BEIJING — A 39.4% share of the global market, with both revenue and net profit up roughly 50%. That was the first-half scorecard for Contemporary Amperex Technology Co. (CATL), the world's largest battery maker. The Chinese company has held the top global spot for nearly a decade, yet its growth shows little sign of slowing. That is why investors in China's stock market call it the "Ning King" — a nickname derived from Ningde, the Chinese city where CATL is headquartered.
Even CATL, however, could not avoid controversy. It began on Sept. 4. On the day Xiaomi announced it would develop its own batteries, Li Auto also became the second-largest shareholder in Shenzhen-based battery maker Sunwoda, fueling talk that CATL was losing customers. When Li Auto said days later that it would expand in-house battery development, the share price began to slide in earnest. A share buyback was not enough to calm concerns, and the stock lost 24% in just two weeks and 40% from its early-May peak.
What came next is the interesting part. Even as its shares plunged, CATL kept silent on the crisis talk that filled the press. Stepping in instead was China Industry and Information Technology News, a publication under the Ministry of Industry and Information Technology, Beijing's counterpart to Korea's trade and industry ministry. In an editorial headlined with the rather combative line that claims of "de-CATL" are unacceptable, the paper defended the company. "It is normal market behavior for automakers to diversify supply chains or pursue their own research and development, yet this is constantly packaged as 'de-CATL,'" it said. It added a lecture of its own: rather than weakening leading firms with global competitiveness, the country should cultivate more outstanding companies.
Around the same time, a controversy over the censoring of Huawei memes — online content that spreads virally — also lit up the Chinese internet. Videos went viral mocking the exaggerated cheering at a Huawei new-vehicle launch event by likening it to the "wah-wah" sound of the juzhiliao, a traditional bamboo cicada toy. After Huawei reported them, large numbers were deleted, drawing a torrent of criticism from internet users asking whether Huawei was a sacred precinct.
This series of episodes unfolded as China sharply tightened its management of public opinion about companies. The Cyberspace Administration of China, the country's internet censorship body, has for years run the "Clear and Bright" campaign to clean up the internet, and since May it has focused on cracking down on false information about companies and content that whips up malicious opinion.
At first glance it seems odd for a socialist state to take the lead in managing the reputation of a single company. But China's current situation offers a clue to the thinking behind it. With weak domestic demand dragging on, exports by leading firms such as Huawei and CATL have become effectively the only pillar holding up the Chinese economy. If exports also falter amid trade pressure from the United States and Europe, the blow to the economy is bound to be considerable. These two companies are, above all, symbols of the technological self-reliance China takes pride in. If they stumble, the standing of the country's advanced manufacturing could be shaken to its foundations.
Excessive protection can, of course, end up eroding corporate competitiveness — that paradox exists too. Nor does covering up bad news about companies resolve the structural problems of the Chinese economy, such as youth unemployment and the property slump. Even so, for President Xi Jinping, whose bid for a fourth term will be decided at next year's 21st Party Congress, minimizing threats to economic and social stability is necessarily the first order of business.
With the possibility of Korea-China and U.S.-North Korea summits rising sharply ahead of next month's Asia-Pacific Economic Cooperation (APEC) leaders' meeting in Shenzhen, Korea also needs to pay attention to these Chinese interests. Facing weak domestic demand at home and an array of political and economic frictions with the United States, Europe and Japan abroad, China is in no position to also absorb rising military tension on the Korean Peninsula. That is why, rather than vaguely asking Beijing to play a "constructive role," Seoul needs to make the case that easing tension on the peninsula serves China's economic interests, and to translate that into a concrete cooperation agenda. Grasping what China is trying to protect — to the point of acting as a corporate public relations team — could be the thread that leads to a workable China policy.