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Tag: Microchips

  • Taiwan Makes the Majority of the World’s Computer Chips. Now It’s Running Out of Electricity

    Taiwan Makes the Majority of the World’s Computer Chips. Now It’s Running Out of Electricity

    It is not just a case of building more capacity. Taiwan’s energy dilemma is a combination of national security, climate, and political challenges. The island depends on imported fossil fuel for around 90 percent of its energy and lives under the growing threat of blockade, quarantine, or invasion from China. In addition, for political reasons, the government has pledged to close its nuclear sector by 2025.

    Taiwan regularly attends UN climate meetings, though never as a participant. Excluded at China’s insistence from membership in the United Nations, Taiwan asserts its presence on the margins, convening side events and adopting the Paris Agreement targets of peak emissions before 2030 and achieving net zero by 2050. Its major companies, TSMC included, have signed up to RE100, a corporate renewable-energy initiative, and pledged to achieve net-zero production. But right now, there is a wide gap between aspiration and performance.

    Angelica Oung, a journalist and founder of the Clean Energy Transition Alliance, a nonprofit that advocates for a rapid energy transition, has studied Taiwan’s energy sector for years. When we met in a restaurant in Taipei, she cheerfully ordered an implausibly large number of dishes that crowded onto the small table as we talked. Oung described two major blackouts—one in 2021 that affected TSMC and 6.2 million households for five hours, and one in 2022 that affected 5.5 million households. It is a sign, she says, of an energy system running perilously close to the edge.

    Nicholas Chen argues that government is failing to keep up even with existing demand. “In the past eight years there have been four major power outages,” he said, and “brownouts are commonplace.”

    The operating margin on the grid—the buffer between supply and demand—ought to be 25 percent in a secure system. In Taiwan, Oung explained, there have been several occasions this year when the margin was down to 5 percent. “It shows that the system is fragile,” she said.

    Taiwan’s current energy mix illustrates the scale of the challenge: Last year, Taiwan’s power sector was 83 percent dependent on fossil fuel: Coal accounted for around 42 percent of generation, natural gas 40 percent, and oil 1 percent. Nuclear supplied 6 percent, and solar, wind, hydro, and biomass together nearly 10 percent, according to the Ministry of Economic Affairs.

    Taiwan’s fossil fuels are imported by sea, which leaves the island at the mercy both of international price fluctuations and potential blockade by China. The government has sought to shield consumers from rising global prices, but that has resulted in growing debt for the Taiwan Electric Power Company (Taipower), the national provider. In the event of a naval blockade by China, Taiwan could count on about six weeks reserves of coal but not much more than a week of liquefied natural gas (LNG). Given that LNG supplies more than a third of electricity generation, the impact would be severe.

    The government has announced ambitious energy targets. The 2050 net-zero road map released by Taiwan’s National Development Council in 2022 promised to shut down its nuclear sector by 2025. By the same year, the share of coal would have to come down to 30 percent, gas would have to rise to 50 percent, and renewables would have to leap to 20 percent. None of those targets is on track.

    Isabel Hilton

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  • Intel Is Cutting More Than 15,000 Jobs Despite Getting Billions From the US Government

    Intel Is Cutting More Than 15,000 Jobs Despite Getting Billions From the US Government

    In a move likely to raise a few taxpayer eyebrows, Intel said today that it will cut 15 percent of its workforce, or more than 15,000 jobs, as it struggles to rebound from disappointing results. In March, the US government said it would give Intel no less than $8.5 billion to help it rebuild its US chipmaking operations.

    Intel said that its revenues were down 1 percent year-on-year for the second quarter. “We do not take this lightly, and we have carefully considered the impact this will have on the Intel family,” CEO Pat Gelsinger said on an earnings call today. “These are hard, but necessary decisions. These reductions do not impact our ability to execute our plan.”

    The job cuts will affect areas including sales, marketing, and administrative roles, Intel said, and would be part of a general cost-cutting plan. The move follows a 5 percent reduction in staff announced by Intel last year. In after-hours trading, the company’s stock fell more than 17 percent.

    “It is a lot of jobs,” Patrick Moorhead, chief analyst at Moor Insights & Strategy, a chip industry consultancy, tells WIRED. However, Moorhead says, it is a positive sign that the proposed layoffs appear to be targeted and not across the board. “Layoffs don’t always mean there’s something wrong with a company, but to me it’s all about the strategy,” he says.

    Intel is struggling to execute a challenging turnaround plan that involves refocusing on making chips for others through its foundry business and moving more quickly to cutting-edge manufacturing methods. In February, the company said its accelerated road map for producing cutting-edge chips was on track and promised to become the world’s second-place foundry company by 2030. Intel said today that it is still on track to meet these goals.

    The money Intel received in March is the biggest grant awarded by the US government so far through the CHIPS Act, 2022 legislation passed that will appropriated $52.7 billion to reshore chip manufacturing and invest in chip research and workforce training. The company will also receive tax credits of up to 25 percent on $100 billion in investments and will be eligible for federal loans of up to $11 billion.

    The $8.5 billion given to Intel will go toward building plants in Arizona, New Mexico, Ohio, and Oregon. Intel said the investments it is making in these chipmaking plants will create over 10,000 company jobs, 20,000 construction jobs, and thousands more roles in supporting industries. “The money that Intel has brought in is being used to build factories,” says Moorehead of Moor Insights & Strategy. “That isn’t stopping, and it does create a lot of jobs.”

    After decades of success thanks to the rise of personal computing, Intel failed to capitalize on the smartphone era, ceding market share to chips based on Arm’s designs. More recently, it has seen Nvidia, a company that started out making graphics chips for gaming, rise to prominence thanks to the importance of its hardware for training AI algorithms. Intel has also fallen behind its manufacturing competitors, TSMC in Taiwan and Samsung in South Korea.

    The US government is helping fund Intel’s reboot because advanced chips are seen as crucial to economic and geopolitical competitiveness. The pandemic highlighted how vulnerable many US industries are to a fragile global supply chain. Advanced chips are also crucial for building AI, which is increasingly seen as a national imperative.

    Today the US makes 12 percent of the world’s semiconductors, compared with 37 percent in the 1990s. The consulting firm McKinsey has predicted that the value of the semiconductor industry would grow impressively this decade, from $600 billion in 2021 to more than $1 trillion by 2030.

    Dan Hutcheson, an analyst with Tech Insights, says Intel’s revenue shortfall reflects an ongoing shift toward AI-focused data center computing. “It used to be that [Intel] owned the data center,” Hutcheson says. “What we’ve seen in the last few years is that the big hyperscalers have focused on AI and GPUs—entire AI data centers.”

    Hutcheson says Intel’s overall strategy seems to make sense, but the cuts suggest that the company is struggling to solve the dysfunction that saw it fall behind in the first place.

    Will Knight

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  • Bitter friends: Inside the summit aiming to heal EU-US trade rift

    Bitter friends: Inside the summit aiming to heal EU-US trade rift

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    The transatlantic reset between Brussels and Washington is on life support.

    After four years of discord and disruption under Donald Trump, hopes were high that Joe Biden’s presidency would usher in a new era of cooperation between Europe and the U.S. after he declared: “America is back.”

    But when senior officials from both sides meet in Washington on Monday for a twice-yearly summit on technology and trade, the mood will be gloomier than at any time since Trump left office.

    The European Union is up in arms over Biden’s plans for hefty subsidies for made-in-America electric cars, claiming these payments, which partly kick in from January 1, are nothing more than outright trade protectionism. 

    At the same time, the U.S. is increasingly frustrated the 27-country bloc won’t be more aggressive in pushing back against China, accusing some European governments of caving in to Beijing’s economic might. 

    Those frictions are expected to overshadow the so-called EU-U.S. Trade and Technology Council (TTC) summit this week. At a time when the Western alliance is seeking to maintain a show of unity and strength in the face of Russian aggression and Chinese authoritarianism, the geopolitical stakes are high. 

    Biden may have helped matters last Thursday, during a joint press conference with French President Emmanuel Macron, by saying he believed the two sides can still resolve some of the concerns the EU has raised. 

    “We’re going to continue to create manufacturing jobs in America but not at the expense of Europe,” Biden said. “We can work out some of the differences that exist, I’m confident.”

    But, as ever, the details will be crucial.

    It is unclear what Biden can do to stop his Buy American subsidies from hurting European car-markers, for example, many of which come from powerful member countries like France and Germany. The TTC summit offers a crucial early opportunity for the two sides to begin to rebuild trust and start to deliver on Biden’s warm rhetoric.

    Judging by the TTC’s record so far, those attending, who will include U.S. Secretary of State Antony Blinken, will have their work cut out.

    More than 20 officials, policymakers and industry and society groups involved in the summit told POLITICO that the lofty expectations for the TTC have yet to deliver concrete results. Almost all of the individuals spoke on the condition of anonymity to discuss sensitive internal deliberations.

    U.S. Secretary of State Antony Blinken will be attending the TTC | Sean Gallup/Getty Images

    Some officials privately accused their counterparts of broken promises, particularly on trade. Others are frustrated at a lack of progress in 10 working groups on topics like helping small businesses to digitize and tackling climate change. 

    “With these kinds of allies, who needs enemies?” said one EU trade diplomat when asked about tensions around upcoming U.S. electric car subsidies. A senior U.S. official working on the summit hit back: “We need the Europeans to play ball on China. So far, we haven’t had much luck.”

    Much of the EU-U.S. friction is down to three letters: IRA.

    Biden’s Inflation Reduction Act, which provides subsidies to “Buy American” when it comes to purchasing electric vehicles, has infuriated officials in Brussels who see it as undermining the multilateral trading system and a direct threat to the bloc’s rival car industry. 

    “The expectation the TTC was established to provide a forum for precisely these advanced exchanges with a view to preventing trade frictions before they arise appears to have been severely frustrated,” said David Kleimann, a trade expert at the Bruegel think tank in Brussels. 

    Biden’s room for flexibility is limited. The context for the subsidies and tax breaks is his desire to make good on his promise to create more manufacturing jobs ahead of an expected re-election run in 2024. The U.S. itself is hovering on the edge of a possible recession. 

    In addition, the U.S. trade deficit with the EU hit a record $218 billion in 2021, second only to the U.S. trade deficit with China. The U.S. also ran an auto trade deficit of about $22 billion with European countries, with Germany accounting for the largest share of that. 

    Washington has few, if any, meaningful policy levers at its disposal to calm European anger. During a recent visit to the EU, Katherine Tai, the U.S. trade representative, urged European countries to pass their own subsidies to jumpstart Europe’s electric car production, according to three officials with knowledge of those discussions. 

    “It risks being the elephant in the room,” said Emily Benson, a senior fellow at the Center for Strategic and International Studies, a Washington-based think tank, when asked about the electric car dispute. 

    After a push from Brussels, there were increasing signs on Friday that the TTC could still play a role. In the latest version of the TTC’s draft declaration, obtained by POLITICO, both sides commit to addressing the European concerns over Biden’s subsidies, including via the Trade and Tech Council. Again, though, there was no detail on how Washington could resolve the issue.

    Politicians across Europe are already drawing up plans to fight back against Biden’s subsidies. That may include taking the matter to the World Trade Organization, hitting the U.S. with retaliatory tariffs or passing a “Buy European Act” that would nudge EU consumers and businesses to buy locally made goods and components.

    Officials and business leaders pose for a photo during the TTC in September 2021 | Pool photo by Rebecca Droke/AFP via Getty Images

    Privately, Washington has not been in the mood to give ground. Speaking to POLITICO before Biden met Macron, five U.S. policymakers said the IRA was not aimed at alienating allies, stressing that the green subsidies fit the very climate change goals that Europe has long called on America to adopt. 

    “There’s just a huge amount to be done and more frankly to be done than the market would provide for on its own,” said a senior White House official, who was not authorized to speak on the record. “We think the Inflation Reduction Act is reflective of that type of step, but we also think there is a space here for Europe and others, frankly, to take similar steps.”

    China tensions

    Senior politicians attending the summit are expected to play down tensions this week when they announce a series of joint EU-U.S. projects.

    These include funds for two telecommunications projects in Jamaica and Kenya and the announcement of new rules for how the emerging technology of so-called trustworthy artificial intelligence can develop. There’s also expected to be a plan for more coordination to highlight potential blockages in semiconductor supply chains, according to the draft summit statement obtained by POLITICO. 

    Yet even on an issue like microchips — where both Washington and Brussels have earmarked tens of billions of euros to subsidize local production — geopolitics intervenes.

    For months, U.S. officials have pushed hard for their European counterparts to agree to export controls to stop high-end semiconductor manufacturing equipment being sent to China, according to four officials with knowledge of those discussions. 

    Washington already passed legislation to stop Chinese companies from using such American-made hardware. The White House had been eager for the European Commission to back similar export controls, particularly as the Dutch firm ASML produced equipment crucial for high-end chipmaking worldwide. 

    Yet EU officials preparing for the TTC meeting said such requests had never been made formally to Brussels. The draft summit communiqué makes just a passing reference to China and threats from so-called non-market economies.

    Unlike the U.S., the EU remains divided on how to approach Beijing as some countries like Germany have long-standing economic ties with Chinese businesses that they are reluctant to give up. Without a consensus among EU governments, Brussels has little to offer Washington to help its anti-China push.

    “In theory, the TTC is not about China, but in practice, every discussion with the U.S. is,” said one senior EU official, speaking on the condition of anonymity. “If we talk with Katherine Tai about Burger King, it has an anti-China effect.”

    Gavin Bade, Clea Caulcutt, Samuel Stolton and Camille Gijs contributed reporting.

    Mark Scott, Barbara Moens and Doug Palmer

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  • EU plans subsidy war chest as industry faces ‘existential’ threat from US

    EU plans subsidy war chest as industry faces ‘existential’ threat from US

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    The EU is in emergency mode and is readying a big subsidy push to prevent European industry from being wiped out by American rivals, two senior EU officials told POLITICO.

    Europe is facing a double hammer blow from the U.S. If it weren’t enough that energy prices look set to remain permanently far higher than those in the U.S. thanks to Russia’s war in Ukraine, U.S. President Joe Biden is also currently rolling out a $369 billion industrial subsidy scheme to support green industries under the Inflation Reduction Act.

    EU officials fear that businesses will now face almost irresistible pressure to shift new investments to the U.S. rather than Europe. EU industry chief Thierry Breton is warning that Biden’s new subsidy package poses an “existential challenge” to Europe’s economy.

    The European Commission and countries including France and Germany have realized they need to act quickly if they want to prevent the Continent from turning into an industrial wasteland. According to the two senior officials, the EU is now working on an emergency scheme to funnel money into key high-tech industries.

    The tentative solution now being prepared in Brussels is to counter the U.S. subsidies with an EU fund of its own, the two senior officials said. This would be a “European Sovereignty Fund,” which was already mentioned in the State of the Union address by Commission President Ursula von der Leyen in September, to help businesses invest in Europe and meet ambitious green standards.

    Senior officials said the EU had to act extremely quickly as companies are already making decisions on where to build their future factories for everything from batteries and electric cars to wind turbines and microchips.

    Another reason for Brussels to respond rapidly is to avoid individual EU countries going it alone in splashing out emergency cash, the officials warned. The chaotic response to the gas price crisis, where EU countries reacted with all sorts of national support measures that threatened to undermine the single market, is still a sore point in Brussels.

    European Commissioner Breton especially has led the pack in sounding alarm bells. At a meeting with EU industry leaders Monday, Breton issued his warning on the “existential challenge” to Europe from the Inflation Reduction Act, according to people in the room. Breton said it was now a matter of utmost urgency to “revert the deindustrialization process taking place.”

    Breton was echoing calls from business leaders all over Europe warning about a perfect storm brewing for manufacturers. “It’s a bit like drowning. It’s happening quietly,” BusinessEurope President Fredrik Persson said.

    The Inflation Reduction Act is a particular bugbear to EU carmaking nations — such as France and Germany — as it encourages consumers to “Buy American” when it comes to electric vehicles. Brussels and EU capitals see this as undermining global free trade, and Brussels wants to cut a deal in which its companies can enjoy the same American benefits.

    With a diplomatic solution seeming unlikely and Brussels wanting to avoid an all-out trade war, a subsidy race now looks increasingly likely as a contentious Plan B.

    To do that, it will be vital to secure support from Germany and from the more economically liberal commissioners such as trade chief Valdis Dombrovskis and competition chief Margrethe Vestager.

    At a meeting of EU trade ministers on Friday, Brussels hopes to get more clarity from Berlin on whether they are willing to break their subsidy taboo.

    France has long been calling for a counterstrike against Washington by funneling state funds into European industry to help industrial champions on the Continent. That idea is now also gaining traction in Berlin, which has traditionally been economically more liberal.

    On Tuesday, German Economy Minister Robert Habeck and his French counterpart Bruno Le Maire issued a joint statement to call for an “EU industrial policy that enables our companies to thrive in the global competition especially through technological leadership,” adding that “we want to coordinate closely a European approach to challenges such as the United States Inflation Reduction Act.”

    Apart from the trade ministers’ meeting on Friday, the idea will also informally be discussed among competition ministers next week. One official said European leaders will also discuss it on the margins of the Western Balkan summit on December 6 and at the European Council mid-December.

    Hans von der Burchard, Giorgio Leali and Paola Tamma contributed reporting.

    Jakob Hanke Vela and Barbara Moens

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  • As Xi reemerges, Europe again falls prey to China’s divide-and-rule tactics

    As Xi reemerges, Europe again falls prey to China’s divide-and-rule tactics

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    BALI, Indonesia — Every European leader at this week’s G20 summit in Bali wanted a one-on-one meeting with Chinese President Xi Jinping.

    Not everyone got one.

    The Europeans’ desire to meet Xi was driven by the fact that this week was the first opportunity to meet the Chinese leader at a major diplomatic jamboree since the lockdowns of early 2020, when the coronavirus pandemic started in China and spread to the world.

    The Europeans always had to accept that they were going to be fighting for the crumbs in terms of the timetable. U.S. President Joe Biden spent three and a half hours with Xi, while France’s President Emmanuel Macron had to be content with (a still perfectly respectable) 43 minutes.

    China conspicuously revived its long-established tactic of courting specific EU countries and their national interests, something it has often used to destabilize Brussels. (When Brussels threatened an all-out trade war in 2013 over China undercutting the EU market in solar panels and telecoms equipment, China expertly shattered EU unity by threatening retaliatory action against French and Spanish wine, playing Paris and Madrid against EU trade officials.)

    Once again in Bali, China took the canny nation-to-nation approach, meeting Macron, Spanish Prime Minister Pedro Sánchez, Italy’s Giorgia Meloni and the Netherlands’ Mark Rutte, while avoiding European Commission President Ursula von der Leyen and European Council President Charles Michel. A meeting with Michel, at least, had been widely expected in diplomatic circles.

    China bristles at the EU designation that it is a “systemic rival” to Brussels, and instead decided to leverage its influence with individual European countries.

    Take the meeting with Rutte. The Chinese leader’s main interest was that the Netherlands, home to chipmaker ASML, a company that makes key equipment for microchip manufacturing, should not join any EU-U.S. trade coalition seeking to box China out of new technologies.

    “It is hoped that the Netherlands would enhance Europe’s commitment to openness and cooperation,” Xi noted in a readout of the Dutch meeting. Translation: Don’t make trade trouble over microchips.

    With Sánchez, Xi played up the importance of China as a motor for tourism in Spain, a sector where Madrid is particularly interested in high-rolling visitors from Asia. “The two sides need to make good preparations for the China-Spain Year of Culture and Tourism to build greater popular support for China-Spain friendship,” Xi said. 

    Similarly, the Xinhua state news agency quoted Macron saying he wanted more cooperation on business, specifically in the aviation and civil nuclear energy sectors. The Chinese account of the Xi-Meloni meeting was that Beijing would import more “high-quality” goods — presumably of the luxury and gourmet variety — and would cooperate in manufacturing, energy and aerospace.

    Macron cozies up to Xi

    In a sign that Xi’s diplomatic strategy was paying dividends, Macron took a non-confrontational approach to Xi, even massaging the Chinese leader’s ego.

    The Chinese embassy to Paris promoted a video by TikTok’s domestic Chinese equivalent Douyin, in which Macron passed his best wishes to China after Xi secured a norm-breaking new mandate. (Xi was appointed for a third term as Communist Party general secretary in a highly choreographed party congress.)

    Macron also hailed Xi as a “sincere” figure who should “play the role of a mediator over the next few months” in stopping further Russian aggression against Ukraine — even though Beijing has shown no sign of being a good fit for such a role since the war broke out in February.

    Ignoring China’s deadly Himalayan tensions with India, escalating tension with Taiwan or military adventurism in the South China Sea, Macron declared: “China calls for peace … [There is] a deep and I know sincere attachment to … the U.N. charter.”

    Macron also told reporters he planned to visit China early next year. That looks like a riposte to the visit by German Chancellor Olaf Scholz, who visited China earlier this month. Scholz reportedly rejected Paris’ suggestion for a joint Macron-Scholz visit and decided to go alone with a delegation of big businesses.

    “Macron needed this air-time with Xi enormously as he couldn’t be seen to be left out by China when the Americans and the Germans have dominated the headlines,” a Western diplomat said.

    While Macron claimed that Xi agreed with him on a “call for respect for Ukraine’s territorial integrity and sovereignty,” China’s own readout made no such mention, saying only: “China stands for a ceasefire, cessation of the conflict and peace talks.”

    Brussels boxed out

    In stark contrast to the French, Spanish, Dutch and Italian leaders, the Brussels-based EU chiefs didn’t get a look-in.

    In a show of Beijing’s continually negative view of the European Union, Xi decided not to go ahead with what POLITICO understood to be a near-certain plan for Michel, the one representing all 27 countries, to meet Xi.

    That event, had it been allowed to take place, would have been significant in showcasing the possibility for the bloc’s smaller economies to also make their voice heard, since Xi would otherwise be busy dealing with the bigger players.

    Xi’s change of heart over a meeting with Michel came shortly after the EU Council president’s prerecorded speech at a Shanghai trade expo was dropped. According to Reuters, he tried to call out Russia’s war of aggression against Ukraine in the speech, a message that was deemed too sensitive to Chinese ears.

    Commission President von der Leyen, meanwhile, busied herself not with plans to line up a meeting with Xi, but on a joint show with Biden to focus on infrastructure financing for developing countries in order to rival China’s Belt and Road Initiative.

    In a thinly veiled criticism of China’s approach to the new Silk Road, von der Leyen said: “The [West’s] Partnership Global for Infrastructure and Investment is an important geostrategic initiative in era of strategic competition.

    “Together with leading democracies we offer values-driven, high-standard, and transparent infrastructure partnerships for low- and middle-income countries,” she said.

    Her tone, though, proved to be a minority among European leaders during the G20 engagement with China.

    “There’s no common message from the EU on China,” according to another EU diplomat in Bali. “But then there never was one.”

    To the relief of European diplomats, at least Xi did not handle their bosses in the same way he treated Canada’s Prime Minister Justin Trudeau.

    “Everything we discuss has been leaked to the paper; that’s not appropriate,” Xi told Trudeau through an interpreter in a clip recorded by Canadian media.

    “That’s not … the way the conversation was conducted. If there is sincerity on your part …” Xi said, before Trudeau interrupted him, defending his country’s interest in working “constructively” with Beijing.

    Xi took his turn to interrupt. “Let’s create the conditions first,” Xi said.

    Go and stand in the corner, Justin.

    Stuart Lau

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  • Germany’s Scholz: The way we deal with China must change

    Germany’s Scholz: The way we deal with China must change

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    BERLIN — Berlin must change the way it deals with China as the country lurches back toward a more openly “Marxist-Leninist” political trajectory, German Chancellor Olaf Scholz wrote in an op-ed on Thursday.

    In his article for POLITICO and the German newspaper Frankfurter Allgemeine Zeitung, Scholz defended his trip to China on Thursday but stressed that German companies would need to take steps to reduce “risky dependencies” in industrial supply chains, particularly in terms of “cutting-edge technologies.” Scholz noted that President Xi Jinping was deliberately pursuing a political strategy of making international companies reliant on China.

    “The outcome of the Communist Party Congress that has just ended is unambiguous: Avowals of Marxism-Leninism take up a much broader space than in the conclusions of previous congresses … As China changes, the way that we deal with China must change, too,” Scholz wrote.

    Germany has faced withering criticism for pressuring Europe into a strategically disastrous dependence on Russian gas over recent years, and Berlin is now having to hit back against suggestions that it is making exactly the same mistakes by depending on China as a manufacturing base and commercial partner.

    While Scholz signaled a note of caution over China, he was far from suggesting that Germany was close to a major U-turn in its largely cozy relations with China. Indeed, he clearly echoed his predecessor Angela Merkel in insisting that the (unnamed but obviously identified) United States should not drag Germany into a new Cold War against Beijing.

    “Germany of all countries, which had such a painful experience of division during the Cold War, has no interest in seeing new blocs emerge in the world,” he wrote. “What this means with regard to China is that of course this country with its 1.4 billion inhabitants and its economic power will play a key role on the world stage in the future — as it has for long periods throughout history.”

    In a thinly veiled criticism of Washington’s policies, Scholz said Beijing’s rise did not justify “the calls by some to isolate China.”

    Crucially, he insisted that the goal was not to “decouple” — or break manufacturing ties — from China. He added, however, that he was taking “seriously” an assertion by President Xi that Beijing’s goal was to “tighten international production chains’ dependence on China.”

    Scholz is planning to fly to Beijing late on Thursday for a one-day trip to the Chinese capital on Friday, where he will be the first Western leader to meet Xi since his reappointment, and the first leader from the G7 group of leading economies to visit China since the outbreak of the coronavirus pandemic.

    The chancellor also sought to counter criticism that his trip undermines a joint European approach to China. According to French officials, President Emmanuel Macron had proposed that he and Scholz should visit Xi together to demonstrate unity and show that Beijing cannot divide European countries by playing their economic interests off against each other — an initiative that the German leader rejected.

    “German policy on China can only be successful when it is embedded in European policy on China,” Scholz wrote. “In the run-up to my visit, we have therefore liaised closely with our European partners, including President Macron, and also with our transatlantic friends.”

    Chancellor Olaf Scholz echoed his predecessor Angela Merkel in insisting that the United States should not drag Germany into a new Cold War against Beijing | Clemens Bilan-Pool/Getty Images

    Scholz said he wanted Germany and the EU to cooperate with a rising China — including on the important issue of climate change — rather than trying to box it out.

    At the same time, he warned Beijing that it should not pursue policies striving for “hegemonic Chinese dominance or even a Sinocentric world order.”

    Scholz also pushed China to stop its support for Russia’s war against Ukraine and to take a more critical position toward Moscow: “As a permanent member of the [United Nations] Security Council, China bears a special responsibility,” he wrote. “Clear words addressed from Beijing to Moscow are important — to ensure that the Charter of the United Nations and its principles are upheld.”

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    Hans von der Burchard

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