Seeking collaboration & growth under the uncertainty of the shadow of de-risking
Three keynote speeches from CCG Munich event on Feb. 19
Hi, this is Yuxuan from Beijing. On February 19, the Center for China & Globalization (CCG) collaborated with the German Federal Association for Economic Development and Foreign Trade (BWA) to organize a luncheon roundtable right after the conclusion of the Munich Security Conference.
Themed "China, Europe, and Globalization in 2024: What’s Next for Business?", the event is composed of two roundtables - one on de-risking and the other on green & digital transition. It gathered over 30 figures from German and Chinese businesses, chambers of commerce, academia, and the media.
The CCG Update will release the insights from the two roundtables held that day, following the order of their presentations at the event. Today's newsletter features the three keynote opening speeches by Mabel Lu MIAO, Co-founder and Secretary General of CCG; Henry Huiyao Wang, Founder and President of CCG; and Michael SCHUMANN, Chairman of the Board at BWA and Chairman of China-Bridge.
For the full transcript, please refer to this Google Doc or the attached PDF file.
Mabel Lu MIAO
Co-founder and Secretary General of CCG; Munich Young Leader 2020; Member, The Chinese People's Political Consultative Conference (CPPCC)
Esteemed guests, friends, ladies and gentlemen:
Good afternoon! My name is Mabel Miao and I am Secretary General of CCG. Welcome, all of you, to take your busy schedule to join us for this luncheon roundtable event co-hosted by CCG and BWA in partnership with the China Bridge. CCG is one of the largest non-governmental think tanks in China. We are one of the globally recognized think tanks as well. Since 2008, we’ve dedicated ourselves to the study of China and globalization and China’s role in globalization. CCG also has a well known business council with over 100 council members drawn from multinational companies and China’s internationalizing sectors. We know that the trajectory of Globalization has been changing in the past decade, affecting global businesses all over the world.
Two days ago, we hosted an official side event in this building with the Munich Security Conference. Many people know CCG hosted side events with the Munich Security Conference in the past few years. This year, our theme was “China, EU, and US cooperation on climate change.” This is a very important topic for everybody. We know that this year’s annual report of the MSC is about “Lose-Lose?” But we know the spirit of business community is win-win cooperation. We have to achieve win-win cooperation.
So today, I think we are going to talk about these topics as well. We have invited so many distinguished guests to talk about that. Later we will have lunch, then we have the luncheon discussions, different roundtables with different themes. Premier Li Qiang says it all too well - “Failure to cooperate is the biggest risk.” “Failure to develop is the biggest insecurity.”
We believe that business itself is the real driver of globalization, and is increasingly becoming straitjacketed by the ongoing narratives of conflict and zero-sum game. Last year at the Global Solutions Summit in Berlin, we co-hosted a business dinner with the BMW Foundation. This year, we’re very pleased to partner up with BMA and China Bridge to host this event for the first time on the heels of the Munich Security Conference. We hope this event can herald more meetings and discussions between Chinese and European business communities in the future.
2024 is a consequential year for the world. We will remain committed to fostering pro-opening, pro-globalization public discourse for Chinese policy-making and welcome you to come to Beijing for our signature annual forum. Our 10th edition of the China and Globalization Forum will be held on May 25-26. If you’re interested, please feel free to contact my colleague Dr. Tang. She is in charge of the program.
Last but not least, I would like to thank our partner – the China Bridge and the dedication and excellent work of its vice chairman Mr. Andreas Hube. Of course, Michael will deliver a keynote later, the boss of the BWA. We’re also grateful for the support of our partner Nio. We know Mr Zhang is here. Thank you for your support. We're honored and privileged to have a very distinguished group here with us today. We thank you so much for being with us.
Without further ado, please join me in welcoming the first keynote speaker – former Counselor to State Council, Vice Chairman of China Association for International Economic Cooperation at the Chinese Ministry of Commerce, Founder of the Center for China & Globalization, Dr. Henry Huiyao Wang.
Henry Huiyao WANG
former Counselor to State Council and Vice Chairman of MOFCOM China Association for International Economic Cooperation, People’s Republic of China; Founder of CCG
Mr. Mike Schumann, distinguishing guests, ladies and gentlemen:
It's really a great honor for me to stand here right after the Munich Security Conference finished. Last night and exactly in this hall, we had 50 key participants of the Munich Security Conference give a very good summary of what has been conducted in the last three days. And as you probably know, China actually had its largest delegation to the Munich Conference this year. The Center for China & Globalization has three participants, myself, Dr. Miao, and Dr. Tang. So we are extremely honored. We've been six years in a row participating in the Munich Security Conference. We are also the official partner for the official site events here - the only China think tanks to hold side events at the Munich Security Conference.
We thought it was a great idea to work with BWA, our partner for a long time. I remember during COVID, we were in Berlin. Michael and his colleague organized a roundtable in Berlin which was very impressive and we thought that it was a good occasion. While we still have many friends who attended the Munich Security Conference like our friend ambassador from Germany to Luxembourg before - he is here right now. And also we thought, you know, the Munich Security Conference is more about security, more about all the grand topics. But we would like to also zoom in a little bit about China-EU and China-German business cooperation. So we had a lot of business representatives at this table, and we're very pleased to have a company representative from Huawei, from Nio, from ByteDance, and from many more. And we also have journalists from Xinwan News Agency and Phoenix and all the rest.
I'm extremely grateful that we have so many German and European friends here - I mean, some coming from outside Munich to attend this event - so we can really continue the spirit of the Munich Security Conference exactly at the same location to continue this more business-related venue. So I really felt very thankful for all of you to attend the event today.
I just want to maybe mention a little bit about the Director of the Central Committee Foreign Affairs Commission, China Foreign Minster, Mr. Wang Yi, who actually spoke a day before yesterday where we were the audience to hear. His speech this year has gained more support and was more accepted than, I would say probably, ever in the Chinese diplomatic speeches because this year we see the Munich thinking is less China-centric. I think in the last few years we had the pandemic, there were sanctions. But this year is more positive. The theme of the report of the Munich Security Conference is talking about "Lose-Lose". As you all know, China has always promoted win-win, which means the win-win logic is there. If there's a lose-lose, there must be a win-win. So how can we really display this win-win cooperation spirit? I think that has come back quite a bit to the Munich Security Conference.
This is very encouraging to see that we are the only two think tanks to hold a China-related event. CCG hosted together with the Munich Security Conference on China-EU-US collaboration on climate because this is probably the only foothold that we can really strive for international cooperation. I know MERICS organized another China-related event called "How to reengage China", which also looks fine from the topic.
What I would like to say is that we hope that in the future, we'll always have an occasion after the Munich Security Conference to have a reflection. And I'm sure after lunch, we'll hear all the bright minds and views from distinguished guests surrounding this table this afternoon. So we will make a document on that and then we hope to reflect on some of that when we go back.
But what I would like to say is that, of course, China-EU relations and China-Germany relations are probably on an upward trajectory for 2024. I know Mr. Wang Yi met Olaf Scholz, the chancellor of Germany. But he also met the foreign minister of Germany and many counterparts of other countries. I know that he met Blinken, he met the Canadian Foreign Minister, the Argentinian Foreign Minister, and also the Ukrainian Foreign Minister, all here at Munich. It's a very good meeting. Of course, Olaf Scholz is visiting China in April, mid-April, probably with a large business delegation. And then we have Mr. Wang Yi visiting France, probably preparing for President Xi's visit to France with both countries celebrating sixty years of diplomatic ties. Also, he visited Spain, which is another key country in the European continent.
So I think there's many more positive picking up of Sino-EU relations and hope that Sino-German relations will pick up again. And I hope that investment on both sides and trade will continue.
Looking at specifically the China-Germany foreign relations, I know there's there's actually a drop in trade for last year, in 2023. I think that was due to partly this kind of de-risking policy pursued probably blindly that is actually not helpful for the German economy and for the business community. The thing that we need to reflect [on is] how we can avoid a lose-lose situation because this is the new spirit of the Munich Security Conference, and then to set a new tune for the new development. But despite the decline overall, direct investment from Germany to China registered a 4.3% increase reaching €11.9 billion, which is great. I mean, the trade may decline, but the investment in China is still on the upside. So this surge in investment marked a significant milestone constituting 2.3% of German total FDI stock, the highest since 2014.
I'm sure Michael knows the data situation very well. I think the confidence of German companies in the Chinese market remains steadfast as evidenced by the Business Confidence Survey 2023/24 conducted by AHK Greater China. So despite the concerns about the Chinese economic trajectory, a staggering 91% of the surveyed companies expressed their intent to continue to do business in China. Moreover, 54% of respondents plan to increase their investment.
I remember when the German Foreign minister visited Beijing last year, the German embassy invited me to have a dialogue with the Foreign Minister. The Foreign Minister was with five Parliamentary members from different parties, along with several big businessmen from German companies.
I hear very clearly from the German business community speak to the 5 parliament members, that they have to be in China because China is in the heart of the state-of-the-art technology development upstream and downstream. And if a German company wants to be competitive in the world, they have to be in China to gain that competitiveness so that they can conquer the world market. And so, to be in China is not a matter of "in China for China", but "in China for the world." And they cannot afford not to be in China.
I also remember last November, I was invited by the German Parliament, by CDU to speak to the German Parliament where von de Leyen was the first speaker, European Council President. And of course, she talked about de-risking and all the things. But I heard my peer speaker together, the CEO of Mercedez-Benz. He was saying that, talking about de-risking, the biggest risk is not going to China. So that is the consistent voice I heard from the German business community in China.
Premier Li just said at Davos that China has 400 million people in the middle-income bracket and in the next decade in China, we'll have 800 million. That's the biggest market nobody can really afford not to be in. So I think as we're seeing the news that President Trump will come back, and he's threatened maybe not going to support NATO on the budget.
I think our European friends here, we have to continue our economic relations with China, and also probably welcome China's investment here in the European market. The economic outlook for China, many will say, is China is slowing down or real estate crises and things like that. But I would encourage people to go to China to take a look. It wasn't as bad as people thought, actually. I just came from there. You know, during this past China's New Year of the Dragon holidays, 9 billion people traveled around China. Hundreds of millions or how many people traveled outside China. And so I think you can see China has recovered quite significantly. The property market used to contribute about 7.3% of China's GDP growth. Last year, it contributed 5.8%. So it's not crashing or anything. It was just slowing down. I think from high speed to high quality is what China wants.
Of course, on the other hand, China has the new export champion now, for example, the EV automobiles, the clean technology, the battery, and solar panels. During our roundtable at Munich, we have Niall Ferguson said he was quite surprised to see China's clean technology has developed so fast, and that really helps to fight climate change.
Also, I have to say that conversely, China's investment in Germany, has steadily declined since 2016 with only 26 reported cases of China investment in 2022, a stark contrast to 68 cases in 2016. So I think now with Olaf Scholz going to Beijing, we have to maintain this economic relations with China. It's important that we still keep this investment channel open because there are a lot of German companies investing in China, why can't we have more Chinese investment in the German market? So I think this is really important. You know, data from Deutsche Bundesbank revealed a sharp downturn in direct Chinese investment with a net flow of €2.3 billion in the previous year from a positive flow of €3.7 billion in 2022. So the widening gap between the investment in China and investment in Germany could be an issue. So we hope that there will be more support for the Chinese corporation in the German market.
Finally, I would like to say that this is really a great dialogue. We would like to seek your advice, your recommendations, and also your brilliant ideas on how we can sustain this economic cooperation and reflecting on the Munich Security Conference theme, how to avoid this lose-lose situation. In China, for instance, Wang Yi talked about a win-win. And I think that if we can work together, if you have a business voice expressed in this positive direction, I think in the New Year of Dragon in 2024, hopefully, we'll usher in some new momentum for our cooperation among these geopolitical tensions. As foreign minister Mr. Wang said, China hopes to inject positive balance into the global scene.
For example, on big power relations, China can project a positive impact. China is the second largest donor to the United Nations’ regular budget and peacekeeping assessment. Hopefully, China can do more to maintain global peace. Second, China concluded the deal with Iranians and Saudis. China hopes to help more in the Middle East peace process. And thirdly, global governance, that is, to participate in climate change and in many global multilateral systems. I hope that China will continue.
Finally, China will continue to inject positive stability into the global economy. Last year, China achieved 5.2% GDP growth, which represents over 30% contribution to the world GDP growth. And Asia is booming with China, ASEAN, and RCEP. So we hope that the stability of Asia, which is the only place where there's no hot war right now, will be very economically and politically still quite positive.
So we hope that we'll continue our China-EU cooperation and China-German cooperation. And I look forward to hearing All of your very good comments. Of course, we'll hear our co-host Mr. Schumann's comment. We're still in the New Year before the 15th of the first month of the Chinese New Year. So I would like to wish all of you a Happy New Year of the Dragon and bring prosperity, peace, and also help. Thank you all very much.
Michael SCHUMANN
Chairman of the Board, BWA; Chairman, China-Bridge
Dear Dr. Wang, dear Dr. Miao, distinguished guests, ladies and gentlemen,
On behalf of BWA, the Federal Association for Economic Development and Foreign Trade, I also have the pleasure to welcome you today to our joint event with the Center for China and Globalization. We are delighted that so many of you are joining us here in Munich. CCG's events in the context of the Munich Security Conference have a long-standing tradition. Four years ago, at the 56th Munich Security Conference, you welcomed former US Secretary of State John Kerry to your roundtable. It was a different time back then.
Well, the 60th Munich Security Conference has just come to an end, and although everyone here has spent the last few days talking about nothing but security, the feeling that remains is one of lingering uncertainty. And if you follow the change in political rhetoric in Germany and Europe closely, you could sense that from the speeches and reports on this year's conference, when you hear the ever louder calls for Germany and Europe to become "fit for war" again, you wonder where this is supposed to lead.
"Peace through Dialogue" has been the motto of the Munich Security Conference for many years. However, part of a genuine dialogue is engaging with voices that challenge you and your beliefs, that at times may even seem like an imposition, that forces you to get out of your comfort zone. If you try to avoid this you run the risk of turning your dialog into an echo chamber. The increasing tendency of the Munich Security Conference to exclude unwelcome voices that advocate for peace instead of further escalation, including elected members of the German parliament, does not necessarily speak for the organizers.
But our topic today is: China, Europe, and Globalization - What's Next for Business? So let me give you a brief outlook from our association‘s point of view: In 2024, we are facing a global super-election year with 4.2 billion voters, which in all likelihood will bring about major changes. After all, it’s the year of the dragon now, so better get ready for some of that dragon energy. The European Union and Germany as its biggest member state face a number of challenging disruptions that corporations must be aware of. Next to the war in Ukraine, we have an ongoing armed conflict in the Middle East, a looming escalation between Serbia and Kosovo, and a migration crisis that could create massive friction between EU member states.
In this environment, the European institutions aim to change guards with the election of a new European Parliament in June, resulting in a new European Commission in late fall and also a new leadership in the European Council. While the present term of the European Commission has been dominated by massive and far-reaching efforts to decarbonize the EU, a shift in the EU Parliament to the center-right could put the new focus on re-industrialization, job creation, and a path back to economic growth; plus tougher migration rules for the 27 member states. Yet, not only Europe is having elections. The United States of America also elects a new President, with potentially massive shifts in policy vis-a-vis Europe and Asia should Donald Trump get reelected.
During Trump's first term, he refocused his country inwardly with an America-first policy platform, picking trade fights with basically every partner and ensuring that previously outsourced jobs came back to the US. In this, he perceived China as his biggest competitor.
Europe's policies towards China nowadays can be summarized under the headline of "de-risking" its exposure to China. Despite the strong involvement of European companies in many sectors of the Chinese domestic market, politicians on both sides of the Atlantic are trying to redefine Europe‘s relationship with China from one of partnership to one of rivalry.
Against this backdrop, the current state of mind of many of our entrepreneurs, especially those who are involved in China or are still considering such involvement, can be characterized best by a growing feeling of uncertainty. Not a day goes by without them being confronted with contradictory news and reports. A few days ago, Reuters announced that German direct investment in China rose by 4.3% to an all-time record high of 11.9 billion EUR in 2023. But shortly before, it was reported that in 2024 the US will overtake China as Germany's most important trading partner and that German companies should adjust their strategies accordingly. In early January, the German media went into overdrive conjuring up the end of the German car makers' success stories in China, then earlier this month, in the light of significantly rising registration figures - Volkswagen sales in China went up by 43% -, they made a full turn around and predicted a positive year for the German automotive industry in the People's Republic.
A mirror-image feeling of uncertainty also characterizes the mood of Chinese companies we talk to that are involved in Europe or are considering such involvement. You don't have to be clairvoyant to predict that, against the backdrop of the current debates, the EU will take an increasingly critical view of any market penetration by potentially superior Chinese products. Nevertheless, there are also still opportunities.
The defining legislation of the current EU Commission has been climate change. More than 34 pieces of legislation were set on their way to reduce CO2 levels and become a net-zero continent by the middle of this century. These policies will bring about a massive uptake in renewable energies, which will be either used directly and most efficient or being stored as green hydrogen to decarbonize the steel, chemical, and transport industries.
Any company leveraging these shifts with its own products may even win the support of environmental NGOs and advocacy groups that are usually more critical of China. So the situation is complex.
But what can we do to counter this all-pervasive feeling of uncertainty? We advise our companies to largely stay away from the heated discussions in the media and politics and keep exploring their markets of interest, find out for themselves, get their own picture, and follow their own entrepreneurial instincts. At BWA we bring together entrepreneurs from Germany with entrepreneurs from different cultural backgrounds and match people who can ideally also do business with each other. And our focus here is on the people, with their respective cultural backgrounds and their respective cultural values; we do not lecture them and we do not bring together abstract entities, institutions, chambers, companies, but always very specific biographies with very specific concerns, to which we at BWA devote a lot of time.
We call that "Economic Diplomacy" and from the experience of more than two decades of doing this, we can say that this kind of "bridge building" work not only ensures growth and prosperity, it also promotes peace and understanding. And this is more important than ever in these times, because "everything is nothing without peace", as our former German Chancellor Willy Brandt once put it. You are certainly aware of German Chancellor Olaf Scholz's keynote at the conference that culminated in the statement: "Without security, everything is nothing", it’s a variation of the famous quote by Willy Brandt. Two different leaders, two different generations. Willy Brandt witnessed and was shaped by the horrors WWII inflicted upon Europe. Olaf Scholz was born in 1958. I prefer to stick to the original version of this statement because even though, ladies and gentlemen, peace does not seem to be in too good a shape at the moment, one must not lose hope. If we want to secure a future for our children, there is no alternative.
Now, there are quite a few who, in view of the current crises and conflicts in the world, are telling us that the concept of economic diplomacy has failed and are calling on us, to only engage with friends and so-called "value partners", who demand a stronger commitment to our "values" from our companies, who promote the hashtag "I stand with" as the one and only proof of decent corporate governance and investability.
We at BWA are not one of these voices, because we trust in our companies' and our society's own set of values, a set of values that - shaped by our history and culture - is much stronger than some people are currently suggesting. This year we will celebrate 75 years of the Federal Republic of Germany, 75 years of living in freedom and peace. Our values are strong and our companies carry them into the world. They need neither be hysterically defended against perceived and real threats at home and abroad, as this makes them smaller than they are, nor presumptuously exalted to become the sole guiding principle for others, as this inflates them and makes them inadmissibly greater than they are. But we should have trust in their power and their attraction, and it is, therefore, wrong to withdraw from economic areas that may appear problematic to us for various reasons. We are currently experiencing an escalating debate in Germany about investments by German corporations in Xinjiang. BASF and Volkswagen are at the center of this debate, and there is immense media and political pressure on both companies to withdraw from the region.
Ladies and gentlemen, I traveled extensively in Xinjiang years ago and saw the poor conditions in which people there lived. China had asked Volkswagen to invest in Xinjiang in order to create better job opportunities for the local population. And with all due respect for the commitment to human rights, someone has yet to explain to me how it helps the people there, who are supposedly at stake if you take those opportunities away from them. We need more commitment instead of less, we need more cooperation instead of confrontation, we need more exchange and understanding at the level of people who can relate to each other, even if they live in different political systems. And to come back to the motto of the Munich Security Conference: this is the kind of dialogue that will truly help to secure peace.
I hope that our event today can also contribute to this understanding, that you will gain new insights and make new friends and I thank you for your attention.