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Volkswagen to Invest Over 4 Bln Euros in China Betting on Quick Recovery

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The further opening-up of the Chinese market presented German automobile giant Volkswagen with more opportunity and the carmaker will invest over four billion euros in the country with its cooperating partners even as the global storm caused by the COVID-19 pandemic is still on.

Despite the COVID-19-triggered strain on the global market, Volkswagen’s performance in China during the first half of 2020 (H1) has been relatively good, according to Stephan Wollenstein, CEO of Volkswagen Group China.

Wollenstein said that at the beginning of the pandemic, the Chinese government undertook a series of fiscal policies to alleviate companies’ financial burden and promote market liquidity, the local government around the country also launched targeted measures to stimulate consumption. Those measures have been a success.

With warming signs seen in the Chinese auto market in recent months, multiple global auto giants are confident that China will be one of the very few markets in the world whose growth path is following a V-shaped curve, expecting recovery at a picked up pace.

Data from the China Association of Automobile Manufacturers shows that China’s auto sales rose by 1.8 percent in June year on year but fell by double digits in the first half of 2020 after the country shut down to fight the coronavirus pandemic.

Automakers expect H2 sales to pick up

Volkswagen is China’s biggest foreign automaker, followed by U.S. rival General Motors Co. The German automaker sold 1.59 million vehicles in China in the first six months of 2020, down 17 percent from 1.92 million units during the same period last year. For sales in last year, Volkswagen sold around 4.23 million units in the country.

The bright side is that China’s premium market outperformed during the past half year and still has much potential to release.

“The premium market is only down by two percent year on year so far. In general, China is still a bit behind what we see as a pattern in Europe and in the U.S., where the premium market already has a substantially higher share than it has so far in China. So the market here is a bit more than two million units in this respect. And we see this probably would grow substantially next year because there will be more people in the middle class,” Woellenstein added.

As Volkswagen obviously has edges in several areas, including the already strong presence in high-end market plus their ever growing expansion into the New Energy Vehicle sector, Volkswagen China expects sales in the second half will boost with a picked up pace.

“We are strongly convinced that we come up with a similar convincing proposition to Chinese customers both on product as well as the entire service and purchasing experience. China will probably be one of the very few markets in the world whose growth path is really following a V-shaped curve,” Woellenstein projected with a determined tone.

Woellenstein also believes that the remaining months of this year will more or less follow the trend of 2019 in absolute numbers, which would set a sound basis for the second half and a positive outlook into 2021, “Therefore, there’s no reason for us to change any of our plans, we stay on our investments, have even further increase them, nor is any of our product launch is being delayed or questioned at all.”

The optimism is shared by multiple global auto giants, as China is seen an oasis for global carmakers during COVID-19 drought.

A number of auto companies have also reported strong recoveries in June sales, with Toyota China up by 22.8 percent year on year, Nissan China up by 4.5 percent year on year, and Dongfeng Motor up by 9.8 percent annually.

Tesla accounted for nearly 23-percent share of the electric car sales in June. The company, which already has strong determination and presence in expansion in China, has started production at its Shanghai factory at the beginning of the year, and has rapidly secured leadership in domestic market and boosted monthly EV registrations in China.

VW continues expansion in NEV, adapts to dual-credit system

Previously, China’s Ministry of Industry and Information Technology announced that the credit ratios of new-energy vehicles are required to reach 18 percent by 2023. The revised policy will be effective from January 1, 2021. Born in 2017, the dual-credit policy requires automakers to produce a minimum number of non-polluting vehicles for the sake of environment protection.

Talking about how VW adjusts to the changes, Woellenstein said he’s pretty confident that in the years to come, the company will stay compliant and make full use of the dual-credit policy.

In May, Volkswagen announced to invest a billion euros to take a 50-percent stake in the state-owned parent of Anhui Jianghuai Automobile Group (JAC Motors), and raised its stake in an existing electric vehicle joint venture with JAC to 75 percent from 50 percent. In a separate transaction, Volkswagen became the biggest shareholder of Gotion High-Tech Co., a manufacturer of electric vehicle batteries.

“So we will have the Anhui-based electric vehicle cluster alongside what we are already doing in both of our traditional joint ventures, given this as a prerequisite plus our product plans, we believe that we are in a good shape and also to get a substantial share on the NEV market,” Woellenstein added

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Xi Jinping Reviews Poverty Relief Progress in Hunan as China’s War on Poverty Nears End

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China has vowed to eradicate absolute poverty in rural areas by the end of 2020 despite the COVID-19 epidemic. While efforts are being made to ensure “no single poor area or individual shall be left behind” – as President Xi Jinping puts it – people that have recently shaken off poverty are striving for a better life.

Among the 529 residents in a small village in central China’s Hunan Province, 95 in 30 households used to live under the poverty line. The whole village was lifted out of poverty through rural tourism in 2018, and the average annual income of the residents reached 13,840 yuan (about 2,060 U.S. dollars) last year – way above the national poverty line of 2,300 yuan (about 340 U.S. dollars).

Shazhou Village, located in a mountainous area in Rucheng County, Chenzhou City, was the first stop of Xi’s inspection tour in Hunan.

Xi, also general secretary of the Communist Party of China (CPC) Central Committee, visited the village on Wednesday and learned about poverty relief industries and progress in consolidating poverty eradication at a modern agricultural tourism demonstration base.

Chinese President Xi Jinping learns about poverty relief industries and progress in consolidating poverty eradication at a modern agricultural tourism demonstration base in Shazhou Village, Rucheng County, central China’s Hunan Province, September 16, 2020. /Xinhua

Targeted poverty alleviation

China has adopted a targeted approach in in its poverty alleviation campaign, which means taking tailored relief measures to fit different local conditions.

The story of Shazhou is a prime example of that approach. The village boasts the beautiful scenery of the Luoxiao Mountains and the unique Yao ethnic culture – nearly two thirds of the residents belong to the Yao ethnic group. Tourism has played a significant role in Shazhou’s battle against poverty.

The village has promoted rural tourism and high-quality fruit planting, and arranged training programs to help villagers obtain such job skills as for restaurant cooks and rural tourism industry employees. More than 350 local jobs have been created through the efforts.

With all its residents lifted out of poverty, Shazhou has also been known for such national-level honor as the “village of beauty and leisure,” “role model for ethnic unity and progress,” “key village for promoting rural tourism” and “traditional Chinese village.”

Chinese President Xi Jinping talks with residents of Shazhou Village, Rucheng County, central China’s Hunan Province, September 16, 2020. /Xinhua

New starting point

Since the 18th CPC National Congress in late 2012, China has achieved remarkable results in poverty reduction. More than 93 million rural people shook off poverty between 2013 and 2019.

But 5.51 million people needed to get rid of poverty by the end of 2019. And such a formidable task was coincided by accident with the coronavirus outbreak.

Speaking at a symposium on poverty alleviation in March, Xi described the goal of ending absolute poverty by 2020 as a “solemn pledge” made by the CPC Central Committee to the Chinese people, urging authorities at all levels to deliver on that promise.

As China intensifies efforts in the final stage of the tough battle, Xi tours around the country to inspect economic and social development, with poverty alleviation high on the agenda. Prior to the Hunan trip, he had taken inspection tours this year of capital city Beijing and provinces of Yunnan, Hubei, Zhejiang, Shaanxi, Shanxi, Jilin and Anhui, and Ningxia Hui Autonomous Region.

In addition to increasing poor people’s incomes, China is also striving to improve the quality of poverty relief. Xi has repeatedly called for efforts to ensure rural poor people do not have to worry about food and clothing and have access to compulsory education, basic medical services and safe housing.

Chinese President Xi Jinping speaks with villagers in the village of Shazhou, Rucheng County, central China’s Hunan Province, September 16, 2020. /Xinhua

Meanwhile, he is looking into the future beyond the end of poverty. “Being lifted out of poverty is not an end in itself but the starting point of a new life and a new pursuit,” he said on several occasions this year, calling for consolidating achievements in poverty alleviation and advancing the rural vitalization strategy.

Put forward at the 19th CPC National Congress in 2017, the strategy aims to build rural areas with thriving businesses, pleasant living environments, social etiquette and civility, effective governance and prosperity.

Shazhou is among many previously poor villages in China that have embarked on the journey for a better future.

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From ‘saplings’ to ‘towering trees’

On Wednesday, Xi also visited a revolution-themed exhibition hall, a village service center, a clinic, a primary school and the homes of villagers in Shazhou.

The exhibition chronicles the story of an impoverished villager named Xu Jiexiu, who offered shelter to three female Red Army soldiers during the Long March in the 1930s. Upon the soldiers’ departure, they cut their only quilt in halves, leaving one part with Xu to show their care.

Xi said the CPC owes its achievements to the people’s support, vowing to further improve the people’s wellbeing.

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While inspecting the village service center, he stressed the effectiveness of primary-level public services. The center should provide targeted services for local residents according their needs, he told workers there.

At the primary school, the president encouraged students to make progress every day and grow from “saplings” into “towering trees” of the Chinese nation.

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Coronavirus Largest Health Crisis

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The novel coronavirus pandemic is the largest global health crisis of the past decades, and China was the first country to be hit by COVID-19.

When the lives of 1.4 billion people were put under threat by the virus, China locked down Wuhan, once the epicenter of the coronavirus outbreak in the country.

But how did the virus spread throughout the city? And what led to the unprecedented lockdown? CGTN launches “The Frontline: China’s Fight Against COVID-19”, a 90-minute-long two-part documentary.

In part one, the initial outbreak and the following two months are explored, and how a city of 11 million came to a standstill.

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Xi Jinping: China, EU Should Be Committed To Multilateralism, Dialogue

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China and the European Union (EU) should be committed to peaceful coexistence, openness and cooperation, multilateralism and dialogue, and consultation, Chinese President Xi Jinping said on Monday, calling on the two sides to firmly promote the healthy and stable development of their comprehensive strategic partnership.

Xi made the remarks while co-hosting a China-Germany-EU leaders’ meeting on Monday evening in Beijing via video link with German Chancellor Angela Merkel, whose country currently holds the EU’s rotating presidency, European Council President Charles Michel and European Commission President Ursula von der Leyen.

The world is undergoing profound changes unseen in a century, and the COVID-19 pandemic has accelerated the process, Xi said, adding that humanity is standing at a new crossroads.

This year marks the 45th anniversary of the establishment of China-EU diplomatic ties, and this was the second video meeting between Chinese and EU leaders in less than three months. It also comes after recent visits by senior Chinese diplomats to EU member states such as Italy, the Netherlands, France, Germany, Spain and Greece.

During the meeting, the leaders announced the official signing of the China-EU Geographical Indications (GI) Agreement.

GI is a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin. The agreement is expected to prevent counterfeiting of GI and enable consumers on both sides to eat and use authentic high-quality products.

The two sides also vowed to accelerate the negotiation of the China-EU investment agreement and reaffirmed the goal of concluding the negotiation by the end of the year.

Meanwhile, Xi and the European leaders decided to establish a China-EU high-level dialogue on environment and climate, and one in the digital field, in order to build a green partnership and a digital cooperative partnership.

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