The National People’s Congress is over and has confirmed the following hierarchy: Xi Jinping far, far above anyone else. Those who, like US President Joe Biden or German Foreign Minister Annalena Baerbock, like to use the term dictator, can do so with increasing semantic accuracy. The permanent demotion of the country’s premier from quote maker to paper reader is another building block in the toolbox for establishing a state cult of personality.
And Xi did not even have to play a prominent role at the People’s Congress. Giving all the other protagonists of the Communist Party so little room was enough that just three appearances by the leader at smaller meetings was enough to generate excessive coverage in the state media, as Joern Petring has observed.
While the People’s Congress is tying the state organs more closely to the party, Chinese carmakers and battery manufacturers are moving further in the opposite direction: Out into the world – especially to Europe, says Julia Fiedler. Manufacturers no longer focus solely on exports but increasingly establish their production capacities in target markets.
In Europe, Hungary, Finland, and Sweden benefit the most. And Hungary stands out above all. While political scientists have officially revoked the EU member state’s status as a full democracy, Hungary is taking this upheaval in its stride. On the one hand, more and more media in Hungary represent the government’s position, and many do not even realize what is happening around them.
On the other hand, generous Chinese investments ensure that Hungary’s economy is strong enough to serve as a trump card for the election campaign of an anti-democrat. In return, Beijing’s friend in Budapest is a valuable Chinese trump card to promote its own interests in the EU.
Party leader Xi Jinping will be able to exert even more influence on the actions of the Chinese government than before. At the end of the National People’s Congress in Beijing, the delegates passed the new version of a law regulating the authority of state bodies, giving the Communist Party more control over the State Council. In short: The Communist Party Central Committee, chaired by Xi as General Secretary, secures even greater influence over Premier Li Qiang’s cabinet.
It was the latest in a series of measures in recent years that have gradually undermined the executive power of the State Council. Nominally, the premier oversees 21 Chinese ministries, including local governments. Now even more power in the country falls to the organs of the Communist Party, which now legally mandates the government to implement the Party’s directives.
The newly added article stresses that the State Council must “resolutely uphold the Party Central Committee’s authority and its centralized and unified leadership” and follow Xi Jinping Thought
“This is a significant shift in the reorganization of executive authority in China,” Ryan Mitchell, a law professor at the Chinese University of Hong Kong, told Reuters. Thomas Kellogg, professor of Asian law at Georgetown University in Washington, D.C., considers the law “yet another sign that the Party is both increasing its overt control over state organs and wants to be seen as fully in charge.”
The government’s increasing loss of authority became apparent at the very end of the People’s Congress. For the first time in more than three decades, the parliamentary meeting ended without a subsequent press conference by the premier. This event has always been a rare opportunity for the head of government to appear live on television in front of the press and establish his own profile. Even if it was increasingly orchestrated, it was still a window that provided an insight into a closed apparatus.
Scrapping the press conference indicated that the spotlight would shift even more to state and party leader Xi Jinping. The president traditionally does not play a central role at the People’s Congress. Nevertheless, state media have reported excessively on his appearances and instructions in recent days. Xi did not even address the entire plenary session at the opening or closing ceremonies. He chose to make his appearances in smaller sessions.
Three appearances by the President, all three focused on technology and renewal. It is no wonder that China observers now pay more attention to Xi’s smaller meetings than the traditionally important appointments at the People’s Congress. For example, Xie Maosong, professor at the National Strategy Institute of Tsinghua University, has long regarded the Xi meetings as the “most important window” of the People’s Congress.
At a meeting with delegates from the Jiangsu province last Tuesday, Xi spoke at length about unleashing “new productive forces” – a reference to the ambitious plan to massively promote domestic technology and modernize the economy.
On Wednesday, Xi attended a meeting with representatives from science and technology as part of the annual meeting of the Chinese People’s Political Consultative Conference (CPPCC), the country’s highest political advisory body, which convenes in parallel with the People’s Congress. There, he called on the participants to “fight the tech battle well.” The message here again was that new technologies have priority.
On Thursday followed a meeting with the NPC delegation of the People’s Liberation Army (PLA) and the People’s Armed Police. Here, Xi, who is also China’s supreme military commander, called on the representatives to integrate “high-tech developments” into the PLA’s war capabilities in order to “comprehensively improve strategic capabilities in emerging areas.”
Chinese EV manufacturers and battery companies are being increasingly drawn into the world – and to Europe in particular. While raw material manufacturers and battery companies have invested here in recent years, such as CATL and Svolt in Germany, companies are now entering the market along the entire value chain, including vehicle production. This is the result of a new study by the think tank Rhodium Group entitled “Pole Position: Chinese EV Investments boom amid growing political backlash.”
Researchers expect Chinese outbound foreign direct investment (OFDI) in the EV sector to reach a record level last year and likely exceed the approximately EUR 27 billion invested in 2022. The final figure for 2023 is not yet known. Much of the money will end up in Europe, Asia, and the Middle East. On the one hand, this trend means a secure supply of components for the domestic EV industry and jobs for Europe. On the other hand, however, it also creates new dependencies.
Previously, Chinese EV makers manufactured their vehicles in China and exported them to their target markets. However, several international plants were announced in 2022 and 2023, including BYD and Great Wall Motor in Thailand, Volvo parent company Geely in Slovakia, and BYD in Hungary. BYD is also considering plans to build a plant in Mexico.
The authors of the Rhodium study call this a new trend. In 2024, investments in vehicle production are likely to gain even more importance. They have also noticed another new development in the EV sector: Battery manufacturers are bringing their own suppliers from China to Europe to supply them with raw materials, i.e., cathode and anode manufacturers.
Europe, the Middle East, North Africa, and Asia: This is where three-quarters of OFDI ends up. In Europe, Hungary, Finland, and Sweden benefit in particular – with 92 percent, the bulk went to these countries in 2023. Hungary stands out: CATL invested 6.7 billion euros in a gigafactory in 2022, and BYD decided to build a car factory in Hungary in 2023.
The total value of the investment is not yet known but is likely to be several billion. Huayou Cobalt plans to produce cathodes in Hungary, and Eve Energy and Sunwoda, which want to produce traction batteries for local car manufacturers, have also invested significant sums.
In the Middle East and North Africa, OFDI focused on Morocco, which signed free trade agreements with the EU and the USA. Gotion High Tech announced an almost six billion euro investment for a gigafactory, while CNGR and competitor BTR invested large sums in cathode production. And in Asia, nearly six billion euros flowed into Thailand and South Korea. In South Korea, investors were primarily interested in joint ventures with battery manufacturers, while in Thailand, companies such as Great Wall Motor, BYD and GAC Aion are investing in vehicle production.
However, there is also a negative trend. Investment in the USA declined in 2023, with only around 2.5 billion euros invested instead of 4.4 billion euros in the previous year. Chinese companies are unsettled by the US regulatory environment: They encounter strong resistance, and the upcoming election this fall will also almost certainly impact how Washington will treat Chinese companies in the future.
In Europe, several push and pull factors make electric mobility investments attractive.
China’s EV manufacturers have the potential to put Europe’s car industry under massive pressure once Chinese brands have gained a foothold with European consumers. Measures such as the EU’s anti-subsidy investigation are the first steps towards protecting Europe as a business location. The difference to the US here is interesting: The US protects its domestic market and makes investment in the industry more difficult. European countries, on the other hand, specifically attract investments from China in order to bring part of the value creation to the EU and create jobs.
However, the authors of the Rhodium study have observed an imbalance that could cause friction between the EU member states: In 2022 and 2023, 53 percent of Chinese investments flowed to Hungary. While the country subsidizes the expansion of Chinese companies, it receives funds from the EU. If the trend continues, EU members could invoke the EU Foreign Subsidies Regulation and have the investments audited. This could potentially have an impact on future investments from China in the region.
Chinese battery companies also rival European companies such as Swedish Northvolt or Automotive Cells in France. If European companies fail to compete, their dependence on Chinese battery manufacturers would increase. The EU could also respond with stricter regulations.
In China, the global expansion of the EV supplier industry is highly desired. This is not only reflected in the development plan for the alternative drive vehicle (NEV) industry for 2021-2035. Recently, the State Council and several ministries have politically reaffirmed the importance of EV expansion. However, the industry’s globalization is creating new concerns.
The intention is to tap into international markets, especially now that Chinese companies have a head start in the EV sector. On the other hand, China loses domestic manufacturing sites and, therefore, jobs. Given the current economic situation, that is not really desirable.
Another concern in Beijing is the technology drain. Know-how could flow out of foreign battery factory production sites, which, however, is what gives the companies their competitive edge. As a result, Beijing could potentially impose regulations, the study’s authors write.
This creates a balancing act in China between the interests of corporations and the government, as is typical in developed economies: While companies want to raise their profits by investing overseas, the government aims for more domestic investment.
The recent Chinese New Year celebrations in the Saxon district town of Borna featured music and dragon dances, as well as a video invitation from the mayor of the Chinese sister city of Dujiangyan: “You are very welcome to the home of the panda bears. We are looking forward to your visit!”
At the World Chinese Language Conference, an education fair in Beijing in December 2023, over one hundred universities offered summer courses for international students, including factory tours and tourist excursions. Chinese high schools are looking for German partner schools: Not one but two schools from Leipzig received invitations to the sister city of Nanjing. Huawei invites young inventors on a tour of the Shenzhen innovation hub, while universities from Guangzhou to Shanghai, from Chongqing to Tianjin, are recruiting conference participants and research cooperation across Europe.
This is also supported by the Beijing government’s decision in December 2023 to allow visitors from Germany (and other countries) to enter the country for up to 14 days visa-free. China aims to stimulate domestic consumption and encourages foreign suppliers and investors. At the same time, it offers scholarships of all kinds via the Center for Language Education and Cooperation (www.chinese.cn).
For three years during the pandemic, travel to China was practically impossible: Only a select few could fly back and forth under difficult conditions and time-consuming quarantine measures. As a result, not only tourism but also economic activity and academic and social exchange suffered. Political dialog was also affected, as was the interest of many Europeans in relocating there or simply exploring. We have obviously not yet recovered from this.
On top of this, two important dimensions of everyday life in China continue to cause us concern: The authoritarian form of politics, which makes us feel uneasy – although this existed in many parts of Europe until a few decades ago, we feel insecure and threatened in our modern democratic self-image. And secondly, there is the centralized control of the media and public opinion decreed by the Communist Party: Journalists cannot pursue their work with the same freedom as they are used to here – this impairs their work and leads to a negative undertone, even when there is something positive to report.
This is probably the reason for German media coverage: Time and again, they say that China is repressive, aggressive, and suddenly “less democratic.” The cancellation of the premier’s press conference is “another step that shows how much China is closing itself off at all levels.” Positive figures are forged, they say. When it comes to scientific breakthroughs, suspicious politicians claim that something can’t be right.
This juvenile cancel culture won’t get us anywhere. A country like Germany, preaching tolerance and cultural diversity, must neither ignore nor belittle China – Communist Party or not. Nor should it refuse to accept Chinese students because of their origin. Talking and negotiating with the people of Taiwan is important, but it is not an alternative.
Confucius is quoted too often (and usually inaccurately), but there is no doubt that he firmly believed in learning and in dialogue with other people. He famously said: “With three men walking, there is always a teacher among them 三人行，必有我师.”
And of course: If you do it right, then those close to you will be happy, and those who are far away will come to you 有朋自远方来，不亦乐乎 – It’s a long flight, but even today, people in China are happy about every visitor from Europe.
Benjamin Creutzfeldt (PhD) is a sinologist, political scientist, and Managing Director of the Confucius Institute Leipzig e.V.
He was only supposed to clean a show pool at Changchun Zhongtai Ocean World in the province of Jilin. However, because a mermaid performer could not perform due to the Spring Festival vacation, he stepped in without further ado. This month, tourist videos of his tongue-in-cheek performance went viral and made the man the latest internet sensation. The aquarium has now even hired him as a full-time merman – with painted-on abs and a tailor-made costume featuring a traditional phoenix motif. “The pay is simply irresistible,” he told Chinese media.
The National People’s Congress is over and has confirmed the following hierarchy: Xi Jinping far, far above anyone else. Those who, like US President Joe Biden or German Foreign Minister Annalena Baerbock, like to use the term dictator, can do so with increasing semantic accuracy. The permanent demotion of the country’s premier from quote maker to paper reader is another building block in the toolbox for establishing a state cult of personality.
And Xi did not even have to play a prominent role at the People’s Congress. Giving all the other protagonists of the Communist Party so little room was enough that just three appearances by the leader at smaller meetings was enough to generate excessive coverage in the state media, as Joern Petring has observed.
While the People’s Congress is tying the state organs more closely to the party, Chinese carmakers and battery manufacturers are moving further in the opposite direction: Out into the world – especially to Europe, says Julia Fiedler. Manufacturers no longer focus solely on exports but increasingly establish their production capacities in target markets.
In Europe, Hungary, Finland, and Sweden benefit the most. And Hungary stands out above all. While political scientists have officially revoked the EU member state’s status as a full democracy, Hungary is taking this upheaval in its stride. On the one hand, more and more media in Hungary represent the government’s position, and many do not even realize what is happening around them.
On the other hand, generous Chinese investments ensure that Hungary’s economy is strong enough to serve as a trump card for the election campaign of an anti-democrat. In return, Beijing’s friend in Budapest is a valuable Chinese trump card to promote its own interests in the EU.
Party leader Xi Jinping will be able to exert even more influence on the actions of the Chinese government than before. At the end of the National People’s Congress in Beijing, the delegates passed the new version of a law regulating the authority of state bodies, giving the Communist Party more control over the State Council. In short: The Communist Party Central Committee, chaired by Xi as General Secretary, secures even greater influence over Premier Li Qiang’s cabinet.
It was the latest in a series of measures in recent years that have gradually undermined the executive power of the State Council. Nominally, the premier oversees 21 Chinese ministries, including local governments. Now even more power in the country falls to the organs of the Communist Party, which now legally mandates the government to implement the Party’s directives.
The newly added article stresses that the State Council must “resolutely uphold the Party Central Committee’s authority and its centralized and unified leadership” and follow Xi Jinping Thought
“This is a significant shift in the reorganization of executive authority in China,” Ryan Mitchell, a law professor at the Chinese University of Hong Kong, told Reuters. Thomas Kellogg, professor of Asian law at Georgetown University in Washington, D.C., considers the law “yet another sign that the Party is both increasing its overt control over state organs and wants to be seen as fully in charge.”
The government’s increasing loss of authority became apparent at the very end of the People’s Congress. For the first time in more than three decades, the parliamentary meeting ended without a subsequent press conference by the premier. This event has always been a rare opportunity for the head of government to appear live on television in front of the press and establish his own profile. Even if it was increasingly orchestrated, it was still a window that provided an insight into a closed apparatus.
Scrapping the press conference indicated that the spotlight would shift even more to state and party leader Xi Jinping. The president traditionally does not play a central role at the People’s Congress. Nevertheless, state media have reported excessively on his appearances and instructions in recent days. Xi did not even address the entire plenary session at the opening or closing ceremonies. He chose to make his appearances in smaller sessions.
Three appearances by the President, all three focused on technology and renewal. It is no wonder that China observers now pay more attention to Xi’s smaller meetings than the traditionally important appointments at the People’s Congress. For example, Xie Maosong, professor at the National Strategy Institute of Tsinghua University, has long regarded the Xi meetings as the “most important window” of the People’s Congress.
At a meeting with delegates from the Jiangsu province last Tuesday, Xi spoke at length about unleashing “new productive forces” – a reference to the ambitious plan to massively promote domestic technology and modernize the economy.
On Wednesday, Xi attended a meeting with representatives from science and technology as part of the annual meeting of the Chinese People’s Political Consultative Conference (CPPCC), the country’s highest political advisory body, which convenes in parallel with the People’s Congress. There, he called on the participants to “fight the tech battle well.” The message here again was that new technologies have priority.
On Thursday followed a meeting with the NPC delegation of the People’s Liberation Army (PLA) and the People’s Armed Police. Here, Xi, who is also China’s supreme military commander, called on the representatives to integrate “high-tech developments” into the PLA’s war capabilities in order to “comprehensively improve strategic capabilities in emerging areas.”
Chinese EV manufacturers and battery companies are being increasingly drawn into the world – and to Europe in particular. While raw material manufacturers and battery companies have invested here in recent years, such as CATL and Svolt in Germany, companies are now entering the market along the entire value chain, including vehicle production. This is the result of a new study by the think tank Rhodium Group entitled “Pole Position: Chinese EV Investments boom amid growing political backlash.”
Researchers expect Chinese outbound foreign direct investment (OFDI) in the EV sector to reach a record level last year and likely exceed the approximately EUR 27 billion invested in 2022. The final figure for 2023 is not yet known. Much of the money will end up in Europe, Asia, and the Middle East. On the one hand, this trend means a secure supply of components for the domestic EV industry and jobs for Europe. On the other hand, however, it also creates new dependencies.
Previously, Chinese EV makers manufactured their vehicles in China and exported them to their target markets. However, several international plants were announced in 2022 and 2023, including BYD and Great Wall Motor in Thailand, Volvo parent company Geely in Slovakia, and BYD in Hungary. BYD is also considering plans to build a plant in Mexico.
The authors of the Rhodium study call this a new trend. In 2024, investments in vehicle production are likely to gain even more importance. They have also noticed another new development in the EV sector: Battery manufacturers are bringing their own suppliers from China to Europe to supply them with raw materials, i.e., cathode and anode manufacturers.
Europe, the Middle East, North Africa, and Asia: This is where three-quarters of OFDI ends up. In Europe, Hungary, Finland, and Sweden benefit in particular – with 92 percent, the bulk went to these countries in 2023. Hungary stands out: CATL invested 6.7 billion euros in a gigafactory in 2022, and BYD decided to build a car factory in Hungary in 2023.
The total value of the investment is not yet known but is likely to be several billion. Huayou Cobalt plans to produce cathodes in Hungary, and Eve Energy and Sunwoda, which want to produce traction batteries for local car manufacturers, have also invested significant sums.
In the Middle East and North Africa, OFDI focused on Morocco, which signed free trade agreements with the EU and the USA. Gotion High Tech announced an almost six billion euro investment for a gigafactory, while CNGR and competitor BTR invested large sums in cathode production. And in Asia, nearly six billion euros flowed into Thailand and South Korea. In South Korea, investors were primarily interested in joint ventures with battery manufacturers, while in Thailand, companies such as Great Wall Motor, BYD and GAC Aion are investing in vehicle production.
However, there is also a negative trend. Investment in the USA declined in 2023, with only around 2.5 billion euros invested instead of 4.4 billion euros in the previous year. Chinese companies are unsettled by the US regulatory environment: They encounter strong resistance, and the upcoming election this fall will also almost certainly impact how Washington will treat Chinese companies in the future.
In Europe, several push and pull factors make electric mobility investments attractive.
China’s EV manufacturers have the potential to put Europe’s car industry under massive pressure once Chinese brands have gained a foothold with European consumers. Measures such as the EU’s anti-subsidy investigation are the first steps towards protecting Europe as a business location. The difference to the US here is interesting: The US protects its domestic market and makes investment in the industry more difficult. European countries, on the other hand, specifically attract investments from China in order to bring part of the value creation to the EU and create jobs.
However, the authors of the Rhodium study have observed an imbalance that could cause friction between the EU member states: In 2022 and 2023, 53 percent of Chinese investments flowed to Hungary. While the country subsidizes the expansion of Chinese companies, it receives funds from the EU. If the trend continues, EU members could invoke the EU Foreign Subsidies Regulation and have the investments audited. This could potentially have an impact on future investments from China in the region.
Chinese battery companies also rival European companies such as Swedish Northvolt or Automotive Cells in France. If European companies fail to compete, their dependence on Chinese battery manufacturers would increase. The EU could also respond with stricter regulations.
In China, the global expansion of the EV supplier industry is highly desired. This is not only reflected in the development plan for the alternative drive vehicle (NEV) industry for 2021-2035. Recently, the State Council and several ministries have politically reaffirmed the importance of EV expansion. However, the industry’s globalization is creating new concerns.
The intention is to tap into international markets, especially now that Chinese companies have a head start in the EV sector. On the other hand, China loses domestic manufacturing sites and, therefore, jobs. Given the current economic situation, that is not really desirable.
Another concern in Beijing is the technology drain. Know-how could flow out of foreign battery factory production sites, which, however, is what gives the companies their competitive edge. As a result, Beijing could potentially impose regulations, the study’s authors write.
This creates a balancing act in China between the interests of corporations and the government, as is typical in developed economies: While companies want to raise their profits by investing overseas, the government aims for more domestic investment.
The recent Chinese New Year celebrations in the Saxon district town of Borna featured music and dragon dances, as well as a video invitation from the mayor of the Chinese sister city of Dujiangyan: “You are very welcome to the home of the panda bears. We are looking forward to your visit!”
At the World Chinese Language Conference, an education fair in Beijing in December 2023, over one hundred universities offered summer courses for international students, including factory tours and tourist excursions. Chinese high schools are looking for German partner schools: Not one but two schools from Leipzig received invitations to the sister city of Nanjing. Huawei invites young inventors on a tour of the Shenzhen innovation hub, while universities from Guangzhou to Shanghai, from Chongqing to Tianjin, are recruiting conference participants and research cooperation across Europe.
This is also supported by the Beijing government’s decision in December 2023 to allow visitors from Germany (and other countries) to enter the country for up to 14 days visa-free. China aims to stimulate domestic consumption and encourages foreign suppliers and investors. At the same time, it offers scholarships of all kinds via the Center for Language Education and Cooperation (www.chinese.cn).
For three years during the pandemic, travel to China was practically impossible: Only a select few could fly back and forth under difficult conditions and time-consuming quarantine measures. As a result, not only tourism but also economic activity and academic and social exchange suffered. Political dialog was also affected, as was the interest of many Europeans in relocating there or simply exploring. We have obviously not yet recovered from this.
On top of this, two important dimensions of everyday life in China continue to cause us concern: The authoritarian form of politics, which makes us feel uneasy – although this existed in many parts of Europe until a few decades ago, we feel insecure and threatened in our modern democratic self-image. And secondly, there is the centralized control of the media and public opinion decreed by the Communist Party: Journalists cannot pursue their work with the same freedom as they are used to here – this impairs their work and leads to a negative undertone, even when there is something positive to report.
This is probably the reason for German media coverage: Time and again, they say that China is repressive, aggressive, and suddenly “less democratic.” The cancellation of the premier’s press conference is “another step that shows how much China is closing itself off at all levels.” Positive figures are forged, they say. When it comes to scientific breakthroughs, suspicious politicians claim that something can’t be right.
This juvenile cancel culture won’t get us anywhere. A country like Germany, preaching tolerance and cultural diversity, must neither ignore nor belittle China – Communist Party or not. Nor should it refuse to accept Chinese students because of their origin. Talking and negotiating with the people of Taiwan is important, but it is not an alternative.
Confucius is quoted too often (and usually inaccurately), but there is no doubt that he firmly believed in learning and in dialogue with other people. He famously said: “With three men walking, there is always a teacher among them 三人行，必有我师.”
And of course: If you do it right, then those close to you will be happy, and those who are far away will come to you 有朋自远方来，不亦乐乎 – It’s a long flight, but even today, people in China are happy about every visitor from Europe.
Benjamin Creutzfeldt (PhD) is a sinologist, political scientist, and Managing Director of the Confucius Institute Leipzig e.V.
He was only supposed to clean a show pool at Changchun Zhongtai Ocean World in the province of Jilin. However, because a mermaid performer could not perform due to the Spring Festival vacation, he stepped in without further ado. This month, tourist videos of his tongue-in-cheek performance went viral and made the man the latest internet sensation. The aquarium has now even hired him as a full-time merman – with painted-on abs and a tailor-made costume featuring a traditional phoenix motif. “The pay is simply irresistible,” he told Chinese media.
