EU-China Summit advises on trade conflict

The opening of the EU-China Summit, which began today in Beijing, was overshadowed by discussions about the ongoing trade conflict between China and the US.

European and Chinese leaders expressed concern over the tit-for-tat trade war and faltering negotiations on an investment protection agreement between the two sides – the EU’s call for more market opening in China and the planned reform of the World Trade Organization (WTO).

Pressure from US President Donald Trump, and his disruptive tactics, have brought China and the EU closer together. For the first time since 2015, there will be a joint declaration at the end of the Summit.  In the trade dispute, the EU, like China, rejects Trump’s unilateral action outside the WTO, but does not want to be over-reliant on Beijing because many EU politicians share Trump’s criticism of China’s market barriers and forced technology transfer.

After talks with Chinese Premier Li Keqiang, European Commission President Jean-Claude Juncker, EU Council President Donald Tusk and other members of the EU leadership were also welcomed by President Xi Jinping. Topics discussed include North Korea’s nuclear programme and the future of the Iran deal in light of the US’s withdrawal earlier this year.

The EU hopes the Summit will help accelerate the proposed investment agreement, and help expand agricultural exports. China has already reopened its market for beef from Ireland and France, which had closed in 2001 after the outbreak of BSE in Europe. Agricultural exports accounted for only 8 percent of all EU exports to China in 2017, but this is expected to grow.

The EU has become China’s largest trading partner. Goods worth EUR 1.5 billion are exchanged between the EU and China on a daily basis. Both sides want to set up a joint working group to discuss reforming the WTO. “The WTO may not be perfect, but it remains the only existing organisation with clear rules and a mechanism for resolving disputes,” said Hans-Dietmar Schweisgut, Head of the European delegation in Beijing.

1.76 million cars but no traffic jam? In the metropolis of Wuxi, China is testing connected driving

The city of Wuxi shows how China plays a leading role in autonomous traffic – thanks to government support and international technology.

Connected driving is already part of everyday life in Wuxi.

A drive through most Chinese city centres consists of blocked roads, concerts of honking motorists and long queues, yet in the new centre of Wuxi none of this can be seen. Traffic is running smoothly.

This is a minor miracle. The number of cars in the metropolis northwest of Shanghai has doubled since 2011 to more than 1.76 million. However, the Chinese are testing the networked driving of the future in this part of the city centre. Unhindered traffic flow, improved safety and efficiency are the main goals of the highly-equipped traffic technology.

Cars, buses, traffic lights and electronic signs are networked, share traffic information and warn of potential hazards. The cars are connected to the infrastructure and the other road users via the LTE mobile network. In Wuxi, the world can marvel at how China wants to get involved in connected driving at the top of the world.

The project has the backing of the Chinese government. Also involved are German companies that contribute important technological know-how. Last Monday (10 July), China and Germany signed an agreement during their intergovernmental consultations to expand cooperation and exchange in autonomous driving.

Audi technology for better traffic flow

Audi brought “Traffic Light Information” traffic technology to Wuxi, allowing data exchange between cars and traffic lights. By knowing how long the green light will last, drivers can adjust their speed accordingly.

The traffic lights use information forwarded by vehicles to calculate whether it should switch faster or slower in order to improve traffic flow. According to Audi’s calculations, such a system could reduce CO2 emissions by 15%.

The first trial for Wuxi began last September at six intersections. Now Wuxi is in the second testing phase. By the end of July, one sixth of the city will be equipped with the special LTE and 220 traffic lights with radio modules.

By 2019, the technology should work nationwide and be installed in about 100,000 cars.

In addition to Audi, the city, the network operator China Mobile and the network equipment supplier Huawei are involved in the project. It is promoted and supervised by the Ministry of Security, the Ministry of Industry and Information Technology (MIIT) and the Ministry of Science and Technology.

Cooperation between public and private sector is exemplary

“In terms of cooperation between government and private sector, Germany is far ahead,” says Michael Adick, head of the Chinese car division at Accenture. Kevin Li of Strategy Analytic, sees this as the strength of the Chinese project. “Connected driving is complex, it involves public and private data and has many players. The earlier they coordinate, the faster they can find common standards.”

Xiong Wei, who oversees technology giant Huawei’s Wuxi project, believes that, “If you want to grow networked driving, you need the support of a central government. Unfortunately, Europeans find it difficult to reach a consensus among different countries. But with China’s strong government, it’s easy.”

Audi managers in China made similar suggestions: “Europe could do so much more. But everything is discussed to death. China simply provides the better environment. That’s why we have to develop here.” Audi plans to expand its development department in China from 280 to 650 employees over the next few years. 200 of them are solely dedicated to work on networked and autonomous driving.

Technology and expertise are moving where demand exists: Audi has produced the “Traffic Light Information” for more than four years. So far, the manufacturer has already tested the system in Ingolstadt, Berlin and Las Vegas. But in Wuxi, it’s happening for the first time on a large scale and using the LTE instead of Wi-Fi.

This is facilitated by Huawei. “Not only do we want to offer solutions, we also want to build an ecosystem that in the long run can be used not only in China but worldwide. That’s why we have invited many foreign companies,” says Huawei manager Xiong. In the process, they have companies known for strong research and development.

Cities seek solutions to clogged roads

China’s systematic approach to mobility is outlined in the national “Medium to Long Term Car Development Plan”. It states that 10% of cars in China will be equipped with systems for connected driving by 2020. 25% of all cars entering the market are expected to be able to offer Level 4 or Level 5 driver assistants (make part or all of the driving decisions themselves) by 2025.

There are two approaches to advancing autonomous driving: either the car itself becomes smarter and makes decisions on its own, or decisions are made at a traffic centre that is networked with the infrastructure. China has shown to favour the second approach, because it allows better control of traffic flow. Clogged roads are a big problem in Chinese cities.

But the IT Ministry wants to test all options. In selected provinces in the north, for example, driving in icy and snowy areas is tested. Other cities are also involved in the project. But Wuxi is the most complex testing area – driving is not used in a sealed off test zone, but in the city centre.

In addition, all key decision-makers are involved from the start. This is important because not only the technology in the car is important in networked driving, but also communication with public infrastructure, telecommunications networks and other road users.

Decentralised initiatives and local experiments are popular testing methods of the Chinese government. China commonly approaches changes “from the point to the surface” – meaning if the project proves successful in the administrative practice of a region, nationwide laws are enacted and the projects implemented nationwide.

In China, plans are realised faster because the government has a vision, recognises Accenture consultant Adick. “Digitization does not just happen inside a company, it’s promoted along the entire value chain by the government”

Chinese are more open to new technology

Furthermore, Chinese citizens are generally more open to new technology. According to a study by Boston Consulting Group, Chinese are fundamentally more open-minded than Europeans when it comes to autonomous driving. 75% said they would sit in a robot car, compared with 45% of Europeans.

However, China has to catch up. Huawei manager Xiong admits that compared with the US, the technology of networked driving is still lagging behind. “But we’re narrowing the gap very quickly, because we’re investing a lot of resources, bringing all the players together and looking at how to use it. America does not understand that in connected driving, businesses can’t compete. It’s joint effort.”

“Cooperation has its advantages, but also pitfalls. You learn a lot from each other, reports, employees from Huawei and Audi. After all, one does not know each other’s industry so well. At the beginning of such a development it was not all about profit,” Xiong commented. “We want to bring the entire industry forward and the more data you can collect, the better you can do research.”

For taxi driver Wang Xiubao, all these developments have long become part of everyday life. Since last summer, a chip has been installed in his taxi’s window, which tracks how many cars are at a traffic light for how long. “I cannot wait to start the next phase of the tests,” he says proudly. “I think it’s good that we are worldwide at the forefront of this technology.”

A New Chemical Giant is Emerging in China

The Chinese chemical companies Sinochem and ChemChina are planning a merger. Together, both companies would form a new world leader.

A mega-merger is said to be planned to form a new chemical giant in China. The two state-owned companies Sinochem and ChemChina want to join forces to become a global leader in industrial chemistry, as the financial publication “Caixin” reported on Saturday, citing insiders. The new $120 billion company will be directed by Sinochem head Ning Gaoning.

However, there is still no concrete framework for how the merger should proceed. Sinochem did not want to comment on the reports. Equally ChemChina, who had acquired Swiss agrochemical group Syngenta for estimated $43 billion last year, has also issued no comment.

Merger talks between the chemical companies were first reported in late 2016, but dismissed by both sides as rumours. Reuters reported last year that the two corporations had accelerated negotiations around May after the competition authorities approved the acquisition of Syngenta by ChemChina.