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Sharp China: Germany’s Hopes for China; Q1 GDP Growth; National Security Day and Transnational Repression; Another TikTok Report · Sharp China Podcast

• 0:04
  SPEAKER_00: Hello and welcome to Sharp China.
• 0:06
  SPEAKER_00: I'm Andrew Sharp and you are listening to a free preview of today's episode.
• 0:12
  SPEAKER_00: Dialogue, dialogue, dialogue.
• 0:14
  SPEAKER_00: Absolutely.
• 0:14
  SPEAKER_00: Win, win, win.
• 0:15
  SPEAKER_00: Dialogue, win.
• 0:16
  SPEAKER_00: Yeah.
• 0:17
  SPEAKER_00: Well, for anybody who's curious about the relationship between Germany and the PRC, Politico EU on the way into this visit had a good overview of why Germany's Schultz is bowing to the Chinese dragon in their words.
• 0:32
  SPEAKER_01: Yeah, but a terrible headline.
• 0:35
  SPEAKER_01: Yes, it was a terrible... If you write about China and put dragon in your headline, I usually...
• 0:41
  SPEAKER_01: deduct 10 points at least, if not completely tune it out.
• 0:44
  SPEAKER_00: I was wondering how you felt about that trend because it does seem kind of hacky or if not hacky, at least hokey.
• 0:52
  SPEAKER_01: Very hacky and cliched.
• 0:54
  SPEAKER_00: Yeah, I agree.
• 0:56
  SPEAKER_00: And the article here, it's...
• 0:58
  SPEAKER_00: Sort of news, but also has a lot of opinion in it.
• 1:02
  SPEAKER_00: So it's tough to get a gauge on what exactly was happening with this article.
• 1:07
  SPEAKER_00: But there were a lot of facts.
• 1:10
  SPEAKER_00: Two thirds of German companies recently surveyed by the German Chamber of Commerce in China.
• 1:15
  SPEAKER_00: complained that unfair competition is a problem in the country.
• 1:19
  SPEAKER_00: German direct investment in China reached nearly 12 billion euros in 2023, which was a record.
• 1:26
  SPEAKER_00: The Germans invested more in China between 2021 and 2023.
• 1:31
  SPEAKER_00: than in the five-year period between 2015 and 2020.
• 1:34
  SPEAKER_00: So clearly the relationship is only deepening as we go here, certainly under Schultz.
• 1:40
  SPEAKER_00: For German companies such as Siemens and Volkswagen, which began investing in China 40 years ago,
• 1:46
  SPEAKER_00: The country is now a pillar of their global business.
• 1:49
  SPEAKER_00: China accounts for about 50% of Volkswagen's global car sales.
• 1:54
  SPEAKER_00: And despite Volkswagen's checkered history, the company was founded under the Nazis and relied on slave labor during World War II.
• 2:01
  SPEAKER_00: It continues to operate a factory in Xinjiang where the Uyghurs are being detained.
• 2:07
  SPEAKER_00: And China, this is another note.
• 2:09
  SPEAKER_00: This is all from the political article.
• 2:11
  SPEAKER_00: Right.
• 2:11
  SPEAKER_00: This is all from Politico.
• 2:12
  SPEAKER_00: And they also had this note.
• 2:15
  SPEAKER_00: China no longer needs the machinery and other highly engineered capital goods that drove German export growth to the country in recent decades.
• 2:24
  SPEAKER_00: That's not just due to weaker domestic demand in the PRC.
• 2:27
  SPEAKER_00: Chinese companies have largely caught up with their German competitors, making the country less dependent on imports.
• 2:35
  SPEAKER_00: And then the last note, this is some of the editorializing I was referring to.
• 2:39
  SPEAKER_00: Lucky for Schultz, there's no German word for de-risk, which may explain why no one wielding power in Berlin seems to take the idea seriously.
• 2:48
  SPEAKER_00: I just thought it was all an interesting object lesson in questions that are facing a lot of countries that aren't the United States, that have a lot at stake in China, and
• 3:02
  SPEAKER_00: There's less upside today than there was 10 or 15 years ago because China has caught up in so many of these sectors.
• 3:10
  SPEAKER_00: And that probably complicates the analysis for a lot of these countries in terms of the best path forward.
• 3:16
  SPEAKER_00: Although apparently it hasn't really complicated what Germany is trying to do right now.
• 3:20
  SPEAKER_01: Well, the thing that's interesting for Germany, I mean, in some ways, I think they're stuck because so much of, you know, the Chinese style industrialization, so much of this, the Chinese modernization that Xi Jinping talks about and this shift to high quality development, you know, a lot of that is becoming more like Germany in terms of manufacturing.
• 3:36
  SPEAKER_01: Right.
• 3:37
  SPEAKER_01: With lower costs.
• 3:39
  SPEAKER_01: And in high-end goods.
• 3:41
  SPEAKER_01: High-end goods and good enough, or in some cases, better, actually, than German.
• 3:45
  SPEAKER_01: So I think the problem for Germany, or the risk for Germany, is they have this deep economic relationship with China.
• 3:50
  SPEAKER_01: Some of their companies are doing quite well.
• 3:51
  SPEAKER_01: Some of them are quite reliant on China.
• 3:53
  SPEAKER_01: And so the...
• 3:55
  SPEAKER_01: There's a lot of resistance to some of the things the U.S.
• 3:58
  SPEAKER_01: is doing or other other members of the EU.
• 4:00
  SPEAKER_01: And then all of a sudden it's going to sort of happen slowly and it happens quickly.
• 4:04
  SPEAKER_00: Right.
• 4:04
  SPEAKER_01: In terms of these German companies.
• 4:06
  SPEAKER_01: And I think we're going to start seeing that in the auto sector.
• 4:08
  SPEAKER_01: We already are seeing it where you're seeing a pretty significant declines in sales of the German sort of the traditional German, you know, cars.
• 4:17
  SPEAKER_01: gas-powered vehicles, internal combustion engine cars in China because they're being replaced by really good locally made EVs.
• 4:26
  SPEAKER_00: That's what I mean in terms of the diminished upside.
• 4:29
  SPEAKER_00: The trade used to be worth it in terms of taking on imports from the PRC as long as you maintain market access to China.
• 4:38
  SPEAKER_00: But if that market is now more competitive and it just really sort of alters the dynamics and Germany has even less leverage in this relationship...
• 4:49
  SPEAKER_01: Yeah.
• 4:50
  SPEAKER_01: But I mean, you know, Germany let itself get over leveraged to Russia when lots of people were saying it's a risk to be so reliant on energy.
• 4:57
  SPEAKER_01: And Schultz's predecessor and her government didn't really take those risks seriously.
• 5:00
  SPEAKER_00: So a lot of those policies did not age well.
• 5:03
  SPEAKER_00: There's no question about that.
• 5:04
  SPEAKER_00: Yeah.
• 5:05
  SPEAKER_01: And so I think the other thing that came up, of course, one of the big topics of this meeting, or at least, you know, was Ukraine.
• 5:10
  SPEAKER_01: And
• 5:11
  SPEAKER_01: that Schultz in Twitter said something about how he asked Xi Jinping to forget the exact term.
• 5:18
  SPEAKER_00: But I've got it here.
• 5:19
  SPEAKER_00: He said China's word carries weight in Russia.
• 5:22
  SPEAKER_00: I have therefore asked President Xi to put pressure on Russia to ensure that Putin finally abandons his insane campaign and withdraws his troops and ends this terrible war.
• 5:33
  SPEAKER_00: So.
• 5:35
  SPEAKER_01: Earlier this week, I think it was yesterday or the day before, in a Q&A with students in Shanghai, it came up, some student asked because of Germany's fairly liberal cannabis laws, a student basically asked if they went to Germany to study, they had to smoke weed.
• 5:48
  SPEAKER_01: And his response was, you know, along the lines of not everyone in Germany has to smoke weed.
• 5:53
  SPEAKER_01: It's not a mandate.
• 5:54
  SPEAKER_01: In this case, if the chancellor believes this, I think he may have actually, maybe there's secondhand smoke on his delegation or he's imbibing himself because there's nothing to indicate that
• 6:05
  SPEAKER_01: Xi Jinping, there's nothing like fact based to indicate the hopes that he's expressing in that tweet.
• 6:11
  SPEAKER_01: Yeah.
• 6:12
  SPEAKER_01: And in fact, I mean, I'll say from the readout today, from the Chinese readout, it also goes on to say that Xi put forth four principles around the Ukraine crisis.
• 6:22
  SPEAKER_01: First, that
• 6:23
  SPEAKER_01: There should be a focus on the overall interest of peace and stability rather than seeking selfish gains.
• 6:28
  SPEAKER_01: Second, cooling down the situation rather than adding fuel to the fire.
• 6:32
  SPEAKER_01: That, of course, is directed at the U.S.
• 6:34
  SPEAKER_01: and the weapons the U.S.
• 6:35
  SPEAKER_01: has been providing, which we'll get to in a second.
• 6:37
  SPEAKER_01: Third, accumulating conditions for restoring peace rather than further aggravating tensions.
• 6:42
  SPEAKER_01: And fourth, reducing the negative impact on the world economy rather than undermining the stability of global industrial supply chains, meaning don't sanction us or don't push forward on de-risking because...
• 6:53
  SPEAKER_01: You know, because you think we're leaning towards the side of Russia is how I read the last one.
• 6:57
  SPEAKER_01: The second point about, you know, not adding fuel to the fire.
• 7:01
  SPEAKER_01: It's very interesting because, you know, in a surely like Schultz joining TikTok, not a coincidentally timed statement.
• 7:12
  SPEAKER_01: The U.S.
• 7:12
  SPEAKER_01: government declassified some intelligence that immediately was picked up by several major media outlets talking about how, you know, we talked about the last podcast or previous podcast in the readouts from the U.S.
• 7:24
  SPEAKER_01: side when they're, you know, Biden or Blinken or these other senior officials are talking in the readouts from their conversation with the Chinese.
• 7:30
  SPEAKER_01: They mentioned PRC support for rebuilding the Russian defense industrial base.
• 7:34
  SPEAKER_01: Right.
• 7:35
  SPEAKER_01: And, you know, the Chinese have not and the U.S.
• 7:37
  SPEAKER_01: is not accused of directly providing weapons.
• 7:39
  SPEAKER_01: But what this declassification last week that that intelligence alleges and what the like the FT, CNN, I think the New York Times and a couple of outlets all ran these big stories was how the Chinese are supplying weapons.
• 7:52
  SPEAKER_01: Goods and technology and things like satellite imagery for targeting goods and technology to make new weapons, make new tanks, rocket motors, etc.
• 8:02
  SPEAKER_01: So maybe it's not lethal aid, but it's all the pieces that have you let you make lethal aid.
• 8:06
  SPEAKER_00: Right.
• 8:07
  SPEAKER_00: And at a certain point, it becomes a question of semantics.
• 8:10
  SPEAKER_01: Right.
• 8:10
  SPEAKER_01: And so the U.S.
• 8:11
  SPEAKER_01: and, you know, again, I really don't think that it was it was a coincidence that it came out a couple of days before or three days before the German chancellor visits PRC, because I think there's concern that, you know, that, you know, there's the U.S.
• 8:23
  SPEAKER_01: is trying to get in other countries.
• 8:24
  SPEAKER_01: You are trying to push China harder.
• 8:27
  SPEAKER_01: And one of the concerns I think that some leaders have had about this visit was that Schultz would really not push that hard and be focused more on the economic side of things.
• 8:36
  SPEAKER_00: Right.
• 8:36
  SPEAKER_00: Well, and that's where I read.
• 8:39
  SPEAKER_00: Another thing he wrote on Twitter Tuesday was President Xi and I have agreed that China and Germany want to coordinate intensively and positively on promoting the hosting of a high level conference in Switzerland and future international peace conferences there.
• 8:54
  SPEAKER_00: And the takes on the war in Ukraine make me feel like I've stepped into a time capsule and gone back to like the spring of 2022, where there was real hope that China was going to use its leverage to broker a solution.
• 9:07
  SPEAKER_00: But at this point, given what we've seen, given at best the fence sitting we've seen from the PRC, but obviously there's all sorts of intelligence clearly indicating that there's a heavy lean on that side of the fence, on the Russian side of the fence.
• 9:25
  SPEAKER_00: To express any hope that the PRC is going to broker a solution in Ukraine is naive at best.
• 9:32
  SPEAKER_00: And I would say, honestly, it's more cynical at this point from Schultz.
• 9:37
  SPEAKER_01: I will say at this point, I think, you know, in many ways, from the perspective of Beijing.
• 9:42
  SPEAKER_01: The war has gone pretty well because Russia is a lot more reliant on the PRC now.
• 9:46
  SPEAKER_01: They're selling a lot more goods.
• 9:47
  SPEAKER_01: They're exporting a lot more.
• 9:48
  SPEAKER_01: You know, Russia's not going to complain about exporting over capacity.
• 9:52
  SPEAKER_01: Right.
• 9:53
  SPEAKER_00: Strategically, this has been a win for the PRC across the board.
• 9:57
  SPEAKER_01: And, you know, the U.S.
• 9:58
  SPEAKER_01: has not, you know, there have been some sanctions on specific companies, but hasn't had any sort of material impacts on the PRC economy.
• 10:06
  SPEAKER_01: The EU is...
• 10:08
  SPEAKER_01: Certainly, I think you hear a lot of frustration with the Chinese side, but you have yet to see significant actions against the PRC.
• 10:16
  SPEAKER_01: And I think that's where, again, this whole idea that now the Chinese and Schultz, Schultz is saying the Chinese want to work towards this peace conference in Switzerland in June.
• 10:24
  SPEAKER_01: That's interesting because it had not been announced that the Chinese were going to be involved.
• 10:28
  SPEAKER_01: The hope was that they would be.
• 10:29
  SPEAKER_01: I think, though, on the Chinese side, you also if you look at the situation on the ground, you know,
• 10:34
  SPEAKER_01: things have looked like they've turned back towards Russia's favor in the war in Ukraine.
• 10:39
  SPEAKER_01: And so ultimately, if the U.S.
• 10:41
  SPEAKER_01: Congress can't get through a new aid package, which, you know, was maybe get voted on this week, but maybe there won't be a speaker by the time the vote comes.
• 10:48
  SPEAKER_01: And so it may not happen.
• 10:49
  SPEAKER_01: Yeah.
• 10:50
  SPEAKER_01: That kind of chaos in the U.S.
• 10:52
  SPEAKER_01: is actually, again, it works out for the PRC, both in terms of at some point, we get to a point where the Ukrainians have to negotiate and have to give up, allow the Russians to keep some of their gains.
• 11:08
  SPEAKER_00: Mm-hmm.
• 11:08
  SPEAKER_01: You also... So the Chinese, in a scenario, the Chinese come in and they can play the peacemaker, right?
• 11:14
  SPEAKER_01: They can sort of move back onto the middle of the fence from having been all the way over in the rushing yard with like one little toe touching the fence.
• 11:21
  SPEAKER_01: Yeah, a finger on the fence.
• 11:23
  SPEAKER_01: Right?
• 11:23
  SPEAKER_01: And they can come back and they can play the peacemaker.
• 11:27
  SPEAKER_01: You know, they can...
• 11:28
  SPEAKER_01: participate in the reconstruction of Ukraine.
• 11:30
  SPEAKER_01: There's going to be a lot of money you have to get spent on rebuilding Ukraine.
• 11:34
  SPEAKER_01: They can also point to, hey, you know, the U.S.
• 11:37
  SPEAKER_01: led this coalition and it failed.
• 11:39
  SPEAKER_01: It fell apart.
• 11:40
  SPEAKER_01: The U.S.
• 11:40
  SPEAKER_01: politics are inconstant.
• 11:42
  SPEAKER_01: They're unpredictable.
• 11:43
  SPEAKER_01: They're basically, again, a paper tiger.
• 11:47
  SPEAKER_00: All right.
• 11:47
  SPEAKER_00: And that is the end of the free preview.
• 11:49
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• 12:07
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• 12:12
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• 12:17
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