The EU has restated its readiness to launch a trade war with China over imports of cheap electric cars, steel and cheap solar and wind technology.
this post was submitted on 06 May 2024
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Why not everything else too (electronic hardware, toys, clothes, etc...)?
They (the EU) want to achieve a goal.. stop the Chinese government from financially helping a company allowing them to undercut competitors and bankrupt competitors who do not get government aid.
If you want to influence behavior you have to show where you want the other party to go. So you don't hit other sectors that do not have this aid.. because that would be unfair.
Game theory 101.. tit for tat. They help a sector, we fine that sector.
All companies working in the energy and transport sector receive vast subsidies and financial help from whatever country they are located in.
This isn't about unfair practices, since it's literally a common practice. This is to protect oil companies and the car makers who took bribes instead of pivoting and are now feeling that decision.
No it is not. The EU asked for information from the companies to show how they come to their prices and they chose not to comply.
Drawing comparison to another sector is not helpful as what is common for one sector is not for the other and leads to unfair advantage.
It's not a "fine" but a XIX century protectionistic measure which is unlikely to help anyone (except making people poorer because higher prices mean higher expenditure for consumers). And from here to the next inflation spiral there is just a small step...
If a government helps a company from their country artificially lower their prices, that causes an unfair advantage to their competitors. And the competitors go bankrupt, the surviving government sponsored entity is then a monopolist able to increase the prices as they want. And the jobs are gone. So how does that fit I to your view on things?
And you are right, it is not a fine, it is a tarrif. But for the explanation the word fine worked better to explain it I thought.
I don't think there is a solution for European economy. Better be prepared for the worst rather than living with the illusion that these tricks may work.
Electric cars Solar panels Wind tech
Everything else doesn't directly compete with their oil monopoly. They should keep their tariffs for when we aren't on the cusp of an ecological collapse, bunch of corrupt cunts.
And if imported goods have cheap prices due to ignoring labor rights, worker safety and environmental protection it is acceptable... This is hypocrite and really does not deserve further comments.
That's fine but like you said, nothing else is being targeted. Out of all the products, they specifically target the ones leading to a greener, less oil dependant society.
You were asking why it's being targeted and it's specifically not because they are ignoring labor rights, worker safety or environmental protections.
God forbid we, the European consumers get to buy cheaper products. What's China doing so right that they can sell stuff for cheaper? What are we doing wrong?
We don't use slave labor, maybe that's what we're "doing wrong".
We shipped all our manufacturing to a country that allows slave labor and now they're beating us.
hey, but you get to deflect from that like you're role models of human rights. until you look into your history, oh wait…
First part: looks like that was a mistake. Decentralized manufacturing has always been the future, though.
Second part: we overcame that, didn't we? That's why it's history and not currently happening like in China.
Decentralized manufacturing has always been the future, though.
No, you don't understand, this is actually an incredibly efficient method of producing food for retail consumption.
Perhaps we mean different things with "decentralized". What I meant was that it's a bad idea to outsource all your manufacturing to the part of the world where its cheaper. Keep some steel mills, auto plants and chip foundries near where they're consumed. Food production is actually a good example of decentralized manufacturing. I buy mostly locally grown produce, I can literally take a walk and see the wheat which will someday be the bread I eat.
it’s a bad idea to outsource all your manufacturing to the part of the world where its cheaper
It's a bad long term logistics strategy, thanks to the tail risk that comes with shifts in geopolitical relations. But its heavily incentivized from a short term profit-maximization strategy.
Keep some steel mills, auto plants and chip foundries near where they’re consumed.
So, there's some economic limit on all of these. Steel mills are voracious electricity consumers, which makes them most efficient near cheap hydroelectric or nuclear power stations. Also, steel is heavy, so you'll want the factory near a port, for cheap shipping. Meanwhile, steel consumption is global and generally predicated on where we're doing large construction projects. You can't build a steel mill right next door to a city, just because its going through a construction boom.
That said, that's not really what has happened in the modern global economy. During the 19th and early 20th centuries, our primary method of powering steel mills was through coal consumption. And that gave us a Rust Belt that ran adjacent to the Coal Belt. For decades, the D.H. Mitchell plant in Gary, Indiana was the primary power source of Gary Works, the largest steel foundry in the nation. But the rate of pollution was enormous, ultimately leading to a shut down of the plant in 2010 and half a billion dollars earmarked to help with clean up.
Thanks to high demands for domestic real estate and tighter environmental laws, we've exported an enormous amount of our steel production oversees and rendered some of our largest manufacturing facilities unprofitable. We effectively outsourced our pollution to our colonies (most notably, Gwangyang South Korea, the largest in the world and one of the major feeders to the Japanese automotive industry).
Also, obviously, too, cheap labor. Cheap real estate. Cheaper electricity thanks to depressed domestic consumption. We're pivoting from Chinese exports to Indian and Indonesian exports, because these are the other countries with an enormous pools of cheap labor.
In the same vein, automotive manufacturing moved from the unionized northern midwest to the southwest and Gulf/Atlantic Coast, chasing the lower wages and weaker environmental protections common to these former plantation states.
Chip foundries are an entirely different animal, because of the sizable investment in their construction (north of $1T for a high end modern facility). You can't just make another Taiwan Semiconductor in your backyard, unless you have hundreds of billions of dollars to throw at the project.
Food production is actually a good example of decentralized manufacturing
The US is a breadbasket, so we produce enormous surpluses. A good share of the wheat you're seeing will never end up on your plate, or in your state, or even in your country.
If you look at the impacts of NAFTA on the Mexican agricultural industry, you'll see what I mean. We crashed their domestic corn industry when we flooded Latin America with our cheap excess produce. And, as a result, we created an enormous demand for farm labor north of the border just as we were bankrupting local farms south of the border.
Many european companies have factories in China, Africa, other Asian countries, so I don't see your point. We do use slave labor quite a lot actually
Massive government subsidies that allow companies to more or less run at a loss for the most part. Its the same playbook as Wallmart and just like Wallmart its a sure bet that those prices will go up once the local competition is wiped out.
Massive government subsidies that allow companies to more or less run at a loss
Where does a government that subsidies a company operating at a loss get the money to fund itself and its unprofitable company? And why is the Chinese economy continuing to grow (often faster than its western peers) if all its businesses operate at a loss?
Its the same playbook as Wallmart
The playbook Walmart uses is to buy cheap disposable foreign imports wholesale and then sell them to western consumers at a 1000% markup, knowing they'll break and need to be repurchased in short order.
Well, it sounds like China knows a little more about the economy than we do then. Maybe we should do the same thing here. Consumers would be happy if they had cheaper products.
China doesn't care as much about regulations. They're okay with massive pollution and slave labour. Do you want to live with that massive lower quality of life to produce cheap products you still can't properly afford because your wages have been cut? There is a tricky balance to keep China as our personal factory and not lose our ability to afford the things they make.
So... communism works?
Looks like the only people this upsets are wealthy Westerners and their useful idiots.
its a sure bet that those prices will go up once the local competition is wiped out.
This actually never happened. Walmart is still cheaper than any regular* grocery store, especially the co-ops.
*ALDI is cheaper because all of their products suck. Their produce sucks, their packaged goods suck, and their meats aren't actually cheaper. I think less of anyone who recommends ALDI and regret all the effort I put into giving it a chance.
*ALDI is cheaper because all of their products suck. Their produce sucks, their packaged goods suck, and their meats aren’t actually cheaper. I think less of anyone who recommends ALDI and regret all the effort I put into giving it a chance.
I guess this is a regional phenomenon because the aldi stores near me have all been great and cheaper.
So... communism works?
They are not Communist, it has now become an even more repressive autocratic regime, under the guise of a Communist label. If you want to know about communism read Karl Marx.
Right. I'm talking about this specific instance, not China as a whole.
The thing is, that is the short term benefit. The long term effect could be is that we be dependent on the exporting party and they can start charging higher prices. Generally it is not in your favour to be dependent on another party.
Currently I am dependent on the rich guys that own all of the facilities that produce what I need. I don't care if it's the Chinese government or a rich fuck from over the US. Maybe we should start doing the same thing that China is doing and actually provide people with cheaper products
I get your frustration but you can't solve one extreme/problem by another. That just creates different problems. And I believe you're smart enough to realise what problems that would be. But yea, affordability is definitely a problem that needs to be solved. Getting exploited is never good. Sadly that rich people problem is present in more countries, including China. (not talking about the size of the problem, that is a point of argument of course)
When companies want to drive down wages by outsourcing to China: "you need to learn to compete with China"
When companies are faced with cheaper products made by Chinese competitors: "we all need to put a stop to this"
Europe: "We're outsourcing our industrial capacity to the far east, because we can hire their workers for a pittance. Now we can fire all our domestic workers and still profit off our domestic consumers."
China: "Damn, look at all this amazing new business capital. We should use it to improve our own lives and livelihoods. Oops! Now wage rates are rising, as we transition to a consumer economy."
Europe: "Oh shit. Oh fuck. Chinese labor went up a fraction of a percentage point, cutting into our profit margins. Launch the trade war. Launch the trade war!!!"
Only that’s part of the story. China’s trade war with the US and their own domestic economic downturn has them looking for other markets to dump their excess goods (electric cars, etc.).
The EU is their only lifeline right now. If they get into a trade war the China will have nowhere to dump their goods except for Africa and South America. Those markets are not nearly as lucrative or built out.
China’s trade war with the US and their own domestic economic downturn
I'm sorry, their downturn? China's economy grew 5.2% in 2023.