Post Covid China feels different !

The geopolitical and macro-economic backdrop could be felt at many steps during my 16 day round trip visit to China from which I am just returning. Stations included Wuxi, Guangzhou, Shenzhen, Beijing, Tianjin and Shanghai and more, visiting the colleagues of my own company, local and global customers, giving a lecture at an elite university, and meeting local journalists.

From my subjective point of view, but aiming for as much objectivity as possible, let me describe some things that impressed me, covering as always “the good, the bad and the ugly”.

Let’s begin this first part of a mini-series, with some rather bad news about the Chinese economy as it could be felt and heard just by travelling. While the buzzing, entrepreneurial and innovative China was still there, there were also a few new impressions which I did not experience in previous visits (I travel to China regularly since 2004, and compare this to pre-Covid times).  

1.      Airline flying longer routes to avoid Russian airspace. E.g. on the way back, my Lufthansa flight used a southerly routes over Kazakhstan, making Shanghai – Frankfurt a 13.5 h affair.

Compare to what it should have looked like on the shortest route (shortes route is a great circle on the flat map)

2.      China tries hard to bring back business travel to China after the Covid-induced slump, global slowdown/recession and particular de-coupling measures to slow down China.

No visa for Germans or French this year, at least up to 15 days. Thank you for that!

I made the mistake of booking a little longer, not having read the fine print properly. So I had to make a detour to HongKong, which although being part of China, got me an exit ant another re-entry stamp into China, and thus a renewed 15 days. Luckily, Shenzhen which I visited is just around the corner in the Pearl River Delta.EU citizen don’t need a Visa to HongKong, while Chinese mainlanders do need a simplified application. Another advantage to the HongKong citizens, making it a preferential destination for doing global business. Why does China even grant them such privileges, making mainlanders citizens of second class?Imagine if you are German like me, non-Bavarian Germans needed to apply for going into Bavaria, while foreigners did not…   Business is still (way too) slow, clawing its way back from the lock-downs. Hardly any foreigners to be seen on the streets even in the tier 1 cities like Guangzhou, Shenzhen, Beijing. A few tourists in Shanghai, but hardly business people. On my flight from Shenzhen to Beijing, there was only one non-Asian besides me on an Airbus A350-600, and the plane was ~ half empty (picture after boarding is complete).

No wonder did the Chinese customs at the re-entry from HongKong ask if they could stage a photo with me going through immigration. A tall white guy in business attire is apparently worth a professional picture these days….

Sure, the government has an interest to show that business is “as usual”. Unfortunately, it is not really, but they do make an effort to make it easier on the foreigners.

3.      Another example: Using my German Vodafone contract, with a Chinese roaming partner of course, and optionally mobile hotspot, the Internet experience was basically 100% like at home. NO need for a VPN to “climb the wall” in this case as previously. Apparently, the government knows that not reaching our “normal” media is not acceptable, and thus spares us the effort to circumvent the barriers, even though it would be easy, given that this data traffic first goes through the Chinese mobile phone provider.

4.      Baggage check in, immigrations & security check, gate at Shanghai Pudong on my way back… Have you ever seen this place so empty before ?!

Most shocking of all: The Yangtse at Shanghai from the air. The great number of ships are just anchored in the road-stead (no backwash visible), very few are moving. And the usually buzzing container terminals are almost completely empty!

 Several people I talked to made educated guesses for the unemployment rate to be at maybe 20%, tier 3,4,5 cities worse than 1 and 2. That is not the youth unemployment, mind you, but overall. It is what people feel the real rate might be, beyond the statistical gimmicks which all countries play (e.g. we in the EU take out everybody for the duration of a sick leave from the official numbers, as we do for people suffering from real long term unemployment or during re-education programs). For the first time, I heard of academics driving Didi (the Chinese Uber equivalent) etc.. China, to some extent, is finally also becoming a “normal country”.

But let’s close this first part on a positive note: Subjectively, air quality has dramatically improved. It will be a mix of different factors. Above described slow economy will be one of course, another is the season (I more often came around the winter time). But it is much more than a windfall, China is actually actively doing a lot. There were an impressive number of EVs on the streets, we Germans can only dream about as of today. Polluting industries were pushed out of the Shanghai area to make it a pure service hub. In terms of renewable power generation, China is likely to beat it’s 2030 target 5 years ahead of time. German “Green” party and other “schoolmasters” take note! In 2022, China installed roughly as much solar capacity as the rest of the world combined, then doubled additional solar in 2023, increases new wind capacity by 66 %, and almost quadrupled additions of energy storage. End of 2023, solar power alone stood at 609 GigaWatt online. Obviously, this gigantic volume has brought prices way down (<< 15 USD cents per Watt, down 42% YoY), and we need no “unfair dumping” accusations to see that economies of scale are the main driver behind, a fair practice if producers continue to make money. We simply got out-competed. We could, for a change, also thank China to have reduced the price of renewables so far that they are more than competitive in a cent/kWh basis, making our own energy transition an economically viable option, instead of ramping up punitive and inflation-driving import duties (Biden, during my stay, raised those for solar cells and panels from 25 to 50%). No matter what the lip service, the world still places local prosperity ahead of global ecology.

Stay tuned for the upcoming parts. I'll talk about e.g. the heightened interest of Chinese individuals, entrepreneurs and companies, as well as the media, to continue on a path of global cooperation. I will discuss how the Chinese I met and discussed with intensively experience the decoupling efforts by the West, how they see their future, what changed in the way of living, but also how they think about the war in Ukraine, the issue of Taiwan and much much more.