A-Infos (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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