Europe turns to China Inc. to compete with Biden's green subsidies, US-China ties still on track after spy balloon & US “stitches arc of alliances" with new Philippine bases -- China Boss News 2.06.23
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Europe turns to China Inc. to compete with Biden’s green subsidies
“A string of Chinese industrial firms including construction machinery giant Sany Heavy Industry Co. and electric-vehicle parts supplier Zhejiang Sanhua Intelligent Controls Co. have raised billions of dollars on the SIX Swiss Exchange,” Bloomberg’s Anjani Trivedi wrote earlier this week. “The move is well timed and makes the most of brewing regulatory pressure to lower emissions, as well as simmering supply-chain pressures,” she said.
Trivedi, Bloomberg:
Late last year, Europe announced requirements that all new cars and vans registered in the region should be zero-emission by 2035 and that average emissions of new cars must come down by 55% by the end of the decade. That’s accelerated the demand for green vehicles, so much so that EV penetration in the region is expected to reach 64% by 2030, exceeding the 50% regulatory threshold, according to S&P Global Mobility and Citigroup Inc analysts. In addition, countries across the world are vying for self-sufficiency as policies like the US Inflation Reduction Act create a sense of urgency.
Emphasis added.
The IRA has become a bit of a sore point in transatlantic relations. According to CNBC, the EU “is working against the clock to create a program to rival President Joe Biden’s unprecedented climate subsidies.”
CNBC:
The EU had, for a long time, asked the United States to be more active on climate policy. Biden delivered on that with the Inflation Reduction Act. But it has raised competition issues for European businesses — which has upset politicians in the region. Brussels has been left considering how best to respond.
The US legislation, which passed last August, slated $430 billion in spending on various climate and energy policies. But much of the controversy in Europe is over tax credits given to consumers for the purchase of American-made electric cars - a move expected to disadvantage European EVs in price comparisons.
Some European officials also worry the continent will see an exodus of green firms to the US at a time when its supply chains are at their most vulnerable due to Russia’s war in Ukraine. That may not be far off the mark, as German automaker Volkswagen and Italy’s Enel, an energy firm, “recently announced investment plans in the U.S. to benefit from an anticipated pickup in demand,” according to CNBC.
Trivedi says the expansion of Chinese firms’ footprint in Europe coincides with local “[m]anufacturers” attempts “to ramp up production and boost capital expenditure to reach their own EV targets,” and that “Chinese enterprises are taking the lead to ensure their industrial wares are integrated into supply chains, expanding businesses and filling gaps.”
To read the rest of Trivedi’s analysis in Bloomberg, Watch Out, China Inc. Is Going Global. Again, click here. For CNBC’s report, Biden’s IRA has left Europe blindsided. And playing catch-up could lead to 2 big mistakes, click here.
Law and International Xi
US-China ties still on track after spy balloon
According to Reuters, analysts believe China’s response to the U.S. downing its spy balloon “will likely be finely calibrated to keep from worsening ties that both sides have been seeking to repair.”
Reuters:
The path of rebuilding U.S.-China relations likely remains on track, said Zhao Tong, a senior fellow at the China office of the Carnegie Endowment for International Peace and a visiting researcher at Princeton University.
"The two sides still have a shared strong interest in stabilising and responsibly managing the bilateral relationship," Zhao told Reuters.
As China Boss wrote on LinkedIn, Beijing, currently, has very strong incentives to ensure the relationship doesn’t worsen. Major parts of the Chinese economy are in danger of failing and, even though officials are playing down the scale of devastation wreaked by Covid, the virus continues to rip through the country with acute deadliness. In short, Xi can ill afford a diplomatic crisis that would exacerbate U.S.-China decoupling and increase military tensions. At least, not now.
Politico’s Nahal Toosi and Phelim Kine also think that the U.S. decision to shoot down China’s spy balloon hasn’t, at last temp taking, “tanked bilateral ties.”
Toosi & Kine, Politico:
In recent weeks, Xi and his aides have launched a charm offensive aimed at easing tensions with Washington as they struggle with a Covid outbreak and an economic downturn. The Chinese government was even preparing to welcome Secretary of State Antony Blinken for a now-postponed visit in which he would potentially have met with Xi.
And because the discovery of the airship is an untimely embarrassment for Xi, he may keep China’s response to the downing limited. In fact, Beijing signaled its desire to prevent the balloon incursion from rupturing ties by issuing a rare expression of “regrets,” although it also claimed the object was a weather balloon that went off course.
Nevertheless, a former advisor in the Obama administration suggests monitoring the situation for changes.
Politico:
“The Biden administration has already signaled that it will seek to reschedule the Blinken visit when conditions allow,” noted Daniel Russel, a former senior Asia hand in the Obama administration who has close ties to Biden aides. “If this closes the book on the incident, the two sides can get back to work. If, instead, the Chinese elect to play the aggrieved victim or to retaliate, we may find ourselves back climbing the escalation ladder.”
For the rest of Reuters’ update, Analysis: China has reasons to keep cool after U.S. downs balloon, click here. For Toosi & Kine’s Politico report, Biden brought down a Chinese spy balloon. But he hasn’t tanked bilateral ties, click here.
Geopolitics
US “stitches arc of alliances" with new Philippine bases
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