Tue. Dec 6th, 2022

Prof. ST Hsieh

Director, US-China Energy Industry Forum

626-376-7460

[email protected]

October 11, 2022

Currently, the world is close to chaos: the COVID-19 Pandemic is not over after three years, the war in Ukraine, started more than seven months ago, sees no sign of any cease fire. In fact, military actions are escalating!

Europe is hurting badly because of the war induced energy crisis which will lead to a global recession. Germany is leading EU for clarifying a China strategy that will enhance trades with China, the second largest economy in the world with a market size of 1.4 billion people. As a contrast to India, Chinese lifestyle is upgrading with significant purchasing power.

Morality and values are important and should be respected. However, if the EU’s economy suffers to the extreme that her populations are subject to a winter without heating and inflation, EU will not be a stable and united political body anymore. Who in Europe would care much about China’s human right?

Human rights have a universal value, but no one is perfect. The world should work together to enhance human rights around the world, just like the world needs to deal with Global Climate Change collectively. Pointing fingers and criticizing each other’s all the time are not productive. Furthermore, geopolitics and economics should be dealt with separately or prioritized/compartmentalized.

It is hard to imagine that when Scholtz meets with host Xi in Beijing and the very first item on Scholtz’s talking points is criticizing Chinas’ human rights record. Aside from criticism, Scholtz could provide some realistic suggestions on how to improve China’s human right, if he were in Xi’s position. On the other hand, Xi may also offer some suggestions for Scholtz on how to manage a cold winter.

US Biden Administration is pursuing a completely different strategy against China from Europe’s engagement strategy. The US is focused on “containing” China by issuing unilateral trade embargos. The US approach is equivalent to decoupling from China immediately. Of course, China will retaliate against US thus accelerating the mutual decoupling.

US and Europe are on two divergent, and contradicting, paths toward China. Should the US and Europe work with China for a better world?

UPDATE 1-Decoupling from China not an option for EU firms – Dombrovskis

Tue, October 11, 2022 at 2:09 AM

BERLIN, Oct 11 (Reuters) – Decoupling from China is not an option for companies in the European Union, EU trade commissioner Valdis Dombrovskis told an engineering conference in Berlin on Tuesday, as the Ukraine war redefines how the bloc sees its important trade partners.

The EU should continue engaging with China with pragmatism and without naivety. Our trading relationship needs more balance and reciprocity,” he said, calling for more focus on better risk management and diversification instead of pulling away.

Besides China, the EU’s relations with its other important trade partner, the United States, have also changed, he said.

“The transatlantic relationship has been reinvigorated,” he said, but there are “deep concerns” about the U.S. Inflation Reduction Act and the advantages it affords to U.S. companies.

“I will be raising these issues with my American counterparts when I travel to Washington tomorrow,” he said.

Scholz to Visit China Next Month Amid Unease Over Russian Ties

Michael Nienaber and Colum Murphy

Tue, October 11, 2022 at 4:44 AM

(Bloomberg) — German Chancellor Olaf Scholz plans to travel to China around November 3-4 in a delicate balancing act to discuss business interests and human rights violations, people familiar with the matter said.

It will be Scholz’s first China visit as German leader since taking office in December and the chancellor will use the talks in Beijing to also seek clarification on China’s ambivalent role in the conflict over Russia’s military invasion in Ukraine, one of the people said.

Scholz’s travel plans are part of a broader effort to reshape Germany’s strategy in the Asia-Pacific region that could increase tension with Chinese President Xi Jinping. But the chancellor has made it a priority to meet Xi to seek better ties. Despite the differences, Scholz is convinced that Europe needs China as a partner in the international fight against climate change.

Germany’s government is working to hone a new national strategy on China that aims to ensure less reliance on the world’s second largest economy, diversify supply chains and enhance security.

Decades of economic entanglement under Scholz’s predecessors Gerhard Schroeder and Angela Merkel have made China Germany’s most important trading partner in terms of imports and exports combined.

Defend Globalization

Speaking at a business conference in Berlin, Scholz defended his nuanced approach on China. “Globalization has been a success story that enabled prosperity for many people. We must defend it,” Scholz said. “Decoupling is the wrong answer.”

The chancellor added that his government was aiming to diversify business ties. “We don’t have to decouple from some countries,” he said. “I say emphatically we must continue to do business with China. But we also have to ensure that we trade with the rest of the world, look at the rest of Asia, Africa, South America – that’s the opportunity.”

Human Rights

Germany’s shift in policy and tone brings it more in line with the US and other allies who have raised mounting concern over China under Xi. The European Union has taken issue with China’s human rights record in Hong Kong and Xinjiang as well as its actions on Taiwan and the South China Sea.

Scholz used his first speech as chancellor at the United Nations last month to denounce China’s human rights record and called on Beijing to implement the recommendations of a recent report on the treatment of Uyghurs in Xinjiang by the former High Commissioner for Human Rights, which accused China of “serious” rights abuses there.

Investment from the EU into China was up 15% in the first half of 2022 compared to a year ago, according to data from Rhodium Group, helped by BMW AG’s purchase of a controlling stake in its car-making joint-venture in the first quarter, and it also opened a multibillion-dollar factory extension early this year in Shenyang in the northeast of the country.

Audi is building its first electric vehicle plant in the country and Airbus SE is cementing its position in the Chinese market thanks to a local final assembly line that helped it score an order worth more than $37 billion earlier this year.

Last month German chemical maker BASF SE opened the first stage of its new plant in the country. The factory is planned to be one of the largest single foreign investments ever in China and the largest investment by BASF, which is planning to spend up to 10 billion euros ($9.7 billion) by 2030, according to a company statement.

Chip Stocks Sink to Lowest Since 2020 as US Expands China Curbs

Abhishek Vishnoi and Ryan Vlastelica Mon, October 10, 2022 at 1:24 PM

(Bloomberg) — Shares of semiconductor companies fell Monday, with the industry selling off globally after fresh US curbs on China’s access to American technology added to a disappointing start to the earnings season, stoking concern that the industry’s downturn is far from over.

How Biden’s Chip Actions May Be Broadest China Salvo Yet

Bloomberg News Mon, October 10, 2022 at 2:02 AM

(Bloomberg) — Washington unveiled sweeping curbs on the way chip companies do business with China’s tech industry, a series of restrictions that together represent some of the strongest actions taken so far to contain the rise of a geopolitical rival.

‘No Possibility of Reconciliation’ as US Slams China Chips

Bloomberg News Mon, October 10, 2022 at 12:34 AM

(Bloomberg) — The Biden administration’s new restrictions on technology exports to China could undercut the country’s ability to develop wide swaths of its economy, from semiconductors and supercomputers to surveillance systems and advanced weapons.

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