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Wednesday, May 29, 2024

CHINA AND THE MEDIA #511

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Graham Perry
Graham Perry
Experienced Arbitration Lawyer | China & Chinese Business Affairs | Public Speaker/Lecturer.

#1   US TARIFF ON CHINESE CARS UPPED 100%

#2   ELON MUSK ON RIGHT PATH WITH CHINA

#3   XI JINPING COMMEMORATES NATO 1999 ATTACK ON CHINESE EMBASSY

#4    CONTAIN CHINA?  THINK AGAIN!

#5    CHINA ECONOMY RECOVERING – SLOWLY

GOOD MORNING FROM LONDON

#1   US TARIFF ON CHINESE CARS UPPED 100%

         THE FINANCIAL TIMES

“The US increased tariffs on Chinese electric vehicles imports from 25 per cent to 100 per cent, as it intensifies efforts ahead of the US election to protect American industry. The administration is expected to announce the move, and other tariffs on clean energy imports, on Tuesday, (14 May 2024) according to people familiar with the situation.

The sharp rise in the levies comes amid mounting concern that China could flood the US market with cheap EVs, threatening the American car industry. President Joe Biden has taken several actions in recent months to convince union members in swing states that he will protect jobs.

The decision to increase tariffs on EVs comes as the administration becomes particularly concerned that China is moving far ahead in the green industrial sector, including in the production of solar panels. “The Biden administration is trying to get ahead of the curve and ensure that the US car industry does not suffer the same fate as the US solar industry, which was virtually decimated by unfairly traded Chinese imports,” said Wendy Cutler, a former trade official and vice-president of the Asia Society Policy Institute. 

…The tariffs are the latest action by the administration that show how Biden is continuing to impose costs on China at the same time that Beijing and Washington pursue efforts to stabilise relations following a summit between the US president and Chinese President Xi Jinping last year. News of the tariff increase comes after the US and China, the world’s two biggest emitters, said this week they would “intensify” co-operation on climate-related issues, including the rollout of green energy. The decision to increase tariffs was first reported by Bloomberg.

GRAHAM PERRY COMMENTS;-

The US and China can agree and co-operate on climate change but on little else – a fact that underlines the fragility of international relations, world power and world peace. 

The decision by the US to substantially increase the antagonism between the world’s two largest economic and military powers and increase tariffs on Chinese EV’s comes at just the time Oliver Gill in the UK’s Sunday Times Business Section backs the exact opposite and notes that “Britain has welcomed cheap EV imports  from China with open arms”

Gill says “There are plenty who think the UK should follow suit” and do what the US is doing – slap on high tariffs on Chinese EV’s. He quotes the former head of MI6, Sir Richard Dearlove, who has that said they (the Chinese EV’s) “are the next Huawei” a reference to the Chinese Telecoms giant that was eventually banned from the UK ‘s 5G over security concerns. 

By slapping 100% tariffs on Chinese cars Biden is trying to counter Donald Trump that he (Biden) is a Sinophile. That makes sense in the context of the forthcoming US Election but it makes no sense in the UK. The UK needs foreign investment and, as Gill notes, support from Nissan and India’s Tata Motors has benefitted the UK.

Oliver Gill concludes “China is already fairly well entrenched. Slapping tariffs on Chinese imports  would bring retaliation from Beijing that would hurt us more than it hurts them – harming crucial European car exports to the showrooms of China.  Slapping tariffs on Chinese imports would simply put EVs financially out of reach of many Britons and dash our environmental targets. Here’s hoping Britain does not follow Biden’s lead”.  

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#2   TESLA ON THE RIGHT PATH WITH CHINA

Another American visitor, Tesla’s founder and CEO Elon Musk, may offer more evidence of the true state of the EV industry in China, which is now rapidly expanding overseas and is, as expected, encountering resistance from the United States to the European Union. Musk unexpectedly detoured to China after abruptly cancelling his planned visit to India, where a US$2 billion gigafactory to assemble EVs for the world’s most populous nation is in limbo.

Musk met Premier Li Qiang. The meeting was a signal to the world that China remains committed to nurturing a business-friendly environment for investors to succeed. After all, Li made it possible for Tesla to open the first and only wholly foreign-owned car factory in Shanghai while he was the city’s party secretary.

Beijing made sure Musk did not leave empty-handed. It recently announced that Tesla vehicles had passed compliance tests with China’s data security rules.

This means its popular cars – still the second bestselling EV brand in China – will no longer face entry bans at government buildings and structures near military bases. Tesla’s shares closed 15 per cent higher in New York on the back of Musk’s Beijing visit, adding about US$10.6 billion to the value of his holdings.

GRAHAM PERRY COMMENTS;-

Trade is a two way street not a one way cul-de-sac. Tesla wants to sell cars in China. Volkswagen, Peugeot and Merecedes-Benz want to sell cars in China. China’s consumers are moving up market – a reflection of China’s growth and progress. Well-to-do Chinese want to drive cars that carry panache and convey success. They want the top international brands.

If we want to sell more cars in China then China must be allowed to sell more cars in Europe. It really is that simple. Trade is about reciprocity, mutual benefit, “what’s good for you is good for me”. You make and supply what the market wants and needs and you open your markets to what the UK consumer wants.

The West wants more of China but the Governments in the West want less of China because they know that China is maturing fast; it is learning quickly; it is sending messages all over the world. China is growing in power and influence. It is not about to change course. It is not going to make a marked turn to the Right or to the Left. It is set fair. China is here for the long term.

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#3   XI JIN PING COMMEMORATES NATO 1999 ATTACK ON CHINA EMBASSY IN BELGRADE

SOUTH CHINA MORNING POST

“Chinese President Xi Jinping is expected to join the commemorations of the 25th anniversary of one of the darkest moments in recent US-China ties, at the former site of China’s embassy in Belgrade, which was bombed by Nato forces on May 7, 1999.

Three Chinese journalists were killed in the strike, part of Nato’s military campaign in the former Yugoslavia, setting off a diplomatic crisis between Beijing and Washington as well as the biggest anti-US protests across China in decades.

The US and its Nato allies insisted the “entirely unintended” strike had meant to target a Yugoslav military facility and the embassy had been misidentified in a “tragic mistake”, but many in China – including government officials – remain unconvinced.

China has maintained close ties with Serbia, since siding with the former Yugoslavia against Nato’s air campaign in the 1990s, and Xi’s anticipated visit – as part of his European tour – will be his second to the site.

During a state visit to Serbia in 2016, Xi visited the location which featured a commemorative plaque, unveiled on the 10th anniversary of the bombing by the mayor of Belgrade and the Chinese ambassador.

Portraits of the three journalists killed in the bombing of China’s embassy in Belgrade on display at an exhibition established in Beijing in the weeks after the incident. Photo: Reuters

Zhiqun Zhu, a professor of international relations and director of the China Institute at Bucknell University in Pennsylvania, said Xi’s latest visit is highly symbolic and serves two purposes.

The first is intended “primarily for domestic audiences as it helps to boost nationalism at home. The official narrative is that this happened when China was weaker, and now the Chinese should be proud of themselves as the country has become a world power”.

Zhu said the high-profile move to mark the embassy bombing also served as a reminder to Nato of this “historical debt to China”. “And it is a subtle warning that a guilty Nato should not get involved in Chinese affairs, nor should it expand to Asia.”

GRAHAM PERRY COMMENTS

The bombing of the Chinese Embassy in Belgrade on 7 May 1999 was not a mistake. The West was testing China. They wanted to assess China’s reactions. Would China accept the West’s explanation “It was a mistake. We were using out of date maps” – the West said.  The streets of the cities of China were filled with angry Chinese demanding retribution for the death of the three Chinese Embassy officials. The protests continued.

The Century of Humiliation – 1849-1949 – was uppermost in the minds and action of the Chinese who angrily protested at the alleged NATO “mistake”. China was not about to allow any of the imperialist powers who had ridden roughshod over millions of Chinese in the 19th Century to repeat their treatment in the last year of  the 20th Century.

Xi Jinping was making a point. During a state visit to Serbia in 2016, Xi had visited the location of the NATO “mistake”  which featured a commemorative plaque, unveiled on the 10th anniversary of the bombing by the mayor of Belgrade and the Chinese ambassador.

Zhiqun Zhu, a professor of international relations and director of the China Institute at Bucknell University in Pennsylvania, is right when he says that said Xi’s current visit is highly symbolic. It serves two purposes. The first is intended “primarily for domestic audiences as it helps to boost nationalism at home. The official narrative is that this happened when China was weaker, and now the Chinese should be proud of themselves as the country has become a world power” Zhu said the high-profile move to mark the embassy bombing also served as a reminder to Nato of this “historical debt to China”. “And it is a subtle warning that a guilty Nato should not get involved in Chinese affairs, nor should it expand to Asia.”

 

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#4   CONTAIN CHINA?  THINK AGAIN!

       SOUTH CHINA MORNING POST

“Some prominent voices in Washington have been arguing that the United States should adopt a cold-war-style approach to contain China. They frame the Biden administration’s policy of attempting to find a middle ground through detente as naive and believe that only a hardline approach, similar to former US president Ronald Reagan’s to the Soviet Union, will effectively counter Beijing.

But this presumption is based on a false premise. Today’s China bears little resemblance to the 1980s-era Soviet Union, which suffered from having a flawed governing ideology and an economic foundation that was completely inadequate.

Well before the Soviet Union fell apart, its state-run economy was largely isolated from the global economy, primarily dependent on extractive industries and already in the process of collapsing under the weight of its own contradictions. During the 1980s, the Soviet Union’s gross domestic product was always less than US$4 trillion. Foreign trade accounted for a mere 4 per cent of its gross national product in 1985.

By contrast, China is a highly diversified economic goliath with a blend of public and private sectors. Despite its current economic and financial challenges, China remains at the epicentre of global manufacturing and is growing by around 5 per cent per year. Nearly 90 per cent of its exports are derived from its vibrant private sector. China’s GDP is almost US$18 trillion. It accounts for 14 per cent of global trade and is the largest trading partner of more than 120 countries. It bears little resemblance to the former Soviet Union.

The collapse of the Soviet Union had far more to do with its own inherent contradictions and the vicissitudes of the global economy than with any actions the United States took to hasten its demise. The truth is that the US’ efforts at regime change or containment have not always worked.

Consider its grand failures in Vietnam, Iraq and Afghanistan, for example, or its more recent inability to stop the Houthis from disrupting global shipping in the Red Sea. Since the US failed in its quests with these arguably less challenging countries, just imagine how immense its failure would likely be in .attempting to do the same with China.

Let us not forget that China is the US’ first proper peer competitor since the end of the Cold War. If containment was going to be implemented against China by the US, it should have been done 30 years ago, when China was comparatively weak and Washington’s alliances were comparatively strong.

The Chinese genie has been out of the bottle for too long to imagine that containment is even possible. The Communist Party knows that. How come the masters of the universe in Washington do not?

GRAHAM PERRY COMMENTS;-

The Cat is out of the Bag or the Horse has already Bolted – Too Late to Close the Stable Door. Whichever metaphor is applied the message is the same – it is too late to “Contain China” if, indeed, it was ever containable.

150 countries have become part of China’s Belt and Road Initiative. A majority of people in South East Asia prefer China to the US. In the last full year before COVID 137m Chinese travelled overseas without any seeking asylum while outside China. China has the most dynamic economy in the world – property woes notwithstanding – which is the reason why the country formerly destitute and impoverished now has lifted 1 billion people out of extreme poverty.

Does China have problems? For sure. What is the future of the approx 150m peasants who have missed being educated and who will find it difficult to obtain jobs in the fast developing economy? What are the employment prospects for those Chinese citizens who may become modern day Luddites if and when their skills are overtaken by AI and computers? How will the Party adjust to the rising expectations of their population as they experience improving living standards and more time to enjoy prosperity? You can be sure that Chinese planners are working full time on these challenges.

The world has not previously seen a country moving forward with such commitment and imagination. The Party’s job is to ensure that the Chinese people do not become smug or complacent or deflected by the good life. They have to remain modest, hard working and outward looking. Challenges await.

The US is not going to relinquish its leading role without a struggle – it may be peaceful  – it may not. The US leaders know the time “to take a pop” at China is fast appearing. Leave it too long and China will be out of sight – a prospect the US mind finds it difficult to accept. War is on the horizon – somewhere down the road a President in the White House is going to have to make a big decision – Stop China in its Tracks. That is what the CIA and MI6 and the respective secret services of the US, the UK and their allies are focused on. The hope of the world is that at the moment of high crisis and unmistakeable danger that wiser counsels will come into play and the giants of the world find a way to co-exist together and not to seek to annihilate each other.

China with its one overseas base in Djibouti is not the threat. It is the country with 800+ overseas bases that presents the gravest threat to world peace and the pursuit by the US of a policy of containment of China is bound to bring conflict clearly into view. The world is big enough for both giants but can Wahington accept such a state of affairs?

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#5    CHINA ECONOMY RECOVERING

         THE FINANCIAL TIMES

“China’s consumer inflation edged higher in April while factory prices continued to slide, pointing to a continued rocky recovery in the world’s second-largest economy as Beijing battles lagging consumer demand and global trade tensions.

The national consumer price index rose 0.3 per cent year on year in April, official statistics showed on Saturday, ticking up from an 0.1 per cent rise in March, with price increases in areas including energy, education and tourism offsetting falling food costs. 

China’s economy had been beset by flat or falling consumer prices for almost a year, with the country’s 1.4bn consumers widely opting to save instead of spend in the wake of the Covid-19 pandemic. But a third straight month of consumer inflation in April suggested some stabilisation of domestic demand despite a years long crisis in the important real estate market. The inflation reading — better than the 0.2 per cent predicted by economists surveyed by Bloomberg — came as President Xi Jinping leans on a manufacturing revival, particularly in high-tech industries, to boost economic growth and offset the property sector slowdown.

The strategy has stoked growing fears among western leaders of cheap Chinese imports flooding their markets, especially as declining prices in the country’s manufacturing sector make Chinese goods cheaper. 

French leader Emmanuel Macron and European Commission president Ursula von der Leyen earlier this week warned Xi on a visit to the continent that the EU needed to protect itself from cheap Chinese imports. In the US, the Biden administration is planning to raise tariffs on Chinese electric vehicles and other green energy imports next week.  In response, Xi has brushed off western leaders’ concerns. He told German Chancellor Olaf Scholz last month that China’s exports were helping to ease global inflation, and this week told European leaders that China did not have an overcapacity problem.”

 

GRAHAM PERRY COMMENTS;-

This is the Micro of world affairs – all the problems that come about when a big power comes knocking on the door. The rest of the world has to make room – it has to provide a seat at the top table and devise formulas to enable a newcomer to be welcomed without threats, military challenges or ultimatums. Chinese solar panels and EV’s and Huawei mobile phones are a fact of life. They are not going away. Room has to be made – changes have to occur.

The world is always changing – a static international economy does not exist – there is always movement and the movement of the 21st Century is the arrival of China. Manage it but do not try to contain it – that is the way forward for the US, for China and for the world. The cake will expand. The slices will be larger. There is room for all. Will the US continue to be the Canute of the Modern Era?

GRAHAM PERRY

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