Beijing plans technological catch-up – Morning Briefing Plus

Hello dear readers,

Welcome to the new weekend edition of the Morning Briefing plus. From now on we want to look at the topics and trends of the past few days here every Saturday – and take a first look at the new week.

And that brings us to China. There, the People’s Congress approved the new five-year plan. One could dismiss this as a side note from the depths of the Chinese party bureaucracy, as further evidence of the omnipotence staging of the “new Mao” named Xi Jinping. But that would be a mistake. Beijing’s plan shows how strategically the regime is planning its technological catch-up race, with a focus on innovation and the expansion of key technology fields.

graphic

Well, patents aren’t everything. Nevertheless, the numbers prove the enormous dynamics of the high-tech location China. Dynamism that is missing in Europe, as the example of quantum computers shows. German research is leading in this field, as my colleagues Moritz Koch and Roman Tyborski analyzed this week. However, quantum computers are built elsewhere. Especially in the US and China. Thought here, done elsewhere…

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Margaret Vestager

(Photo: AFP)

Everything should be better now. At the beginning of the week, the EU announced the starting signal for a technological restart. The 1920s are supposed to be a “digital decade”. The Commission wants to make 150 billion euros available for this. “We are at the beginning of a new chapter in digitization,” said Vice President of the Commission, Margrethe Vestager, in an interview with the Handelsblatt. A phase in which industry, business processes and supply chains are digitized.

It is quite possible that some billion-dollar corporations will emerge in this next phase in Europe. But three things are needed for this: sufficient capital for the young companies, better networks between business and research and, thirdly, more digital specialists.

So far, much of it has only existed in the files of the EU Commission. And in the Chinese five-year plan. So it’s just as possible that the EU will mess up this major project as well.

What also moved us last week:

1. The combustion engine is increasingly becoming a bad bank in the German automotive industry. Daimler is running scenarios in which the group could say goodbye to the internal combustion engine as early as the early 2030s, and at VW the majority of investments in the future are to flow into electromobility. There has long been a worldwide race to get out. But now the real work begins, as the Handelsblatt Auto team analyses: the corporations have to convert their plants, cut staff en masse, train the remaining team – and recruit new specialists. A difficult mission – with an open outcome, as our analysis shows.

2. Is inflation coming now? Hardly any question is as controversial among economists as this one. The US economics Nobel Prize winner Joseph Stiglitz told the Handelsblatt: “The inflation warnings are completely wrong.” A little later, the ex-IMF chief economist Olivier Blanchard warned us against waking up the “monster” of inflation. In his view, the US government’s aid packages, which are worth billions and are mainly financed with debt, are far too comprehensive.

3. At first glance, it sounds like good news for Germany as a high-tech location: Apple is investing more than one billion euros in chip development in Munich. At second glance, it is an oath of revelation. After all, Siemens had built up the specialist knowledge for this. However, the group sold the business – it passed through several hands and finally ended up with Apple. The Americans know how to use it.

Frankfurt financial district

(Photo: imago images/Arnulf Hettrich)

4. One of the most important questions in the corona crisis is: how much are German banks suffering? “The situation is tense,” said Bafin executive director Thorsten Pötzsch in an interview with the Handelsblatt. The banking industry is more robust than it was a few years ago, but non-performing loans are increasingly affecting institutions. Reassurance is different.

5. Which brings us to Greensill, the once billionaire financial conglomerate that suddenly collapsed. Numerous states, cities and communities have invested their money in the German subsidiary in Bremen. And again the question arises how such a scandal could remain undiscovered for years. No wonder that Bafin is also taking action against the institute’s auditors, as our banking team reports. Similarities with the Wirecard case are of course purely coincidental.

6. Sustainable investments are the topic of the hour. But behind the green label there is sometimes nonsense. This week our investment team analyzed which funds are really green and which eco stocks offer potential.

Armin Laschet

(Photo: via REUTERS)

7. And then there is Armin Laschet, who realized this week how difficult it is to lead a party. Three Union MPs are giving up their offices because of dubious deals – just in the week before the important state elections in Baden-Württemberg and Rhineland-Palatinate. The CDU is in the deepest crisis of credibility since Helmut Kohl’s donation scandal, comments Handelsblatt political chief Thomas Sigmund.

I wish you a pleasant start into the weekend.

It greets you cordially
Yours Sebastian Matthes

Editor-in-Chief of the Handelsblatt

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