Major industries heavily dependent on Chinese imports

Thursday, November 2nd, 5:00 a.m.: According to a study by the Prognos Institute, German industry is also heavily dependent on the geopolitically uncertain China when it comes to importing its primary products. This applies, among other things, to data processing, chemistry and electrical equipment, as the experts at the consulting institute write in the paper published on Thursday. They therefore recommend that companies order more from less risky states.

The main source of the analysis are the German import statistics. “Intermediate services” are goods that domestic industry needs and processes for its production – be it chemicals, computer chips or car parts. The study was commissioned by the Bavarian Business Association (vbw) in Munich.

Last year, the German economy sourced around eleven percent of its inputs from China, making the People’s Republic the most important single procurement market. In the paper, a “risk traffic light” shows those countries marked in red that are either currently at war, such as Russia against Ukraine, or are threatening other nations with war, such as China in the case of Taiwan.

However, according to Prognos, Chinese imports play a larger role in several industrial sectors that are important for Germany than the average of eleven percent would suggest. Accordingly, in 2022 the German economy imported almost a fifth – 19 percent – of its requirement for chemical intermediate products from China. “This is associated with a certain risk of failure due to geopolitical tensions,” write the authors.

In data processing, a third of the components and devices required were imported from China. The situation in this area is made more complicated by the fact that, according to Prognos, Taiwan follows in second place with a nine percent import share. In the event of a Chinese attack on the democratic island state, deliveries from both countries would be at acute risk. Beijing considers independently governed Taiwan to be its territory.

When it comes to preliminary products for electrical equipment, the Chinese import share is 22 percent. Batteries and accumulators are cited as an example in the study, 38 percent of which were purchased in China.

The authors therefore advise companies to send their buyers to other, less risky countries and regions of the world. The study recommends, among other things, to look to India for chemical products, to look for car tires and other plastic products in Thailand, for construction supplies in North America and for electrical equipment in Mexico, to name just a few examples.

Diversification of supply chains is “the order of the day,” said Bertram Brossardt, managing director of the contracting company vbw. “Our study shows that we have additional markets in almost all areas that can strengthen local production chains.”

China’s military open to talks with US after long radio silence

Monday, October 30th, 9:27 a.m.: China’s military is open to resuming talks with the US, according to a senior general. China is willing to expand Sino-US military ties based on mutual respect and peaceful coexistence, Central Military Commission Vice Chairman Zhang Youxia said at an international security dialogue in Beijing on Monday. The second highest commander in the military after state and party leader Xi Jinping gave the opening speech at the Xiangshan Forum. Otherwise the Minister of Defense is responsible for this. However, after the government removed Li Shangfu from his post last week, the position is currently vacant.

China and the US are currently moving closer again after economic sanctions, espionage allegations and China’s stance in the Ukraine war brought relations to a low point. The two nuclear powers have not had any military exchanges since former Speaker of the US House of Representatives Nancy Pelosi visited Taiwan in August 2022. The US had imposed sanctions on Li Shangfu, which made talks with him impossible.

In his speech, however, Zhang Youxia also took a harsh tone with regard to Taiwan. “No matter who wants to secede Taiwan from China in any way, the Chinese army will never agree to it and will never show any leniency,” he said. Taiwan is in China’s core interest. If China’s government is forced to resolve the Taiwan issue by force, it will be a lawful and reunifying war, Lt. Gen. He Lei told the Communist Party mouthpiece Global Times on Sunday. The USA had promised Taiwan support in an emergency and regularly supplies weapons to the democratic island state, which Beijing considers its territory.

The Xiangshan Forum is Beijing’s response to the Shangri-La Dialogue – an important security conference for the Asia-Pacific region. In addition to representatives from Russia, Belarus, Saudi Arabia and Iran, there was also a delegation from the USA. Germany is represented by a defense attaché from the German embassy in China.

China’s Foreign Minister: Road to possible Biden-Xi meeting ‘not smooth’

Sunday, October 29th, 9:24 a.m.: At the end of his visit to Washington, China’s Foreign Minister Wang Yi identified hurdles on the way to a possible summit meeting between the two countries. “The road to San Francisco is not smooth and cannot be left on ‘autopilot,'” Wang said on Saturday, according to the Chinese news agency Xinhua, referring to a possible meeting between US President Joe Biden and Chinese leader Xi Jinping in November San Francisco.

Both sides hope to “stabilize and improve bilateral relations as soon as possible,” said Wang at an Aspen Strategy Group event in Washington. Beijing and Washington have “agreed to work together toward a summit between the two heads of state in San Francisco.”

Wang arrived in Washington on Thursday for a multi-day visit. The foreign minister was the highest-ranking Chinese politician in Washington in nearly five years. During his visit, he met Biden, Secretary of State Antony Blinken and National Security Advisor Jake Sullivan.

The meeting between the two heads of state could take place in mid-November on the occasion of the next summit of the Asia-Pacific Economic Community (APEC) in San Francisco; Biden invited Xi to this.

Relations between Beijing and Washington have been strained over a range of conflicting issues from trade to human rights to dealings with Taiwan. The US government sees China, which is emerging economically, militarily and politically, as the biggest geopolitical challenge. At the same time, the two economic powers are closely linked economically and are important trading partners.

US military complains about dangerous maneuvers by a Chinese fighter jet

10:44 a.m.: According to US military information, a Chinese fighter jet approached a US B-52 bomber in a dangerous maneuver over the South China Sea. The pilot of the J-11 aircraft flew in an “unsafe and unprofessional manner” under and in front of the US aircraft at a distance of only ten feet (about three meters), the US command in the Indo-Pacific said on Friday night. A fighter jet was seen approaching in a video released. According to US information, the incident occurred at night and with low visibility. Accordingly, the fighter jet’s maneuver violates international aviation safety rules.

The air incident occurred during Chinese Foreign Minister Wang Yi’s talks in Washington, where he met US Secretary of State Antony Blinken on Thursday. On Friday there was a meeting with US President Joe Biden’s security advisor, Jake Sullivan, in the White House. China’s foreign ministry spokeswoman blamed the US for the unstable situation in the South China Sea. The fact that a US military aircraft travels all the way to China’s doorstep to show strength is the cause of the security risk at sea and in the air, said Mao Ning in Beijing on Friday. China will continue to protect its territorial integrity.

The USA and China repeatedly accuse each other of dangerous behavior by their armed forces in the Indo-Pacific. According to US information, there have been more than 180 incidents since autumn 2021. Both sides recently published pictures of the events. On Thursday, China’s Defense Ministry distributed a video that was supposed to show the US Navy destroyer “USS Ralph Johnson” cutting the route of the Chinese destroyer “Guilin” with a sharp turn. China accused the USA of wanting to provoke with the maneuver on August 19th.

China’s foreign minister expressed hope for “more stable relations” with the USA in Washington

Friday, October 27th, 3:26 a.m.: In Washington, Chinese Foreign Minister Wang Yi expressed hope for “more stable relations with the US after months of turmoil.” “We want to expand cooperation for the benefit of both sides to stabilize US-China relations and return them to the path of healthy, stable and sustainable development,” Wang said at the start of his three-day visit to the US capital on Thursday (local time) before a meeting with US Secretary of State Antony Blinken.

There will always be disagreements, Wang admitted. China then wants to “react calmly,” he assured. Blinken, for his part, said he was looking forward to “constructive discussions” with his guest, and a dinner together was also planned.

On Friday, Wang will speak with National Security Adviser Jake Sullivan at the White House. A meeting with US President Joe Biden has not yet been announced, but is expected after Chinese President Xi Jinping also received Blinken in Beijing.