China’s Role for the Global Economy

By Elisabeth Hellenbroich

Several days ago the German daily Frankfurter Allgemeine Zeitung (FAZ) published a lengthy article under the title “The rise of a world power – 70 years after the foundation of the People’s Republic”. The theme of the article: In Beijing a second airport – Beijing Daxing International Airport – was inaugurated, only after 5 years of construction. A very impressive performance, if one compares it to the problems which one observes in the building of an additional Berlin airport BER which after 9 years construction and many mishaps, still awaits its inauguration by 2020. The second Beijing airport in a city with 22mio inhabitants has the shape of a “Sea Star”; it is fully automated and it is reported by the German daily that the processing of passengers that check- in, till their arrival at the relevant terminal will not last more than 8 minutes. This includes the arrival by car and its parking, which is automatically done. The car driver will be informed by a QR code on a smart phone, indicating him where the car got parked. The Beijing Daxing airport has the size of 97 football stadiums and it is a masterful demonstration of Chinas “power,” FAZ commented. The new airport will process 77mio passengers till 2025, to increase to 100mio in 2040.

Coinciding with such report many leading western press were publishing nasty articles attacking Chinas 70 year China Republic celebrations as being “overshadowed” by the violence used by the police in Hong Kong against demonstrating student. Aside US President Trump’s hysterical trade war against China what can be observed in Europe and particularly in Germany is great “skepticism” expressed by politicians and leading industry people in respect to Chinas impressive rise as an economic superpower in the 21rst century.

Based on the information that has been compiled by researchers about China, it is clear that 1. The EU has only one chance in the future: it must choose a “realistic” and pragmatic policy and economic approach towards China. 2. The EU must drop its “sanctions-policy” vis a vis Russia (whose key enforcer was Germany), that have driven Russia “into the arms of China”. 3. The EU rather than waiting and hesitating or blindly following Trump’s anti- China tirades should develop its own “grand strategy” how to participate in China’s fascinating “New Silk Road” Project coupled with a new policy towards  Russia.

During the last two years several books got published in Germany – among them a book by China expert Frank Sieren who lives since several years in China. The book is entitled: Zukunft? China! Wie die neue Supermacht unser Leben, unsere Politik, unsere Wirtschaft verändert.(Future?  China! (How the new superpower changes our lives, policy and economy;”, Penguin Publishing House, 2018 ) The other noteworthy book has been written by Theo Sommer: China First.  Die Welt auf dem Weg ins chinesische Jahrhundert (The world on its way into the Chinese century, C.H. Beck, 2019).  The book of former chief editor of the German Weekly “Die Zeit” like the book of F. Sieren gives many valuable facts and critical information for Chinas role in the world today.

Both books conclude that the 21rst century will be shaped by the global power player China. The authors however warn that the US and the EU should not “turn inward” but try to design a “realist” policy vis a vis China. While Sommer qualifies China as an “authoritarian democracy” with a state using “surveillance instruments” (facial recognition; social – credit system et cetera) as a mean of control of its 1,4 billion(!) population, both authors urge that a “productive participation” in Chinas Grand Strategy should take place. Instead of a geopolitical war and conflict, which several US war mongers under Trump (National Security Council Document, Rand Corporation Study) advocate, the authors of the books advise to participate in China’s grand design as well as in the development of Russia- which both aim to bring most of mankind out of poverty, based on infrastructure projects like the New Silk Road and Eurasian development, in the next decades.

Frank Sieren, the author of the above mentioned book, is deeply impressed by Chinas rapid rise. He urges the reader to break with the stubborn “stereotypes” as well as with the prejudices – for example that China only steals technology and copies, that the Chinese only can obey, that China is a communist dictatorship, by underlining that: 1. China is no longer the extended workbench of Western Europe, in particular of Germany that used to sell its high speed trains in the 1990ies, being replaced today by Chinese high speed trains that even perform more efficiently. 2. China is leading in the development and production of electrical cars and busses. In the special economic zone Shenzhen today 16.000 electrical buses drive, while in Germany there are only a few driving. 3.According to Sieren China is today’s leading power in “Artificial Intelligence” that will put the world upside down; since years China is investing in key industries and resources as well as in infrastructure projects like the huge project “Belt and Road,” the biggest infrastructure project since the building of the Great Wall  in the seventh century B.C.  It constructs rail lines, roads, airports, harbors, housing and it is the power which founded the independent AIIB “The Asia Infrastructure and Investment Bank”- which the US refused to join, an independent bank involved in the financing of such projects.

China is building new strategic economic alliances with countries around the world and the country itself has no “foreign debts.”  It is the biggest creditor of the US. For all those who believe in the prejudice that China is the biggest environmental polluter on earth, Sieren states that China ecologically is one of the most progressive, having invested gigawatts in “solar energy and cells”, as well as in water power stations – much more than the US or Europe did. While the per capita income in the US is 60.000 US Dollars annually, in China it is 9000 US Dollars annually, but this according to Sieren will change one day, giving the President Xi Jinping has the plan to increase Chinas living standard till 2035 and 2049 so that most of the 1,4bn people of China can live well and decently.

Sieren predicts that China will globally push back the influence of the Western Hemisphere in its totality and he sees a lot of potential in China’s youth, indicated by the enormous rise in Startup enterprises. He underlines that 60% of the world population lives in Asia.  Germans and Europeans- i.e. the West as a whole have no more than  15% share in world population, the EU 7%, while the Chinese have 18% of world population. Aside this China is becoming a leader in “Artificial Intelligence” and the 4^th revolution and will have a future say in the technological order of the globe, i.e. China is on its way to become a global “innovative” power.

“Belt and Road” involves 70 countries now

A look at China’s new Silk Road (Belt and Road) demonstrates the immense progress made by China around the globe. Exemplary is Africa, which has 1,2bn people and by 2050 its population will have doubled.  In the last years China has invested in Africa’s infrastructure- exemplary is the build- up of a rail line between Kenia’s Mombasa and Nairobi. They built 200 schools, 80 sports stadiums, roads, parliamentary buildings. The company Huawei annually trains 12 000 Africans and 100 000 Africans study at China universities in order to return one day to build up their own country. Like Russia, China is member of the SCO (Shanghai Corporation Organization) assembling key central Asian states (Kazakhstan, Kirgizstan, Uzbekistan, Tajikistan etc.) with India, Iran, and Pakistan as observers. Together with Russia it is also member of the BRICS and it cooperates with Russia in Eurasia – a space where 70% of the world population lives and 75 % of world energy resources are located. The new Silk Road involves 70 countries by now and investments from China could go up to 900bn Dollars in the next decades. In the EU China was the one that invested massively in the harbor of Piraeus (Greece) – when the EU told the indebted Greece to get rid of its debts by privatizing. They invested 500mio Euro and Piraeus is now the first harbor after Suez for ships coming from Asia.

In the EU China has further proceeded with its policy 16+1 – inviting most countries from Southeastern and Central Europe to participate in Chinas Silk Road. This was followed by many infrastructure projects in Hungary, Serbia, Croatia, Albania etc. and despite the fact that Li Keqiang stated in July 2018 that China does not want to split Europe, the skepticism in the last years has grown dramatically and counter measures were taken for example by the German government which in 2018 prohibited the takeover of a German business Westphalian special machine producer “Leifeld Metal Spinning” producing material for Air and Space traffic and for nuclear industry. The nervousness of the German government illustrates however, according to Sieren, that Germany is with its “back against the wall”. Since any wise thinking person would see that there is always the “principle of reciprocity.” Some industry thinks this way like the German car producer BMW, which wants to increase its joint venture with China from 50 to 75%. The chemical company BASF can now construct in China its own facility – worth 10bn Dollars. The chairman of BASF Martin Brudermüller told in a background interview with Sieren that “the development goes in the right direction and that we must get accustomed to the newly emerging world order.” Brudermüller sees a real deficit in the European debate: Europe has enormous capacities he stated. But our own innovation power is at stake. We defended the line that for innovation and creativity you need freedom based on the western model. They don’t have that in China. Yet we must admit that China is not a democracy but they have the “freedom to be innovative and creative.” Brudermüller criticized the shortsightedness to stem against China. And he underlined that the state must have the right to steer the development of industry with correct regulation and incentives and fight against resistance when it’s needed. He also added that most far seeing politicians in Germany are convinced that “we must ally with Russia in order to be in a stronger position and integrate the Eastern EU countries.”

Russia and China

What happens in Eastern Europe also happens with Russia.  Also here the unfounded belief of the West that sanctions will bring Russia to reason produced the contrary, driving Russia into the arms of China. Since May 2014 both countries concluded a 30-years treaty about gas deliveries, where by Gazprom will pump annually 38bn cubic meter of gas to China, the deal worth 400bn dollars (estimated). This involved the “China Development Bank” which lent VTB bank one billion US dollars in Yuan and the credit span is 15 years. Aside building infrastructure, Chinese are also interested in wood, agriculture, mines and non- ferrous metals in Russia. Sinopec, the Chinese oil company also is participating with 10% in Russia’s petrochemical company Petrochemical Sibur. In the liquefied gas project Yamal LNG both have 29,9 %  and both Russia and China build a large jet plane and 4 new nuclear plants worth 3,6bn Dollars. In December 2019 the new gas pipeline from Russia to China will start; it’s  called “Force of Siberia” and costs 55bn Dollars. In the construction engineers had in part to fight at 80 minus temperature differences. Annually the pipeline will pump 38bn cubic meter gas to China (to Germany Russian gas is 53bn cubic meters).

There is also potential in terms of the Artic, according to Sieren. The Chinese government published a “White Book” which made known plans that it wants to realize with Russia: “Given the warming up, artic ship- routes will probably become the most important transport lines for international trade. Sea-lines from the mid 21rst century on could be free of ice and the goods transport between Asia and Europe be shortened. China wants to explore the new ship lines network together with Russia. Russia is member of the “Arctic Council” aside Norway, Greenland, Canada and the US. China has invested 90bn dollar in energy infrastructure and financial cooperation. China has an icebreaker Xuelong (167 meters long, 21000 tons heavy) which is doing its eighth artic expedition.  2019 another icebreaker is to be ready.  If Russia and China go together America has bad cards.  Moscow has 44 icebreakers  and Beijing has the money. 30% of the natural gas reserves and 13 % of oil reserves are under artic soil.

The coming Chinese century

Another remarkable book is the one by Theo Sommer- former chef editor of “Die Zeit” and former collaborator of Helmut Schmidt who published 2019 his book “China first- The world on its way to a Chinese century.” He speaks of a shift of power relations – the first shift was in the 15^th century Columbus discovery of America- the European century; the second the 19^th century American century and the third shift is the 21rst century which is Chinese. Since the end of 1978 China has increased 40 times more the per capita income and has become the second largest economy in the World.  It has 1,4bn people and wants to bring out its people from poverty: a report published by the government in 2015 makes clear according to Sommer, that till mid 2020 China will lead in key industries, including information technology, robotics, air- and space travel, shipbuilding, high speed traffic, biomedicine and medical equipment, alternative automobiles, energy production, new work materials and agricultural machines. The state will support global champions and AI is to be pushed till 2030 with 150bn. According to Sommer Xi Jinping is the only statesman at present that has a grand design strategy.  He gives at one point an interesting insight into the personality of Xi Jinping. Born in 1953 as third kid among four, he is the son of Xi Zhongxun, who was a leading CP member since 1928 and later Vice- Minister President, responsible for culture. Xi visited an elite school. In 1962 his father was condemned to become factory worker and his mother had to do heavy work on the country side. Later his father was Governor of Guangdong, Xi studied at the Tsingua university chemical engineer; 20 years later he delivered his doctoral thesis in jurisprudence. Xi’s wife is opera singer and his daughter studied at Harvard English and Psychology.  He  reads a lot of Chinese classics- travelled to Russia and France and  knows writers like Pushkin, Dostoevsky, Tolstoy inside out; also the American literature is familiar for him, like Whitman,  Mark Twain, Jack London, Hemingway; as well as the French,  British and German literature like Stendhal, Balzac, Victor  Hugo, Shakespeare and Goethe.

According to Sommer Xi studied in detail the he collapse of the SU as well as the colored revolutions. He wrote a book “How to govern China” and he is surrounded by a small group of influential advisors: among them Wang Qishan, close advisor who has deep US knowledge and who knew Helmut Schmidt very well. Another advisor is Liu He – 66 years old Vice Minister President who also studied in Harvard and there is the Chairman of the Central Bank Wang Hunin who studied Augustinus, Machiavelli and Hegel. Sommer advises the EU and Germany in particular to wake up and not follow the aggressive war scenarios (Rand corporation: “Coming war with China”). By changing its attitude towards Russia it should grasp the opportunity for participating in a grand design.