Greater Efficiency in China More
November 21, 2024; 9 a.m. CET (4 p.m. Beijing time)
Acclime Consulting, Webinar: Expanding Your Business in China vs. ASEAN: Balancing Opportunities and Risks More
According to a survey conducted by the industry association VDMA, German mechanical engineering companies in China are skeptical about business development in the country. 44 percent of the 218 companies surveyed rated the current situation as poor, the German Engineering Federation (VDMA) announced on Thursday. Another 44 percent described the development as satisfactory and 12 percent as good. However, the survey shows that the order situation has improved compared to a survey last spring: 62 percent of respondents currently report a normal order backlog. Previously, the figure was 39 percent.
Overall, companies expected average sales growth of 1.5 percent in 2024 – which is still an improvement over last year’s zero percent. “The mood among German mechanical engineering companies in China is tense for the third year in a row. In 2022, the Covid restrictions weighed heavily on the industry, followed in 2023 by the aftermath of the pandemic, weak consumer confidence and the slowing property sector,” explained Claudia Barkowsky, VDMA Managing Director in China.
The somewhat mixed results are also reflected in capacity utilization: According to the survey, 10 percent of respondents are working above their normal capacity, 43 percent at normal levels. Nearly half of the respondents, namely 47 percent, report under-utilization of their capacities. “The increased order backlog is possibly due to the Chinese government’s recently announced stimulus measures. The fact that capacity utilization nevertheless remains at a low level could indicate further destocking or delays in the production process. However, this gives us hope that the last quarter of the year could gain momentum,” says Barkowsky. ari
The state-owned Chinese aircraft manufacturer Comac has found its first buyer for its wide-body airliner C929. The company announced an agreement with Air China at the aviation trade fair in Zhuhai. However, Comac did not disclose the number or planned delivery dates. The C929 is to be positioned on the global market as a competitor to the Airbus a350 and the Boeing 787.
Its development has recently stalled several times. Comac had initially launched the project with Russian partners. However, after Moscow’s invasion of Ukraine, the collaboration was scrapped and China continued the development of the model on its own. The final design of the C929 has not yet been completed. Experts do not expect its maiden flight before the end of the decade.
Comac also received dozens of orders for the C919, the first passenger aircraft to be developed entirely in the People’s Republic. Hainan Airlines reportedly ordered 60 aircraft. The company had already broken the 1,000 order mark for the C919 last year. The medium-haul model is the counterpart to the A320 and the Boeing 737. grz/rtr
French President Emmanuel Macron and former President of the European Central Bank Mario Draghi have warned of a renewed trade war between the European Union (EU) and the USA under Donald Trump. In a discussion at the Collège de France in Paris on the future of European competitiveness on Wednesday, they called on the EU to push ahead with quick and minor reforms instead of waiting for unanimity. The Chamber of Commerce to the EU of the People’s Republic, which is itself preparing for a tariff war with the US, shared a media report about the warning words on X (formerly Twitter).
“We are very clearly entering a world of tariff wars,” said Macron, according to Politico. He believes the EU must stand on its own two feet to avoid becoming collateral damage in a trade war between the US and China. The former Prime Minister of Italy, Draghi, described Trump’s election victory as a “wake-up call” and said that Europe must now “work more intensively than we had perhaps previously planned.” mcl
While the people of China mourn the victims of the worst killing spree in the People’s Republic for years, the authorities are trying to control public reaction. This was reported by several media outlets. On Monday evening (local time), a 62-year-old man drove his car into a crowd of people in the southern Chinese city of Zhuhai, killing dozens of people and injuring 43 others.
People laid down wreaths, candles and drinks at the crime scene near a sports stadium in the hours and days following the attack. Reuters news agency reports that florists received numerous anonymous deliveries to the crime scene. Some wreaths had handwritten notes: “Farewell, strangers” was written on one, and on another: “May good triumph over evil.” According to Reuters, dpa and the BBC, officials had repeatedly removed the makeshift memorial.
The authorities also curbed reactions on social media. Angry internet users criticized the government for not releasing the death toll until almost a day later. Some opinion posts were deleted, reports Reuters. According to the BBC, some people also accused the state media of barely covering the incident and instead reporting on a military air show that was taking place in Zhuhai around the same time. China’s state broadcaster CCTV did not mention the attack in its 30-minute midday news bulletin.
Other people discussed the phenomenon of “revenge on society,” in which people act out personal grievances to the detriment of others. According to the police, the attacker sought revenge over his divorce settlement. Similar acts of violence have occurred in recent months, such as a stabbing in a Shanghai supermarket and a knife attack in a school in Beijing.
The Chinese censorship apparatus tries to control the debate on all topics that attract a great deal of public attention. This applies particularly to cases where the authorities could be accused of negligence. The police in Zhuhai corrected their original report on the attack. It initially stated that the alleged perpetrator had unsuccessfully appealed the court ruling on his divorce settlement in several instances. This information was missing in the revised version. mcl
Two events in the last week ripped the Chinese government’s carefully cultivated image of being able to put everything under control and maintain social order in the way it wishes.
On the evening of November 8, more than 100,000 students in Zhengzhou, the capital of the central Henan Province, rode shared bicycles to Kaifeng, an ancient city 50 kilometers away, just for what they described as “priceless youthful” fun. The next day, authorities took a multi-pronged approach involving the police, college administrators, and bike-sharing companies to prevent follow-ups: Admonitions were issued, Bicycle lanes were blocked, and bikes locked. But more students still hit the road on foot. In addition, the nightly bike ride fever spread to other cities, before it phased out later in the week.
In another incident in the evening hours of November 11, a 62-year-old man drove into a stadium in Zhuhai, Guangdong, where thousands were conducting evening exercises, resulting in a casualty of at least 78. This incident, taking place on the eve of the biennial China International Aviation & Aerospace Exhibition, represented a new episode in a series of fatal attacks in public places in the country this year which also left a couple of foreigners dead or injured.
In a heavily policed country with a regime paranoid about any unrest and instability, this was a severe blow.
Local police immediately linked the Zhuhai attack to the man’s grievances over his divorce case. On November 12, President Xi Jinping called for steps to “safeguard against extreme cases” by “checking origins of risks and resolving disputes and conflicts.” The next day, some local governments were already instructed to conduct surveys of people in financial difficulties or with psychological challenges in their jurisdictions.
Chinese officials often claim China is one of the safest countries in the world, with a low criminal crime rate. However, even with the strict censorship of information, there has been a steady flow of news about fatal indiscriminate attacks in public places, the vast majority of which were reportedly committed by distraught men with grudges over injustice. A quick search on the internet yielded 17 such cases all over China so far this year.
In fact, Xi’s demand for checking the origins of social risks was not new. Authorities always knew what the potential risks were. However, the judiciary system, which is under total control of the party, is as corrupt as the government’s other branches. In addition, the social benefits for the impoverished are far from enough to help them survive. The government’s habitual measures to monitor and control what they see as “dangerous people” would result in more grievances and, potentially, more violence. It is a problem without a solution.
China’s school children and young people generally lead quite a hard life. In a still quite paternalistic society, they are manipulated by parents, schools, and other official institutions as beings with little free will. As early as in elementary school, they have to finish loads of homework, which would keep them up until late in the evening. In many high schools, students have just two days off a month.
From elementary school to high school and university, they must take grueling exams fighting with one another. For about five years, a bachelor’s degree is no longer enough to find a decent job, meaning college graduates must compete for postgraduate schools. When they are about to finish their master’s, most of them would also take civil servant exams because jobs in the government are considered the best. Even after landing their first job, young people still face a harsh life: overtime is normal, and the pay is low. Despite all the hardships, college students, free from parents’ day-to-day intervention, have at least some free time under their control and can make some small decisions about their lives.
The rebellious spirit of China’s youth was most famously seen in 1989, when massive student demonstrations in Beijing and other big cities rocked the country and eventually triggered the bloody Tiananmen Massacre. After that they became quiet, so quiet that critics lamented that authorities had succeeded in making the youth a group brainwashed by government propaganda and with energy consumed by academic competition, exams and careers.
This perception was proven wrong when students in different cities spearheaded demonstrations towards the end of the COVID-19 pandemic against the draconian lockdown measures. Students at high schools in other cities of the country have also been openly voicing opposition to their deprived holidays.
Last year, the authorities again targeted large gatherings of young people when they celebrated large Halloween street parties in central Shanghai. Many costumes carried thinly veiled political messages – something the authorities had not anticipated. However, the government was prepared for this year’s Halloween, blocking possible venues that could be used by Halloween partygoers. But the young people found other open-air places to celebrate, although the political messages were toned down.
The nighttime bicycle excursions also started as a purely joyful activity with no political connotation. It began in June when four female students in Zhengzhou cycled to Kaifeng to enjoy renowned local steamed dumplings, now known in the West as Bao, and posted videos of their excursion on social media. Inspired by the four, others followed suit, culminating last week as a naturally congregated massive public activity.
Authorities’ reaction, as expected, revealed their deep fear of massive gatherings of young people. Some schools quickly accused it of being instigated by “foreign and adversarial forces.” The cyclists were only doing it for fun. However, their pursuit of joy in big groups outside the officially sanctioned system is still to be commended. After all, they are still real young people with a beating heart.
Kevin Liu has been Head of Logistics APAC at Henkel since November. Liu has been working for the Düsseldorf-based consumer goods group in Shanghai for four years. Most recently, he was Manager PMO APAC and Program Manager of the Management Trainee Program “CHAiNGERS” APAC.
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Chinese pragmatism is an ingredient in the second-largest economy’s recipe for success. To be successful, you simply have to adapt to difficult circumstances here and there instead of struggling with them. Courier services in the People’s Republic are a prime example of this. Logistical precision work often takes place on the open road. Who needs new distribution centers just because a few million additional packages have to be delivered each year? This may not be an optimal long-term solution. But for now, it’s working. Other economies could do with some of this Chinese pragmatism.
China is the gym of the global economy. Its market size and fierce competition have been a test for companies for many years: If you can survive here, you can make it anywhere. But are German companies – faced with a second Trump administration and uncertain German policy – ready for this gym? My colleague Julia Fiedler put these and many other questions to the BDI representative in China, Elisa Hörhager, on the sidelines of the Xceleration Days.
The German Chamber of Foreign Trade is hosting the community event for the third time. More than 1,000 German and Chinese business representatives come together in Beijing to exchange ideas on future economic cooperation. Today, we are reporting exclusively from the event. On the one hand, the meeting highlights the similarities between the two sides. On the other hand, Germany’s security policy and economic interests are coming together, as Julia Fiedler explains based on speeches by the distinguished participants.
Finally, our “China Perspective” column shows that China’s youth are nowhere near as obedient as Beijing would like them to be. From Halloween costumes and mass bicycle trips to reactions following the car rampage in Zhuhai, several symptoms of a society in turmoil can be observed.
Have an informed start to the day!
The German Chamber of Foreign Trade invited more than 1,000 German and Chinese company representatives to the 3. Xceleration Days. The venue was a gigantic former steel mill. The Chamber brought in high-ranking representatives from Chinese politics as speakers and organized 15 events over three days. The aim: networking, gathering ideas, boosting confidence.
However, just one week after the US election, the uncertain political climate was omnipresent, and with it, the challenges for Sino-German cooperation. Hong Simen, Vice Mayor of the capital, and Vice Minister of Commerce Li Fei emphasized how hard the Ministry of Commerce is working to strengthen cooperation between the two sides. Ambassador Patricia Flor, on the other hand, struck a critical note shortly after her welcome address.
Flor emphasized that Germany needs to protect its industry and economy in China and called for better access to public tenders and easier cross-border data transfer. Flor also drew the hosts’ attention to Chinese cyber operations and attacks against critical infrastructure in Germany. The Chinese representatives reacted with indignation. Attendees from the Chinese Ministry of Commerce left the room immediately after the speech.
Some guests may have wondered whether this was really necessary. Clearly addressing issues in relations with the second-largest economy is enshrined in the German government’s China strategy. However, participants criticized what they saw as an unnecessarily politicized business event. Meanwhile, the Ministry of Commerce seems to seek closer cooperation with European companies. In talks with several participants, the tenor was that China sees an opportune moment to bind Europe more closely to itself in order to cushion the impact of growing tensions with the United States.
Meanwhile, the situation on the German side is apparently different. It was rumored at the conference that the Ministry of Economic Affairs objected to the event. In response to a corresponding question from Table.Briefings, the ministry emphasized the necessity of de-risking, but stressed that this type of diversification does not automatically mean decoupling. According to the ministry, the German government’s China strategy is not aimed at ruling out future economic cooperation between German and Chinese companies.
Amid the geopolitical tensions, supply chain risks are now a relevant issue on both sides. While many German companies opt for an “in China for China” strategy in order to mitigate international shocks, their Chinese partners are growing uncertain. For their part, they are setting a diversification process in motion.
“De-risking is also happening among Chinese customers,” Gang Yang, President of Trumpf Group China, told Table.Briefings. “Very loyal customers, for whom we used to be the only high-tech supplier in-house, are suddenly also qualifying local suppliers with a greater willingness to take risks.” In some cases, companies put a lot of effort into qualifying local companies, says Gang, and even accept inefficiencies in return. “Chinese companies are very worried that they will suddenly no longer be able to deliver due to a sanction or other trade-restricting mechanism.”
For most, the competitive environment in China has become tougher. “More and more companies have reported that their main competitors are now technologically on the same level as them. This used to be a tiny percentage, and it is increasing every year,” confirms Clas Neumann, Chairman of the German Chamber of Commerce in East China.
The same goes for the chemical industry. André Rittermeier is Head of Group Innovation & Sustainability APAC at Covestro, one of the world’s leading manufacturers of high-quality polymer materials, which is also represented in China. Rittermeier has been in China for six years and observed that local companies have become stronger not only in areas that require less expertise but also in highly specialized industries.
This means that innovation is becoming increasingly important. “With the incredibly fast innovation cycles in China, you have to regularly launch new products in order to stay ahead. Covestro is represented in the high-end segment and therefore needs to differentiate itself even more from the market.” However, the competitive pressure must also be put into perspective. “Anyone who has grown up in China has lived in a very high growth environment for 30 years. It was all about filling the market, there was enough room for everyone. Now that growth is slowing down, real competition is starting, in other words, cut-throat competition for market share. But we are used to this competition in Germany.”
How do you rate the Chinese economic stimulus package?
The assumption that there would be a reaction to the election result in the US did not come to pass. The Chinese government sticks to its tightly controlled narrative of continuity and stability and is following through with the measures announced weeks ago. Beijing only wants to make the gradual adjustments that are necessary for the transition from infrastructure and property-driven growth to industry-led growth. The “new productive forces,” that is, rapid scientific and technological innovation and the modernization of traditional industries, continue to be crucial.
How do German companies in China feel about the stimulus?
German companies have been massively suffering from price competition in China for some time now, for example in the mechanical engineering and automotive sectors. Many companies had hoped that the government would stimulate domestic consumption. Some had even expected a “Chinese bazooka,” which the recently announced measures are not. On the contrary, the expectation is that consumption will not increase significantly.
How do companies deal with this?
They continue to prepare for difficult years ahead, especially with growing trade tensions between the US and China following the outcome of the US election. However, China remains an important market, especially for companies that have invested in China. Over the next few years, the real estate crisis must be resolved and structural reforms tackled. Important reforms have already been announced in the Third Plenum, including the real estate tax. This will be painful for consumers. What is certain is that China is facing urgent structural challenges that necessitate transforming the economy.
How has the business environment in China developed?
Competition is getting tougher. Some products from Chinese competitors are much cheaper, yet the quality is adequate. This is nothing new, but it is a trend that is becoming increasingly apparent. This means that companies will increasingly consider localizing and producing in China for China, meaning manufacturing products specifically for the Chinese market at lower prices that differ in quality from their German counterparts. Subsidies play a central role here, as does the question of the framework conditions for foreign companies. The Chinese government still has much to do to ensure fair competition and equal market access.
How important is In China for China for German companies?
Due to the size of the market and the fierce competition, China is the gym for German companies. If you can survive here, you can survive anywhere. I would even dare to say that China is a greenhouse. Innovations are created here, and there is so much technological lead in certain areas that we can use for ourselves in Germany, for example, in autonomous driving or the development of electromobility.
Are all German companies ready for this gym?
That is the key question. I hear from Chinese companies that buy from German suppliers that they still value the German quality advantage. Such Chinese companies can convincingly explain to their customers why their end product is more expensive but also lasts longer. Made in Germany still carries weight in China. The only question is how much longer it will last. We compete with China’s state-dominated economic system. How and in which areas do we strategically secure our leading positions? Defensive instruments to safeguard against market distortion are certainly part of the solution. However, to counter Chinese advantages in costs and technology and create incentives for Europe as a production base, we need to improve our competitiveness.
How is that supposed to work?
The key to this is to fully utilize the strength of the European market. This includes using trade policy instruments and creating incentives for welcome Chinese investments in the EU. The anti-subsidy tariffs on EVs from China mean both sides are back at the negotiating table. In light of the US election result, China is listening even closer. Now is the time to act confidently and united, and pursue our European interests just as strategically as the Chinese do. Then, we will have the chance to push through important demands for fair competitive conditions vis-à-vis China.
Elisa Hörhager has worked in Beijing, Berlin and Brussels for the Federal Foreign Office on economic and China-related matters. Since August 1, 2024, she has headed the representation of the Federation of German Industries (BDI) in Beijing.
November 18, 2024; 2 p.m. CET (9 p.m. Beijing time)
SOAS China Institute, Webinar: The Chinese Cultural Revolution discourse in Ming Pao More
November 18, 2024; 11:30 a.m. EST
Harvard Fairbank Center, on-site lecture: 冷战史研究与档案的开放和利用 More
November 18, 2024; 6 p.m. CET (November 19, 1 a.m. Beijing time)
Harvard Fairbank Center, Webinar: Daniel Kritenbrink, “America’s Future in East Asia” More
November 20, 2024; 9 a.m. CET (4 p.m. Beijing time)
Dezan Shira & Associates Webinar: Cost Control Series: Reshape Your Business Cost Structure for Greater Efficiency in China More
November 21, 2024; 9 a.m. CET (4 p.m. Beijing time)
Acclime Consulting, Webinar: Expanding Your Business in China vs. ASEAN: Balancing Opportunities and Risks More
According to a survey conducted by the industry association VDMA, German mechanical engineering companies in China are skeptical about business development in the country. 44 percent of the 218 companies surveyed rated the current situation as poor, the German Engineering Federation (VDMA) announced on Thursday. Another 44 percent described the development as satisfactory and 12 percent as good. However, the survey shows that the order situation has improved compared to a survey last spring: 62 percent of respondents currently report a normal order backlog. Previously, the figure was 39 percent.
Overall, companies expected average sales growth of 1.5 percent in 2024 – which is still an improvement over last year’s zero percent. “The mood among German mechanical engineering companies in China is tense for the third year in a row. In 2022, the Covid restrictions weighed heavily on the industry, followed in 2023 by the aftermath of the pandemic, weak consumer confidence and the slowing property sector,” explained Claudia Barkowsky, VDMA Managing Director in China.
The somewhat mixed results are also reflected in capacity utilization: According to the survey, 10 percent of respondents are working above their normal capacity, 43 percent at normal levels. Nearly half of the respondents, namely 47 percent, report under-utilization of their capacities. “The increased order backlog is possibly due to the Chinese government’s recently announced stimulus measures. The fact that capacity utilization nevertheless remains at a low level could indicate further destocking or delays in the production process. However, this gives us hope that the last quarter of the year could gain momentum,” says Barkowsky. ari
The state-owned Chinese aircraft manufacturer Comac has found its first buyer for its wide-body airliner C929. The company announced an agreement with Air China at the aviation trade fair in Zhuhai. However, Comac did not disclose the number or planned delivery dates. The C929 is to be positioned on the global market as a competitor to the Airbus a350 and the Boeing 787.
Its development has recently stalled several times. Comac had initially launched the project with Russian partners. However, after Moscow’s invasion of Ukraine, the collaboration was scrapped and China continued the development of the model on its own. The final design of the C929 has not yet been completed. Experts do not expect its maiden flight before the end of the decade.
Comac also received dozens of orders for the C919, the first passenger aircraft to be developed entirely in the People’s Republic. Hainan Airlines reportedly ordered 60 aircraft. The company had already broken the 1,000 order mark for the C919 last year. The medium-haul model is the counterpart to the A320 and the Boeing 737. grz/rtr
French President Emmanuel Macron and former President of the European Central Bank Mario Draghi have warned of a renewed trade war between the European Union (EU) and the USA under Donald Trump. In a discussion at the Collège de France in Paris on the future of European competitiveness on Wednesday, they called on the EU to push ahead with quick and minor reforms instead of waiting for unanimity. The Chamber of Commerce to the EU of the People’s Republic, which is itself preparing for a tariff war with the US, shared a media report about the warning words on X (formerly Twitter).
“We are very clearly entering a world of tariff wars,” said Macron, according to Politico. He believes the EU must stand on its own two feet to avoid becoming collateral damage in a trade war between the US and China. The former Prime Minister of Italy, Draghi, described Trump’s election victory as a “wake-up call” and said that Europe must now “work more intensively than we had perhaps previously planned.” mcl
While the people of China mourn the victims of the worst killing spree in the People’s Republic for years, the authorities are trying to control public reaction. This was reported by several media outlets. On Monday evening (local time), a 62-year-old man drove his car into a crowd of people in the southern Chinese city of Zhuhai, killing dozens of people and injuring 43 others.
People laid down wreaths, candles and drinks at the crime scene near a sports stadium in the hours and days following the attack. Reuters news agency reports that florists received numerous anonymous deliveries to the crime scene. Some wreaths had handwritten notes: “Farewell, strangers” was written on one, and on another: “May good triumph over evil.” According to Reuters, dpa and the BBC, officials had repeatedly removed the makeshift memorial.
The authorities also curbed reactions on social media. Angry internet users criticized the government for not releasing the death toll until almost a day later. Some opinion posts were deleted, reports Reuters. According to the BBC, some people also accused the state media of barely covering the incident and instead reporting on a military air show that was taking place in Zhuhai around the same time. China’s state broadcaster CCTV did not mention the attack in its 30-minute midday news bulletin.
Other people discussed the phenomenon of “revenge on society,” in which people act out personal grievances to the detriment of others. According to the police, the attacker sought revenge over his divorce settlement. Similar acts of violence have occurred in recent months, such as a stabbing in a Shanghai supermarket and a knife attack in a school in Beijing.
The Chinese censorship apparatus tries to control the debate on all topics that attract a great deal of public attention. This applies particularly to cases where the authorities could be accused of negligence. The police in Zhuhai corrected their original report on the attack. It initially stated that the alleged perpetrator had unsuccessfully appealed the court ruling on his divorce settlement in several instances. This information was missing in the revised version. mcl
Two events in the last week ripped the Chinese government’s carefully cultivated image of being able to put everything under control and maintain social order in the way it wishes.
On the evening of November 8, more than 100,000 students in Zhengzhou, the capital of the central Henan Province, rode shared bicycles to Kaifeng, an ancient city 50 kilometers away, just for what they described as “priceless youthful” fun. The next day, authorities took a multi-pronged approach involving the police, college administrators, and bike-sharing companies to prevent follow-ups: Admonitions were issued, Bicycle lanes were blocked, and bikes locked. But more students still hit the road on foot. In addition, the nightly bike ride fever spread to other cities, before it phased out later in the week.
In another incident in the evening hours of November 11, a 62-year-old man drove into a stadium in Zhuhai, Guangdong, where thousands were conducting evening exercises, resulting in a casualty of at least 78. This incident, taking place on the eve of the biennial China International Aviation & Aerospace Exhibition, represented a new episode in a series of fatal attacks in public places in the country this year which also left a couple of foreigners dead or injured.
In a heavily policed country with a regime paranoid about any unrest and instability, this was a severe blow.
Local police immediately linked the Zhuhai attack to the man’s grievances over his divorce case. On November 12, President Xi Jinping called for steps to “safeguard against extreme cases” by “checking origins of risks and resolving disputes and conflicts.” The next day, some local governments were already instructed to conduct surveys of people in financial difficulties or with psychological challenges in their jurisdictions.
Chinese officials often claim China is one of the safest countries in the world, with a low criminal crime rate. However, even with the strict censorship of information, there has been a steady flow of news about fatal indiscriminate attacks in public places, the vast majority of which were reportedly committed by distraught men with grudges over injustice. A quick search on the internet yielded 17 such cases all over China so far this year.
In fact, Xi’s demand for checking the origins of social risks was not new. Authorities always knew what the potential risks were. However, the judiciary system, which is under total control of the party, is as corrupt as the government’s other branches. In addition, the social benefits for the impoverished are far from enough to help them survive. The government’s habitual measures to monitor and control what they see as “dangerous people” would result in more grievances and, potentially, more violence. It is a problem without a solution.
China’s school children and young people generally lead quite a hard life. In a still quite paternalistic society, they are manipulated by parents, schools, and other official institutions as beings with little free will. As early as in elementary school, they have to finish loads of homework, which would keep them up until late in the evening. In many high schools, students have just two days off a month.
From elementary school to high school and university, they must take grueling exams fighting with one another. For about five years, a bachelor’s degree is no longer enough to find a decent job, meaning college graduates must compete for postgraduate schools. When they are about to finish their master’s, most of them would also take civil servant exams because jobs in the government are considered the best. Even after landing their first job, young people still face a harsh life: overtime is normal, and the pay is low. Despite all the hardships, college students, free from parents’ day-to-day intervention, have at least some free time under their control and can make some small decisions about their lives.
The rebellious spirit of China’s youth was most famously seen in 1989, when massive student demonstrations in Beijing and other big cities rocked the country and eventually triggered the bloody Tiananmen Massacre. After that they became quiet, so quiet that critics lamented that authorities had succeeded in making the youth a group brainwashed by government propaganda and with energy consumed by academic competition, exams and careers.
This perception was proven wrong when students in different cities spearheaded demonstrations towards the end of the COVID-19 pandemic against the draconian lockdown measures. Students at high schools in other cities of the country have also been openly voicing opposition to their deprived holidays.
Last year, the authorities again targeted large gatherings of young people when they celebrated large Halloween street parties in central Shanghai. Many costumes carried thinly veiled political messages – something the authorities had not anticipated. However, the government was prepared for this year’s Halloween, blocking possible venues that could be used by Halloween partygoers. But the young people found other open-air places to celebrate, although the political messages were toned down.
The nighttime bicycle excursions also started as a purely joyful activity with no political connotation. It began in June when four female students in Zhengzhou cycled to Kaifeng to enjoy renowned local steamed dumplings, now known in the West as Bao, and posted videos of their excursion on social media. Inspired by the four, others followed suit, culminating last week as a naturally congregated massive public activity.
Authorities’ reaction, as expected, revealed their deep fear of massive gatherings of young people. Some schools quickly accused it of being instigated by “foreign and adversarial forces.” The cyclists were only doing it for fun. However, their pursuit of joy in big groups outside the officially sanctioned system is still to be commended. After all, they are still real young people with a beating heart.
Kevin Liu has been Head of Logistics APAC at Henkel since November. Liu has been working for the Düsseldorf-based consumer goods group in Shanghai for four years. Most recently, he was Manager PMO APAC and Program Manager of the Management Trainee Program “CHAiNGERS” APAC.
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Chinese pragmatism is an ingredient in the second-largest economy’s recipe for success. To be successful, you simply have to adapt to difficult circumstances here and there instead of struggling with them. Courier services in the People’s Republic are a prime example of this. Logistical precision work often takes place on the open road. Who needs new distribution centers just because a few million additional packages have to be delivered each year? This may not be an optimal long-term solution. But for now, it’s working. Other economies could do with some of this Chinese pragmatism.