Recently, there have been continuous major events in China, with Volkswagen suddenly announcing the closure of its Nanjing factory. Why are foreign car companies finding it increasingly difficult to operate in China?
Cities like Shenzhen and Shanghai, once prosperous, are now experiencing large-scale business closures and a surge in unemployment, leaving many jobless people wandering the streets. What exactly is causing these economic issues?
To make matters worse, the core team handpicked by Xi Jinping within the CCP Political Bureau has now descended into chaos. What exactly is happening in Zhongnanhai?
Additionally, a tragic case of lead poisoning at a kindergarten in Gansu has sparked outrage among netizens, as the official investigation has been heavily criticized. What secrets are being hidden behind the scenes?
In recent times, global car manufacturers have been facing tough times in the Chinese market. Even Volkswagen, a once thriving company, had to bid farewell to its Nanjing plant. According to a report from Reuters on July 11th, the Volkswagen-SAIC joint venture Nanjing factory has confirmed its closure.
Since its establishment in 2008, this factory specialized in producing classic models such as the Passat and Skoda Superb, with an annual production capacity of up to 360,000 vehicles. However, with the sudden changes in the market due to the decline of petrol cars and the factory’s location in downtown Nanjing, logistics challenges, and the high cost of factory transformation, Volkswagen ultimately made the difficult decision to shut down completely.
Although the production of Passat will be moved to other locations in Jiangsu, this closure is a significant blow to Volkswagen. In the past, the Chinese market was a cash cow for Volkswagen, accounting for 30% of its global deliveries. However, now it is gradually losing ground. This is not the first time Volkswagen has closed a plant in China; as early as 2022, Volkswagen partially shut down its first factory in Anting, Shanghai, relocating petrol car production to Yizheng, Jiangsu, and converting the original location into a research and development center.
How did Volkswagen end up in such a dire situation in China? According to Electrek’s report, the Chinese petrol car market has shrunk rapidly, while domestic electric car brands such as BYD, Xiaopeng, and NIO have rapidly risen. In particular, BYD surpassed Volkswagen for the first time in 2023, becoming the best-selling brand in China, selling 380,000 vehicles in June alone and exceeding 2.1 million vehicles in the first half of the year, a staggering 33% increase year-on-year. The market share of foreign brands has been significantly eroded.
Furthermore, a price war among local electric car manufacturers has intensified, with BYD’s models being 40% cheaper than Volkswagen’s. Analysts have calculated that for Volkswagen’s electric car sales to reach 1.2 million vehicles annually in China by 2028 to avoid losses. HSBC and Jefferies predict that if Volkswagen can hold on until 2029, it may see a profit margin of 6.5%. However, UBS poured cold water on the situation, suggesting that this round of price wars might completely erode Volkswagen’s profit margin.
In addition to Volkswagen, even Stellantis, the parent company of Jeep, is struggling in the Chinese market. Their joint venture with GAC Group, GAC Fiat Chrysler Automobiles, filed for bankruptcy. Since October 2022, Jeep models can only be sold in China through imports, resulting in dismal sales figures.
This situation is eerily similar to the experiences of American tech giants in China. The Wall Street Journal reported that when Tesla built its factory in Shanghai in 2019, Elon Musk confidently declared that “China is the future.” However, just a few years later, the supply chain partners nurtured by Tesla in China rapidly transformed into formidable competitors.
Similar stories have also unfolded with Motorola and Apple. In the 1990s, Motorola, with its cutting-edge technology, entered China, only to be acquired by Lenovo for its mobile business. Apple, on the other hand, inadvertently nurtured strong competitors like Huawei and Xiaomi, who not only exclude high-end models from government consumer subsidy policies but also continuously squeeze their market share.
From Motorola to Apple, Tesla to Volkswagen, these multinational corporations have discovered that their former “apprentices” in the Chinese market have now become their “masters,” gradually marginalizing foreign brands.
For years, the CCP has employed a strategy of enticing foreign businesses with a vast market and favorable policies, only to later engage in technology theft through methods like technology transfer, joint ventures, and corporate espionage, ultimately squeezing out foreign enterprises from the market.
How much survival space do these foreign brands still have in the Chinese market? What is your perspective on this situation? Feel free to leave a comment in the section below to share your views.
Not only foreign businesses but even cities like Shenzhen and Shanghai, known as the wealthiest cities in China, are now sounding economic alarms.
Take Shenzhen, the city hailed as the “Silicon Valley of Asia,” for example. Recent economic data has been far from optimistic. According to the Shenzhen Municipal Statistics Bureau, in the first five months of this year, Shenzhen’s industrial growth rate was only 3.5%, an alarming 8.8 percentage point drop year-on-year, with the enterprise profit margin nearing 40%. Fixed asset investment is even more dismal, declining by 9.2%, and private investment even dropped by 11.8%. Export has slumped by 8.6%, with a particularly sharp 12.5% decline in exports to the United States.
The closely related freight volume has also seen a significant decline. Railway freight volume decreased by 18.9%, with railway freight volume being one of China’s key economic indicators, believed to be more reflective of the real economic situation than the official GDP figures.
When the economy falters, the lives of ordinary people become difficult. A blogger, “Shenzhen Bay Fairy,” revealed that in May, a high school teacher in Luohu District, Shenzhen, only received one-third of their salary. High-tech companies, state-owned enterprises, and public enterprises are all withholding wages, leading many companies to force employees to resign in order to cut costs. In Nanshan Technology Park, office buildings are largely vacant, some have been converted into shared workspaces, and even shopping malls have begun to transform into farmer’s markets.
Even more distressing is the increase in the number of homeless people on the streets. According to “996Rainmaker,” unemployed individuals can be seen camping on the streets in Longhua at Longhua Bus Station, squares, and parks. Even in the core areas of Futian CBD, under bridges, near subway stations, and behind office buildings, people can be seen sleeping on cardboard at night, including unemployed software developers, construction workers, and delivery riders.
The wave of business closures has exacerbated the departure of companies with Hong Kong and Taiwan investments. In August 2023, a Hong Kong-funded home appliance company with a 38-year history in Shenzhen announced its closure.
A report from the Center for Strategic and International Studies (CSIS) in the United States in September last year indicated that over 57% of Taiwanese companies had considered or started to withdraw from the mainland. The reasons cited include rising costs, unstable supply chains, and deteriorating policy environment. Many business owners even resorted to “dismantling equipment at midnight” and fleeing quietly.
Turning to Shanghai, this international metropolis is also facing dire straits. Although the official GDP growth rate for the first quarter of this year was announced to be 5.1%, the general public has a different perception.
A blogger named “Achang,” who has been running a noodle restaurant in Shanghai, expressed his view that business is becoming increasingly difficult, and he can barely keep afloat. Since the epidemic, the streets in Shanghai have been noticeably quieter, with deserted subways, sparse pedestrian traffic in the city center, and increasing vacancy rates in office buildings.
Statistics show that in 2024, the number of Shanghai’s non-local residents fell below ten million for the first time, a reduction of 230,000 people year-on-year, leading to a sluggish rental market and a continuous rise in apartment vacancy rates.
To make matters worse, the middle class in Shanghai is struggling on the brink of bankruptcy. Another blogger, “Shanghainese,” shared his story; as a standard member of the middle class, he took out a high mortgage to buy a house before the epidemic and made blind investments in restaurants. When the restaurant closed during the epidemic, he resorted to high-interest loans to pay off the mortgage and ended up heavily indebted, on the verge of bankruptcy. Achang also revealed that the overall situation in the catering industry in Shanghai is difficult, with eight out of ten establishments facing challenges.
From Shenzhen to Shanghai, these once prosperous cities are now facing a dim future. With foreign companies retreating, a shrinking manufacturing industry, and setbacks in high-tech industries, the once bustling cities are becoming increasingly deserted.
So, is the economic downturn in Shenzhen and Shanghai a temporary adjustment or a sign of long-term decline? Where do the future paths of these once glorious cities lead? Feel free to share your views in the comments section.
As we discussed the bleak economic situation in Shenzhen and Shanghai, it is essential to address the ongoing power struggles and chaotic decision-making within the CCP’s top echelons that are closely related.
On July 10th, independent commentator Du Zheng wrote an article in Taiwan’s “United Daily News,” pointing out that the core team personally selected by Xi Jinping in the Political Bureau of the CCP is now struggling with severe infighting despite being more than halfway through their term, leading to increasing instability within the entire camp.
Firstly, the youngest member of the Political Bureau Standing Committee, Ding Xuexiang, who was highly anticipated by Xi Jinping to lead regional coordination efforts in areas like the Beijing-Tianjin-Hebei and Guangdong-Hong Kong-Macao regions, has largely failed. This year in June, the National Committee of the CPPCC publicly recognized that the Guangdong-Hong Kong-Macao Greater Bay Area plan was not progressing smoothly, exposing Ding Xuexiang’s inadequacies and highlighting the intense high-level infighting.
Former Xinjiang Secretary Ma Xingrui was suddenly dismissed in July, sparking various speculations. Some claim he is involved in a corruption case in the Aerospace Science and Technology Group and is being investigated, while others speculate he may take over the role of Cai Qi as the director of the Central Committee Office or succeed Shi Taifeng as the first vice-chairman of the CPPCC. However, his downfall is sure to impact high-level power dynamics.
The exchange of positions between the Minister of Organization Department Shi Taifeng and the Minister of the United Front Work Department Li Ganjie is a puzzle. In March of this year, Shi Taifeng had just taken control of the crucial Organization Department, while Li Ganjie was shifted to the seemingly less favorable position of the United Front Work Department, sparking speculation that Li Ganjie might be the next target for investigation.
Furthermore, the absence of Central Military Commission Vice Chairman He Weidong since March has led many to believe he has fallen from grace. The majority of military power has fallen into the hands of 75-year-old Zhang Youxia, creating a situation where the “gun commands the party.”
In contrast, Minister of Economy He Lifeng is currently in a prominent position, not only controlling the “treasury” but also representing the CCP in negotiations with the United States. However, Du Zheng also pointed out that He Lifeng’s cultivation of power within the officialdom is too apparent, with his cronies spread throughout the National Development and Reform Commission, the Ministry of Finance, and the central financial system. Key individuals such as Zheng Zhuojie, Lan Foan, and Wang Jiang, who hold crucial positions, are all his old subordinates or alumni.
Regarding Tianjin Party Secretary Chen Min’er, once considered one of Xi’s potential successors, his promotion of the big data industry in Guizhou led to a large-scale corruption scandal. Currently, he has shown no outstanding performance in Tianjin, endangering his future prospects.
Furthermore, looking at the CCP Political and Legal Affairs Committee Secretary Chen Wenqing, despite his promotion from Minister of State Security to Political Bureau member, he has been sidelined by Minister of Public Security Wang Xiaohong and Minister of State Security Chen Yixin, rendering him a figurehead.
Du Zheng further analyzed other members of the Political Bureau, such as Li Xi, who has made significant arrests but failed to establish authority; as for Wang Yi, Wang Huning, and Cai Qi, they seem more like figureheads with minimal actual power.
Of particular note is Xi Jinping himself. By the end of June this year, the CCP Political Bureau deliberated on adjusting regulations on internal power, with the South China Morning Post controlled by Jack Ma suggesting that this may signal Xi Jinping’s beginning of a phased power decentralization and even pave the way for retirement. Coupled with the fall of Qin Gang, rocket military generals, and influential figure in the military, Miao Hua, Xi Jinping’s authority has clearly been undermined.
Du Zheng believes that the internal struggles within the CCP have entered a phase of white heat, with Xi Jinping’s personally selected team turning out to be his greatest threat. This chaos not only weakens CCP rule but also reveals to the outside world that their true enemy may actually be hidden within the party.
Earlier, we discussed the ongoing power struggles at the top of the CCP and the turmoil in local governance. The recent lead poisoning incident at a kindergarten in Tianshui, Gansu Province has once again exposed the governance crisis and collapsed public trust in local governments.
In this recent case at the Peixin Kindergarten in Maiji District, Tianshui, a total of 233 children were found to have excessive lead levels in their blood, with 40% of them reaching moderate to severe poisoning levels. Many children experienced abdominal pain, hair loss, and even black spots on their gums.
After the incident came to light, the authorities quickly conducted an investigation, stating that the kindergarten kitchen had used industrial paint purchased online to color food, despite the packaging clearly stating “not for consumption.” As a result, the principal and eight others have been criminally detained. However, the seemingly clear investigation results have failed to convince the public.
An article from the public account “Basic Common Sense” raised three major suspicions: Firstly, it is unreasonable for the kindergarten to use industrial paint, as food coloring with industrial paint is not significantly cheaper than edible pigments; Secondly, the boss who invested in multiple kindergartens monitored by surveillance videos, including two young chefs, did not seem ignorant as they would unlikely use industrial paint to cook boldly; Thirdly, the local test results were drastically different from those in Xi’an, with a child locally tested for a blood lead content of only 82 micrograms, but testing in Xi’an revealed levels as high as 512 micrograms.
The “Huidu Jiang” public account also revealed that netizens discovered that the implicated kindergarten was not far from a local industrial enterprise, both located near the river, suggesting a potential risk of groundwater pollution; some netizens with a chemistry background questioned that even with the use of paint, it would be challenging to cause such severe lead poisoning since children only occasionally consume colored food, with the intake not enough to result in such serious poisoning. Crucially, some parents reported that even children who do not eat at the kindergarten appeared to have lead poisoning, raising further suspicions.
The surveillance videos were also questioned by netizens, as they appeared too clear and staged, lacking dates and times. Some even cynically remarked, “This is the cleanest kindergarten kitchen I’ve ever seen.”
Netizens further commented: “The kindergarten is clearly being scapegoated!” “There is definitely heavy industry nearby causing lead pollution.” “This is an enterprise the local operators heavily rely on, the KPIs all depend on this.”
The “Duan Duan Jiang” public account went further to point out that historically, lead pollution has long been a “chronic illness” in Gansu. As early as 2006, there was lead poisoning in 334 children in Wujiahe Village, Tianshui. In 2009, Huixian County in Longnan, 2015 in Jinchang City, and 2018 in Baiyin, similar incidents occurred. Each time, the authorities quickly identified individuals to blame, but failed to address systemic pollution and actively avoided long-term solutions to pollution through token short-term measures.
CNN interviewed a local mother who, despite her child not attending the implicated kindergarten, made it clear that all parents believe that food is not the real cause of poisoning. The real cause is known only to the government, which is unlikely to disclose the truth to them. She even expressed fear of government retaliation and hesitated to disclose her name publicly.
While the authorities claim to have tested food, water, and soil, reporting that food samples were 2,000 times above the lead standard, this explanation remains unconvincing. A parent surnamed Wu questioned: “The children eat colored pastry one or two times a week; how could they be poisoned so severely?”
Contrasting this with incidents in other countries, the lead contamination crisis in Flint, Michigan, in 2014, was resolved with a public apology from the U.S. government and funding for systematic reforms, compensation to affected families, ultimately resolving the problem. In contrast, the official response in Gansu to this incident lacked systemic measures, quickly placing blame on a few kindergarten staff, completely bypassing the potential environmental pollution issue.
The Gansu incident has revealed the complete failure of the CCP’s local governance mechanism, with officials repeatedly lying and covering up the real issues, leading to continued erosion of public trust.
How do you view the lead poisoning incident in Gansu this time? What do you think the authorities are hiding? What might be the actual source of pollution? Feel free to share your thoughts and opinions by leaving a comment.
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