The 2022 Red Paper

China is home to the largest electric vehicle market in the world. Homegrown EV makers such as NIO, Xpeng, and SAIC are challenging Tesla’s dominance in the country. Behind them are dozens of others who wish to do the same. In the battery business, China is the largest manufacturer of lithium-ion batteries. In May, Robin Zeng (曾毓群 Zēng Yùqún), the CEO of the Tesla supplier CATL, toppled real estate mogul Li Ka-shing (李嘉誠 Lǐ Jiāchéng) to become the richest man in Hong Kong. It was a potent sign that the drive toward a renewable energy future was finally in sight and, this time, China was in the driver’s seat. 

When it comes to electric vehicles, China has leapfrogged the rest of the world with an effective industrial policy of electrification since the early 2000s. Europe and America are now playing catch-up. As China’s EV startups ballooned over the years, Beijing has hinted at a policy of deceleration, which would wean EV companies off government subsidies. It has drafted measures to rein in overcapacity and concentrate supply chains, for example, by tying investments to certain production quotas.

The business of electric vehicles is at the convergence of numerous industries, including AI, data management, software, batteries, urban planning, the energy grid, critical minerals, and much more. China enjoys a dominance in the upstream supply chain — minerals, batteries, components — but it also has significant advantages in software. As artificial intelligence becomes inseparable from the future of electric vehicles, China’s top software and internet companies are teaming up with the EV industry: Tie-ups such as Baidu–Geely, Tencent–Evergrande, Alibaba-SAIC, and Huawei-BAIC look set to dominate the world’s future transport.

The news that shocked the auto world this year involved a cute electric mini car that outsold Tesla: the Wuling Hong Guang Mini EV. Since its July 2020 release, the mini EV, part of a joint venture between SAIC, GM, and Wuling, has consistently been the top-selling electric vehicle model in China. In January, it dethroned Tesla’s Model 3 to become the best-selling EV worldwide.

Wuling has been described as a “people’s supercar” or an “EV for the masses.” Where many investors and EV makers previously thought that EVs were primarily a luxury project, Wuling, whose mini EV only costs around $5,000, proved that electric vehicles can have mass market appeal. 

The year 2021 was a breakout year for China’s electric car companies in the most literal sense. With blessings from the government, China’s EV startups, along with more legacy marques, have left their domestic markets and entered Europe, the second-largest EV market after China. The sports vehicle brand MG, owned by Shanghai’s SAIC, now has 350 dealers in 16 European countries. Battery-powered SUVs, including from Great Wall Motor, Geely, and even Tesla — made from its Shanghai factory — have all hopped on one-way trips to Europe this year. 

Many of the new Chinese startups, including NIO, Xpeng, and BYD, chose as their first destination Norway, which, like China, subsidizes electric vehicles and boasts an extensive charging infrastructure. By next year, both NIO and Xpeng have plans to expand further into countries such as Denmark, Sweden, and the Netherlands. “With NIO and Xpeng entering European markets, there’s a confidence and excitement that is rightly deserved,” said Tu Le, the founder of Sino Auto Insights. “But there’s also a studied caution about challenging the big dogs [legacy automakers like Volkswagen] on their turf, hence their decision to enter via EV-friendly Norway.” 

China will be the largest market for autonomous vehicles by 2040, with an estimated 66% of all cars on the road being automated, according to Mckinsey. As drivers fall away, cars will become more of a service than a product. That is propelling the birth of robotaxi services, and the epicenter of robotaxi trials is China.

Self-driving technology startups garnered significant investor attention this year, including Pony.ai, Momenta, AutoX, and WeRide. In November, Beijing granted Baidu and Pony.ai permission to charge a fee for robotaxi rides, a major milestone toward a

viable autonomous driving business model. Alibaba-backed AutoX has also announced a fully driverless robotaxi operation in a region of Shenzhen.

All of these startups will eventually be folded into an EV manufacturer. Baidu, for example, plans to co-brand its self-driving tech with three car makers: WM Motor, Guangzhou Automobile Corporation, and state-owned BAIC Group’s Arcfox. Huawei similarly unveiled its first production model in a partnership with EV maker Seres, which will come fitted with Huawei’s own AI software.

As EV demand soars, so does the demand for EV components and the minerals needed to make them: cobalt, lithium, rare earths, and semiconductors. After the U.S. deprived Beijing of chips, China’s tech sector mobilized to develop their own. There were 18,800 new semiconductor companies in the first half of 2021, according to the research firm Qichacha, up 170% from the previous year. China’s tech giants are now racing to become the biggest Chinese chip supplier. Contestants include Baidu and Alibaba, but also smartphone brands Huawei, Xiaomi, and Oppo, and home appliance brands like Midea, Haier, Gree, and TCL. 

While Chinese companies wean themselves off U.S. chips, the rest of the world is trying to wean itself off Chinese minerals. China currently supplies 85% of the world’s battery-grade cobalt, 90% of processed rare earths, and around 60% of processed lithium. This year, the main Chinese players have been busy expanding their reach by inking deals, buying up mines, and brokering with governments all over the world.

In the Democratic Republic of Congo, which has more than half of the world’s cobalt, Chinese companies have purchased 15 of the country’s 19 cobalt mines as of last year. This fall, China Molybdenum, the world’s second-largest cobalt producer, announced plans to invest $2.5 billion and double production at one of its copper and cobalt mines.

In the adjacent world of lithium, Ganfeng, a Tesla supplier and one of China’s biggest lithium mining companies, has been snapping up stakes of lithium mines and salt lakes all over the world from Argentina to Mexico in order to match its ambitious plans to double production by 2025. The battery giant CATL has also been on a buying spree of lithium mines this year from Australia to Canada.

Chinese companies have also been cementing their position in the global supply chain for rare earth metals. Chinese rare earth giant Shenghe Resources has consolidated partnerships throughout the year in Western Australia and Greenland. In both cases, it has faced political opposition, suggesting that geopolitical factors — the optics of Chinese-controlled companies in critical minerals — matter across the world. In December, China approved a merger of three state firms to create one of the world’s largest rare earth companies, an effort to retain its competitive edge against a rising tide of global rare earth initiatives. 

Data security is already one of the most important global challenges that will impact the movement of capital in the coming years. This summer, Beijing suspended app downloads of its ride-hailing giant Didi to reprimand its hasty public listing in New York despite regulators’ reservations. Didi’s eventual delisting by diktat this December cemented Beijing’s hardline stance on the issue of data, one that has also deterred other tech companies — including its AI darling Pony.ai — from an IPO this year. As Chinese EV companies expand into Europe next year, they will need to navigate a slew of local data regulations, while also reassuring their own government that the data of Chinese citizens will not be compromised. Given the scale and novelty of the issue, that is no easy task given. 

Next year, more and more EV companies will roll out new models and begin sales. Collaborations between software companies and EV manufacturers will come to fruition, and the smart car era will officially begin.

Chinese consumers will help decide which of the hundreds of current aspiring EV companies deserve to live. The business of robotaxis, which also began this year, will continue to expand, first to Tier 1 cities like Shanghai, Guangzhou, and Shenzhen, and next to Tier 2 and 3 cities, which are both ripe for disruptions in technology and consumer habits. 

Competition for minerals will also intensify. Massive state subsidies in the U.S., EU, and Japan will come into effect next year, offsetting the imbalance of current global supply chains and challenging Chinese battery- and mineral-related industries. Meanwhile, geopolitics continues to matter in an era of ideological competition, and Chinese companies hoping to expand their influence will face stiff opposition from unexpected parts of the globe. Although it was Beijing that chose to bolster domestic legitimacy at the expense of a compromised international image, it will be Chinese companies that pay the price.

Since the #MeToo movement took on wide momentum in China in 2018, a growing number of prominent Chinese men in different walks of life have been forced out of power as more women found the confidence to speak their truth about sexual assault and abuse. But few of the accusers have generated as much international attention as Chinese tennis star Péng Shuài 彭帅, whose case has served as a bleak reminder of China’s official resistance to the movement, especially in situations where the patriarchal culture of the Communist Party is called into question.

In a November 2 post on Weibo, the 35-year-old tennis player, a former Wimbledon and French Open doubles champion, accused retired Vice Premier Zhāng Gāolì 张高丽, 75, of pressuring her into having sex 10 years ago, and then carrying on an on-and-off extramarital affair with her that spanned almost a decade. “I know that for someone of your seniority, Vice Premier Zhang Gaoli, you’ve said that you’re not afraid,” she wrote.

“But even if I’m like an egg striking a stone, or a moth darting into the flames, inviting self-destruction, I’ll tell the truth about you.”

The post was taken down minutes after it went up, and the allegations immediately sent China’s social media censors into overdrive, resulting in a blanket block of nearly 600 references related to the news — including, at one point, wǎngqiú 网球, the Chinese word for tennis. But not only was Peng scrubbed from the internet; she went missing in real life, too.

Given the lack of transparency surrounding China’s handling of Peng’s allegations, most reasonable people were wondering, “Where is she now?” That included a growing number of sports celebrities like Naomi Osaka and Serena Williams, who used their platforms to draw attention to Peng’s initial disappearance.

And while Peng reappeared in videos released by Chinese state media, a cohort of sports organizations and politicians continued to voice their concerns about her whereabouts and ability to speak freely, as well as demand a full investigation of her claims and assurance of her safety. Frustrated by its repeated failed attempts to communicate with Peng directly, the Women’s Tennis Association (WTA) announced in December that it would immediately suspend all tournaments in China, including Hong Kong. “While we now know where Peng is, I have serious doubts that she is free, safe and not subject to censorship, coercion and intimidation,” Steve Simon, the chief executive of WTA, said in a statement.

In the latest development in Peng Shuai’s saga, the tennis star appeared in a December 19 interview that seemed staged but was presented as a doorstop, with Lianhe Zaobao 联合早报, a Singapore-based Chinese-language newspaper that is usually pro-Beijing. In the interview, Peng denied that she was sexually assaulted, and said, without elaborating, that people had “misunderstandings” and “distorted interpretations” of her account. When asked about her recent whereabouts and if she was aware of the concern about her safety, Peng said she has “always been very free” and was mainly staying at her home in Beijing. However, Peng’s denial was found not to be credible by many concerned parties, who suspected that the tennis player was coerced into rehearsing video appearances by Chinese officials. 

Adding to the skepticism was another jarring aspect of the controversy: Despite the extensive reporting on Peng’s saga in the international media, there has been barely a mention of her allegations or the following denial in domestic news coverage. The media blackout is perhaps the most powerful example of China’s censorship against the #MeToo movement to date. Her treatment is also an object lesson in the danger faced by Chinese women when they dare to challenge the authorities — even those who once enjoyed fame and adoration from the government. 

For a fleeting moment, it felt like a turning point for China’s faltering #MeToo movement.

In August, after being detained by police in Beijing on suspicion of rape, Chinese-Canadian singer-actor Kris Wu (Wú Yìfán 吴亦凡), who was a member of the enormously popular South Korean-Chinese supergroup EXO before pursuing a solo career in China, was officially arrested.

The allegations against the 31-year-old pop star first emerged in July when Dū Měizhú 都美竹, a 19-year-old college student, accused him on social media of date-raping her while she was too drunk to give consent. Following her claims, a handful of women came forward to detail a pattern of predatory behavior, alleging, among other things, that Wu lured aspiring models and actresses, some underage, into inappropriate sexual relationships with promises of jobs and other opportunities, which rarely materialized.

Wu, ​​who holds Canadian citizenship and spent his childhood and teenage years between Vancouver and Guangzhou, initially denied the accusations outright and threatened to take legal action against what he called “malicious” rumors. However, his attempts at damage control did little to soften the criticism as the Chinese internet swiftly and overwhelmingly sided with his accusers.

The enormous outcry — marked by hashtags expressing support and solidarity, such as #WithDuMeizhu# and #GirlsHelpGirls# — also prompted more than a dozen companies, including several major global brands, to cut ties with Wu, marking a significant blow to his professional career.

At this point, it’s hard to imagine Wu making a comeback after this gigantic debacle: His Chinese social media accounts, with tens of millions of followers, were taken down, along with his music and movies from streaming services; in the offline world, a wax figure of Wu in Madame Tussauds Shanghai was removed.

Understandably, when the news broke of his arrest, Wu’s dramatic fall from grace was hailed as a major win for China’s #MeToo movement. Feminists and activists attributed his downfall to the shifting public opinion in China around sexual misconduct, saying that the arrest might suggest a radical change in the way Chinese authorities handle #MeToo allegations.

But their optimism was short-lived. In the aftermath of his arrest, state-run newspapers — whose editorials and commentaries often reflect the viewpoint of the government — largely connected the scandal surrounding Wu to China’s recent crackdown on the entertainment industry and the culture of celebrity worship. By framing the news as a story of a public figure misbehaving and failing to be a role model for their followers, these articles deliberately ignored the #MeToo nature of the claims against Wu and even put the blame on his fans for not keeping his influence in check.

“Of course fan groups have their own problems, but they have no responsibility for Wu’s behavior. Not to mention that Wu was preying on his fans and some of them are victims,” Lǚ Pín 吕频, a U.S.-based Chinese feminist activist, told The China Project. “This is further proof that the government is always finding ways to marginalize the conversation about gender powers.”

The swiftness and magnitude of Beijing’s reaction to Wu was a contrast to how it responded to #MeToo accusations against Zhū Jūn 朱军, a high-profile television host at CCTV, the state broadcaster.

In September, after numerous delays in court proceedings, prosecutors in Beijing dismissed a lawsuit filed by Zhōu Xiǎoxuán 周晓璇, saying that she didn’t meet the burden of proof in her sexual harassment claim against Zhu.

Zhou, popularly known as Xiánzǐ 弦子, first went public with her accusations in 2018 in a 3,000-word essay on Weibo, where she claimed that while working on Zhu’s celebrity interview show, Art Life 艺术人生, the TV star forcibly groped and kissed her in a dressing room. The court’s judgment marked an unsatisfying end to a three-year legal ordeal involving Zhou, which started with the famous TV anchor suing her for defamation, then Zhou countersuing him for sexual harassment.

Speaking to a small group of supporters and journalists outside the courthouse, a tearful Zhou said that she was “exhausted” from the prolonged legal fight and “disappointed” about the verdict. Later in a statement, Zhou vowed to appeal the judgment, claiming that the court treated her case unfairly in many ways, including blocking her repeated efforts to retrieve video footage evidence, and refusing her requests to consider evidence from a psychologist.

Zhou’s experience is emblematic of many victims of sexual harassment or assault across the country who want to hold their perpetrators accountable and seek justice in civil courts. Although #MeToo cases have been successful in society by raising awareness about sexual misconduct and encouraging women to demand their rights, Darius Longarino, a research scholar at the Yale Law School’s Paul Tsai Center, told The China Project that “it’s still depressingly hard for victims to win in Chinese courts” because they tend to give stronger protection to alleged harassers than to survivors.

The human rights abuses involved in China’s large-scale, coercive assimilation program in the country’s Xinjiang region have been well documented for years. Beijing’s policies in Xinjiang in recent years have included extralegal detention — leading, increasingly, to mass formal incarceration — along with hyperactive policing, reproductive oppression, less-than-voluntary labor programs, destruction of the linguistic and cultural heritage of Uyghurs and other ethnic minority groups, and more.

Writing in The China Project, the scholar Darren Byler has described Xinjiang as an internal settler colony. In the region, Byler explains, state policies in education are forcing Uyghur children to grow up in non-Muslim, Mandarin-speaking environments, and the technology used by the Chinese state in its crimes against humanity can “control movement and thinking in such total and automated ways [that it seems] to preclude the intentional mass killing that accompanied past genocidal moments.” In general, Byler told The China Project recently, China’s policies in Xinjiang have seen “a shift from mass internment to coerced labor and mass imprisonment.” 

By the end of 2020, international condemnation of the abuses in Xinjiang had grown significantly louder and more coordinated, and began to include more explicit references to genocide. In 2021, more outside observers labeled China’s abuses “genocide,” an international violation more specific and difficult to prove than crimes against humanity. The U.S. government, parliaments in countries such as Canada, the Netherlands, and the U.K., a group of scholars of China, human rights, and international law, and an independent panel in the U.K. all came to the determination that China’s policies constituted genocide, though the U.S. State Department’s Office of the Legal Advisor dissented. Meanwhile, Uyghur activist groups have welcomed the recognition of the grave nature of the Chinese government’s violations. 

Regardless of the proper term, legally or morally, for the abuses in Xinjiang, two things became clearer in 2021: The issue’s damage to China’s foreign relations became much more significant, but nevertheless, Beijing seems dead-set on continuing the direction of its ethnic and religious policies.

The European Union and China ended the year 2020 on a high note. The EU-China Comprehensive Agreement on Investment (CAI), a deal seven years in the making, had been quickly signed and seemed set for ratification, much to the chagrin of the incoming Biden administration in the U.S.

EU-China relations quickly froze over starting in March 2021, when the EU placed sanctions on four individuals and one entity associated with human rights abuses in Xinjiang. Europe’s willingness to register its objection to Beijing, using a tool not employed in this way since a 1989 arms embargo, reportedly shocked Chinese diplomats. 

China responded by effectively sabotaging the CAI, issuing countersanctions on European scholars, organizations, and even members of the European Parliament who would have had a direct say in ratifying the deal. Europeans were incensed by what they viewed as an attack on free expression, and by May, the CAI was frozen. 

As Harry Seavey wrote on The China Project, the EU-China chill extends beyond Xinjiang and human rights concerns to other areas, particularly Taiwan. “As the year ends and the popular mood on the continent continues to shift against China, observers should expect a more muscular approach out of Brussels, but one that avoids training its sights on Beijing’s political bottom line,” he concludes.

The Chinese Communist Party is not shying away from large-scale assimilation of Muslims in the Xinjiang region — General Secretary Xí Jìnpíng 习近平 said in September 2020 that the policies in Xinjiang were “completely correct,” and he gave comments in August 2021 indicating his satisfaction with the direction of ethnic policy. Xi also reinforced the country’s policies on religion in a national religious work conference this month, the first since 2016, in which he stated that China “must adhere to the direction of the sinicization of religion, [and] insist on uniting the masses of religious believers around the party and the government.”

Nearly every Chinese Foreign Ministry statement on Xinjiang in 2021 derided claims of forced labor or genocide in Xinjiang as “the lie of the century” — a propaganda line that Beijing first deployed a year ago. After the EU sanctions and unusually forceful condemnations from other countries in March, the Foreign Ministry put on a tour de force of whataboutism, claiming that the “ignoble record on human rights” of other countries disqualified them from criticizing China. 

That day’s press conference ended with one of the most forceful displays of modern Chinese nationalism to date:

Today’s China is by no means what it was 120 years ago. Gone are the days when the U.S. and Western countries thought they could force China to yield, compromise and surrender through rumors, lies, slander, attack and containment. They may not have the ability to choke China and will eventually pay a heavy price for their foolishness and arrogance.

The U.S. government ended the year with a flurry of actions to denounce China’s actions in Xinjiang and apply economic pressure to Beijing. 

One symbolic action was a “diplomatic boycott” of the Olympics, announced on December 6, under which the Biden administration will not send any officials to Beijing for the Winter Olympics in February, even as Team USA continues to compete. Other countries, including Australia, Britain, and Canada, soon joined the U.S. in announcing diplomatic boycotts.

Several far more significant actions followed, including the U.S. blacklisting of AI giant SenseTime and eight other major Chinese companies that it said were implicated in surveillance of Uyghurs, and bans on trade with dozens of other Chinese institutions and entities for abuses. 

The largest move was the passage of the Uyghur Forced Labor Prevention Act by the U.S. Senate on December 16 — if President Joe Biden signs it into law, as he is expected to do, the U.S. government would effectively begin to assume that any product made in Xinjiang is tainted by forced labor unless proven otherwise. 

The next year will likely see a wave of negative publicity hit the Beijing Winter Olympics — far worse than the “Free Tibet” and other protests around the 2008 Beijing Olympics — and then, as the Uyghur Forced Labor Prevention Act goes into effect, multinational companies will largely shift their supply chains out of Xinjiang.

In the 1980s, when China first opened to the world, there were hardly any Chinese companies in the consumer market. In the 2000s, in cities, one saw college students with oversized glasses wending through campuses with a Häagen-Dazs ice cream cone or a bottle of Coca-Cola in hand. Today, young Chinese prefer the taste of Chicecream, an up-and-coming Chinese ice cream brand. Instead of Coke, they’re more likely to be sipping on the latest zero-carb zero-sugar health beverage from Genki Forest.

China is one of the largest consumer economies in the world, and a hungry middle class begets new consumer brands. In 2021, one unexpected impact of the pandemic was the disruption of global supply chains, crunching multinational businesses but also breathing new life into Chinese companies serving Chinese customers.

Patriotism has also been a major driver of this year’s domestic consumer revolution. Foreign brands such as H&M and Nike have suffered the most after their statements about Xinjiang cotton last fall led to widespread boycotts of their products in China. Meanwhile, Chinese alternatives such as Li Ning and Anta Sports have cashed in handsomely on what the academic Chenchen Zhang termed consumer or “market nationalism.” More and more, it has become trendy to buy Huawei over Apple, wear “proudly made in China” clothes, drink Yunnan coffee, put on “China chic” makeup, and drink baijiu instead of wine. 

All of this has been accelerated by major central government initiatives. The movement toward domestic consumption began in earnest last fall, when Xi Jinping unveiled the “dual circulation” plan, which was an effort to drive the economy to be self-sustaining. But in his “new development concept” — which has been put forth and refined since 2018 — Xi has made clear that China is moving toward an economic model that prioritizes “domestic economic flow.” Compounded by continuing trade tensions and data security issues, China’s government is pushing toward a future where Chinese supplies meet Chinese demand, occasionally with foreign help, as opposed to foreign supplies meeting Chinese demand, occasionally with Chinese help. In the coming years, all signs point to a boom in the Chinese consumer market. 

This has already started: 2021 was a great year for new Chinese consumer brands. Here are some standouts to look out for next year.

As foreign sportswear brands stagnate, China’s homegrown alternatives Li-Ning and Anta Sports have had a transformative year. Shares of Li Ning have grown 100% over 2021 and Goldman Sachs recently included both brands in its “common prosperity” stocks, a list of companies to invest in over the coming years based on Xi Jinping’s new China. In July, the Chinese lingerie brand Neiwai raised $100 million and announced an expansion into the athleisure category. Meanwhile, in high-end fashion, the Italian fashion houses such as Prada and Salvatore Ferragamo are facing stiff competition from up-and-coming Chinese fashionistas. They include the online fashion platform ICY, an innovative startup integrating designers, influencers, and retail supply chains. 

Outside of China, Shein, a Chinese fast-fashion brand, has had a breakaway year and now rivals Zara as the largest online retailer in the world. In June, a Chinese tech blog reported the company to be worth around 300 billion yuan ($47 billion) after its latest funding round — roughly the valuation of Twitter. In May, the company surpassed Amazon as the most popular app in the shopping category, ahead of Nike, Zara, H&M, and Uniqlo, on iPhone and Android. A similar brand named Cider received $22 million in funding in June from the renowned Silicon Valley venture capital firm Andressen Horowitz.

The year 2021 has been a breakout year for dozens of Chinese food and beverage companies. The bubble tea giant Nayuki raised $656 million in a Hong Kong IPO in June and its close competitor HeyTea is planning a similar-sized IPO early next year. In soda, the health beverage startup Genki Forest deserves to be on everyone’s watch list, with its zero-carb, zero-sugar motto and its charismatic gaming entrepreneur turned CEO. Found in nearly all convenience stores and vending machines, Genki may be the closest competitor to foreign legacy brands such as Coca-Cola. In the coffee category, Shanghai-based Manner Coffee is trying to offer a Chinese alternative to Starbucks: It has built over 150 new stores in the first half of this year and is reportedly mulling an IPO in Hong Kong following a cash injection from ByteDance in June. 

In alcohol, China’s largest pub chain, Helen’s International, went public in September in Hong Kong, raising $340 million. It operates more than 350 pubs across China, and bills itself (in Chinese) as “an offline social platform for young people.” Baijiu, the spirit of the ancient Chinese, is making a comeback with new marketing campaigns directed at younger Chinese.  One of the leading companies, Chongqing-based Jiangxiaobai, has made major inroads this year. 

Chinese cosmetic brands are also catching up to their foreign frontrunners, such as L’Oréal and Estée Lauder. Perfect Diary, Herborist, and Proya have made big market share gains in cosmetics and skin care segments. In the fall of 2020, the skin care brand Winona ranked No. 9 in the Tmall beauty category, becoming the only Chinese beauty brand to reach the top 10.

This year, the new startup Florasis outsold all other Chinese brands in the beauty category on Alibaba’s Tmall. Companies like Florasis bring new traditional Chinese elements into the beauty category, creating fashion products with delicately carved lipstick packaging.

Chinese brands are already becoming a force for the world to reckon with. In the coming years, the “China chic” (国潮 guócháo) fad, where Chinese brands imbue their products with traditional Chinese elements, will continue to flourish on the back of recent state initiatives to promote “traditional Chinese culture.” 

Lower-tier cities’ consumption is set to rise dramatically in the coming years. Consumers in cities like Chengdu, Chongqing, Dalian, and Wuhan are looking for higher-quality goods at reasonable prices. They are also well connected to ecommerce channels and looking for innovative new brands both domestic and overseas. 

From the brand perspective, 2022 will likely see more emphasis on sustainability and modest styles of advertising in line with the “common prosperity” ethos and recent state initiatives. All of these trends were on display in the latest Singles Day drive, which promised to promote “environmentally friendly lifestyle” shopping.​​ 

Finally, small- and medium-sized brands will likely thrive as antitrust enforcement and tech crackdowns bring monopolies in line.

It is a popular belief in China that its 7 million food-delivery drivers, whose daily toil has helped power the country’s app-based meal-delivery boom, earn handsome incomes. But in the past few years, there’s been a steady drip of reporting on how the perception isn’t actually aligned with reality: Most workers in the industry, who exist in a “gray area” where they’re neither employees of the delivery apps nor of the restaurants, are actually easy targets for exploitation by their multibillion-dollar employers.

The plight of Chinese food-delivery workers first came to the forefront of public consciousness in September 2020, when a long-form investigative article in Chinese magazine Portrait on the exploitative and dehumanizing working conditions of food couriers went viral on the Chinese internet. The damning exposé, which detailed how they were encouraged to risk their lives at work to meet platforms’ insatiable appetite for optimal efficiency and maximized profits, and the subsequent nationwide discussions inspired by it, led Ele.me and Meituan, two market-dominating Chinese food-delivery companies, to implement measures aimed at prioritizing riders’ safety. 

However, drivers’ heavy workload and lack of labor protections remained unaddressed. Disappointed at the slow pace of change, some Chinese food-delivery workers have gone from suffering in silence to strikes and protests this year. Many of these demonstrations — including an incident in January, where a 45-year-old delivery driver for Ele.me set himself on fire to protest unpaid wages — generated considerable media attention and sparked a renewed wave of calls from labor activists and consumers for food-delivery companies to give their workers essential rights and protections.

The growing discontent reached a fever pitch in September, when the Beijing Zhicheng Migrant Workers Legal Aid and Research Center, a nonprofit organization established in 2005 to provide legal assistance to low-income workers, revealed in a searing report that Ele.me and Meituan were using a variety of shady methods to reduce their legal obligations to their armies of couriers, including classifying them as contractors rather than full-time employees entitled to essential labor rights, forcing them to register as independent businesses, and creating “ghost” companies to confuse couriers about who they actually worked for.

In response to the public shaming triggered by the article, the two companies finally agreed to stop forcing their couriers to register as self-employed business owners, an unethical practice that had enabled them to escape responsibilities as employers for years. But they stopped short of reclassifying couriers as their own employees, which means there’s still work to be done and the exploitation is likely to continue.

The most significant labor activism tool in China this year is probably crowdsourced spreadsheets. In October, thousands of Chinese office workers across multiple industries, including technology and finance, participated in a collaborative project named “Worker Lives Matter.” Created by four recent college graduates, the document allowed people to detail their working hours and name their employers. A month later, a similar spreadsheet — which contained thousands of entries exposing bad managers at big internet companies — went viral on the Chinese internet. 

These spreadsheets are part of a growing labor consciousness among Chinese tech workers at a time when they have found themselves increasingly disillusioned with exploitative practices by their employers, specifically the infamous “996” culture — working 12 hours a day (9 a.m. to 9 p.m.) and six days a week. The resentment against the culture of overwork has been brewing for years, but in 2021, the uproar gained new momentum following the deaths of several exhausted workers in China’s tech sector, including a 22-year-old employee at ecommerce firm Pinduoduo.

Amid rising anger about overwork, the industry has signaled a retreat from the practice. In June, Lightspeed and Quantum Studios (光子工作室), a Shenzhen-based video game developer owned by Chinese internet giant Tencent, introduced a set of policies designed to prevent employees from working excessive hours and encourage them to use vacation time. Since then, a growing number of Chinese companies have followed suit. At ByteDance, the owner of TikTok and its domestic version, Douyin, there’s now a mandate ordering employees to end their day by 7 p.m. The policy of “big week/small week,” which used to require workers to alternate five-day work weeks and six-day work weeks, was abandoned by several companies, including ByteDance’s domestic rival Kuaishou.

While many overworked young Chinese pushed for change from the inside at their companies, others have simply given up on the rat race. This year, in a simple act of resistance against China’s long-held prosperity narrative of the inevitability of success from hard work, plenty of Chinese millennials embraced “lying flat” — a social movement that advocates doing the bare minimum to maintain a low-desire life, including forgoing marriage, not having children, consuming as little as possible, and refusing to work extra hours or to hold a job at all.

For many who joined the ranks of the movement, this passive approach to life was almost the only way to cope with the pains of “involution” (内卷 nèijuǎn), a new word that found common usage this year to describe the feeling of being stuck on an accelerating treadmill that goes nowhere. 

Unlike their parents’ generation, today’s young Chinese feel that their participation in society’s unrelenting economic race isn’t paying off in terms of higher living standards, especially amid China’s slowing economic growth. Despite their long hours at work, a large number of Chinese millennials still struggle to buy a home or cope with rent increases. Some surveys also show that this sense of financial insecurity is one of the primary reasons why many young Chinese have postponed or canceled their plans of forming families.

This lifestyle choice is hardly new, nor is it exclusive to China. This year, millions of Americans, many of them young professionals, took part in what some call “The Great Resignation,” where employees quit their jobs to find happiness in life and focus on mental health. The core message of “lying flat” is also reminiscent of the grim outlook on life promoted by “demotivational culture” (丧文化 sàngwénhuà), a 2017 social trend.

Back then, the prevalence of such defeatist attitudes worried Chinese authorities, who described the subculture as “ideological opium” that’s worth “our concern and discussion.” Four years later, the official reaction to the “lying flat” movement was predictably similar in tone, but more aggressive in action. 

Since the “lying flat” movement took off in the summer, the government has censored numerous discussion threads on the phenomenon, ordered major ecommerce platforms to remove any products touting the philosophy, and removed a “lying flat” community with more than 9,000 members on Douban, a popular social networking forum.

The concern was so high among Chinese officials that it even resulted in a public condemnation by Xí Jìnpíng 习近平. “It is necessary to prevent the stagnation of the social class, unblock the channels for upward social mobility, create opportunities for more people to become rich, and form an environment for improvement in which everyone participates, avoiding involution and lying flat,” he said in comments published in October by Qiushi 求是, the Communist Party’s flagship journal on political theory.

It is easy to understand the anxiety of Chinese officials over the movement. From the government’s point of view, the idea of “lying flat” runs against almost everything that it has asked of its young people. At a time when China is struggling with flagging birth rates and a slowing economy, the movement also poses a serious threat to its goals of boosting population growth and creating a more productive generation of workers as the country grows older. 

But although Beijing can stop people from talking about “lying flat,” it can’t change the state of despair that many Chinese millennials find themselves in. The movement might have fallen flat in the face of clampdowns, but the idea is bound to make a comeback, in another form, in the near future.

This year, Beijing continued its project of crushing the democracy movement in Hong Kong, the city under Chinese sovereignty that used to be governed with a large degree of autonomy and personal freedoms, but, since the imposition on June 30, 2020, of a sweeping National Security Law, is increasingly adopting mainland-style political norms. Chinese officials have made clear that their goals are more ambitious than just preventing a repeat of the mass protests of 2019, but rather include remaking the whole of Hong Kong society to become more patriotic. 

China has been “too patient for too long, and needs to sort things out once and for all,” an individual “with direct knowledge of China’s plans” told Reuters in January 2021, after a mass arrest of more than 50 people on political charges. The individual added that “more tough moves would be rolled out for ‘at least a year.’”

That individual was not wrong. In March, the National People’s Congress in Beijing quickly formulated and then approved new election laws for Hong Kong to be inserted into the annex of the city’s constitution, the Basic Law. This is the same method by which local political autonomy was subverted with the National Security Law less than a year before. 

The new rules, which among other changes established a committee to screen out candidates for public office deemed to be insufficiently patriotic by Beijing’s standards, effectively ensure that pro-democracy politicians remain in a permanent minority in the territory. When the rules were formally approved by Hong Kong’s Legislative Council in May, the vote did not include a group of 15 opposition politicians who resigned en masse last year after several of their colleagues were disqualified by a previous legal decision in Beijing.

Hong Kong authorities also took numerous steps, with Beijing’s urging and support, to rein in the city’s civil society and ramp up prosecutions on national security charges:

Media tycoon Jimmy Lai (黎智英 Lí Zhìyīng), age 75, was given two prison sentences totaling 20 months for his role in the 2019 protests, and an additional sentence, to be served concurrently, for his role in Tiananmen Square commemorations.

Lai’s pro-democracy tabloid, Apple Daily, was shut down in June, days after its office was raided by 500 police officers and several editors were accused of “colluding with foreign powers,” a new crime under the National Security Law.

Prominent democracy advocates were targeted: For instance, Martin Lee (李柱銘 Lǐ Zhùmíng), age 82, often called Hong Kong’s “father of democracy” for helping to found the city’s largest opposition party, was given a suspended sentence of 11 months.

The first trials under the National Security Law led to yearslong prison sentences that strictly interpreted protest slogans as being “capable of inciting others to commit secession.”

Film censorship was tightened around the same time, as new rules made clear that any movie, whether foreign or domestic and even regardless of content, could now be barred from screening in Hong Kong if local censors feel its showing could endanger national security as defined by Beijing.

The June 4 Tiananmen vigil was banned for a second year in a row, again ostensibly for COVID-19 protocol reasons, despite the city recording zero cases at the time.

New school curriculum guidelines downplayed critical analysis of Chinese history and instead emphasized instilling “an awareness of and a sense of responsibility for safeguarding national security.”

Beijing is satisfied with its results in Hong Kong. In a speech in July, Xià Bǎolóng 夏宝龙, the head of the Chinese State Council’s Hong Kong and Macao Affairs Office, hailed the effects of the National Security Law, and indicated that more patriotic education is to come. “We look forward to a Hong Kong where…‘patriots ruling Hong Kong’ has been fully realized, and where loving the country and Hong Kong has become a core, mainstream value, deeply rooted in the people,” Xia said. 

Hong Kong’s chief executive, Carrie Lam (林鄭月娥 Lín Zhèng Yuè’é), indicated that she had received five directives from Beijing from the speech, one of which was to strengthen oversight on “schools, universities, social organizations, media and the internet” using Article 9 of the National Security Law.

One directive, to ensure only “patriots” were put in charge in future elections, was dutifully carried out in the December 19 Legislative Council election, after which 89 out of the chamber’s 90 seats are held by pro-establishment loyalists. 

Another directive will likely be fulfilled next year: Lam indicated that she had been asked to draft more laws and regulations, including “the territory’s own national security law based on Article 23 of the Basic Law…with a broader scope than even Beijing’s law.” Lam recently stated that this remains on the agenda, though perhaps not until the second half of 2022.

Foreign governments, particularly those of the wealthy G7 countries that have the largest financial interests in Hong Kong, have strongly objected to the imposition of the National Security Law and the reshaping of the city’s elections. The separate grouping of the U.S., Britain, Canada, Australia, and New Zealand have been more explicit in condemning “actions that undermine Hong Kong’s rights, freedoms and high degree of autonomy.” 

The international concern has led to an outflow of international businesses, particularly American ones. An American Chamber of Commerce in Hong Kong survey from May found that 42% of respondents were either planning to leave the city or were considering doing so. Since then, the political risks to businesses have only increased. Washington issued a Hong Kong Business Advisory in July, warning U.S. companies of the increasing difficulty of complying with both U.S. sanctions and Chinese regulations — particularly after China passed an anti-sanctions law in June that “does not explicitly distinguish between mainland China, Hong Kong, and Macau,” the advisory noted. 

The long-term future of the city remains uncertain. In 2021, Hong Kong’s economy finally rebounded from a recession that began during the 2019 protests. The city was also buoyed by a wave of IPOs, many of Chinese companies listing for the first time or heeding Beijing’s calls to make a secondary “homecoming” listing, though this wave cooled off in the second half of the year amid China’s regulatory clampdowns. However, the city is also shrinking, and in the 12 months leading up to June, recorded an outflow of 90,000 residents, or 1.2% of the population. Depending on the future makeup of the city’s human capital, and the decisions made by leaders, Hong Kong may or may not be a rival to other regional city powerhouses like Shanghai, Shenzhen, or Singapore by the end of the decade.

On the rationale behind “common prosperity”

“For quite some time, China’s success was basically defined by the GDP scorecard. And there’s perhaps an overly simplistic argument that the CCP’s legitimacy also stems from its ability to deliver growth. But along the way, sacrifices like rising inequality, rising living costs, rent and property prices, a deteriorating environment, poor social safety nets, they’re treated as second-order issues. And I think now analysts would agree that common prosperity fundamentally is a shift of priority from efficiency to equity, or, in Xi Jinping’s own words, previously it was about making the cake larger, now it’s about dividing the cake more evenly.”

—Lizzi Lee, reporter and presenter at Wall Street TV

On Wang Huning and China’s societal reforms

“Why [does] culture and why do ideas matter so much? I think we could think of this [China’s programs under “common prosperity”] in terms of the Party saying, ‘We’ve handled the hardware, we have a strong industrial base and military. Now the key contradiction is the software. Look, when America was so great in the 1980s, it had these software problems. Look where America is now.’ Wake up and smell the coffee, or the oolong.”

—Timothy Cheek, intellectual historian at the University of British Columbia

On the lived experience of China’s diplomatic corps

“For a lot of China’s early diplomats, national humiliation was a lived experience…An example that jumped out to me was Wu Jianmin, who would go on to be China’s ambassador in Paris, as a kid was playing outside the French Embassy in Nanjing and had a dog set on him for playing out in the streets there. The guy went on to serve in Paris and to go through this process of seeing China gradually and slowly treated like an equal. I think that left an indelible mark on China’s early diplomats. I think it’s shaped the institutional culture of Chinese diplomacy as well. This idea that you need to be constantly vigilant against even the smallest slights, the smallest dismissals at China’s status has been really, really crucial.”

—Peter Martin, Bloomberg journalist and author of China’s Civilian Army

On profiling in the DOJ’s China Initiative

“When you look at the language surrounding the China Initiative since its inception, it lumps together people not just based on connections with the P.R.C. Party-state, but also based on ethnicity, based on national origin, and you even get — in some of the press releases — statements like “and this person spoke fluent Chinese” and I don’t see any reason why that’s connected to the criminal allegation…When you look at the way that it’s been discussed, it’s this “so and so unnaturalized U.S. citizen” again emphasizing where people are from…Under the Trump administration, not only did I see no grappling with the influence of bias, but there was a flat-out rejection of any efforts to try to figure out if there might be influence [of implicit bias].”

—Margaret Lewis, professor of law at Seton Hall University

On “psychological distance” between Taiwan and mainland China

“Modern Chinese nationalism was forged almost precisely between 1895 and 1945. Taiwanese were just not there for it. They were in an entirely different social, economic, linguistic, cultural, and political space.”

—Shelley Rigger, professor of political science at Davidson College

On rare earths and America’s deindustrialization

“We have to remember that there was a very clear economic and policy incentive to do this [export rare earth production overseas]. Edward Nixon was an environmentalist. He’s credited with persuading his brother [Richard Nixon] to issue the executive order to establish the Environmental Protection Agency. And so from his standpoint — based on the archival materials that I’ve been able to gather — he was very much interested in preserving “America the Beautiful.” And the way you do this is by exporting dirty industry, and he happened to be well connected in China…”

—Julie Klinger, professor at the University of Delaware’s Department of Geography and Spatial Sciences

On the transformational lives of the post-1980s generation

“When we were there in Fuling — I arrived there in 1996 — you could really sense that this was an important generation. You even had that feeling, even as a kid, I was only 27 years old, because they were all from the countryside, these kids, more than 80% of them, by ‘99 more than 90% of them had grown up in villages. Almost always either the first or second person from the village to go to college. A good percentage of them had illiterate parents, but now they were college students and there was that incredible moment because when you go to the University, your hukou [household registration] becomes a city hukou…They still looked like rural kids, they still thought like rural kids. But they were going in a different direction.”

—Peter Hessler, staff writer at The New Yorker

On trauma and its impact on a society’s mental health

“The U.S. is a country that has obviously for hundreds of years experienced relative peace. Apart from the Civil War, [we] as Americans have not fought a war on our land, on our soil, really ever since the Civil War…Over here [in Shanghai], though, that has not been the case. China has undergone continuous shifts, continuous shifts in government, continuous shifts in its borders, continuous shifts for all of its existence, really. So there is an element of instability or an element of fear or anxiety that is sort of built in to the Chinese experience, the Chinese worldview…That affects the psyche in ways that I think really need to be studied.”

—George Hu, president of the Shanghai International Mental Health Association