China’s economy grew faster than expected in the final quarter of 2020, setting the scene for an encouraging start to 2021. In 2020, China’s GDP grew 2.3% over the course of the year, making China the only major global economy to expand last year. As such, China is now one of the best possible markets for the foreign enterprises with a local foothold. FBCB has also enjoyed a great leap forward, as we've acquired a new member company every month. Together we are stronger in this huge market.

The Chinese economy has been boosted by the export sector, but domestic consumption has remained slow. China’s new Dual Circulation policy, one of the main themes of the 14th five-year-plan, is expected to encourage Chinese consumption and is a step towards moving the Chinese economy from a manufacturing and export-based economy toward a consumer model. What does this Dual Circulation policy mean? It means is that China will be considering Chinese consumers' domestic demand on one hand, while at the same time improving conditions to facilitate foreign investment and boost production for exports. The 'dual’ refers to both internal circulation as well as international circulation. The aim is to shift towards a demand and innovation-driven economy.

In addition to China government big meetings, there are also two other economically important issues which we need to follow closely. 1) U.S.-China trade tensions will might not disappear entirely under the Biden administration, but it seems that there's room to evolve. Hopefully we'll see some burden alleviated for the 35% of Finnish companies that have been suffering due to the trade war, according to our FBC Business Confidence survey. 2) In the end of December 2020, after seven years of negotiations, the EU and China were able to establish a deal in principle on investments. The Comprehensive Agreement on Investments (“CAI”) is the most ambitious agreement that China has ever entered with a third country. This means that China has committed to ease market access for EU investors.

These globally significant matters will be covered by Team Finland China, who are organizing a webinar “Recent Trends in Superpower Relations” in the beginning of March. We will have top experts sharing insights on the impact for companies. More information to follow.

While almost all Beijing social events were cancelled on January due to Covid19 restrictions, we have successfully continued to work together online and arranging smaller physical events whenever possible. The hybrid mode seems to be the new normal. Take a look at our upcoming events in this newsletter.

This month's guest writer comes from Wartsila, which was recently awarded in recognition as the Global Most Innovative Knowledge Enterprise. We are very proud of the achievements of Finnish Companies!

On the behalf of FBCB I wish you Happy Spring Festival and the Year of Ox!

Ulla Nurmenniemi

Executive Director

Finnish Business Council Beijing

Dear friends at the Finnish business community,

Thanks to the Finnish Business Council Beijing for the kind invitation as guest writers for January newsletter, we hope this will be a good opening for year 2021. 

The passed year 2020 has been a year like nothing before. The pandemic has impacted us all, some less and some considerably more. Just like all others, we Wärtsilä had to face COVID-19 in the frontline. Wärtsilä's sizeable operations in China and northern Italy were hit first by the rapidly spreading virus. But It was also heart-warming to see how our global organization came virtually together by sharing best practices, personal experiences and developed new ways of working and collaborating. Meanwhile, we have helped keep critical infrastructure - power generation and marine transport - running around the world. 

But year 2021 is a new beginning, which offers us all a new opportunity. Wärtsilä is today widely recognized and valued for its commitment to transform its markets and to lead decarbonization and innovative capability. We are a purpose-driven company and we will continue our journey to enable sustainable societies with smart technologies. Going forward we will continue to translate our purpose, vision and overall strategy into concrete priorities, actions and proof points.

Recently in China, Wärtsilä and the China Energy Power Planning & Engineering Institute (EPPEI) jointly launched a study titled “Enhancing Power System Flexibility: Finnish Experience and Application in Jiangsu”. The study showcases how China can accelerate the energy transition by integrating more renewables and improving power system flexibility. The study considers three scenarios – baseline, moderate RES and high RES – and shows how the optimal path to more renewables can help lower system costs, while maintaining system reliability. To achieve this, flexible capacity, notably gas-based internal combustion engine (ICE) power plants, is needed to integrate RES and provide peaking and frequency regulation services.

According to the study, increasing the amounts of RES and adding flexible ICE power plants to Jiangsu’s power system will provide both economic, environmental, and operational benefits. RES combined with flexible ICE power plants will enable increased grid stability and reliability, while lowering the overall power system costs. Integrating cheap RES into the power system will also enable less gas usage and will decrease dependence on imported gas (liquefied natural gas). It will also lower CO2 emissions and reduce water consumption compared to gas turbines. Looking at the results of the study, with more renewable integration, the power system can achieve the highest savings, a lower levelized cost of electricity (LCOE), and much lower emission levels, which is important from a sustainability perspective and for China to reach President Xi’s target of carbon neutrality by 2060.

The above-mentioned study is a research project under the cooperation framework between Business Finland and EPPEI, which is a concrete result of the bilateral energy cooperation between Finland and China. 

At the same time, Wärtsilä also actively participated in the energy innovative cooperation projects in China. For that, Wärtsilä and Huaneng Jiangsu sign a strategic cooperation framework agreement, the aim of the cooperation agreement is to develop more sustainable and flexible power generation based on internal combustion engine (ICE) technology that would enable the integration of more renewable resources into the Jiangsu grid. This aligns with China’s energy security strategy of “four revolutions and one cooperation.” The strategy’s four revolutions are intended to curb energy consumption, establish a diversified energy supply system, upgrade energy technology, and speed energy sector development. The cooperation aspect refers to strengthening international cooperation to achieve energy security under open conditions.

At the signing ceremony Mr Cao Qingwei, Chairman of Huaneng Jiangsu Co, said: “I appreciate Wärtsilä’s willingness to cooperate and enhance EU-China cooperation on energy. This will help us to innovate and take advantage of market opportunities in ancillary services, such as frequency regulation and peak shaving in Jiangsu province. Implementation of ICE technology will help China to accelerate its transition towards clean energy.”

In response, Frederic Carron, Wärtsilä Energy’s Vice President Middle East and Asia, said: “Signing this Cooperation Agreement is of great significance to Wärtsilä. The development of cleaner and more sustainable power generation through the application of flexible ICE technology is a positive step. At Wärtsilä we look forward to working together with Huaneng Jiangsu to create both technological, economical, and social benefits.” 

Wärtsilä’s long-term R&D commitment on improving combustion engine efficiency has resulted in Wärtsilä engines having the highest efficiency numbers among existing prime movers. A key success factor has been the development of integrated engine functionalities that enable low emissions, and high engine efficiency of up to 50 percent in single cycle mode, depending on the engine type.

EU and China share common interests and goals for the clean energy transition and are jointly responsible for one third of the world's primary energy consumption. The EU-China energy cooperation focuses on supporting global transition towards clean energy on the basis of a common vision of a sustainable, reliable and secure energy system.

I would like to sincerely thank Finnish Business Council, Business Finland and everyone in the Team Finland community for your unwavering support for Finnish businesses in China, for providing us a valuable and rich environment of friendly Finland – China relations that is the bedrock for building business cooperation for Finnish companies in the China market. 

In energy sector alone, the framework MOUs signed between the ministries of the two countries had paved the way for Wärtsilä and other Finnish companies to entering the market, while those fruitful delegation visits to the provinces had also created good chances for companies to expand their business activities and secure potential project opportunities. 

We in the Finnish business community in China are very lucky to have such strong support from Finland, we hope this will continue in year 2021 as everyone is hoping to recover soon from the pandemic. As part of the energy field cooperation between Finland and China, Wärtsilä is committed to do our best to build the future flexible power grid and actively looking for win-win partnership in China.

Finally, I wish everyone in the Finnish Business Community a good new year 2021!

Finnish Business Council Beijing is part of Team Finland in China, and an outstanding platform for all Finnish businesses in China. For those companies which need more visibility, we have launched a Premium Membership. It's an upgrade from normal membership, as you can see from the table below.

For those companies in Finland, who are planning to expand their businesses to China, or are in the early stage and don't have an office in China yet, we have a distant membership. It's called Proxy Membership. A very cost-effective way to make your company known to a large audience, and get essential contacts for your future.

See all membership options HERE