China – Politics & Policy media

Tariffs as a Geopolitical Tool: The Intersection of Domestic Politics and Global Trade

Summary

Tariffs as Geopolitical Tools: Tariffs are increasingly used not only for economic protection but also for geopolitical strategy, influencing global trade and signalling national interests.
Chinese EV Industry Example: The EU and other countries are imposing or considering tariffs on Chinese electric vehicles, citing unfair competition, while also protecting domestic industries from the rapid growth of China’s EV sector.
Domestic Political Motives: Tariffs often cater to domestic political considerations, such as protecting jobs and industries, as leaders seek to address public concerns and safeguard strategic sectors.
Impact on Global Trade: While tariffs may protect local industries, they risk disrupting international supply chains, increasing costs for consumers, and escalating global trade tensions.
Strategic Industries and Future Trends: Tariffs on key sectors like green energy and advanced technology are expected to grow, further entrenching protectionism and complicating global trade relations.

Chinese electric vehicles & soft power: situation update

Summary

Tariff Increase: The Biden administration is set to increase tariffs on Chinese electric vehicles (EVs) from 25% to potentially 100%, significantly raising the cost of Chinese EVs in the US market.
Geopolitical Strategy: This move aims to curtail China’s dominance in the global EV market and protect the nascent US clean energy sector from a flood of subsidised Chinese imports.
Domestic Industrial Policy: The tariffs are part of Biden’s broader strategy to boost American manufacturing, specifically in the EV and clean energy sectors, to ensure national security and economic growth.
Labour and Employment: The tariff policy is designed to support American jobs, particularly in the auto industry, resonating with labour unions and blue-collar workers in key battleground states.
Electoral Strategy: With the 2024 presidential election approaching, Biden’s move to raise tariffs helps distinguish his trade policy from that of former President Trump, who has also advocated for high tariffs on Chinese goods.

Taiwan’s Presidential Elections: Situational brief

Taiwan’s upcoming January 2024 presidential election is a pivotal moment in its political landscape, marked by the candidacy of four main contenders: Vice President Lai Ching-te of the Democratic Progressive Party (DPP), Hou Yu-ih of the Kuomintang Party (KMT), Ko Wen-je of the Taiwan People’s Party (TPP), and independent candidate Terry Gou. This election is closely watched by both Washington and Beijing, given its implications for cross-Strait tensions and Taiwan’s global relationships.

The election’s focus is on managing relations with China, a key foreign policy issue, alongside domestic concerns such as economic and environmental policies. Lai Ching-te emphasises increasing Taiwan’s autonomy and security through closer relations with the United States and other democracies. The DPP has been at the helm during a period of growing tensions in the Taiwan Strait. Conversely, Hou Yu-ih from the Kuomintang (KMT) party, campaigns on averting war with China, asserting that the KMT is better equipped to manage cross-strait tensions.

Chinese electric vehicles & soft power

China’s electric vehicle (EV) industry plays a critical role in its geopolitical strategy, especially as it gains increasing market share in both Western Europe and Asia. In 2023, China’s EV market, accounting for 60% of the global total, is expected to maintain strong growth. The country led global EV sales in 2022, representing around 60% of these sales. This dominant position isn’t just an economic triumph; it’s a strategic move in the realm of soft power and international influence, positioning China as a key player in shaping the future of global transportation and energy policies. It’s a fascinating mixture of technology, geopolitics, soft power and marketing. All in a package that is visible and impactful in the day-to-day lives of regular people.

In Western Europe, Chinese automakers are steadily increasing their presence. They accounted for about 8.4% of the region’s EV market, up from 6.2% the previous year. Made-in-China EVs comprised 11.2% of all EVs sold in Germany in the first half of 2023, and the overall market share of China-based car brands in Western Europe’s EV market is expected to grow from 6% to 9% in 2023. This growth is indicative of China’s expanding influence in one of the world’s key automotive markets.

China and multilateral financial institutions

Q: “has China shown the IMF, the deal that has supposedly been struck between the China EXIM Bank and Sri Lanka?”

A: “We have not seen the details of this yet, but this again should come out through our routine engagement.”
Transcript of the Press Briefing on the 2023 China Article IV Consultation Mission

That exchange, in the latest press briefing by the IMF on China, caused us to revisit our post on Sri Lanka’s debt situation and provides an opportunity to expand on the broader geopolitical issues at play.

China’s interactions with multilateral financial institutions embody its larger international ambitions. Through strategic policy choices and leveraging its creditor status, China is actively working to transform these institutions, seeking a balance between its duties and rights, and striving to infuse the global financial governance structure with its own brand of influence.