Also on the daily podcast: blackouts in Ukraine and the delights of doner kebabs

Chinese firms are spreading across the global south

The Intelligence - Chinese firms are spreading across the global south | Podcasts | The Economist

Yuan direction: Chinese firms head south

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As domestic demand in China slows, and the West puts up trade and political barriers, Chinese firms are shifting their focus to poorer parts of the world. After Russian attacks on Ukraine’s energy infrastructure intensify, our correspondent visits a wrecked power plant (9:10). And how the doner kebab became a cultural touchstone (17:00). Runtime: 24 min

As domestic demand in China slows, and the West puts up trade and political barriers, <a href="https://www.economist.com/leaders/2024/08/01/chinese-companies-are-winning-the-global-south?utm_campaign=a.io&utm_medium=audio.podcast.np&utm_source=theintelligence&utm_content=discovery.content.anonymous.tr_shownotes_na-na_article&utm_term=sa.listeners" target="_blank">Chinese firms are shifting</a> their focus to poorer parts of the world. After Russian attacks on Ukraine’s energy infrastructure intensify, our correspondent visits a <a href="https://www.economist.com/europe/2024/07/15/half-ukraines-power-is-knocked-out-winter-is-coming?utm_campaign=a.io&utm_medium=audio.podcast.np&utm_source=theintelligence&utm_content=discovery.content.anonymous.tr_shownotes_na-na_article&utm_term=sa.listeners">wrecked power plant</a> (9:10). And how <a href="https://www.economist.com/culture/2024/06/25/the-doner-kebab-has-a-meaty-role-in-german-society?utm_campaign=a.io&utm_medium=audio.podcast.np&utm_source=theintelligence&utm_content=discovery.content.anonymous.tr_shownotes_na-na_article&utm_term=sa.listeners" target="_blank">the doner kebab</a> became a cultural touchstone (17:00). Runtime: 24 min

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Rosie Blau [00:00:10] Hello and welcome to the intelligence from The Economist. I’m Rosie Blau.

Rosie Blau [00:00:10] Hello and welcome to the intelligence from The Economist. I’m Rosie Blau.

Jason Palmer [00:00:14] And I’m Jason Palmer. Every weekday we provide a fresh perspective on the events shaping your world.

Jason Palmer [00:00:14] And I’m Jason Palmer. Every weekday we provide a fresh perspective on the events shaping your world.

Rosie Blau [00:00:24] From the start of the war in Ukraine, it became normal, even expected, that Russia would try to destroy energy infrastructure. Those attacks have intensified and are now targeting solar and wind installations. We pay a visit to a wrecked power plant.

Rosie Blau [00:00:24] From the start of the war in Ukraine, it became normal, even expected, that Russia would try to destroy energy infrastructure. Those attacks have intensified and are now targeting solar and wind installations. We pay a visit to a wrecked power plant.

Jason Palmer [00:00:40] And whether you call it a kebab. Kebab, kebab. Whatever. Everyone knows the flatbread filled with seasoned meat, salad and sauces. In Britain, it’s survival food. After a heavy night. In Germany, the doner kebab has become a cultural touchstone.

Jason Palmer [00:00:40] And whether you call it a kebab. Kebab, kebab. Whatever. Everyone knows the flatbread filled with seasoned meat, salad and sauces. In Britain, it’s survival food. After a heavy night. In Germany, the doner kebab has become a cultural touchstone.

Rosie Blau [00:01:01] But first. China has been one of the world’s fastest growing economies for decades. It is now the second largest.

Rosie Blau [00:01:01] But first. China has been one of the world’s fastest growing economies for decades. It is now the second largest.

Clip [00:01:16] If anything, he said, China is trying to stop the economy from overheating too quickly. Of course, China growing faster than America or then Europe or Japan.

Clip [00:01:16] If anything, he said, China is trying to stop the economy from overheating too quickly. Of course, China growing faster than America or then Europe or Japan.

Rosie Blau [00:01:28] But growth has slowed sharply, partly because of weak demand at home and a drawn out downturn in property.

Rosie Blau [00:01:28] But growth has slowed sharply, partly because of weak demand at home and a drawn out downturn in property.

Clip [00:01:34] This is supposed to be the year that China’s economy came roaring back. What we’ve had instead are signs that this economy is struggling. China’s economy is in trouble due in part to the real estate collapse.

Clip [00:01:34] This is supposed to be the year that China’s economy came roaring back. What we’ve had instead are signs that this economy is struggling. China’s economy is in trouble due in part to the real estate collapse.

Rosie Blau [00:01:48] It was once considered the workshop of the world. Foreign companies flocked there to make goods for exports. That business is also under pressure. Yesterday, new figures showed that factory output has been falling for the past three months. Geopolitics isn’t helping, nor are the protectionist policies in America and other Western countries.

Rosie Blau [00:01:48] It was once considered the workshop of the world. Foreign companies flocked there to make goods for exports. That business is also under pressure. Yesterday, new figures showed that factory output has been falling for the past three months. Geopolitics isn’t helping, nor are the protectionist policies in America and other Western countries.

Clip [00:02:07] Joe Biden has imposed a new 100% tariff that’s on top of the 2.5%. So actually it’s 102.5% tariffs, enormous tariffs.

Clip [00:02:07] Joe Biden has imposed a new 100% tariff that’s on top of the 2.5%. So actually it’s 102.5% tariffs, enormous tariffs.

Rosie Blau [00:02:16] So Chinese firms are now changing how they operate and scouring the world for new markets.

Rosie Blau [00:02:16] So Chinese firms are now changing how they operate and scouring the world for new markets.

Thomas Lee-Devlin [00:02:22] Chinese companies have long been comparatively inward looking, even as foreign companies poured into China to tap into its consumers and its vast workforce.

Thomas Lee-Devlin [00:02:22] Chinese companies have long been comparatively inward looking, even as foreign companies poured into China to tap into its consumers and its vast workforce.

Rosie Blau [00:02:32] Tommy Devlin is the business editor of The Economist.

Rosie Blau [00:02:32] Tommy Devlin is the business editor of The Economist.

Thomas Lee-Devlin [00:02:36] But that’s now changing quite dramatically as growth in the Chinese market slows and competition at home intensifies.

Thomas Lee-Devlin [00:02:36] But that’s now changing quite dramatically as growth in the Chinese market slows and competition at home intensifies.

Rosie Blau [00:02:44] Changing dramatically. So what’s it doing now?

Rosie Blau [00:02:44] Changing dramatically. So what’s it doing now?

Thomas Lee-Devlin [00:02:47] Well, China has long been seen both by foreign and domestic firms as probably the most attractive and market in the world, both because of the huge numbers of consumers there, but also just because of how much it’s grown in terms of income. But that started to change it. In recent years, the economy has slowed and the market has also become just ferociously competitive in industries, from cars to wind turbines to bubble tea. You see these periodic price wars that just make it very difficult to eke out really any meaningful profit there. China is obviously known as an export powerhouse, but traditionally at least a sizable share of what was exported from the country was actually produced there by foreign multinationals, not by Chinese companies themselves. But what we’ve seen in recent years is a real widening out of the number of Chinese companies going abroad. And Chinese companies are actually looking at these markets in the global South and dramatically ratcheting up the amount that they’re selling to these countries. Listed Chinese companies have actually quadrupled their sales in the Global South since 2016, just as Western firms have grown theirs by only about a third.

Thomas Lee-Devlin [00:02:47] Well, China has long been seen both by foreign and domestic firms as probably the most attractive and market in the world, both because of the huge numbers of consumers there, but also just because of how much it’s grown in terms of income. But that started to change it. In recent years, the economy has slowed and the market has also become just ferociously competitive in industries, from cars to wind turbines to bubble tea. You see these periodic price wars that just make it very difficult to eke out really any meaningful profit there. China is obviously known as an export powerhouse, but traditionally at least a sizable share of what was exported from the country was actually produced there by foreign multinationals, not by Chinese companies themselves. But what we’ve seen in recent years is a real widening out of the number of Chinese companies going abroad. And Chinese companies are actually looking at these markets in the global South and dramatically ratcheting up the amount that they’re selling to these countries. Listed Chinese companies have actually quadrupled their sales in the Global South since 2016, just as Western firms have grown theirs by only about a third.

Rosie Blau [00:03:52] Does this mean they’ve given up on selling goods in Western countries?

Rosie Blau [00:03:52] Does this mean they’ve given up on selling goods in Western countries?

Thomas Lee-Devlin [00:03:56] No, no, I don’t think that’s the case. I mean, rich countries still account for three quarters of global consumption outside of China, so that is still the big prize. But I think Chinese companies recognize, firstly, that those are increasingly hostile markets for them to operate in. But then also, I think they recognize that the fastest growing economies in the world are not the richest ones today. They are those in the global south, like Indonesia, like Nigeria, that have massive populations that will only expand in the decades ahead.

Thomas Lee-Devlin [00:03:56] No, no, I don’t think that’s the case. I mean, rich countries still account for three quarters of global consumption outside of China, so that is still the big prize. But I think Chinese companies recognize, firstly, that those are increasingly hostile markets for them to operate in. But then also, I think they recognize that the fastest growing economies in the world are not the richest ones today. They are those in the global south, like Indonesia, like Nigeria, that have massive populations that will only expand in the decades ahead.

Rosie Blau [00:04:25] Haven’t Chinese companies been trying to go abroad for a while?

Rosie Blau [00:04:25] Haven’t Chinese companies been trying to go abroad for a while?

Thomas Lee-Devlin [00:04:28] So we have seen earlier ways for Chinese companies abroad hire an appliance manufacturer, Huawei, a maker of telecoms gear. But what we’ve seen is a real widening out of the number of industries in which this is happening.

Thomas Lee-Devlin [00:04:28] So we have seen earlier ways for Chinese companies abroad hire an appliance manufacturer, Huawei, a maker of telecoms gear. But what we’ve seen is a real widening out of the number of industries in which this is happening.

Rosie Blau [00:04:40] Can you just be a bit more specific for a minute? What sorts of things are they actually selling and where?

Rosie Blau [00:04:40] Can you just be a bit more specific for a minute? What sorts of things are they actually selling and where?

Thomas Lee-Devlin [00:04:46] Well, to take an example, Transsion, which is a Chinese company, now makes about half of the smartphones that are purchased in Africa. Mindray, which is a Chinese medical equipment company, is the leading provider of patient monitoring systems in Latin America. If you look at Chinese cars, they are rapidly gaining share in places like Thailand. Chinese wind turbines are being sold to Uzbekistan, so this is really quite broad across the lot of poor regions of the world. And what’s also striking is we’re seeing Chinese companies also starting to expand production abroad. Historically, Chinese firms really concentrated their manufacturing at home, given it was such a well-developed manufacturing base there. But in recent years, they’ve been setting up factories in places from Southeast Asia to Latin America to the Middle East.

Thomas Lee-Devlin [00:04:46] Well, to take an example, Transsion, which is a Chinese company, now makes about half of the smartphones that are purchased in Africa. Mindray, which is a Chinese medical equipment company, is the leading provider of patient monitoring systems in Latin America. If you look at Chinese cars, they are rapidly gaining share in places like Thailand. Chinese wind turbines are being sold to Uzbekistan, so this is really quite broad across the lot of poor regions of the world. And what’s also striking is we’re seeing Chinese companies also starting to expand production abroad. Historically, Chinese firms really concentrated their manufacturing at home, given it was such a well-developed manufacturing base there. But in recent years, they’ve been setting up factories in places from Southeast Asia to Latin America to the Middle East.

Rosie Blau [00:05:34] So it makes sense that China is trying to sell goods abroad. But why is it moving its factories abroad?

Rosie Blau [00:05:34] So it makes sense that China is trying to sell goods abroad. But why is it moving its factories abroad?

Thomas Lee-Devlin [00:05:40] Well, one of the reasons it’s doing this is that in the last few years, Western countries have started to raise trade barriers on a number of goods. And what we see is that Chinese companies will move parts of the production process to a place like Southeast Asia that will allow them to skirt those tariffs. Unsurprisingly, Western governments have started to catch on to that strategy. To take an example, we’ve seen the United States put anti-dumping duties on some. Chinese solar manufacturers in Southeast Asia. And so actually, a lot of Chinese companies are actually looking at these markets in the global South as end markets in their own right.

Thomas Lee-Devlin [00:05:40] Well, one of the reasons it’s doing this is that in the last few years, Western countries have started to raise trade barriers on a number of goods. And what we see is that Chinese companies will move parts of the production process to a place like Southeast Asia that will allow them to skirt those tariffs. Unsurprisingly, Western governments have started to catch on to that strategy. To take an example, we’ve seen the United States put anti-dumping duties on some. Chinese solar manufacturers in Southeast Asia. And so actually, a lot of Chinese companies are actually looking at these markets in the global South as end markets in their own right.

Rosie Blau [00:06:16] And how is that working in those countries? There’s been some skepticism, indeed, suspicion about Chinese goods in a lot of wealthy countries. How are these other countries responding?

Rosie Blau [00:06:16] And how is that working in those countries? There’s been some skepticism, indeed, suspicion about Chinese goods in a lot of wealthy countries. How are these other countries responding?

Thomas Lee-Devlin [00:06:27] Well, the first thing I’d say is that attitudes towards China generally are far more favorable in the global South than they are in the West. And there’s some backstory here. I mean, China over the past decade has invested about $1 trillion in infrastructure in the global South through the Belt and Road Initiative, building power networks and railways and ports and all that infrastructure, incidentally, makes manufacturing in these markets more efficient for Chinese companies, too. So increasingly, Chinese companies are not just selling goods into these markets, but they’re also bringing jobs to them. Now, there are some caveats to that. So in some instances when Chinese companies are producing in these markets, they’re really only undertaking kind of a final stage in the assembly process, which means a lot of the value is still being generated back home for them. And also the expansion of Chinese manufacturing is still limited to a small number of industries, particularly the ones that have been affected by Western tariffs like electric vehicles and solar panels. So we have seen in places like Indonesia and Brazil, some pushback from local populations that are worried about the impact all this might have on domestic jobs in industries like textiles.

Thomas Lee-Devlin [00:06:27] Well, the first thing I’d say is that attitudes towards China generally are far more favorable in the global South than they are in the West. And there’s some backstory here. I mean, China over the past decade has invested about $1 trillion in infrastructure in the global South through the Belt and Road Initiative, building power networks and railways and ports and all that infrastructure, incidentally, makes manufacturing in these markets more efficient for Chinese companies, too. So increasingly, Chinese companies are not just selling goods into these markets, but they’re also bringing jobs to them. Now, there are some caveats to that. So in some instances when Chinese companies are producing in these markets, they’re really only undertaking kind of a final stage in the assembly process, which means a lot of the value is still being generated back home for them. And also the expansion of Chinese manufacturing is still limited to a small number of industries, particularly the ones that have been affected by Western tariffs like electric vehicles and solar panels. So we have seen in places like Indonesia and Brazil, some pushback from local populations that are worried about the impact all this might have on domestic jobs in industries like textiles.

Rosie Blau [00:07:39] And is there any concern that these companies might be selling Chinese Communist Party ideals, along with the goods that trade comes with ties attached?

Rosie Blau [00:07:39] And is there any concern that these companies might be selling Chinese Communist Party ideals, along with the goods that trade comes with ties attached?

Thomas Lee-Devlin [00:07:49] Well, I think what we can certainly say is that as commercial ties between China and these countries deepen, diplomatic ties strengthen as well. And so this does have bigger implications for the West in terms of its bigger strategic rivalry with China. But, you know, thinking about this from the perspective of the global South, this is something to celebrate. We’re talking about cheaper and better goods, particularly goods related to the energy transition being available in these markets. Now obviously the losers from all of this are going to be Western companies if they don’t get their act together in terms of competing with these new Chinese rivals. And what’s interesting is that protectionist politics at home, it’s not going to save them from that. In fact, over time, if Western governments coddle their companies, it could actually make them less competitive abroad in the long run.

Thomas Lee-Devlin [00:07:49] Well, I think what we can certainly say is that as commercial ties between China and these countries deepen, diplomatic ties strengthen as well. And so this does have bigger implications for the West in terms of its bigger strategic rivalry with China. But, you know, thinking about this from the perspective of the global South, this is something to celebrate. We’re talking about cheaper and better goods, particularly goods related to the energy transition being available in these markets. Now obviously the losers from all of this are going to be Western companies if they don’t get their act together in terms of competing with these new Chinese rivals. And what’s interesting is that protectionist politics at home, it’s not going to save them from that. In fact, over time, if Western governments coddle their companies, it could actually make them less competitive abroad in the long run.

Rosie Blau [00:08:35] Tom, thank you so much.

Rosie Blau [00:08:35] Tom, thank you so much.

Thomas Lee-Devlin [00:08:37] You’re very welcome. Thanks for having me. Oh.

Thomas Lee-Devlin [00:08:37] You’re very welcome. Thanks for having me. Oh.

Rosie Blau [00:08:50] Today. Episode five of boom is Out, a brilliant new series about the generation that reshaped American politics. I know you want to listen to it, and to do that, you need to be a subscriber. Search for Economist Podcast Plus to find the best offer.

Rosie Blau [00:08:50] Today. Episode five of boom is Out, a brilliant new series about the generation that reshaped American politics. I know you want to listen to it, and to do that, you need to be a subscriber. Search for Economist Podcast Plus to find the best offer.

Jason Palmer [00:09:10] In the past couple of years, a particular sound has come to define life in much of Ukraine. Along main streets outside of businesses in virtually every city. Diesel generators. They now provide the basic power needed to keep restaurants, shops and basic services running. The reason? Years of attacks from Russian missiles and drones on power plants and the energy grid.

Jason Palmer [00:09:10] In the past couple of years, a particular sound has come to define life in much of Ukraine. Along main streets outside of businesses in virtually every city. Diesel generators. They now provide the basic power needed to keep restaurants, shops and basic services running. The reason? Years of attacks from Russian missiles and drones on power plants and the energy grid.

Clip [00:09:44] Attacks against civilians and civilian infrastructure violates international humanitarian law are unacceptable and must end now.

Clip [00:09:44] Attacks against civilians and civilian infrastructure violates international humanitarian law are unacceptable and must end now.

Jason Palmer [00:09:53] It’s an issue that’s been brought before the United Nations. And this spring, the International Criminal Court issued arrest warrants for two of Russia’s top military brass charged with war crimes for orchestrating attacks in the first year after the invasion. But the attacks have been relentless since then and getting worse.

Jason Palmer [00:09:53] It’s an issue that’s been brought before the United Nations. And this spring, the International Criminal Court issued arrest warrants for two of Russia’s top military brass charged with war crimes for orchestrating attacks in the first year after the invasion. But the attacks have been relentless since then and getting worse.

Rosie Blau [00:10:14] Just in the last 2 or 3 weeks, the weather has gotten hotter. They’ve been suffering a heat wave well over 30 degrees. And when you have power outages and no access to electricity for fridges, for air conditioning units has become, you know, really quite acute.

Rosie Blau [00:10:14] Just in the last 2 or 3 weeks, the weather has gotten hotter. They’ve been suffering a heat wave well over 30 degrees. And when you have power outages and no access to electricity for fridges, for air conditioning units has become, you know, really quite acute.

Jason Palmer [00:10:30] Wendell Stevenson writes about Ukraine for The Economist.

Jason Palmer [00:10:30] Wendell Stevenson writes about Ukraine for The Economist.

Rosie Blau [00:10:33] We were lucky enough to have a tour of one of the thermal power stations that had taken a direct hit by a missile that had exploded.

Rosie Blau [00:10:33] We were lucky enough to have a tour of one of the thermal power stations that had taken a direct hit by a missile that had exploded.

Jason Palmer [00:10:42] So you’ve seen this for yourself then? What was it like going to it to a site that’s been directly hit?

Jason Palmer [00:10:42] So you’ve seen this for yourself then? What was it like going to it to a site that’s been directly hit?

Rosie Blau [00:10:47] It was unbelievably impressive. The scale, the size, the apocalyptic wreckage that this power plant had endured. It was totally destroyed. And most of the roof was smashed in bent pipes and ducts and bits of wire scattered throughout. We walked on the roof and there was just this sort of sludge of coal dust and rain that muddied our shoes. It was quiet. It was dark. There was rain falling through the holes in the roof. And there was this sort of extraordinary moment when one of the chief engineers put his finger in the holes that the shrapnel had made in the 20 millimeter thick casing of the turbine, just to illustrate the force of the blast. And it was pretty clear that this was the sort of destruction that’s being witnessed throughout the electrical generation sector in Ukraine now.

Rosie Blau [00:10:47] It was unbelievably impressive. The scale, the size, the apocalyptic wreckage that this power plant had endured. It was totally destroyed. And most of the roof was smashed in bent pipes and ducts and bits of wire scattered throughout. We walked on the roof and there was just this sort of sludge of coal dust and rain that muddied our shoes. It was quiet. It was dark. There was rain falling through the holes in the roof. And there was this sort of extraordinary moment when one of the chief engineers put his finger in the holes that the shrapnel had made in the 20 millimeter thick casing of the turbine, just to illustrate the force of the blast. And it was pretty clear that this was the sort of destruction that’s being witnessed throughout the electrical generation sector in Ukraine now.

Jason Palmer [00:11:37] And you said that the scale of that had changed this summer. What’s actually going on that hasn’t been going on before?

Jason Palmer [00:11:37] And you said that the scale of that had changed this summer. What’s actually going on that hasn’t been going on before?

Rosie Blau [00:11:43] Well, the last time that the Russians really targeted the Ukrainian electrical infrastructure, they targeted a lot of substations and transmission lines in the autumn of 2022. Ukraine was able to repair that back up to almost full capacity, so that for a year or so, a lot of Ukraine was not suffering from electricity shortages and blackouts. And this spring, they’ve gotten better at targeting, and they’ve been targeting predominantly coal fired thermal power stations, but they’ve also been hitting hydroelectric power stations for the first time, solar and some wind turbine fields. So it’s very clear that the Russians are now targeting the generating capacity of Ukraine. And crucially, and this was made clear again and again by almost every Ukrainian engineer and executive in the power industry that we talked to, that they really lack air defenses.

Rosie Blau [00:11:43] Well, the last time that the Russians really targeted the Ukrainian electrical infrastructure, they targeted a lot of substations and transmission lines in the autumn of 2022. Ukraine was able to repair that back up to almost full capacity, so that for a year or so, a lot of Ukraine was not suffering from electricity shortages and blackouts. And this spring, they’ve gotten better at targeting, and they’ve been targeting predominantly coal fired thermal power stations, but they’ve also been hitting hydroelectric power stations for the first time, solar and some wind turbine fields. So it’s very clear that the Russians are now targeting the generating capacity of Ukraine. And crucially, and this was made clear again and again by almost every Ukrainian engineer and executive in the power industry that we talked to, that they really lack air defenses.

Clip [00:12:39] Absolute priority for all of us, air defense systems.

Clip [00:12:39] Absolute priority for all of us, air defense systems.

Rosie Blau [00:12:43] And that’s certainly what I heard from Maxim, Tim Schenker, who’s the head of Ukraine’s largest private energy generation company. When I talked to him, he was just back from the Ukraine Recovery Conference in Berlin, and the energy sector just dominated those talks.

Rosie Blau [00:12:43] And that’s certainly what I heard from Maxim, Tim Schenker, who’s the head of Ukraine’s largest private energy generation company. When I talked to him, he was just back from the Ukraine Recovery Conference in Berlin, and the energy sector just dominated those talks.

Clip [00:12:58] And we basically dismantle and bring back to Ukraine, used a complete ban from decommissioned coal power stations so that they can immediately stop. So we have to learn how to restore at least 50% of their equipment.

Clip [00:12:58] And we basically dismantle and bring back to Ukraine, used a complete ban from decommissioned coal power stations so that they can immediately stop. So we have to learn how to restore at least 50% of their equipment.

Rosie Blau [00:13:14] Tymoshenko explained to me that he’s got engineers now scouring Europe for equipment from decommissioned Soviet era power plants to try and plug in this refurbished equipment and to repair some of their thermal power generating capacity. But they have not yet targeted the three nuclear power plants that Ukraine still has in the territory that they control.

Rosie Blau [00:13:14] Tymoshenko explained to me that he’s got engineers now scouring Europe for equipment from decommissioned Soviet era power plants to try and plug in this refurbished equipment and to repair some of their thermal power generating capacity. But they have not yet targeted the three nuclear power plants that Ukraine still has in the territory that they control.

Jason Palmer [00:13:39] And what about Ukraine’s ability to do the repairs to get things back on line once they’ve been hit?

Jason Palmer [00:13:39] And what about Ukraine’s ability to do the repairs to get things back on line once they’ve been hit?

Rosie Blau [00:13:45] As was made clear to me by the engineers I talked to at the plant that I toured, the missiles are getting more accurate and they’re increasingly repeatedly coming under attack, so they quite often will have repaired something. And then 2 or 3 weeks later, it’s hit again. So what they talk about is really the cycle of destruction. So it’s hard to know exactly what the Ukrainians can do right now. It’s difficult for them to import more electricity than they already do from Europe, because there are constraints on those transmission lines. They just don’t have the kind of capacity to make more of an incremental increase in that direction. There’s also talk of decentralizing power generation. And so municipalities are trying to buy gas turbines that can be locally plugged in and put on line to run water pumping heat to make sure the municipal services continue through the winter. But they’re expensive to buy, and there are some technical complications with hooking them up to the local grids. The Ukrainian government has announced a plan for four new nuclear reactors to be built, but this is very much a decade away. Long term solution.

Rosie Blau [00:13:45] As was made clear to me by the engineers I talked to at the plant that I toured, the missiles are getting more accurate and they’re increasingly repeatedly coming under attack, so they quite often will have repaired something. And then 2 or 3 weeks later, it’s hit again. So what they talk about is really the cycle of destruction. So it’s hard to know exactly what the Ukrainians can do right now. It’s difficult for them to import more electricity than they already do from Europe, because there are constraints on those transmission lines. They just don’t have the kind of capacity to make more of an incremental increase in that direction. There’s also talk of decentralizing power generation. And so municipalities are trying to buy gas turbines that can be locally plugged in and put on line to run water pumping heat to make sure the municipal services continue through the winter. But they’re expensive to buy, and there are some technical complications with hooking them up to the local grids. The Ukrainian government has announced a plan for four new nuclear reactors to be built, but this is very much a decade away. Long term solution.

Jason Palmer [00:14:57] So that you think is the long term solution here. In any case that that Ukraine ultimately gets off of coal and more onto nuclear.

Jason Palmer [00:14:57] So that you think is the long term solution here. In any case that that Ukraine ultimately gets off of coal and more onto nuclear.

Rosie Blau [00:15:04] I think that’s certainly what the Ukrainian government is looking towards and investing in. In the meantime, there is hope that there could be a solution in renewables, in wind, in solar, in local hydroelectricity and so forth.

Rosie Blau [00:15:04] I think that’s certainly what the Ukrainian government is looking towards and investing in. In the meantime, there is hope that there could be a solution in renewables, in wind, in solar, in local hydroelectricity and so forth.

Clip [00:15:23] The irony of this destruction of this war is that it accelerated decarbonization of the energy industry. If you. We return to life. In this, solar comes in days and weeks, months and hundreds of millions to do the same capacity for thermal generation. That’s good example why we need to invest much more in renewables.

Clip [00:15:23] The irony of this destruction of this war is that it accelerated decarbonization of the energy industry. If you. We return to life. In this, solar comes in days and weeks, months and hundreds of millions to do the same capacity for thermal generation. That’s good example why we need to invest much more in renewables.

Rosie Blau [00:15:47] But again, that needs investment. It needs access to lines of credit. And there is concern by some of the experts and analysts. We talk to that by stating that the future of Ukraine’s energy market will be solidly nuclear. That actually undermines the interest of private investors to get involved in the renewable market. If down the line, nuclear is going to step in. So there’s a little bit of an interim confusion, I think, going on. But ultimately strategically as well as ecologically, a lot of people would like to see renewables like wind and solar stepping into the fray and certainly being able to provide some local solutions. So it’s going to be really hard for Ukraine to plug the shortfall this winter, and it seems pretty clear that there are going to be long and difficult power outages throughout the country.

Rosie Blau [00:15:47] But again, that needs investment. It needs access to lines of credit. And there is concern by some of the experts and analysts. We talk to that by stating that the future of Ukraine’s energy market will be solidly nuclear. That actually undermines the interest of private investors to get involved in the renewable market. If down the line, nuclear is going to step in. So there’s a little bit of an interim confusion, I think, going on. But ultimately strategically as well as ecologically, a lot of people would like to see renewables like wind and solar stepping into the fray and certainly being able to provide some local solutions. So it’s going to be really hard for Ukraine to plug the shortfall this winter, and it seems pretty clear that there are going to be long and difficult power outages throughout the country.

Jason Palmer [00:16:44] Thanks very much for joining us, Wendel.

Jason Palmer [00:16:44] Thanks very much for joining us, Wendel.

Rosie Blau [00:16:45] Thank you. It’s a pleasure as always.

Rosie Blau [00:16:45] Thank you. It’s a pleasure as always.

Jason Palmer [00:17:01] Against my better culinary judgment, I have been brought to a London kebab shop. To experience it as the English do, which overwhelmingly is not by choice, but rather what you fall into after a few drinks. And accordingly, because I am committed to my journalism, I have had three beers.

Jason Palmer [00:17:01] Against my better culinary judgment, I have been brought to a London kebab shop. To experience it as the English do, which overwhelmingly is not by choice, but rather what you fall into after a few drinks. And accordingly, because I am committed to my journalism, I have had three beers.

Clip [00:17:21] Oh, hello. Hello. Is it okay if we record this interaction? Is that cool? Can I have a small lambda honor then, please? Can I also grab a, check into his office as well? Oh, Jack, can I grab a larger first? How long you’ve been making kebabs for? For five years.

Clip [00:17:21] Oh, hello. Hello. Is it okay if we record this interaction? Is that cool? Can I have a small lambda honor then, please? Can I also grab a, check into his office as well? Oh, Jack, can I grab a larger first? How long you’ve been making kebabs for? For five years.

Jason Palmer [00:17:39] 35 years? You’re not even 35 years old.

Jason Palmer [00:17:39] 35 years? You’re not even 35 years old.

Clip [00:17:41] Come on. Oh. The business. Oh, it’s the same old idea.

Clip [00:17:41] Come on. Oh. The business. Oh, it’s the same old idea.

Jason Palmer [00:17:46] Does it get rowdy.

Jason Palmer [00:17:46] Does it get rowdy.

Clip [00:17:47] Here after hours? Yeah, he gets rowdy around 11:00. Everywhere else closes, right? Oh, we get good customers, you get popular, you get drunk, you get all patched up. Just need to know how to deal with me. I mean.

Clip [00:17:47] Here after hours? Yeah, he gets rowdy around 11:00. Everywhere else closes, right? Oh, we get good customers, you get popular, you get drunk, you get all patched up. Just need to know how to deal with me. I mean.

Jason Palmer [00:18:03] In fairness, this is really good. This is so much better than the one I was forced to eat the other night.

Jason Palmer [00:18:03] In fairness, this is really good. This is so much better than the one I was forced to eat the other night.

Clip [00:18:13] George, from my. I’m.

Tom Nuttall [00:18:17] People in Britain might regard the doner kebab as basically a byword for drunken excess sort of thing that you devour before bed, and that you recall in shame the next day.

Tom Nuttall [00:18:17] People in Britain might regard the doner kebab as basically a byword for drunken excess sort of thing that you devour before bed, and that you recall in shame the next day.

Jason Palmer [00:18:29] Tom Nuttall is The Economist’s Berlin bureau chief.

Jason Palmer [00:18:29] Tom Nuttall is The Economist’s Berlin bureau chief.

Tom Nuttall [00:18:33] In Germany, it’s sort of a more exalted affair. I talked to any Berliner and they will have extremely strong opinions about where to find the best donor kebab in town. And I’m pronouncing it like that because it has a number. It’s very important in German, unlike in Britain. The doner kebab. The dirndl lent itself to a hit song 20 years ago, donor Mark Cerna.

Tom Nuttall [00:18:33] In Germany, it’s sort of a more exalted affair. I talked to any Berliner and they will have extremely strong opinions about where to find the best donor kebab in town. And I’m pronouncing it like that because it has a number. It’s very important in German, unlike in Britain. The doner kebab. The dirndl lent itself to a hit song 20 years ago, donor Mark Cerna.

Unidentified [00:19:01] Blossom coffee shop in a burned out and. Mike Turner.

Unidentified [00:19:01] Blossom coffee shop in a burned out and. Mike Turner.

Tom Nuttall [00:19:07] The lyrics of which begin. I have an onion on my head. I am a kebab. Because kebab makes you beautiful.

Tom Nuttall [00:19:07] The lyrics of which begin. I have an onion on my head. I am a kebab. Because kebab makes you beautiful.

Clip [00:19:14] I time for and talk to our in our client list.

Clip [00:19:14] I time for and talk to our in our client list.

Tom Nuttall [00:19:17] And my list. I do not, by the way, recommend looking up this song because it’s an appalling. A woman will ruin your day. The vertical roasting technique that is crucial to making the dinner kebab dates from Turkey or, strictly speaking, the Ottoman Empire. Most people think it was invented in a town called Bursa, but the German story really begins with the Turkish gastar biter, or guest workers, who started to emigrate to Germany in large numbers in the 1950s. In the early 70s, parts of Germany were undergoing deindustrialization, and workers who may previously been in the mines found themselves out of work. They were threatened by the West German government, as it was then with deportation, if they were unable to support themselves as some enterprising types opened kebab stands. And what’s crucial is that it was adapted to German tastes. One is that it’s eaten sandwich style, so it’s put in bread rather than simply having bread as an accompaniment, as you might have seen in Turkey. And the second thing is the holy trinity of sauces that accompany the donor kebab, as any self-respecting kebab stands herb, garlic and scharf, or spicy. And normally people go for all three, but they will always ask you which of those sausage that you want. So they’re the sort of distinguishing features of the German kebab. And one of the things that’s interesting is that some of these features have now been reexported to Turkey. So you’ll be able to get a German style doner kebab inside Turkey, where it’s put inside the bread. It’s a sort of fascinating example of the culinary cross exchanges that you can have between countries. It’s recently that Donna has acquired a sort of symbolic meaning, political meaning, as well as a culinary one. So in April, Germany’s president is a largely ceremonial role, paid a state visit to Turkey and as a symbol of amity between the two countries, he took along a 60kg slab of doner kebab meat along with a kebab shop owner, and was photographed carving not particularly adeptly this slab of meat for dignitaries at a meeting in Istanbul. But lately this has taken a slightly darker turn, because a Turkish association of kebab makers wants to have an official European Union imprimatur of quality placed on their exports of done meat. They want all sorts of criteria applied. The meat can only be of a certain thickness. It has to be marinated in a certain way. And were this to happen. This would mean that the owners of the 15,000 or so doner stands inside Germany would either have to totally change the way that they produce their own kebabs, or they’d have to change the name of it. Although the DNA has been pretty widespread across Germany now for many decades, Germany is demographically changing very quickly, have been very high levels of immigration, including from across the Arab world, in the Middle East, and that is to an extent manifested in some of the dirty handstands that you see in Germany. One place that I visited recently, they added carrot and aubergine to their community kebab, the vegetable kebab, which does contain meat, by the way, but has a focus on vegetables. And the reason for that, I was told when I visited, is that the place doesn’t actually employ anybody of Turkish descent, but is largely populated by Arab workers, and this is something that you’re more likely to find in kebabs across parts of the Arab world. So just as Germany, the country is changing, one of its biggest contributions to global cuisine is changing at the same time.

Tom Nuttall [00:19:17] And my list. I do not, by the way, recommend looking up this song because it’s an appalling. A woman will ruin your day. The vertical roasting technique that is crucial to making the dinner kebab dates from Turkey or, strictly speaking, the Ottoman Empire. Most people think it was invented in a town called Bursa, but the German story really begins with the Turkish gastar biter, or guest workers, who started to emigrate to Germany in large numbers in the 1950s. In the early 70s, parts of Germany were undergoing deindustrialization, and workers who may previously been in the mines found themselves out of work. They were threatened by the West German government, as it was then with deportation, if they were unable to support themselves as some enterprising types opened kebab stands. And what’s crucial is that it was adapted to German tastes. One is that it’s eaten sandwich style, so it’s put in bread rather than simply having bread as an accompaniment, as you might have seen in Turkey. And the second thing is the holy trinity of sauces that accompany the donor kebab, as any self-respecting kebab stands herb, garlic and scharf, or spicy. And normally people go for all three, but they will always ask you which of those sausage that you want. So they’re the sort of distinguishing features of the German kebab. And one of the things that’s interesting is that some of these features have now been reexported to Turkey. So you’ll be able to get a German style doner kebab inside Turkey, where it’s put inside the bread. It’s a sort of fascinating example of the culinary cross exchanges that you can have between countries. It’s recently that Donna has acquired a sort of symbolic meaning, political meaning, as well as a culinary one. So in April, Germany’s president is a largely ceremonial role, paid a state visit to Turkey and as a symbol of amity between the two countries, he took along a 60kg slab of doner kebab meat along with a kebab shop owner, and was photographed carving not particularly adeptly this slab of meat for dignitaries at a meeting in Istanbul. But lately this has taken a slightly darker turn, because a Turkish association of kebab makers wants to have an official European Union imprimatur of quality placed on their exports of done meat. They want all sorts of criteria applied. The meat can only be of a certain thickness. It has to be marinated in a certain way. And were this to happen. This would mean that the owners of the 15,000 or so doner stands inside Germany would either have to totally change the way that they produce their own kebabs, or they’d have to change the name of it. Although the DNA has been pretty widespread across Germany now for many decades, Germany is demographically changing very quickly, have been very high levels of immigration, including from across the Arab world, in the Middle East, and that is to an extent manifested in some of the dirty handstands that you see in Germany. One place that I visited recently, they added carrot and aubergine to their community kebab, the vegetable kebab, which does contain meat, by the way, but has a focus on vegetables. And the reason for that, I was told when I visited, is that the place doesn’t actually employ anybody of Turkish descent, but is largely populated by Arab workers, and this is something that you’re more likely to find in kebabs across parts of the Arab world. So just as Germany, the country is changing, one of its biggest contributions to global cuisine is changing at the same time.

Jason Palmer [00:23:23] Is this what you require? Are these the crunching sounds that make a story for you?

Jason Palmer [00:23:23] Is this what you require? Are these the crunching sounds that make a story for you?

Clip [00:23:28] It’s what the audience wants.

Clip [00:23:28] It’s what the audience wants.

Jason Palmer [00:23:30] My concern is that you’re going to get chili sauce on your microphone.

Jason Palmer [00:23:30] My concern is that you’re going to get chili sauce on your microphone.

Rosie Blau [00:23:43] That’s all for this episode of The Intelligence. Do let us know what you think of the show. You can get in touch at podcast@economist.com. We’ll see you back here tomorrow.

Rosie Blau [00:23:43] That’s all for this episode of The Intelligence. Do let us know what you think of the show. You can get in touch at podcast@economist.com. We’ll see you back here tomorrow.

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Also on the daily podcast: blackouts in Ukraine and the delights of doner kebabs

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