Is China’s High-Tech ‘Overproduction’ Killing Jobs In The West? | When Titans Clash | Full Episode

Textiles, toys, electronics, over the last two decades, the world has become accustomed to these products carrying the Made in China label, but there are new categories of products made in China that dominate the global market and that is causing unrest. China is now simply too big for the rest. Europe is also increasingly concerned about the future of its

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industries, as Byd is starting to sell more cars than BMW, which is going to pose problems for China. and relations with Germany take the electric vehicle sector, it is a crucial industry for the clean economy with huge potential in Europe, but global markets are now flooded with cheaper Chinese electric cars as Beijing tries to export its way out of an economic slowdown What impact would it have? has in the rest of the world, let me say something to China, if you're listening, President, those big monster car manufacturing plants that you're building in Mexico right now and you think they're going to understand that you're not going to hire Americans and they're going to make us sell the cars now, if I am not elected, it will be a bloodbath for the country globally, the green capacity is not excessive, but in D, the shortage, the problem is not over now. capacity but out of anxiety and how China developed such a formidable competitive advantage in the three clean

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industries of Eves solar panels and lithium-ion batteries on April 9, 2024.

Steel workers protested outside Chile's Presidential Palace to demand biggest terrorists over Chinese steel imports. According to data from the Latin American Steel Association, in 2023 the region imported a record 10 million tons of Chinese steel, an increase of 44% compared to the previous year. Chinese steel will be almost 40% cheaper than that manufactured locally in 2024. Chile's largest steel company announced this. is closing World Bank data shows China is the top steel exporter

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measured by quantity Chile Mexico South Africa and Saudi Arabia have taken action against China Steel exports in the United States Steel has also become an election issue Chinese steel companies By producing much more steel than China needs, you end up dumping more steel into global market markets and unfairly low prices, and the prices are unfairly low because China's steel companies don't need to worry about making profits because the Chinese governor subsidized them so much.

They are not competing strongly, they are cheating, they are cheating and we have seen the damage here in the United States as they conclude their visit to China in April 2024. US Treasury Secretary Janet Y delivered these remarks. China is now simply too big for the rest. of the world to absorb this enormous capacity, actions taken today by the People's Republic of China can change world prices and

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the global market is flooded by artificially cheap Chinese products, the viability of American and foreign companies is called into question, according to Yelen. China manufactures more solar panels. batteries and electric vehicles than its domestic market can absorb, reflects Chinese policies that place

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priority on these sectors.

The support channel provided to them allows them to continue operating even when prices fall to very low levels due to excess capacity and their companies do not exit the market. instead, it is potentially our companies that have to do it a day later China refutes these claims A week later, during a visit to China, German Chancellor Olaf Schultz defended his arguments for open and fair markets, warning his hosts against dumping and

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, while urging the The European Union must avoid acting out of protectionist interest when Byd is starting to sell more cars than BMW, which is going to pose problems for relations between China and Germany, we committed at the end of April.

Blink raised the issue of solar, er, electric panels again. The vehicles and the batteries that power them China alone is producing more than 100% of global demand for these products, flooding markets, undermining competition, putting livelihoods and businesses around the world at risk. In early May, it was French President Macron who raised the same issue during President C's visit to France. In response, President C says that excess capacity does not exist before continuing, it is important to remember a basic economic principle, the principle of comparative advantage, which says that when a country can make goods cheaper for reasons such as low-cost operations, that is their advantage and they should sell it to the world, country B should find its own comparative advantage in goods that they can improve and then should trade;

That has been the key principle guiding global trade for the past 200 years, since China joined the World Trade Organization in 2001. Of global exports has been increasing, as this United Nations data set shows that China's share of global goods exports has increased exponentially over the past two decades, making it the undisputed champion of the world's exports around the same time the United States lost more than 5 million. Jobs in the manufacturing sector are due in part to the growing trade deficit in manufactured goods with China, Japan, Mexico and other countries. The United States' trade deficit with China was the largest.

Let's talk about China's first shock. Now the number here is that there are 5 million manufacturing

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in the United States. were lost and the hollowing out of the manufacturing industry has been linked to all sorts of problems, like poverty, drug use, depression, but can you break down these numbers for us? How much is due to outsourcing factories to China and how much is due to technology? iCal factors like automation, for example, what really happened is that the China factor has accelerated a long-standing trend of declining manufacturing employment in the US. If we go back to the 1950s, 30% of The US workforce was in manufacturing in the early 2000s, before China joined. the WTO which had already been halved to 15%, so you can see these long-standing trends of technological automation, digitalization, which reduce employment in the manufacturing industry and then China also joins in and accelerates this whole process so you get a much faster loss of manufacturing

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after China. joined the WTO in 2001 and that comes down to about 9% of total employment in the United States.

About 5 million jobs were lost. I think what the China shock did was really accelerate a process that maybe would have taken 20 years, normally actually took place in about 10 years for some. Economists refer to that first round of manufacturing job losses as the first China shock as toys, textiles, glass and all sorts of other simple manufacturing processes move to China. What worries us and some European leaders is the beginning of a second China shock and this time it is not going to be in goods like these, the second shock in China could be even greater than the first and I think what we have now in China it is an unprecedented combination of four things: the first is a 30% share of global manufacturing and the second is relatively cheap wages even now, the third and this is key.

Advanced technological capacity and then the fourth massive and sustained state support to these sectors. The combination of these four factors is unprecedented in history and with that I believe we are going to achieve a second. China trade shock this time in advanced manufacturing products and that is going to put a lot of pressure now on Europe, Japan, South Korea and even pressure again on the US. This is a new shock that is actually just beginning and it will continue. It will last for the next four five ten years National interest because in 2016 Trump ran an election campaign targeting China and won, we cannot continue to allow China to rape our country this time Trump is doing the same thing, let me tell you something for China, yes You're listening, President, to those big monster car manufacturing plants you're building in Mexico right now and you think you're going to understand that you're not going to hire Americans and you're going to sell the cars.

For us now we are going to put a 100% tariff on every car that crosses the line and they are not going to be able to sell those guys if they elect me now, if they don't elect me, it will be a bloodbath for the whole, that will be the thing. At least, it will be a bloodbath for the country, which will be the least important today after the China issue also appears in President Biden's election campaign instead of depending on equipment manufactured abroad in places like China, the chains of supply will be manufactured again in the United States will begin again in the United States in the United States in Europe similar concerns have arisen Chinese automaker byd has much to celebrate in 2023 became the world's largest seller of electric vehicles or EVs a title that it claimed from the American company Tesla, those results forced Tesla to reduce the prices of its cars worldwide in the first quarter of 2024.

Tesla once again emerged on top, but the competition between Tesla and byd remains intense. You come to the Auto Show and you see all the traffic at the stands of the Chinese car manufacturers I was at the Audi stand and one of my favorite beautiful cars is the rron the RS rron and it took me less than 10 seconds to wait for someone and then I I went up to him and then you pass. to zeker and they just launched the Zer I waited 10 minutes for this small car because there were a lot of people who wanted to see it and then the management of these European car manufacturers also saw this and then in disbelief they got into the vehicles themselves, closed the door, heard the sound that matches what they're traditionally able to do and then they looked at the technology in the instrument panel and the infotainment system and um.

They were speechless. I think there's a lot of disbelief, a lot of shock, uh, but a little bit of fear, you know, director level, manager level, now they touch each other. look at these cars and say: wow, we're in trouble. China's dreams of electric vehicles date back to 1992, when prominent Chinese scientist Chenu asked the government to start working on electric vehicles if he believes he can achieve them. The Chinese government played a critical role in the development of the electric vehicle industry. When evaluating state support in China, it is important to note that China could be called a mobilization state, so when aiming to develop vehicles electric or made in China by 2025, it's not as simple as just one-time subsidies, it's a complete effort that the party state backs it, it has cheap loans funded in part by the People's Bank of China, it has local governments offering land deals and utilities, the Ministry of Commerce imposes restrictions on competing products being imported into China and then even retail investors see a political signal. and they are going to accumulate shares of these companies and provide them with cheap financing, so it is really a whole system approach to developing and supporting these sectors that has been carried out steadily for several years and in the specific case.

EVS highlights a couple of policies that were really crucial, number one was cheap financing, both for the companies themselves and for their potential buyers, the households that buy these vehicles, and the other was tax rebates and the ease of purchasing these vehicles, in particular. In big cities where license plates are quite scarce, it's no secret that government subsidies were crucial to the growth of Chinese EV companies. For example, it relied on a state-owned company near Guang Joo to lend it more than 200 million in 2017 for the construction of its initial factory, then the city of Wuhan helped xong buy land and borrow money at low interest rates. interest for a new plant there.

Now xong is not only making electric vehicles, it is also putting out cars straight out of sci-fi movies. This is xun's electric flying car. automobile, the vehicle will be sold for the first time in China for more than US$1 million or US$140,000. The company says buyers should be able to fly the electric vehicle in designated test areas in February 2021. China introduced the concept of low-altitude economy in its national planning economists. Concerned about a second shock in China often point to the forces of state planning, government subsidies and corporate innovation, these flying EVs are an example that governments elsewhere arerejecting the electric vehicle sector, it is a crucial industry for the clean economy with a huge impact. potential in Europe, but world markets are now flooded with cheaper Chinese electric cars and their price is kept artificially low thanks to huge state subsidies.

This is distorting our market, which is why I can announce today that the Commission is launching an anti-subsidy investigation into electric vehicles from China how capacity is exceeded The automotive industry in Europe is a major employer and employment is a hot topic when deals with elections in Europe in February 2023. Car maker Ford said it will cut 4,000 jobs in Europe in June 2023. Swedish auto parts maker Autolive said it will cut 8,000 jobs in the same month as car maker Stellantis automobiles announced that it plans to close its plant in Austria after 40 years, affecting 300 jobs in October. Germany's Volkswagen cut 2,000 jobs the following month.

French tire maker Michelin said it will cease operations. in three factories in Germany by the end of 2025, affecting more than 1,500 jobs. The automotive industry is a large part of the European economy. Its turnover is approximately seven times the European GDP of the European Union, that is, it directly and indirectly employs about 13 million people, that is, 6%. of total employment in the EU and also psychologically it is a big part of the history of industrial development within Europe, so it is a huge part of the economy and they are very concerned about Chinese competition both within Europe and globally the 10, On April 24, the European Commission published a 700-page document detailing the details of what they say are distortions in the Chinese market.

Do you think we will see a trade war emerge between Europe and China like the one we have seen between China and the rest of the world?U.S. I think trade friction is inevitable and it is guaranteed that we can see an open trade war already happening. I think it is less likely, mainly due to two factors: the first is something ideological. Europe is an open economy, it has to trade to survive, so it is less willing than the United States, which is almost self-sufficient in many cases, to be isolationist, so Europe needs to stay open and it needs to trade.

The second factor is that although the pressure is coming from China, it is still the largest market for many European luxury goods companies. For vehicles for industrial products, these European companies depend on China for a lot of revenue, a lot of profits that are reinvested within Europe, so that dependence exists to a much greater degree than what we saw in the United States, for example, throughout rural China. Even in the most remote parts of the country, solar panels could be seen dotting the landscape of China's cities. Solar panels are also distributed on roofs and even on the facades of buildings.

China installed a record 27 solar panels in 2023, more than the United States has built in its entire history and more than any other country, one of the key reasons why solar energy production and installation is so high in China is because the economy has been weak now that Xi Jinping is trying to turn the economy away. from the old growth model that depends on real estate infrastructure, high debt towards something a little more advanced that manufactures new technology, a little more on the export side, and so, when covid arrived and the real estate crisis occurred in The last few years in China instead of pulling the old stimulus levers which was build roads, build more houses, China really went all out in these advanced manufacturing sectors, so loans and investment in those sectors increased by about 20 % year over year for the last few years and a lot of that came from the On the solar side, because the economy is weak, they're getting more subsidies, more pressure to produce and that's driving installation over the last three decades.

Industrial policy. State subsidies. Innovation. Intense competition and economies of scale have propelled Chinese solar companies to a global level. competitiveness that few elsewhere can rival today China dominates the global solar sector in 2021 Chinese companies represent more than 80% of the global market at every stage of the manufacturing process according to the International Energy Agency in the shadow of its success hundreds of solar companies companies in the US and Europe filed for bankruptcy we have not forgotten how China's unfair trade practices affected our solar industry many young companies were driven out by heavily subsidized Chinese competitors pioneering companies had to declare bankruptcy promising talents when They were seeking their fortune abroad this is why justice in the global economy is very important because it affects lives and livelihoods Hi my name is Joe Mourville I am the president of Energy Independent Solutions we do a wide mix of anything, Solar's price, I mean, when we started the business was around $3. a discount for a module and now you know a decent module you get for less than 50 cents, it's like you know 1/8 of the price or something So.

The U.S. was once a bastion of solar module manufacturing, accounting for about a quarter of global solar energy. module shipments in the early 2000s, but that started to change around 2010, we Americans did them until maybe 2012 2014, when we couldn't buy the product anymore because at that time, you know, China had taken most of companies going bankrupt. American companies that filed for bankruptcy at the time testified in the trade case in Washington because China basically subsidizes their level of production, so their product comes off the line before entering a container that already has subsidies. American solar manufacturers were going bankrupt, but the industry as a whole was growing rapidly, people found jobs selling and installing solar modules from China.

It couldn't compete head to head with China, but in a way it improved the entire market. Everyone began to step forward and then began to move forward. finance started to make sense, you know, it just started to accelerate from that point on, helped by cheap imports. Solar installations soared in the 2010s and peaked in 2016 16 before Trump was elected and plunged after Trump imposed huge tariffs on solar energy from China. Imports no more tariffs in the sun. Sun for everyone, no more tariffs on sun Sun for everyone, no more tariffs on solar modules from China, which received a 30% tariff during Trump's trade war, we are here to fight the solar tariffs that the administration has imposed Trump. make sure that doesn't hurt American workers in this growing industry, solar is growing, we don't want to stop the growth, the US and China need to get politics out of the way and start looking at the good of the race human when President Biden was elected.

Solar installations skyrocketed again. The US continued to import solar panels, but this time mainly from Southeast Asia, where many Chinese solar companies set up new factories to avoid tariffs. The US has also been trying to rebuild its solar manufacturing industry factories that were excluded from Chinese competition are reopening again, they are doing so thanks to the generous subsidies from the inflation reduction law that funnels 430 thousand billions of dollars towards clean energy Industries now the US is also trying to build it Solar industry using subsidies from the huge inflation reduction law by subsidizing US industries on this scale are not the United States doing exactly what China is doing, yes, yes, the United States is returning to industrial policy.

It's a little ironic considering that they are criticizing China's model for doing things, but they are going back there and if they do it themselves, the big difference is that they have lost the ability to do it. Industrial policy was strongly opposed in Washington for years and years and years. Trying to do it again, it's very difficult. They have lost the knowledge or ability to do so. carry out large effective industrial policy programmes, yes, exactly on that point, could there be a risk of over-subsidizing an industry that may not be globally competitive and may not be sustainable in the long term?

Yes, I mean it is certainly a real risk and to implement an industrial policy effectively you need to have a clear objective: choose the right sector and be sustainable enough and large enough over a long period of time to develop that industrial competitiveness. within a national economy. Now the United States can make the market big enough. They have the financial resources, but the question also revolves around political will, if, if a new president arrives, they will continue with this impulse of industrial policy worldwide, the green capacity is not excessive, but in D the shortage, The problem now is not overcapacity but the anxiety that demands A stronger climate response, on the one hand, and the construction of green trade barriers, on the other, would only increase the cost of the transition to a low-carbon economy itself. and would also slow down the global clean energy development we are committed to, as Blinkin raises the issue of excess capacity in the solar system.

China's industry is targeting new markets for its cleantech exports: the global South, populated and fast-growing, energy-hungry parts of the world that are trying to shift to clean energy as soon as they can. There are currently 745 million people in the world who still do not have access to electricity Europe and Asia were the largest export markets for China's solar companies in 2023: Europe accounted for 48% of all solar exports from China and Asia the 23% as debates continue over whether or not China's solar industry is facing overcapacity. a new trade complaint is filed this time in wind farms the EU is investigating China's involvement in wind farms in Spain Greece France Romania and Bulgaria last year the EU imported around $1.42 billion worth of turbines and components from China , so the wind energy industry is It's interesting, it's an area where the EU is still competitive and where there are a lot of advantages in terms of localized production, so shipping those big turbine blades is very difficult, they're huge now that are becoming increasingly large to transport.

From, say, China to Europe is very expensive, very difficult, so by moving early, the hope is that the EU maintains this competitive advantage that it has in wind energy production and I think that is the goal of these early stages research on electric vehicles, solar panels and lithium. ion batteries these are the three industries in which China's exports dominate the global market debates have arisen about whether or not China has excess capacity in these three areas how China came to dominate the global battery industry the answer is very far from China's borders here in Zimbabwe in Africa The Chinese company J changuu Cobalt Company began construction of a new lithium m in July 2023.

Here at the opening ceremony is the president of Zimbabwe, a sign of the importance of this investment. Jiang Hau Cobalt Company is a market leader in battery manufacturing and has been investing in mines across Africa, in southern South America, in the remote salt flats of Bolivia. The Chinese company catl announced in 2023 that it will invest more than $1 billion here to produce lithium carbonate used in battery production in Southeast Asia, in Indonesia. Chinese companies also dominate the supply chain Indonesia has the world's largest nickel reserve and Ching Shan Holding Group, the world's leading nickel producer, has been operating here in Indonesia for almost two decades, long before nickel was become a critical component in battery manufacturing, according to the IEA.

China processes more than half of the world's lithium along with other crucial battery materials. How did Chinese mining companies achieve such a presence in different parts of the world? Made in Africa with China for the world. In China, the battery supply chain is care

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y supported. State planning is in Sichuan, a city with a population of about 2.8 million people, and all companies on the main street of Sweing work with a single product - lithium batteries, here they manufacture the battery cells and even They recycle batteries, all this. It happened by government design. The local government office selects companies that complement the industrial chain thatThey want those swed-made battery components to support catl's operations the world's largest battery manufacturer catl has a plant in the neighboring city iben again as a result of industrial policy the result of these coordinated overseas mining efforts to plan care

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y Supply chains are a battery production process that is unrivaled in the world China's battery manufacturers have achieved unimaginable economies of scale in just over a decade, today more than 3/4 are manufactured of lithium ion batteries. in China and mainly by just two companies catl and b and d, the US and Europe have taken steps in recent years to develop their domestic battery industries the price of self-sufficiency will not be cheap BNF data suggests that Europe and we would need spending 98 billion and 82 billion respectively on growing a local battery industry, whether in simple toys, home accessories, party accessories or in the field of high-tech batteries, solar panels and electric vehicles, China has managed to achieve a comparative advantage in all of these industries and see more in the In the context of its long history, it is a moment of reckoning.

I think the second trade shock with China is just beginning. We have had a big shift in perception of trade with China driven by three major events. Co Trump, the trade war, Russia, Ukraine, so perceptions have changed, but. we are only now starting to see the real economic effects in terms of investment decisions trade flows higher inflation global supply chain route that is just getting started and with that will come a lot more trade friction in the coming months so it's really just beginning of the economic impact and the beginning of a new series of trade disputes