WORLD WORLDWIDE ITALY News Journal Update - (en) Italy, FDCA, il Cantiere #23: The world on the verge of a nervous breakdown - Cristiano Valente (ca, de, it, pt, tr)[machine translation]

The economic, social and political situation of the entire world is
currently on the verge of a "nervous crisis" in the sense that the
echoes of war, never completely quelled, are today even more thunderous,
such as to once again insert into the scenario in the medium term the
possibility of a war waged despite all the continuous hypocritical calls
by the major international agencies and governments, starting from the
UN, which should have guaranteed a form of global "governance"
regulating economic and social disputes.
In this context, imagining themselves more left-wing and radical, there
are those who even continue to believe in the socialist characteristics
of the People's Republic of China or those who still persist in
imagining a stars and stripes super imperialism (USA) against which not
only China , but even current Russia can represent an anti-imperialist
perspective.

In the latest and unfortunate scenario of the Middle East with the
worsening of the armed conflict between Palestinians and Israel, these
forces and these parties, in coherence with this crazy approach and with
a crude syllogism, even negotiate and support organizations like Hamas
which would represent the right resistance of the Palestinian people and
not the representation of the Palestinian bourgeoisie, moreover the most
backward and reactionary, (1) colluded and manipulated in turn by states
such as Qatar, an emirate and therefore a de facto hereditary and
absolute monarchy, whose economy is based on the immense oil and gas
resources present in its subsoil and Iran itself, even a theocracy, also
governed and based on oil revenues, totally oblivious to the atrocities
that the Palestinian proletarians have been experiencing for over
seventy years. Conversely, self-defined progressive and/or reformist
parties and forces continue to indicate the need for an alleged
"multilateralism", as opposed to the unilateralism of the dominant
American power, sponsoring and dreaming of a European economic hub that
could become an economic and political "player". in contrast with the
USA itself and the ascendant economic and financial power of China, in
the absurd belief and narration of the possibility of a peaceful and
conflict-free capitalist world.

Some others go so far as to see the creation of commercial, financial,
unification and transport networks between states free from Western
control as a positive factor.

In this direction, the formation of new organizations for cooperation
such as the BRICS (2) would represent a development of the capital of
the former "global south" such as to determine a balance of forces
guaranteeing development and peace in the world.

In reality, capitalism, since its appearance, has continued to generate
competition, rivalry and wars.

The arms race, militarism and wars are all intrinsic logics of
capitalism which gives rise to them and develops them as economic
conflicts increase.

The tendency towards war determined by the incurable contradictions that
torment it is irreversible, and is risking leading humanity to a new
catastrophe.

It is a dangerous illusion that of an imperialism that would be based on
the advent of a phase of capitalist cooperation and widespread peace,
establishing a climate of fraternal collaboration between state
financial economic powers.

Intercapitalist competition, mother of all wars

Let's see how this inherent and implicit reality develops in a sector
such as the    "automotive" industry which has always represented and
represents the peak of the development of a capitalist nation.

Electric cars are becoming a new point of friction between China and the
West, with repercussions that could be felt far beyond the automotive
industry alone.

At the center of this new competition is the paradigm of the green
transition, which has rapidly established itself in the sector in recent
years and which is decisively pushing production companies towards the
conversion of their car lines. For this reason, green technologies and
critical materials that will enable the electrification of transport
have attracted so much interest in the industry in recent years.

In fact, the production of cars requires very complex, diversified and
specialized industrial capabilities: from electronics to steel, from IT
to chemistry, from engineering to design, the industries involved in the
production chain are numerous.

In Europe, for example, around 14 million workers    depend directly or
indirectly on the automotive industry, whose future, however, is made
uncertain by the change in technological paradigm.

The numbers of the Chinese challenge

Last year, the People's Republic of China was the world's largest market
for electric cars, accounting for around 60% of all vehicles sold
globally. Furthermore, the Chinese electric car market is expanding at a
rapid pace: according to data from the China Passenger Car Association,
sales projections for the current year should reach 8.5 million units,
an increase of 30.8%. compared to 2022.

In 2020, the government had set 2025 as the date by which electric car
sales would have to exceed 20% of total car sales in the country, but
that threshold was reached already last year, three years ahead of
schedule. as expected.

The growth of the internal market also has consequences on an
international level. In fact, at the center of this boom are often
Chinese companies that account for 84.7% of all electric car purchases
in the country and have been the driving force behind their diffusion in
the People's Republic market.

BYD, the leading Chinese car manufacturer in the sector and focused on
cheaper models, is preparing to overtake Tesla as the world's leading
producer of electric cars while Li Auto, which instead focuses on the
premium segment of the market,

(therefore in direct competition with the cars usually associated with
the German trio Audi, BMW and Mercedes-Benz) recorded a +191% in sales
between January and November .

This development has resulted in a strong growth of the industrial base
which has worried many in the West.

According to the president of the EU Chamber of Commerce in China,
production capacities are close to 50 million units per year while
currently the overall demand for cars (not just electric) in the country
stops at just 23 million units.

Incidentally, these simple data, from a single product sector, although
important and strategic for the economy, for those who dream of an
alleged socialist economy in China, testify that in this sector we are
in the classic situation of overproduction of goods typical of the
economic system capitalist.

But let's return, albeit briefly, to the analysis of our sector. This
excess capacity, combined with the downward price war that has roiled
the Chinese auto market, is rapidly turning into an export momentum
whose first signs are already observable.

For example, BYD's share of foreign sales rose from 5% to 9% between the
second and third quarters of this year. Or again, in October in Europe
the import of electric cars from China exceeded the threshold of 2
billion dollars for the first time , doubling the September figure and
recording a +32.3% compared to the same month of the previous year .

The European response: everyone looks to their economic and political
interest

To protect its industrial heritage, at the beginning of October the EU
launched an investigation to determine whether imports of electric cars
from China (whether produced by Chinese or Western car manufacturers)
cause harm to European manufacturers in terms of unfair competition .

The European institutions have a total of 13 months to introduce duties
against imports from China, basing their conclusions on the examination
of three Chinese producers (BYD, SAIC and Geely): this is a decision
that has caused much discussion: according to some , the duties
calculated on the subsidies received by the three Chinese companies
could seriously damage the exports of Western cars produced in China
(such as Tesla ), which probably received less aid from the Beijing
government.

The launch of the European investigation was a diplomatic victory for
France, which was an important promoter. The intent of the Paris
government is to protect the national (and European) industrial heritage
in the automotive sector, threatened in the price range under 40,000
euros by Chinese competition which, according to the French authorities,
distorts the normal market balance.

Along the same lines, in recent months France has launched a subsidy
program for the purchase of electric cars which, by tying the
disbursement of the tax credit to the manufacturer's carbon footprint,
effectively excludes electric cars produced in China (where Much of the
electricity used in factories is produced by burning coal.)

Germany, on the other hand, is much more cautious and, while supporting
the European anti-subsidy investigation, fears possible Chinese
retaliation. In fact, as we have seen, German car manufacturers, in
addition to positioning themselves in a higher market segment than their
French counterparts, are highly exposed to possible Chinese
countermeasures in the event of the application of European duties.

With 4.6 million vehicles sold, China is in fact one of the main
reference markets for the German automotive industry and, for example,
both BMW and Volkswagen depend on the People's Republic for more than a
third of their sales.

However, European car manufacturers are already moving to close the gap
in the run-up to Chinese competition.

Companies such as Renault and Orano are entering into agreements with
their Chinese counterparts to produce battery components (which alone
make up 30-40% of the value of an electric car) in France, while
Volkswagen has entered into an alliance with Xpeng to jointly develop
new electric models, based on Chinese technology but to be launched on
the market with its own brand. A similar agreement was also reached
between Audi and SAIC.

The conflictual nature of the US response

The US has taken the issue of Chinese dominance in the electric car
supply chain seriously, identifying it as a strategic challenge to the
West's technological-industrial leadership that requires a vigorous
response.

The approach of the administration led by Joe Biden is in fact much more
radical and decisive than the European one.

The US strategy is not limited to trying to block Chinese competition,
which is often technologically superior to that of Western car
manufacturers, but pursues a clear objective of re-industrialisation of
the country.

By establishing constraints and limits in such a way as to incentivize
companies in the sector to invest in production in the USA, Biden has
launched a direct challenge to China which, however, also poses a major
dilemma for car manufacturers in other countries .

Already last year, the Inflation Reduction Act (IRA) also introduced a
combined tax credit worth approximately $7,500 for each electric car
purchased. To be eligible for the subsidy, the IRA requires that an
electric model must meet two criteria: the first requires that the
critical materials contained in the vehicle's battery must be extracted
or processed in a country with which the USA shares a free trade treaty
(therefore not China) or that they must have been recycled in North
America; the second instead requires that the battery components must be
produced or assembled in North America.

Furthermore, at the beginning of December, the USA made public some
implementation guidelines which further restricted the margins of
maneuver for Chinese automotive companies in the US market.

The legislation approved last year provides that the tax credit cannot
be granted for vehicles produced by " foreign entities of concern " (FEOC).

In essence, to access the benefit, a vehicle cannot contain battery
components produced by foreign-owned companies, particularly Chinese ones.

The recently issued guidelines define as FEOC any company or group that
is subject to the jurisdiction of the People's Republic, or
alternatively that is "owned, controlled or subject to the management"
of the Chinese government, identifying this condition when more than 25%
of the share capital , voting rights or seats on the board of directors
are in the hands of Beijing.

However stringent, however, the new guidelines also leave room for the
technological contamination of Chinese companies that are leaders in
innovation. For example, the partnership formed between Ford and CATL
(the largest Chinese battery manufacturer in the world) at the beginning
of the year should be able to continue according to the provisions of
the guidelines, thus allowing the US brand to continue to benefit from
the licenses granted by the first company to world in battery production.

On the other hand, the importance of the partnership is difficult to
underestimate since it focuses on LFP batteries, a technology based on a
mix of lithium-iron-phosphate that is rapidly developing but which above
all involves much lower costs than nickel-based NCM batteries
-cobalt-manganese (which are predominant in Western electric vehicles).
To compete with Chinese companies, Western car manufacturers cannot rely
solely on the industrial policies of their governments, but must also be
able to compete on the level of technologies and costs.

As can be seen, in one of the most significant economic and productive
sectors, the competitive battle is at its maximum and is developing on
all fronts; from raw materials, to technology, to production costs. When
this continuous economic battle does not prove sufficient for supremacy
and economic domination, the logic of war remains the possible and
necessary terrain of imperialist contention.

Note:

1) See joint statement from Hamas Islamic Resistance Movement - Hamas
Popular Front for the Liberation of Palestine - Palestinian Islamic
Jihad Movement - Democratic Front for the Liberation of Palestine -
Popular Front for the Liberation of Palestine - General Command - Beirut
on 28/ 12/2023

2) see the CONSTRUCTION SITE n.21 November 2023 "Assault on the dollar"
by Gianni Cimbalo

http://alternativalibertaria.fdca.it/
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