Blog https://www.merics.org/en/blog/rss?field_topics_target_id=All en Cutting import tariffs can help China’s economy – and global trade https://www.merics.org/en/blog/cutting-import-tariffs-can-help-chinas-economy-and-global-trade <span>Cutting import tariffs can help China’s economy – and global trade</span> <span><span lang="" about="/en/user/301" typeof="schema:Person" property="schema:name" datatype="">smuscat</span></span> <span>Thu, 05/24/2018 - 09:39</span> <div class="layout layout--onecol"> <div class="layout__region layout__region--content"> <div class="field field--name-field-blog-date field--type-datetime field--label-hidden field--item"><time datetime="2018-05-24T12:00:00Z">24/05/18</time> </div> <div class="field field--name-field-announcement-text field--type-text-long field--label-hidden field--item"><p><span><span><span><strong><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">At a time of rising protectionism, China is sending a signal of liberalization by lowering its import tariffs on cars. The unilateral move is only a first step if China wants to prove its commitment to the multilateral trading system. Sacrificing outdated protections can also help China’s transition towards a higher value-added economy. </span></strong></span></span></span></p></div> <div class="field field--name-field-main-image field--type-image field--label-hidden field--item"> <img srcset="/sites/default/files/styles/max_325x325/public/2018-05/Blog_German%20car%20sales%20in%20China_pbu805663_29_imaginechina.jpg?itok=f1JoqMKZ 325w, /sites/default/files/styles/max_650x650/public/2018-05/Blog_German%20car%20sales%20in%20China_pbu805663_29_imaginechina.jpg?itok=Rf1NA9oX 650w, /sites/default/files/styles/max_1300x1300/public/2018-05/Blog_German%20car%20sales%20in%20China_pbu805663_29_imaginechina.jpg?itok=vD8RTmXs 1300w, /sites/default/files/styles/max_2600x2600/public/2018-05/Blog_German%20car%20sales%20in%20China_pbu805663_29_imaginechina.jpg?itok=DsbJ-P1C 2600w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2018-05/Blog_German%20car%20sales%20in%20China_pbu805663_29_imaginechina.jpg?itok=f1JoqMKZ" alt="Car sales" title="German luxury carmakers stand to gain from China&#039;s lowered import tariffs. Source: ImagineChina/Xu Congjun." typeof="foaf:Image" class="img-responsive" /> </div> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Right before German chancellor Angela Merkel’s trip to Beijing, China has doubled down on its pledge to save the global trading system from a wave of protectionism. In the wake of Xi Jinping’s promise given in Davos in 2017, China has taken a few steps such as </span><span lang="EN" xml:lang="EN" xml:lang="EN">dropping the requirement that forced foreign investors to enter into joint ventures with Chinese partners</span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">. But by and large, the international business community remained unconvinced of China’s true commitment to </span><span lang="EN" xml:lang="EN" xml:lang="EN">further liberalize access to its markets.</span></span></span></span></p> <p><span><span><span><span lang="EN" xml:lang="EN" xml:lang="EN">This may be about to change. By </span><a href="https://www.reuters.com/article/china-autos-tariffs/china-to-cut-tariffs-for-cars-auto-parts-from-july-1-idUSB9N1SI00Z"><span lang="EN" xml:lang="EN" xml:lang="EN">reducing import tariffs for cars from 25 to 15 percent</span></a><span lang="EN" xml:lang="EN" xml:lang="EN"> by July 1, the Xi leadership has started to tackle one of the biggest obstacles to China’s credibility as a global leader on trade: the country’s highly selective and distorted tariff structure. The move delighted the shareholders of German carmakers such as Audi, BMW, Daimler, and Porsche that export their premium models to China. The overall effect on these companies’ profits may be limited however, since the </span><a href="https://www.bloomberg.com/view/articles/2018-05-23/china-s-tariff-cuts-darken-carmaker-profit-hopes"><span lang="EN" xml:lang="EN" xml:lang="EN">lower import tariffs will also lead to lower prices</span></a><span lang="EN" xml:lang="EN" xml:lang="EN"> for the middle-class models they produce in China.</span></span></span></span></p> <p><span><span><span><span><span lang="EN" xml:lang="EN" xml:lang="EN"><span>As f</span></span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>or China, allowing cheaper car imports may seem courageous, but it is in China’s own interest. The change in tariffs will be felt in the Chinese economy, but in the long run, it will facilitate the transition to a higher value-added economic model.</span></span></span></span></span></span></p> <p><span><span><span><span> <span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>China’s current production model is rooted in the time when the country’s focus was on being the world’s extended workbench. The combination of low labor costs and high tariffs on finished products such as cars induced international companies to move their assembly lines to China. But due to China’s lower technological level many critical components were imported (at lower tariff rates), meaning that most of the value-added remained abroad. The cost of importing intermediate products was offset by the savings in labor costs during the assembly stage in China. For Chinese companies as well as for international companies willing to produce in China, the high import tariffs on finished or downstream goods also meant that their assembly stages were then strongly protected from international competition in the Chinese market.</span></span></span></span></span></span></p> <p><span><span><span><strong><span lang="EN" xml:lang="EN" xml:lang="EN">China’s tariffs are high and inflexible</span></strong></span></span></span></p> <p><span><span><span><span lang="EN" xml:lang="EN" xml:lang="EN">Even compared to other emerging economies, China’s tariff structure has been rigid. First, China maintains a tariff level for non-agricultural products (9 %), which is considerably higher than that of its two main trading partners, the United States and the European Union (both below 4%). Especially in the upper ranges (between 15 and 25 %), the Chinese level is far higher than that in the world’s other two large trading blocks. Second, China has been less willing than countries like India or Brazil to unilaterally lower tariffs from the maximum level allowed under WTO rules (“bound tariffs”). Since its WTO entry in 2001, this rigidity explains why China’s “applied” tariffs on non-agricultural products have been almost identical with the “bound” tariff rates.</span></span></span></span></p> <p><span><span><span><span lang="EN" xml:lang="EN" xml:lang="EN">This behavior no longer serves China’s own economic interests. It has cemented a production structure in cross-border supply chains in which China’s role is often reduced to that of a finishing-touch assembler of inputs. </span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>The current tariff structure discriminates against the production of upstream products such as battery production or data technologies for e-mobility that are defined as central sectors in the “Made in China 2025” industrial policy strategy and that the Chinese government supports with generous subsidies.</span></span></span></span></span></p> <p><span><span><span><strong><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>Lower tariffs would help China’s transition</span></span></strong></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>If China continues to lower the high import tariffs on finished products, this would increase competition with producers abroad. Especially in combination with rising wages, China would likely end up losing many low-skilled manufacturing jobs in assembly to less developed countries. This is true for the car industry, but also for a number of other industries that have been </span></span><span lang="EN" xml:lang="EN" xml:lang="EN">overproportionately protected, </span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>from</span></span><span lang="EN" xml:lang="EN" xml:lang="EN"> textile and clothing to several food industries.</span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Yet </span><span lang="EN" xml:lang="EN" xml:lang="EN">all of these industries can no longer be a backbone of China’s industrial structure as China charges ahead with its industrial upgrading plans laid down in the Made in China 2025 strategy. China will have to sacrifice a number of processing stages and even entire low-tech industries, which had been symbols of China’s transformation in the reform era.</span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span>This overdue transition would be a necessary step in China’s development towards an advanced economy. The competition created through lower import tariffs would incentivize domestic investment in the production of those intermediate products that so far had less chance to compete with products from abroad than the downstream stages of production.</span></span><span lang="EN" xml:lang="EN" xml:lang="EN"> Changing the tariff structure might therefore one day result in China becoming a competitive producer of intermediates instead of only a finishing touch producer. </span></span></span></span></p> <p><span><span><span><span lang="EN" xml:lang="EN" xml:lang="EN">A series of deep unilateral cuts of tariffs below the bound level would bring a double dividend to China. It would help the country’s economic transformation while enhancing the global standing of its leadership – as a leader in global trade, if not as the savior of the WTO.</span></span></span></span></p></div> <div class="field field--name-field-authors field--type-entity-reference field--label-hidden field--items"> <div class="field--item"> <article role="article" about="/en/team/rolf-j-langhammer" class="team is-promoted tile-view clearfix darktile"> <a href="/en/team/rolf-j-langhammer" rel="bookmark"> <div class="tile-view-wrapper" style="background-color: ;background: url(/sites/default/files/2017-07/161004_Rolf_Lammhammer_CV_2.jpg) no-repeat;background-size: cover;"> <h3> <span>Rolf J. Langhammer</span> </h3> <div class="content"> <div class="field field--field-position">Senior Policy Fellow</div> </div> </div> </a> </article> </div> </div> </div> </div> Thu, 24 May 2018 07:39:05 +0000 smuscat 7096 at https://www.merics.org Germany needs China to save the global order from Trump’s attacks https://www.merics.org/en/blog/germany-needs-china-save-global-order-trumps-attacks <span>Germany needs China to save the global order from Trump’s attacks</span> <span><span lang="" about="/en/user/301" typeof="schema:Person" property="schema:name" datatype="">smuscat</span></span> <span>Wed, 05/23/2018 - 08:14</span> <div class="layout layout--onecol"> <div class="layout__region layout__region--content"> <div class="field field--name-field-blog-date field--type-datetime field--label-hidden field--item"><time datetime="2018-05-23T12:00:00Z">23/05/18</time> </div> <div class="field field--name-field-announcement-text field--type-text-long field--label-hidden field--item"><p><span><span><span><strong><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>The US president’s attacks on multilateralism may push Chancellor Merkel into an unlikely alliance with Beijing. Germany and the EU have to test ways to work with China in the absence of transatlantic coordination. The goal must be to organize an international pushback against destructive US trade policies.</span></span></span></strong></span></span></span></p></div> <div class="field field--name-field-main-image field--type-image field--label-hidden field--item"> <img srcset="/sites/default/files/styles/max_325x325/public/2018-05/180523_China_Germany_Puzzle_pbu654668_12.jpg?itok=0w4zDaMv 325w, /sites/default/files/styles/max_650x650/public/2018-05/180523_China_Germany_Puzzle_pbu654668_12.jpg?itok=1S0rl8nm 650w, /sites/default/files/styles/max_1300x1300/public/2018-05/180523_China_Germany_Puzzle_pbu654668_12.jpg?itok=LnCiJKVH 1300w, /sites/default/files/styles/max_2600x2600/public/2018-05/180523_China_Germany_Puzzle_pbu654668_12.jpg?itok=-x1Froh0 2600w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2018-05/180523_China_Germany_Puzzle_pbu654668_12.jpg?itok=0w4zDaMv" alt="China Germany" title="Image by ImagineChina" typeof="foaf:Image" class="img-responsive" /> </div> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>Angela Merkel finds herself in an awkward position on her visit to China this week. The trip – her 11<sup>th</sup> to China since she became chancellor in 2005 – should be the routine courtesy call to mark the beginning of her fourth term. But nothing is routine these days. At a time when the United States is overturning the fundamental rules of the international order, the EU and Germany have to test new ways of working with Beijing.</span></span></span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>US president Donald Trump’s attack on multilateralism may push Merkel into an unlikely – and uncomfortable – alliance with China. This is at least the case for issues on which both sides feel the need to hedge against US policies with potentially destructive consequences for world trade and world peace. Saving the WTO and saving the Iran nuclear deal will be at the top of the agenda of Merkel’s talks with Xi in Beijing.</span></span></span></span></span></span></p> <p><span><span><span><strong><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>Shared interest in open global markets</span></span></span></strong></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>As export nations, China and Germany share the interest in open global markets and free trade flows – at least in theory. Under different circumstances, the German government would seek transatlantic coordination in urging China to lower barriers to market access for American and European investors. Instead, Merkel is forced to rely on China to uphold the principles and rules of the current global system. Germany and Europe hope that Xi will take on the responsible leadership role he has promised the world in Davos last year. The common goal has to be to protect the global trade regime from the American onslaught onto their legitimacy, but also to renew the system in a way that will make it attractive for all again, even for the United States.</span></span></span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>So far, China’s announcements contrast with the country’s actual foreign economic policy, which excludes foreign companies from many lucrative markets and investment opportunities. Now is the time for the Chinese leadership to show that it is serious about open markets and free trade. China has announced a number of important steps in that direction over the next years. But in face of the open current attacks from the US as well as growing public suspicion over Chinese investment in the EU, Beijing will have to offer more if it wants to prove its good intentions and restore faith in the liberal trading order.</span></span></span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>This is also true for Xi’s signature Belt and Road Initiative. Beijing can be expected to ask Merkel to sign a MoU in support of the Chinese-led Eurasian – and increasingly global – connectivity project. And just like other European leaders before her, Merkel will refuse to honor the Chinese request. In itself, the Chinese push for improving the transportation and communication infrastructure between Asia and Europe should be a welcome endeavor. But the way China has steamrolled recipient countries has generated skepticism. In an unusual step, the IMF has recently warned these countries of taking on excessive debt loads that would create dependencies on China.</span></span></span></span></span></span></p> <p><span><span><span><strong><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>EU-China BIT talks need new impetus</span></span></span></strong></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>Despite all these concerns, Merkel has to push for expediting the languishing talks between the EU and China about a bilateral comprehensive trade and investment agreement. Successful negotiations would generate pressure on the United States, which has extracted itself both from transatlantic and transpacific negotiations. Moreover, it is in both sides’ interest to limit the privileged role of the US dollar as an international lead and reserve currency. China has been working towards this goal already, but the EU has so far been cautious to not offend the transatlantic ally.</span></span></span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>Europeans will have to define and defend their interests vis-à-vis both China and the United States if they don’t want to be caught up in a dual squeeze between Chinese and US economic nationalism. They should develop a strategy to deal with the growing US-Chinese competition, not just on trade, but also on international standard setting. For example, Europe should work on developing its own rules for cyberspace and the digital economy before the two other powers have divided up the world. But so far the EU has not even completed its internal common digital market.</span></span></span></span></span></span><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>Managing the relationship with China will be a tightrope act for Merkel. A rising China is a competitor, not just for European companies but also for European norms and values. But the fact that there is no transatlantic ally ready to have Europe’s back means that siding with Beijing on selective issues will be necessary for the EU and Germany to carve out their own diplomatic and economic space.</span></span></span></span></span></span></p> <p><span><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><span><span>At least for this visit, the shared interest in saving the Iran nuclear deal and the WTO will provide an opportunity for Chinese-German cooperation, perhaps preparing the ground for tackling trickier bilateral issues down the road.</span></span></span></span></span></span></p> <p> </p></div> <div class="field field--name-field-authors field--type-entity-reference field--label-hidden field--items"> <div class="field--item"> <article role="article" about="/index.php/en/team/sebastian-heilmann" class="team is-promoted is-sticky tile-view clearfix darktile"> <a href="/index.php/en/team/sebastian-heilmann" rel="bookmark"> <div class="tile-view-wrapper" style="background-color: ;background: url(/sites/default/files/2017-07/Sebastian_Heilmann.jpg) no-repeat;background-size: cover;"> <h3> <span>Sebastian Heilmann</span> </h3> <div class="content"> <div class="field field--field-position">President</div> </div> </div> </a> </article> </div> </div> </div> </div> Wed, 23 May 2018 06:14:59 +0000 smuscat 7081 at https://www.merics.org "Small NGOs particularly vulnerable under new NGO law" https://www.merics.org/en/blog/small-ngos-particularly-vulnerable-under-new-ngo-law <span>&quot;Small NGOs particularly vulnerable under new NGO law&quot;</span> <span><span lang="" about="/en/user/286" typeof="schema:Person" property="schema:name" datatype="">h.seidl</span></span> <span>Thu, 05/17/2018 - 14:30</span> <div class="layout layout--onecol"> <div class="layout__region layout__region--content"> <div class="field field--name-field-blog-date field--type-datetime field--label-hidden field--item"><time datetime="2018-05-17T12:00:00Z">17/05/18</time> </div> <div class="field field--name-field-announcement-text field--type-text-long field--label-hidden field--item"><p>Interview with <a href="/team/jessica-batke">Jessica Batke</a></p> <p><span><span><strong><span><span>When China’s law on non-governmental organizations went into effect in early 2017, observers worried that many international NGOs would pull out as a result. Almost 18 months </span></span></strong><strong><span><span>later</span></span></strong><strong><span><span>, the picture is mixed as Jessica Batke of ChinaFile has found out. As part of ChinaFile’s NGO Project, she tracks the experiences with the new law and says </span></span></strong><strong><span><span>that</span></span></strong><strong><span><span> no NGO is known to have </span></span></strong><strong><span><span>left China</span></span></strong><strong><span><span> so far. Yet, this could change in 2018. Small NGOs find it particularly difficult to comply with the new regulations.</span></span></strong></span></span></p></div> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p>Questions: <a href="/team/claudia-wessling">Claudia Wessling</a></p> <p> </p></div> <div class="field field--name-field-blog-paragraphs field--type-entity-reference-revisions field--label-hidden field--items"> <div class="field--item"> <div class="paragraph paragraph--type--download-whole-width paragraph--view-mode--default"> <div class="layout layout--onecol"> <div class="layout__region layout__region--content"> </div> </div> </div> </div> </div> <div class="field field--name-field-podca field--type-file field--label-hidden field--items"> <div class="field--item"><span class="file file--mime-audio-mpeg file--audio icon-before"><span class="file-icon"><span class="icon glyphicon glyphicon-headphones text-primary" aria-hidden="true"></span></span><span class="file-link"><a href="https://www.merics.org/sites/default/files/2018-05/Merics%20Experts%2054%20-%20Jessica%20Batke_0.MP3" type="audio/mpeg; length=30488832" title="Open audio file in new window" target="_blank">Merics Experts 54 - Jessica Batke.MP3</a></span><span class="file-size">29.08 MB</span></span></div> </div> </div> </div> Thu, 17 May 2018 12:30:33 +0000 h.seidl 7011 at https://www.merics.org Facing up to China's state-led tech revolution https://www.merics.org/en/blog/facing-chinas-state-led-tech-revolution <span>Facing up to China&#039;s state-led tech revolution</span> <span><span lang="" about="/en/user/301" typeof="schema:Person" property="schema:name" datatype="">smuscat</span></span> <span>Wed, 05/09/2018 - 13:27</span> <div class="layout layout--onecol"> <div class="layout__region layout__region--content"> <div class="field field--name-field-blog-date field--type-datetime field--label-hidden field--item"><time datetime="2018-05-15T12:00:00Z">15/05/18</time> </div> <div class="field field--name-field-announcement-text field--type-text-long field--label-hidden field--item"><p><strong>The success of authoritarian innovation in China challenges liberal market theories. Technological innovation is no longer just driven by Silicon Valley-style capitalism, but also by technocrats in Beijing. China is proving to be a "red swan," as unforeseen as a "black swan" event. Its techno authoritarianism appears well suited for dealing with many megachallenges of the 21st century.</strong></p></div> <div class="field field--name-field-main-image field--type-image field--label-hidden field--item"> <img srcset="/sites/default/files/styles/max_325x325/public/2018-05/180515_Tencent_Logo_pbu763876_03.jpg?itok=ysOB8WM3 325w, /sites/default/files/styles/max_650x650/public/2018-05/180515_Tencent_Logo_pbu763876_03.jpg?itok=IhTmyiUA 650w, /sites/default/files/styles/max_1300x1300/public/2018-05/180515_Tencent_Logo_pbu763876_03.jpg?itok=mrGuHKPx 1300w, /sites/default/files/styles/max_2600x2600/public/2018-05/180515_Tencent_Logo_pbu763876_03.jpg?itok=-z-lcd1C 2600w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2018-05/180515_Tencent_Logo_pbu763876_03.jpg?itok=ysOB8WM3" alt="Tencent Logo" title="Image by ImagineChina" typeof="foaf:Image" class="img-responsive" /> </div> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p>At first glance, leading Chinese internet players like Baidu, Tencent Holdings and Didi Chuxing can look like copies of established US counterparts like Google or Uber. But there is a crucial difference.</p> <p>The American companies are products of Silicon Valley's cut-and-thrust markets, one of the planet's purest forms of capitalism. By contrast, while the Chinese companies are all privately owned, their rapid growth at home and abroad owes much to the firm hand of the Chinese state.</p> <p>Indeed, we will have to get used to associating tech innovation not just with spontaneous bursts of creativity and injections of private capital, but also with technocrats in Beijing drafting long-term technological development plans.</p> <p>It was meant as a wake-up call when former Google CEO Eric Schmidt recently predicted that China could overtake the U.S. in the field of artificial intelligence within a decade. Chinese telecom equipment maker Huawei Technologies is about to roll out 5G mobile broadband networks around the globe. And e-mobility solutions from China's leading internet players were the center of attention at this year's Consumer Electronics Show in Las Vegas.</p> <p><strong>Can creativity develop under authoritarian rule?</strong></p> <p>While the internet itself and many other technologies we take for granted now have their roots in the U.S. defense and space programs, we have come to think of creativity and entrepreneurship as linked to open societies and markets. Innovation and authoritarian rule do not seem like a natural pairing. The Soviet Union may have taken the early lead in the space race in the late 1950s and early 1960s but with limited impact on economic or social development.</p> <p>China censors the internet, intervenes frequently with market mechanisms and demands that even private companies pledge ideological loyalty. Two years ago, many China watchers were embracing the view that authoritarian tightening under President Xi Jinping was producing a dangerous retrenchment that might stifle the country's innovative potential and ultimately undermine its economic success.</p> <p>Once again, China is challenging us to rethink our assumptions. After the fall of the Soviet Union, many felt the trend toward the political and economic triumph of free-market democracies was irresistible, based partly on advantages in technology development. But China is proving to be a "red swan," as unforeseen as the "black swan" events much discussed over the past decade.</p> <p>Unlike its former counterparts in Eastern Europe, the Chinese Communist Party has managed to maintain its grip on power while leaving room for policy experimentation at the local level, from market liberalization to administrative modernization and technological innovation. The leadership has allowed bottom-up initiatives to inform central policies, leading to a boost in productivity.</p> <p><strong>Change of economic model requires indigenous innovation</strong></p> <p>Maintaining this delicate balance seemed possible as long as growth rates kept rising. But China is reaching the limits of the quantitative growth and poverty-alleviation benefits that can be generated from a manufacturing-based economy. The shift to qualitative growth and a higher-value adding economy requires indigenous innovation.</p> <p>The conventional wisdom suggests that the constraints of China's system -- from a rigid education system to the lack of the rule of law -- bode ill for this next transformation. But in 2018, China's leaders are no more willing than in 1978 to act according to Western textbooks on economic or political theory. Rather than relaxing control, Xi has re-centralized power and reinforced the Communist Party's grip over the economy and society.</p> <p>So far at least, Xi's hands-on approach has not seemed to stand in the way of China's ambitious agenda for industrial upgrading and technological innovation. On the contrary, as it turns out, the discipline and obedience of its Leninist "democratic centralism" are a tight fit with many of the internet-driven technologies that Chinese companies have developed over the past few years with generous state support.</p> <p>Red Swan China now seems better positioned than liberal democracies to deal with the mega-challenges of the 21st century, from climate solutions to smart city management. Many big data-based technologies that are being pioneered in China these days -- from intelligent traffic management to online payment systems -- serve the purposes of enhanced surveillance. The most prominent example is the "social credit system," which rates the trustworthiness of citizens, companies and institutions based on their compliance with economic and social rules, with consequences on everything from loan approvals to access to flights and trains.</p> <p><strong>China's technological solutions could become an export hit</strong></p> <p>At the same time, these new tools are attractive not just for authoritarian regimes. The underlying technologies of China's new techno-authoritarianism are exportable and applicable around the world as they address many worries of our age, from mounting security threats to urbanization and environmental pressures.</p> <p>At a time when public trust in free markets and democratically elected politicians is on the decline even in Western societies, the technological solutions offered by Chinese companies and financiers for addressing concrete social and economic problems appear appealing, especially in developing and emerging countries.</p> <p>In 2018, just as in 1978, the secret of China's success lies in the combination of long-term priorities and flexible implementation. The difference is that Deng Xiaoping's approach then was experimental and allowed ground-up innovation and thinking outside the box, whereas Xi's focus is purely instrumental: The leadership is striving to concentrate its full energy on optimizing what it is putting inside the box.</p> <p>In the age of big data and artificial intelligence, a political economy in which the government, IT companies, financiers and consumers jointly push for, or passively facilitate, unrestrained and centralized data collection and processing may turn out to have a systemic advantage. Top-led policy implementation boosted by large-scale data processing could have an edge in economic competition with decentralized and fragmented democratic rule-of-law systems with their privacy, transparency and competition concerns in the transition toward a digital civilization.</p> <p>As liberal democracies around the world struggle with political and social crises, Beijing has decided what it wants China to be: a high-tech superpower that emphasizes hierarchy and discipline over the perceived chaos of free markets and societies. If liberal political and economic systems do not find a way to reinvigorate their problem-solving capacities, social cohesion, and international credibility and appeal, they could find themselves on the losing end of economic, technological and eventually global systemic competition with China.</p> <p><strong>This blogpost is based on the book, <a href="https://www.merics.org/en/publications/red-swan">"Red Swan: How unorthodox policy making facilitated China's rise," </a>by Sebastian Heilmann, published by the The Chinese University Press in January 2018.</strong></p> <p><strong>The article was first published by <a href="https://asia.nikkei.com/Opinion/Facing-up-to-China-s-state-led-tech-revolution2">Nikkei Asian Review on May 2, 2018</a>.</strong></p> <p> </p></div> <div class="field field--name-field-authors field--type-entity-reference field--label-hidden field--items"> <div class="field--item"> <article role="article" about="/index.php/en/team/sebastian-heilmann" class="team is-promoted is-sticky tile-view clearfix darktile"> <a href="/index.php/en/team/sebastian-heilmann" rel="bookmark"> <div class="tile-view-wrapper" style="background-color: ;background: url(/sites/default/files/2017-07/Sebastian_Heilmann.jpg) no-repeat;background-size: cover;"> <h3> <span>Sebastian Heilmann</span> </h3> <div class="content"> <div class="field field--field-position">President</div> </div> </div> </a> </article> </div> </div> </div> </div> Wed, 09 May 2018 11:27:35 +0000 smuscat 6971 at https://www.merics.org German-Chinese media dialogue: some connections amid fundamental differences https://www.merics.org/en/blog/german-chinese-media-dialogue-some-connections-amid-fundamental-differences <span>German-Chinese media dialogue: some connections amid fundamental differences</span> <span><span lang="" about="/en/user/301" typeof="schema:Person" property="schema:name" datatype="">smuscat</span></span> <span>Wed, 05/09/2018 - 15:13</span> <div class="layout layout--onecol"> <div class="layout__region layout__region--content"> <div class="field field--name-field-blog-date field--type-datetime field--label-hidden field--item"><time datetime="2018-05-09T12:00:00Z">09/05/18</time> </div> <div class="field field--name-field-announcement-text field--type-text-long field--label-hidden field--item"><p><span><span><strong><span><span>At this year’s German-Chinese media dialogue in Berlin participants shared concerns over separating real news from fake news on social media while acknowledging the fundamental differences in how both sides see the role of the media. Chinese participants spoke of the media’s job to promote government views, i.e. on globalization. Germans demanded better access to the Chinese media market and better conditions for foreign correspondents in China.</span></span></strong></span></span></p></div> <div class="field field--name-field-main-image field--type-image field--label-hidden field--item"> <img srcset="/sites/default/files/styles/max_325x325/public/2018-05/GermanChinaMediaDialogue.jpg?itok=FjwAKg4V 325w, /sites/default/files/styles/max_650x650/public/2018-05/GermanChinaMediaDialogue.jpg?itok=KnPkC37J 650w, /sites/default/files/styles/max_1300x1300/public/2018-05/GermanChinaMediaDialogue.jpg?itok=74X-AnWo 1000w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2018-05/GermanChinaMediaDialogue.jpg?itok=FjwAKg4V" alt="German and Chinese media representatives exchanged views at the 7th German-Chinese Media Dialogue at Humboldt University in Berlin on May 7, 2018." title="Neoclassical setting: 7th German-Chinese Media Dialogue at the Humboldt University in Berlin. Picture by Auswärtiges Amt." typeof="foaf:Image" class="img-responsive" /> </div> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><span><span><span><span>There was curiosity, mixed with some misgivings, among German journalists gathered for the seventh state-level media dialogue in Berlin on May 7 – after all it is no secret that the values and practices behind journalism in Germany, one of the world’s most open societies, and China, one of the world’s most censored, are different. How would they connect to their Chinese counterparts?</span></span></span></span></p> <p><span><span><span><span>Yet in four working groups over the course of the day (they dealt with the role and responsibilities of the media in times of globalization, and international communication in a social media age,) some real progress was made. The atmosphere was largely courteous, everyone had their say, information was shared, and, while there were differences, there was also a sense of connection to people through issues on which both sides agreed, and disagreed.</span></span></span></span></p> <p><span><span><strong><span><span>Germans like detail, Chinese make broader points</span></span></strong></span></span></p> <p><span><span><span><span>Several times, Chinese participants pointed to something they felt was a key difference: while Chinese journalists preferred to speak broadly, Germans were detail-focused. “You like detail, we like generalities,” said Wu Qimin, the deputy director general of the International English Department of the People’s Daily.</span></span></span></span></p> <p><span><span><span><span>So much so that Wang Xiaotong, director of the media center at the Chinese Academy of International Trade and Economic Cooperation, referred to the growing global interconnectedness in vague terms. “You are in me and I am in you,” she said, a notion that puzzled some of the German journalists.</span></span></span></span></p> <p><span><span><span><span>A key theme that emerged at the event, part of state-level consultations between Germany and China and held in a neoclassical, former veterinary school established by the Prussian kings now part of the Humboldt Graduate School: Chinese media see it as part of their job to promote the Chinese government’s vision of globalization, for example by reporting on “One Belt One Road (OBOR),” China’s flagship international policy project.</span></span></span></span></p> <p><span><span><strong><span><span>Will Chinese reporters join global cooperative investigations?</span></span></strong></span></span></p> <p><span><span><span><span>German reporters were more skeptical and asked it if were possible in China to examine critically the process, in regard to global issues such as the growing wealth gap and the fast accumulation of power and resources of international finance companies. Sven Hansen of Tageszeitung (taz), the German daily newspaper, asked if it would be possible one day to cooperate with Chinese reporters on the large, multi-point, cooperative investigations that had produced key moments in journalism in recent years, such as the Panama Papers and the Paradise Papers. The request was taken on board and later, in summarizing the event, Shao Jianguang, the deputy director of the International Cooperation Center of China Media Group, expressed some support for the idea.</span></span></span></span></p> <p><span><span><span><span>The dialogue over globalization was occasionally scratchy, with German reporters pressing for detail on issues such as how Chinese media were staffing their operations (but not getting answers) and the moderators regularly interrupting when Chinese participants spoke for too long or appeared to stray from media issues into political and economic topics, such as the importance of OBOR. In a discussion of wrongdoing by states, Chinese reporters referred to events in the United States such as the Watergate scandal under the Nixon administration. They claimed that China was very open and transparent, citing the 2012 corruption case against Bo Xilai, the former party secretary of Chongqing, as an example of public broadcasting of major wrongdoing.</span></span></span></span></p> <p><span><span><span><span>In comparison, the social media sessions were smoother. (Full disclosure: I moderated one group, and Ariane Reimers of ARD, the German state broadcaster and a former China correspondent, the other.)</span></span></span></span></p> <p><span><span><strong><span><span>Participants agreed that the internet has produced a cacophony</span></span></strong></span></span></p> <p><span><span><span><span>There was true agreement that “social media” was a real form of media (and not merely platforms supported by technology companies), and therefore carried social responsibility. Zhao Zizhong, the dean of the New Media Institute and the Communication University of China, shared some research that explored who, in China, was putting a negative interpretation of public events online, and found that “only a very small percentage of people was bad.” With 38 billion WeChat messages daily, the state could not possibly control everything and only intervened to manage what it deemed false reports (for example, of a violent attack underway somewhere, which was in reality not happening) if they reached a certain amount. </span></span></span></span></p> <p><span><span><span><span>The internet had produced a “cacophony,” the Chinese journalists said – something the German journalists agreed with – and it was important to maintain clear voices of authority. In China, that was People’s Daily. “Content is king, but the platform is a bigger king,” (“</span></span><span lang="ZH-CN" xml:lang="ZH-CN" xml:lang="ZH-CN"><span>内容是王道,平台是霸道</span></span><span><span>,”) said Ms. Wu. </span></span></span></span></p> <p><span><span><span><span>Opening the event that morning, Andreas Michaelis, the German deputy foreign minister, had asked for “a real and honest dialogue.” Guo Weimin, the Chinese vice minister of the State Council Information Office, said: “We absolutely want results from this cooperation.”</span></span></span></span></p> <p><span><span><span><span>In that spirit, participants shared their ideas of what results could look like, with specific proposals: Come to our OBOR conference in China, said one; another demanded more access for German companies to the Chinese media market. Other proposals included: more articles by German experts for Chinese media, more openness from China but also more sensitively contextualized stories by German reporters in China, cooperation on reporting beat stories such as weapons sales, more German TV content for China such as programs on soccer or nature, and, finally, more visas, and better access, for German journalists in China, to match the conditions of Chinese journalists in Germany.</span></span></span></span></p></div> <div class="field field--name-field-authors field--type-entity-reference field--label-hidden field--items"> <div class="field--item"> <article role="article" about="/en/team/didi-kirsten-tatlow" class="team is-promoted tile-view clearfix darktile"> <a href="/en/team/didi-kirsten-tatlow" rel="bookmark"> <div class="tile-view-wrapper" style="background-color: ;background: url(/sites/default/files/2018-01/171201_Didi_Tatlow.jpg) no-repeat;background-size: cover;"> <h3> <span>Didi Kirsten Tatlow </span> </h3> <div class="content"> <div class="field field--field-position">Visiting Academic Fellow</div> </div> </div> </a> </article> </div> </div> </div> </div> Wed, 09 May 2018 13:13:27 +0000 smuscat 6976 at https://www.merics.org Europe needs a Mandarin excellence strategy https://www.merics.org/en/blog/europe-needs-mandarin-excellence-strategy <span>Europe needs a Mandarin excellence strategy</span> <span><span lang="" about="/en/user/301" typeof="schema:Person" property="schema:name" datatype="">smuscat</span></span> <span>Mon, 05/07/2018 - 13:16</span> <div class="layout layout--onecol"> <div class="layout__region layout__region--content"> <div class="field field--name-field-blog-date field--type-datetime field--label-hidden field--item"><time datetime="2018-05-07T12:00:00Z">07/05/18</time> </div> <div class="field field--name-field-announcement-text field--type-text-long field--label-hidden field--item"><p><span><span><span><strong><span>European schools should step up their efforts to teach students the Chinese-language skills required in a changing global landscape. Governments should follow the British example of acknowledging the strategic importance of learning Mandarin – and provide the political support and funding necessary to close this gap.</span></strong></span></span></span></p></div> <div class="field field--name-field-main-image field--type-image field--label-hidden field--item"> <img srcset="/sites/default/files/styles/max_325x325/public/2018-05/180507_Blog_Mandarin-excellence-strategy.jpg?itok=7ItU__WR 325w, /sites/default/files/styles/max_650x650/public/2018-05/180507_Blog_Mandarin-excellence-strategy.jpg?itok=FDyVQPSe 650w, /sites/default/files/styles/max_1300x1300/public/2018-05/180507_Blog_Mandarin-excellence-strategy.jpg?itok=stdGnSJi 1300w, /sites/default/files/styles/max_2600x2600/public/2018-05/180507_Blog_Mandarin-excellence-strategy.jpg?itok=rxdoKcP2 2508w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2018-05/180507_Blog_Mandarin-excellence-strategy.jpg?itok=7ItU__WR" alt="Study Mandarin" title="Teaching Mandarin Chinese in schools requires a sound setup for Chinese as a curriculum subject. Picture by michaeljung via 123RF." typeof="foaf:Image" class="img-responsive" /> </div> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><span><span><span><span>China’s rise to a global player is the subject of much public debate, but it is so far not reflected in school curriculums in Germany and other European countries. If today’s students are to succeed in tomorrow’s increasingly “Chinese” global environment, their educators need to start preparing them now. China deserves to occupy a larger place in history and social studies classes. But most importantly, Chinese-language teaching has to attain the status it deserves.</span></span></span></span></p> <p><span><span><span><span>Many European companies today have problems hiring professionals with adequate Chinese language proficiency. And there is a critical shortage of skilled Chinese interpreters who are native speakers of English, German or other European languages. To close this gap, European countries would have to produce enough graduates with command of oral and written Chinese equivalent to at least skill level C1 of the </span><a href="https://www.coe.int/t/dg4/linguistic/source/framework_en.pdf"><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Common European Framework of Reference for Languages</span></a><span>. Yet, in Germany at least, this operational proficiency is not even reached by the average holder of a master’s degree program in Chinese studies.</span></span></span></span></p> <p><span><span><span><span>The objective therefore must be to train a sizeable cohort of students who enter university or vocational college with Chinese language proficiency. The school systems need to start preparing students for this at a much younger age, and the curriculum has to guarantee a seamless transition into more advanced classes in institutions of higher education.</span></span></span></span></p> <p><span><span><span><strong><span>Chinese lags behind Classical Greek at German schools</span></strong></span></span></span></p> <p><span><span><span><span>As our newly released <a href="https://www.merics.org/de/china-monitor/china-kompetenz">MERICS China Monitor</a> reveals, the reality in most major European countries is far removed from reaching this standard. In German schools, Mandarin teaching is better established than it was 20 years ago – most federal states have developed their own curricula, and teacher training has been built up at several universities. Yet the status of the world´s most spoken language in the school curriculum is still that of a “minor” (meaning lesser-taught) language. Chinese is not even among the eight most-taught languages in German schools. With currently 5,000 learners in secondary school (1 in 1,000 secondary school students), it lags far behind Russian (109,000 learners), Turkish (47,000 learners), and even Classical Greek (11,000 learners). Only about 80 of over 33,000 German schools offer Chinese as a full subject.</span></span></span></span></p> <p><span><span><span><span>In Sweden and the Netherlands the percentage of Mandarin learners among secondary school students is slightly higher, yet overall numbers are still low. In Spain, Chinese lessons are offered mainly as an after-school activity in cooperation with Confucius Institutes. France alone stands out among European countries with 38,850 pupils learning Chinese at school in 2016. But that still means that only 7 in 1,000 secondary school students take Chinese as a curriculum subject.</span></span></span></span></p> <p><span><span><span><span>Acknowledging China’s </span><a href="https://www.contractsfinder.service.gov.uk/notice/ee1a7f8a-627e-4e03-9333-38fa622469b0"><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">“huge strategic importance to the UK,”</span></a><span> the British government has launched a “Mandarin Excellence” initiative. The four-year program is funded by the British Department for Education and aims at making 5,000 British students fluent in Mandarin Chinese by 2020. </span><a href="https://www.tes.com/news/school-news/breaking-news/ps10m-mandarin-schools-programme-reaches-less-third-target-half-way"><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">Criticism</span></a><span> of the program centers on a perceived lack of sustainability, because purportedly it does not include training enough teachers to reach its ambitious goal. </span></span></span></span></p> <p><span><span><span><strong><span>Learning Chinese requires strong commitment</span></strong></span></span></span></p> <p><span><span><span><span>This is a problem that other countries will face as well if they try to ramp up Chinese proficiency among teachers and students: Mandarin Chinese is not a subject that lends itself to quick and easy learning success. Mastering Chinese, especially the writing system, requires a considerable amount of time and commitment from teachers and students. Teaching it in schools therefore requires a sound setup for Chinese as a curriculum subject.</span></span></span></span></p> <p><span><span><span><span>All of Europe needs a Mandarin Excellence Strategy to ensure that the overall numbers of Mandarin learners rise and that students get an early start with learning this complex language. Today, too many European companies and institutions rely on English in their communications with Chinese partners. But this ignores the fact that in China, more than in many other countries, the language is the key to understanding the culture.</span></span></span></span></p> <p><span><span><span><span>Given that many European countries struggle with their approach to teaching Mandarin in schools, there is clear potential for closer European coordination – similar to the type of coordination among Chinese-language experts from across Europe that led to the formulation of the <a href="http://ebcl.eu.com">European Benchmarks for the Chinese Language</a>.</span></span></span></span></p> <p><span><span><span><span>While education systems vary between – and sometimes even within – European nations, European governments should exchange their views and models on how to provide consistent political support as well as the appropriate funding for training teachers and for developing and producing modern teaching materials. Digital methods are especially promising for teaching and learning Mandarin – for training the ear to the subtle nuances of a tonal language or for helping the brain to memorize Chinese characters. </span></span></span></span></p> <p><span><span><span><span>Close coordination and exchange of information on experiences or best practices – for example on the British program – could help all European countries to close the gap in Chinese language teaching and to train a future generation of skilled Mandarin speakers.</span></span></span></span></p> <p><strong><span><span><span><span>This article summarizes the findings of a <a href="https://www.merics.org/de/china-monitor/china-kompetenz">MERICS analysis (in German language only) </a>commissioned by the German Federal Ministry of Education and Research, which was released on May 7, 2018.</span></span></span></span></strong></p></div> <div class="field field--name-field-authors field--type-entity-reference field--label-hidden field--items"> <div class="field--item"> <article role="article" about="/en/team/andrea-frenzel" class="team is-promoted tile-view clearfix darktile"> <a href="/en/team/andrea-frenzel" rel="bookmark"> <div class="tile-view-wrapper" style="background-color: ;background: url(/sites/default/files/2018-05/Andrea_Frenzel_Web_0.jpg) no-repeat;background-size: cover;"> <h3> <span>Andrea Frenzel</span> </h3> <div class="content"> <div class="field field--field-position">Project Assistant</div> </div> </div> </a> </article> </div> <div class="field--item"> <article role="article" about="/index.php/en/team/matthias-stepan" class="team is-promoted tile-view clearfix darktile"> <a href="/index.php/en/team/matthias-stepan" rel="bookmark"> <div class="tile-view-wrapper" style="background-color: ;background: url(/sites/default/files/2017-07/matthias%20stepan_gross.jpg) no-repeat;background-size: cover;"> <h3> <span>Matthias Stepan</span> </h3> <div class="content"> <div class="field field--field-position">Head of Program Public Policy</div> </div> </div> </a> </article> </div> </div> </div> </div> Mon, 07 May 2018 11:16:43 +0000 smuscat 6936 at https://www.merics.org Germany's export industry in a US-China squeeze https://www.merics.org/en/blog/germanys-export-industry-us-china-squeeze <span>Germany&#039;s export industry in a US-China squeeze</span> <span><span lang="" about="/en/user/306" typeof="schema:Person" property="schema:name" datatype="">komprakti</span></span> <span>Mon, 04/30/2018 - 10:07</span> <div class="layout layout--onecol"> <div class="layout__region layout__region--content"> <div class="field field--name-field-blog-date field--type-datetime field--label-hidden field--item"><time datetime="2018-04-30T12:00:00Z">30/04/18</time> </div> <div class="field field--name-field-announcement-text field--type-text-long field--label-hidden field--item"><p><a href="https://www.merics.org/en/team/sebastian-heilmann">Sebastian Heilmann</a>, <a href="http://bruegel.org/author/guntram-b-wolff/">Guntram B. Wolff</a></p> <p><strong>Germany’s economic success is under threat. Berlin needs to reduce the country’s dependency on exports by stimulating domestic growth</strong><strong>―and push for robust European trade and industrial policies.</strong></p></div> <div class="field field--name-field-main-image field--type-image field--label-hidden field--item"> <img srcset="/sites/default/files/styles/max_325x325/public/2018-04/180430_Hafen_Hamburg_123rf_via_Thomas%20Lukassek.jpg?itok=u3fN7X2_ 325w, /sites/default/files/styles/max_650x650/public/2018-04/180430_Hafen_Hamburg_123rf_via_Thomas%20Lukassek.jpg?itok=AyBgc6hO 650w, /sites/default/files/styles/max_1300x1300/public/2018-04/180430_Hafen_Hamburg_123rf_via_Thomas%20Lukassek.jpg?itok=xTG6o7Pj 1300w, /sites/default/files/styles/max_2600x2600/public/2018-04/180430_Hafen_Hamburg_123rf_via_Thomas%20Lukassek.jpg?itok=4fnUl2yI 2403w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2018-04/180430_Hafen_Hamburg_123rf_via_Thomas%20Lukassek.jpg?itok=u3fN7X2_" alt="Hamburg container temrinal" title="The United States and China have the tools to hurt Germany’s export-oriented economy. Image by Thomas Lukassek via 123rf." typeof="foaf:Image" class="img-responsive" /> </div> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p>The German export-oriented economic model is under attack this year: Germany is caught between tough American protectionism and aggressive Chinese industrial policy. The US government is threatening to impose painful sanctions on key German export goods, such as automobiles, while China’s industrial policy is focused on acquiring important industrial technologies, and eventually replacing existing foreign technology leaders in the automotive, engineering, and chemical industries.</p> <p>Because of the sizes of their markets, the United States and China unquestionably have the tools to hurt Germany’s export-oriented economy. The new German government under Angela Merkel will have to counter the effects of the US-Chinese squeeze.</p> <p>First, German dependence on exports to the United States and China must be reduced. The focus should be on strengthening growth forces – and not just in Germany, but Europe as well. All euro area countries except France, Finland, Cyprus, and Belgium have current account surpluses, and Germany’s surplus amounts to almost 8 percent of its GDP. The euro area as a whole has a surplus of around 3 percent of GDP. These external surpluses are no longer sustainable in a world in which the US president is threatening to launch a trade war and the World Trade Organization can no longer regulate open markets in key economies.</p> <p>Germany’s capital investment is lagging behind. Even without this acute pressure, it would be in Germany’s interests to set domestic growth forces free. German business investment has been weakening for years. German gross investment in the industrial sector has been lower even than in France or Italy since the start of the millennium. A timely and feasible step would be to massively improve the rules for depreciating assets on capital, software, and research investments in the German tax code. This is all the more necessary now as US corporate tax reform will allow companies to immediately depreciate 100 percent of their expense for equipment and building upgrades.</p> <p>Beyond reforming the tax code and lowering other regulatory barriers, Germany will have to accelerate the development of public infrastructure. Improvements are urgently needed for the country’s roads and public transport infrastructure, as well as its data infrastructure and broadband network. Schools and universities could use more funding as well. The increased availability of both private and public capital will also help raise wage levels in Germany. After all, capital complements most labor activity. This set of measures would promote domestic growth and reduce dependence on exports; the resulting growth in Germany would also help its EU partner countries by increasing demand for their products.</p> <p><strong>Promoting Infant Industries</strong></p> <p>Second, German innovation policy must also make a real leap forward, especially in the digital economy, so as not to leave the future of technological change entirely to others. American and Chinese IT corporations are in the process of dividing up world markets, setting technological standards that will be associated with huge licensing revenues in the future. They are also making significant advances towards the technology of the (near) future: artificial intelligence.</p> <p>At the moment, neither Germany nor Europe has a lot to offer in terms of a digital economy. The EU’s Digital Single Market is not progressing. As early as 2019, Europeans will become painfully aware of the shortcomings in their networks’ innovation policies when the Chinese company Huawei begins to install 5G mobile technologies in Europe, a prerequisite for networked industrial production and autonomous driving.</p> <p>Europe needs a much more ambitious and active digital innovation policy, one that includes the targeted promotion of European “infant industries,” for example through the development of larger venture capital markets. Research shows that scaling companies is more difficult in Europe than in the US due to lower access to venture capital in all industries. With regards to critical infrastructures, there should be no taboo on the targeted support of currently weak European 5G developers, such as Nokia or Ericsson. If European semiconductor and mobile network companies disappeared from the markets, after all, dependencies on US and Chinese technology providers would not only create security risks, but would permanently reduce European innovation capacities.</p> <p>European governments will therefore need to fundamentally rethink their innovation policies, and in particular their digital policies, in order to counter the rush of American and Chinese companies and innovations. The German coalition agreement does hint at the importance of research, but it gives the impression that rather marginal changes are being considered, when a qualitative change is needed. Company- and market-driven “innovation from below” will be necessary but insufficient; digital transformation requires new, state-financed infrastructures, targeted support measures, and educational offers as well as continuously adapted market rules provided by governments and parliaments. Public innovation policy must simply become more ambitious and think in terms of bigger goals and dimensions. Substantially strengthening research and development spending in the European and German budgets is only a first necessary step in this direction.</p> <p><strong>Screening Foreign Investments</strong></p> <p>Third, Germany should campaign for a robust foreign trade policy in Europe. On the one hand, this is about adequately examining security interests in foreign investments and acquisitions and flanking them with a pan-European coordination office. On the other hand, it is also about protecting strategic technologies from being taken over through market manipulation practices. For this task, the competencies of the EU Directorate-General for Competition should be strengthened. It is completely unacceptable that foreign top dogs operating with state funding from closed domestic markets should be able to drive European companies out of the European market.</p> <p>Germany must stand up for open markets and fair trade practices more decisively than before through the EU’s Directorate-General for Trade, without weakening the European institutions through unilateral action. European Trade Commissioner Cecilia Malmström is doing a very good job, not only in her negotiations with the United States and China, but also in establishing new strategic trade relations with, for example, the Latin American Mercosur, along with a free trade agreement with Japan. Europe should build further partnerships and, at the same time, sharpen its trade policy instruments to defend itself in the case of conflict and represent European interests more effectively than before.</p> <p>Germany can no longer avoid an economic policy correction in the face of the dual pressure coming from the United States and China. The new German government has to act now if it wants to defend domestic industries from unfair competition while releasing Europe’s own growth forces.</p> <p>​​​​​​<strong>Guntram B. Wolff  <span><span><span><span><span>is Director of Bruegel, the Brussels-based European think tank specializing in economics.</span></span></span><span><span> </span></span></span></span></strong></p> <p><strong>This article was first published by the<a href="https://berlinpolicyjournal.com/squeezed-model/"> Berlin Policy Journal </a>on April 26, <strong>2018 and was<span><span><span> simultaneously published by MERICS and <a href="http://bruegel.org/2018/04/germany-export-oriented-economic-model-us-chinese-squeeze/">Bruegel</a> on April 30, 2018.</span></span></span></strong></strong></p></div> </div> </div> Mon, 30 Apr 2018 08:07:08 +0000 komprakti 6891 at https://www.merics.org Local governments power up to advance China’s national AI agenda https://www.merics.org/en/blog/local-governments-power-advance-chinas-national-ai-agenda <span>Local governments power up to advance China’s national AI agenda</span> <span><span lang="" about="/en/user/306" typeof="schema:Person" property="schema:name" datatype="">komprakti</span></span> <span>Tue, 04/24/2018 - 11:07</span> <div class="layout layout--onecol"> <div class="layout__region layout__region--content"> <div class="field field--name-field-blog-date field--type-datetime field--label-hidden field--item"><time datetime="2018-04-26T12:00:00Z">26/04/18</time> </div> <div class="field field--name-field-announcement-text field--type-text-long field--label-hidden field--item"><p><strong><span><span><span>China is determined t</span></span></span>o become the globally-leading innovation center for Artificial Intelligence (AI). <span><span><span>National industrial policies to promote AI are implemented at top speed at local and provincial level. </span></span></span>In some cases, the local goals even exceed the national ambitions.</strong></p></div> <div class="field field--name-field-main-image field--type-image field--label-hidden field--item"> <img srcset="/sites/default/files/styles/max_325x325/public/2018-04/180426_Baidu_AI_exhibition_pbu678770_11.jpg?itok=9aVy1fU- 325w, /sites/default/files/styles/max_650x650/public/2018-04/180426_Baidu_AI_exhibition_pbu678770_11.jpg?itok=LSaw6WDq 650w, /sites/default/files/styles/max_1300x1300/public/2018-04/180426_Baidu_AI_exhibition_pbu678770_11.jpg?itok=qcKoMMJH 1300w, /sites/default/files/styles/max_2600x2600/public/2018-04/180426_Baidu_AI_exhibition_pbu678770_11.jpg?itok=seZfPj33 2600w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2018-04/180426_Baidu_AI_exhibition_pbu678770_11.jpg?itok=9aVy1fU-" alt="Visitors at the &quot;Artificial Intelligence (AI) Science Popularization Exhibition&quot; held by Baidu in Nanjing" title="Visitors at the &quot;Artificial Intelligence Science Popularization Exhibition&quot; held by Baidu in Nanjing, September 2017. Image by ImagineChina." typeof="foaf:Image" class="img-responsive" /> </div> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p>China’s government has identified Artificial Intelligence (AI) as a key technology to push its Made in China 2025 agenda and leapfrog to global technological leadership. When the State Council published its “New Generation of Artificial Intelligence Development Plan” in July 2017, it kickstarted its top-down industrial policy routine which is currently unfolding at full speed. The overarching goals are for China to catch up with advanced countries and create an AI core industry worth 150 billion CNY by 2020, to achieve major technological breakthroughs in AI by 2025, and to become the<strong> </strong>globally-leading innovation center for AI by 2030. With the overall framework set, China’s industrial AI policy has entered the next crucial phase, trickling down from the national level to individual provinces, municipalities and cities. By mid-April, governments within 18 provinces and municipalities had released AI plans to promote their local AI industries.</p> <p><strong>Local AI targets even exceed ambitious national goals</strong></p> <p>In the pursuit to outbid each other, their local targets even exceed ambitious national goals. 11 local governments published targets for their AI core industries for 2020. Accumulated, this would create an AI core industry of almost 400 billion CNY in 2020, exceeding the national target of 150 billion CNY more than twofold. While the unparalleled enthusiasm of local governments will accelerate China’s AI development considerably, it also carries the risk of creating overcapacities.</p> <p>Frontrunners in the AI race are China’s most advanced economic centers Beijing, Shanghai and Shenzhen. As tech hubs and headquarters of the pioneers of China’s AI drive such as Baidu and Tencent, and of major AI startups including leaders in facial recognition technology SenseTime and Megvii, these cities will harness a massive impetus with powerful state backing.</p> <p>The municipal government of Shanghai drew up the most ambitious AI plan of all, aiming for an AI core industry size of more than 100 billion CNY by 2020. To achieve this, Shanghai is building AI industry zones in multiple locations across the city. Last December, Shanghai’s Lingang Area Development Administration signed agreements with 15 leading Chinese AI firms, including Baidu Innovation Center, iFlyTek, Horizon Robotics, and Cambricon. Beijing thus sees its position as China’s leading science and technology hub with its stronghold in Zhongguancun seriously challenged. In response to Shanghai’s advances, Beijing’s government announced a 14 billion CNY AI industrial park in Mentougou district in January 2018.</p> <p>Beyond first tier cities, other localities are also well positioned to compete for dominance in specific AI technologies. In Hefei, for example, the AI-focused industrial base called “China Speech Valley” (中国声谷) is already in full swing, hosting around 200 companies including China’s global champion in speech recognition, iFlyTek. The Anhui provincial government and the municipal government of its capital city Hefei are now joining forces to turn the industrial park into the country’s largest and strongest hub for speech recognition technology products. Together they plan to spend 3.2 billion CNY on R&amp;D and application of intelligent speech and AI technology until 2020.</p> <p>Provinces that have thus far kept a lower profile now desperately try to jump on the AI bandwagon as well. For example, China’s economically struggling northeastern provinces of Heilongjiang, Liaoning and Jilin all issued their own AI plans at the beginning of this year. According to the ambitions set forth in its plan, Liaoning seeks to transform from a blank spot on the AI map into the biggest AI innovation center in Northeast Asia by 2030.</p> <p><img alt="Local governments charge ahead with AI development" data-entity-type="file" data-entity-uuid="35561043-6239-41a3-b856-c2ff2ee5c605" src="/sites/default/files/inline-images/AI-Investitionen-01_0.jpg" /></p> <p><strong>China is looking to attract international AI experts</strong></p> <p>China’s various AI plans feature a common narrative: governments at all levels mobilize a lot of money to attract the cream of the crop of AI companies and talent. Changzhou in Jiangsu province, for example, plans to hand out between 200,000 and 300,000 CNY to companies and research institutions for each world-class or national-level AI talent who settles down in Changzhou Science and Education Town. In another example, Hangzhou tries to lure highly skilled workers with subsidies e.g. for auctions of highly-contested car license plates.</p> <p>The message is clear: China is aware of its limited pool of AI experts. The run on exceptional AI talent, however, is a global phenomenon. Chinese and US companies try to snatch talent away from each other by establishing AI research centers in proximity to one another in Silicon Valley, Seattle and Shenzhen. As a result, salaries in the field of AI have skyrocketed. By entering an already fierce and pricy battle over such a small talent pool, China’s local governments more than ever risk burning through a lot of cash without yielding the envisioned results.</p> <p>In its effort to tackle the talent shortage in AI, China’s national government is also looking to attract foreign experts. In the annual work report for the National People’s Congress last month, Premier Li Keqiang pledged to accelerate efforts to surpass the United States in advanced technologies such as AI by wooing overseas talent as one of the state priorities for 2018. A set of initiatives already underway includes express green cards to foreign high-end talent and their families (see also p. 11). Foreigners of Chinese descent as well as Taiwanese have been a special focus of China’s efforts to attract talent to work or set up companies on the mainland.</p> <p>China is determined to play a leading role in global AI development. The country’s dynamic tech environment benefits from the sheer amount of data generated by its 800 million smartphone users and a legal system that does not provide effective protection of private data. Even though the AI sector is currently dominated by private companies, the national strategic interests in AI business applications and AI usage in defense as well as public security have prepared the ground for more active state involvement. The current top-down approach in China’s AI industry is thus in line with the country’s overall industrial policy, in that it mobilizes massive amounts of capital and labor towards a specific target even at the at the risk of creating inefficiencies and wasting resources.</p></div> <div class="field field--name-field-authors field--type-entity-reference field--label-hidden field--items"> <div class="field--item"> <article role="article" about="/en/team/jaqueline-ives" class="team is-promoted tile-view clearfix darktile"> <a href="/en/team/jaqueline-ives" rel="bookmark"> <div class="tile-view-wrapper" style="background-color: ;background: url(/sites/default/files/2017-07/160909_Jaqueline_Ives_final.jpg) no-repeat;background-size: cover;"> <h3> <span>Jaqueline Ives</span> </h3> <div class="content"> <div class="field field--field-position">Former employee</div> </div> </div> </a> </article> </div> <div class="field--item"> <article role="article" about="/en/team/anna-holzmann" class="team is-promoted tile-view clearfix darktile"> <a href="/en/team/anna-holzmann" rel="bookmark"> <div class="tile-view-wrapper" style="background-color: ;background: url(/sites/default/files/2018-05/Anna_Holzmann_zugeschnitten_0.jpg) no-repeat;background-size: cover;"> <h3> <span>Anna Holzmann</span> </h3> <div class="content"> <div class="field field--field-position">Junior Research Associate</div> </div> </div> </a> </article> </div> </div> </div> </div> Tue, 24 Apr 2018 09:07:09 +0000 komprakti 6851 at https://www.merics.org Chinese hackers are expected to put their country first https://www.merics.org/en/blog/chinese-hackers-are-expected-put-their-country-first <span>Chinese hackers are expected to put their country first</span> <span><span lang="" about="/en/user/301" typeof="schema:Person" property="schema:name" datatype="">smuscat</span></span> <span>Wed, 04/18/2018 - 11:42</span> <div class="layout layout--onecol"> <div class="layout__region layout__region--content"> <div class="field field--name-field-blog-date field--type-datetime field--label-hidden field--item"><time datetime="2018-04-18T12:00:00Z">18/04/18</time> </div> <div class="field field--name-field-announcement-text field--type-text-long field--label-hidden field--item"><p><span><span><span><strong><span>The Chinese government’s decision to pull Chinese nationals from international hacking contests should worry international IT companies. They stand to lose valuable information about security vulnerabilities in their devices and run the risk that exploits will be reported to the Chinese government instead.</span></strong></span></span></span></p></div> <div class="field field--name-field-main-image field--type-image field--label-hidden field--item"> <img srcset="/sites/default/files/styles/max_325x325/public/2018-04/180418_Apple_Store_Shanghai_pbu728779_02.jpg?itok=Y2zwh7hB 325w, /sites/default/files/styles/max_650x650/public/2018-04/180418_Apple_Store_Shanghai_pbu728779_02.jpg?itok=rUTJsPsI 650w, /sites/default/files/styles/max_1300x1300/public/2018-04/180418_Apple_Store_Shanghai_pbu728779_02.jpg?itok=GyUHafIA 1300w, /sites/default/files/styles/max_2600x2600/public/2018-04/180418_Apple_Store_Shanghai_pbu728779_02.jpg?itok=Vo3U8Yzq 2600w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2018-04/180418_Apple_Store_Shanghai_pbu728779_02.jpg?itok=Y2zwh7hB" alt="The logo of Apple is pictured in the Apple Store in front of the Oriental Pearl TV Tower in the Lujiazui Financial District in Pudong, Shanghai" title="The Apple Store in front of the Oriental Pearl TV Tower in the Lujiazui Financial District, Shanghai. Image by ImagineChina" typeof="foaf:Image" class="img-responsive" /> </div> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p><span><span><span><span>Chinese IT specialists are developing the applications of the future in the outskirts of Guangzhou and in Beijing’s start-up-district Zhongguancun. Chinese hackers are also among the best of their craft internationally. For years, international IT companies from Apple to SAP have relied on Chinese nationals’ reports on vulnerabilities as the basis for software patches in products like MacOS, the iPhone Operating System iOS or business software like SAP. This may change soon.</span></span></span></span></p> <p><span><span><span><span>The Chinese government is eager to develop Chinas IT sector and to promote domestic Chinese companies – sometimes through unfair means and at the expense of Western competitors. This includes a recent move to keep Chinese hackers from helping Western tech companies identify their vulnerabilities.</span></span></span></span></p> <p><span><span><span><span>In a rather cryptic announcement, the organizers of the popular hacking-contest Pwn2Own let it be known that, "There have been regulatory changes in some countries that no longer allow [their citizens’] participation in global exploit contests, such as Pwn2Own and Capture the Flag competitions." They later clarified this statement applies to Chinese citizens.</span></span></span></span></p> <p><span><span><span><strong><span>Chinese teams used to dominate international hacking contests</span></strong></span></span></span></p> <p><span><span><span><span>Hacking contests like Pwn2Own or CanSecWest are an opportunity for security researchers to earn considerable prize money. Some of these contests offer reward money of up to two million USD in total and take place in different cities around the world. Payouts for individuals who detect vulnerabilities can be up to 200,000 USD. They also offer a big international stage for hackers to show off their skills and recommend themselves for employment to international IT companies. This chance will be denied to Chinese hackers under the new rules. Chinese hackers are now expected to serve China.  In that sense, one could say that they are treated as a national strategic reserve.</span></span></span></span></p> <p><span><span><span><span>Chinese teams dominated Pwn2Own in previous years – among them Tencent’s security team, Qihoo 360 as well as individual researchers. Another Chinese team of international prominence is Pangu, a group of hackers specialized in analyzing the iOS-System and publishing jailbreaks. An exploit is a piece of software code created to demonstrate a vulnerability to hacks. With a jailbreak, iPhone users can unlock more powerful features of their phone and install illegal copies of software. It should be noted, however, that applying a jailbreak tremendously lowers the security of iPhones. </span></span></span></span></p> <p><span><span><span><span>It should worry international IT companies that the Chinese government no longer lets its citizens participate in these contests. It could be a sign that China plans to oblige hackers to share knowledge of previously unknown security problems (often called 0-day-exploits, as there are 0 days to prepare for an attack) with the Chinese government and its agencies instead of the vendor, who could fix the flaw for everybody through security updates. This would leave all users vulnerable to the attack, should criminals discover the same problem. And it would allow the Chinese government to use this knowledge in hacking operations against foreign or domestic targets. </span></span></span></span></p> <p><span><span><span><strong><span>Security exploits sell for huge sums in shadowy market</span></strong></span></span></span></p> <p><span><span><span><span>Many governments around the world buy exploits from a shadowy market with almost no regulation and questionable ethics. Most hackers don’t sell directly to governments though. Instead, they relay their findings through exploit dealers like Zerodium, a US-firm. Companies like Zerodium buy knowledge about weaknesses and sell them to the highest bidder. Some are sold to makers of spyware tools, and many are sold to government-agencies like the NSA, UK-based GCHQ or the newly formed German agency Zitis. These companies pay up to 1.5 million USD for a reliable iOS-exploit that can be triggered from afar. Vulnerabilities in the Android operating system are easier to come by and sell for considerable lower price tags. This is due to Android’s more open ecosystem and a need to support a much broader set of hardware and devices.</span></span></span></span></p> <p><span><span><span><span>This is considerably more money than so-called “white hat” (i.e. responsible) hackers can gain from sharing that knowledge with vendors directly, allowing the latter to fix the flaw and secure all users. Some companies pay ethical hackers for disclosing problems in their software through so-called bug bounty programs. Many hackers are not primarily motivated by money, however but want to share their knowledge for ethical reasons. Some can, however, make a nice living off of reporting these problems. Hacker One, a famous platform for listing bug bounty programs, reported that 14 percent of registered researchers hack full-time, and among these there are a few who make more than 100,000 USD a year.</span></span></span></span></p> <p><span><span><span><strong><span>IT nationalism is a big market risk for companies</span></strong></span></span></span></p> <p><span><span><span><span>There may be another motivation for the Chinese government to hold back hackers. If less skilled talent looks at Western-made software, fewer bugs will be found. This will result in an overall decrease in security. This helps China in two ways: First, the government can argue that companies should buy more domestic software as it is more secure and free from international influence. This notion is not necessarily true, however and requirements to buy only domestic hardware, software and services have been met with a pushback from Chinese IT companies and financial institutions in the past. Secondly, it lowers the bar for Chinese hacking attempts against internationally used software. 0-day exploits will usually be used in targeted espionage attempts against governments as well as companies. </span></span></span></span></p> <p><span><span><span><span>For now, the Chinese government is not keeping researchers from disclosing problems directly to vendors, a process usually called responsible disclosure. But the recent move shows that it views hackers as a national asset and as a strategic reserve in cyberspace.</span></span></span></span></p> <p><span><span><span><span>International IT-companies should be aware that the software they use is viewed as more than a business decision by some governments. Where China tries to ban Windows and Western anti-virus software, the United States retaliates against China’s Huawei and ZTE or against Russia’s Kaspersky. This IT nationalism is a significant market risk for companies, as it adds additional costs, complexity and insecurities.</span></span></span></span></p></div> <div class="field field--name-field-authors field--type-entity-reference field--label-hidden field--items"> <div class="field--item"> <article role="article" about="/index.php/en/team/hauke-gierow" class="team is-promoted tile-view clearfix darktile"> <a href="/index.php/en/team/hauke-gierow" rel="bookmark"> <div class="tile-view-wrapper" style="background-color: ;background: url(/sites/default/files/2017-07/Hauke%20Gierow_Kachel_Mittel.jpg) no-repeat;background-size: cover;"> <h3> <span>Hauke Gierow</span> </h3> <div class="content"> <div class="field field--field-position">Policy Fellow</div> </div> </div> </a> </article> </div> </div> </div> </div> Wed, 18 Apr 2018 09:42:35 +0000 smuscat 6791 at https://www.merics.org China reaches into the heart of Europe https://www.merics.org/en/blog/china-reaches-heart-europe <span>China reaches into the heart of Europe</span> <span><span lang="" about="/en/user/286" typeof="schema:Person" property="schema:name" datatype="">h.seidl</span></span> <span>Mon, 04/09/2018 - 13:22</span> <div class="layout layout--onecol"> <div class="layout__region layout__region--content"> <div class="field field--name-field-blog-date field--type-datetime field--label-hidden field--item"><time datetime="2018-04-09T12:00:00Z">09/04/18</time> </div> <div class="field field--name-field-announcement-text field--type-text-long field--label-hidden field--item"><p><strong><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US">China’s growing political, economic and cultural influence in Europe is finally attracting the public attention it deserves. In this OpEd for the New York Times, former Beijing correspondent and current </span></span></span></strong><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"><strong>MERICS</strong><strong> fellow Didi Kirsten Tatlow </strong><strong>offers</strong></span></span></span><strong><span><span><span lang="EN-US" xml:lang="EN-US" xml:lang="EN-US"> a personal view of how China expanded its footprint in Berlin since she last lived in the German capital.</span></span></span></strong></p></div> <div class="field field--name-field-main-image field--type-image field--label-hidden field--item"> <img srcset="/sites/default/files/styles/max_325x325/public/2018-04/170712_Football_Xi_Jinping_809252364GI.jpg?itok=mf2i7jJ4 325w, /sites/default/files/styles/max_650x650/public/2018-04/170712_Football_Xi_Jinping_809252364GI.jpg?itok=rfTfzUU1 594w" sizes="(min-width: 1290px) 1290px, 100vw" src="/sites/default/files/styles/max_325x325/public/2018-04/170712_Football_Xi_Jinping_809252364GI.jpg?itok=mf2i7jJ4" alt="China&#039;s president Xi Jinping, his wife Peng Liyuan and German Chancellor Angela Merkel attend the Chinese German Football Summer Camp in Berlin in July, 2017." title="China&#039;s president Xi Jinping and German Chancellor Angela Merkel attend the Chinese German Football Summer Camp in Berlin in July, 2017. Image by Oliver Hardt / Getty Images" typeof="foaf:Image" class="img-responsive" /> </div> <div class="field field--name-body field--type-text-with-summary field--label-hidden field--item"><p>The previous time I lived in Berlin, in 2000, China had recently bought a building by the Spree River to use for a sprawling new embassy, and the staff would bully the clients of a women-only gym that had a lease on the top floor with verbal insults and by making them undergo intimidating security checks.</p> <p>The bizarre practice was aimed, apparently, at forcing out the gym and securing use of the entire building for China. It worked. Today, the silver and mirror-clad embassy sparkles by the spinach-colored waters of the Spree, satellite dishes and antennas poking out on top.</p> <p>I’m back in Berlin, having spent the intervening years reporting in Beijing as China vaulted from sixth place to second in global economic strength, pushing down Germany from third to fourth. Returning to this country from China, I am struck by how Beijing is asserting its interests here in ways that threaten Germany’s core values, going well beyond intimidating gym-going women.</p> <p><strong>China is testing the boundaries </strong></p> <p>Germany must end Chinese meddling in its hard-earned democracy. Berlin has a stronger hand than many Germans appear to realize: China does not want to lose the goodwill and cooperation of this technologically strong and politically influential partner in the heart of Europe. Germany should be pushing back against Chinese interference with consistency and strength, just as China does when it feels its core interests are threatened.</p> <p>In recent months China has sent up a series of trial balloons to see how far it can stretch the boundaries of German democracy. First and most easily spotted: challenges to free speech and political protest on German soil.</p> <p>Take an incident in November, when the Chinese halted a soccer match between their under-20 team and TSV Schott Mainz in southwestern Germany to protest a handful of Tibetans and German fans with Tibetan “snow lion” flags. China regards the flags as a sign of resistance to its rule in Tibet. The Chinese players returned to the field only after the flags were furled. (China lost, 3-0.)</p> <p>“Of course we stand by freedom of expression,” Ronny Zimmermann, a vice president of German soccer’s governing body, said afterward. “Our partner hasn’t really been able to get used to it yet.” A planned series of matches has been postponed. Germany has an excellent opportunity to defend democracy by canceling them until China agrees to respect free speech and political protest here.</p> <p>A month later, in December, the president of Germany’s domestic intelligence agency warned of “a broad attempt to infiltrate regional Parliaments, ministries and administrations” by Chinese agents to recruit German sources using fake social media accounts.</p> <p><strong>“Germany isn’t really defending itself”</strong></p> <p>Chinese diplomats have also exerted pressure to stop town halls from flying the snow lion flag on March 10 in commemoration of the failed 1959 uprising against Chinese rule in Tibet, said Michael Brand, a member of the federal Parliament, the Bundestag. The Interior Ministry in the southern state of Bavaria asked local governments in 2016 to reconsider the practice after Chinese diplomats contacted the ministry.</p> <p>The problem, Mr. Brand said in an interview, is “Germany isn’t really defending itself.”</p> <p>He should know. In 2016, China’s ambassador to Germany told Mr. Brand, who was at the time chairman of the Bundestag’s human rights committee, that he could travel to China only if he canceled certain speaking engagements <em>in Germany</em> and deleted images and words from his official homepage.</p> <p>Mr. Brand refused and was barred from China. He said his government did little in retaliation. About a month after his travel ban, German-Chinese cabinet consultations took place as scheduled in Beijing, with Chancellor Angela Merkel in attendance. It was a missed opportunity: Germany should have skipped the talks as a warning to China to stop interfering in the affairs of elected German officials.</p> <p>Sure, people here are preoccupied with challenges closer to home, including hard-right populism in Central Europe, Vladimir Putin’s Russia, authoritarian Turkey, a million refugees from the Middle East, an unpredictable Donald Trump and Britain’s plan to leave the European Union.</p> <p>These are all of concern. Yet none has China’s combination of economic muscle and political authoritarianism.</p> <p>China became Germany’s most important trading partner in 2016, outranking the United States and France. That year Germany exported about 92 billion USD in goods to China and imported about 114 billion USD. Germany is dependent on exports and tends to run trade surpluses around the world — its relationship with China is an exception.</p> <p><strong>Democracies should push back against CCP efforts</strong></p> <p>So what may finally focus German minds is “Made in China 2025,” Beijing’s ambitious plan to become the high-tech manufacturing center of the world.</p> <p>The plan threatens Germany’s long-term prosperity because it aims to substitute technologically advanced goods from Germany and other nations with cheaper Chinese goods, first at home, then throughout the world. When - if - China replaces German technology in electric-powered vehicles, robotics and a host of other engineering, Germany may face tougher times.</p> <p>Other democracies, notably Australia, are beginning to realize they must push back against the efforts by the secrecy-ridden Communist Party to shape the global narrative about China in order to secure its control at home and abroad.</p> <p>Germany, as Europe’s central power and biggest economy, should monitor attempts to weaken its democratic system and publicize them so that citizens can educate and protect themselves. It should decline to sell to China economic assets of strategic value, deepen financial transparency in academic research and politics to prevent influence-buying by cash-rich China, and use its standing in Brussels to help smaller European Union members do the same. China will complain loudly but will get the message that Germany is serious about defending democracy.</p> <p>It’s worth remembering that West Germany banned its own Communist Party in 1956, fearful of the influence of the Soviet Union. No one wants a return of Cold War mentalities, but that history offers a precedent for prohibiting activities here by the Communist Party of China, for example within student associations, as a firm warning to Beijing.</p> <p>Germany expects students and businessmen from China to live here with democratic values, as most already do, and leave authoritarianism at home.</p> <p>Otherwise, what will become of those post-World War II German freedoms won at a horrible price to the world and to itself?</p> <p><strong><span><span>This article was first published by the <a href="https://www.nytimes.com/2018/01/25/opinion/china-germany-tech-manufacturing.html">New York Times on January 25, 2018</a>.</span></span></strong></p></div> <div class="field field--name-field-authors field--type-entity-reference field--label-hidden field--items"> <div class="field--item"> <article role="article" about="/en/team/didi-kirsten-tatlow" class="team is-promoted tile-view clearfix darktile"> <a href="/en/team/didi-kirsten-tatlow" rel="bookmark"> <div class="tile-view-wrapper" style="background-color: ;background: url(/sites/default/files/2018-01/171201_Didi_Tatlow.jpg) no-repeat;background-size: cover;"> <h3> <span>Didi Kirsten Tatlow </span> </h3> <div class="content"> <div class="field field--field-position">Visiting Academic Fellow</div> </div> </div> </a> </article> </div> </div> </div> </div> Mon, 09 Apr 2018 11:22:58 +0000 h.seidl 6711 at https://www.merics.org