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​.
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Global Farmer Protests: Briefing Note

Recently, the agricultural sector has experienced significant unrest, manifesting in waves of farmer protests across the globe. Particularly prominent in the EU and India, these movements have been driven by a confluence of economic, environmental, and political challenges, reflecting broader concerns about sustainability, equity, and governance in the agricultural domain. This briefing note provides an overview of these protests, highlighting key examples, common themes and issues, and the wider political implications.

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Interconnected:  The electrical grids of India, Bhutan, and Nepal

Summary

  • While the electrical grids of India, Bhutan, and Nepal aren’t fully synchronized as a single system, they are interconnected through various points and agreements, allowing for electricity exchange. 
  • As landlocked and mountainous countries, Nepal and Bhutan have limited options to industrialize, but have hydropower potential. Electricity can be an important export for both. 
  • The electrical grid connections facilitate the trade in electricity and contribute to regional energy security. Countries like Nepal and Bhutan export surplus electricity and import energy during periods of deficit, thereby supporting their energy needs and economic development.
  • These interconnections between India, Bhutan, and Nepal have spurred significant geopolitical and domestic political issues within the region, largely shaped by strategic interests, economic dependencies, and environmental concerns.
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Bangladesh’s economy: Situational brief

The current economic developments in Bangladesh, particularly in its apparel industry and regarding foreign reserves, reveal a mix of past growth and current challenges.

  • Apparel Industry Growth: Over the past decade, Bangladesh’s apparel industry has seen significant growth. From 2011 to 2019, Ready-Made Garment (RMG) exports from Bangladesh more than doubled, increasing from $14.6 billion to $33.1 billion, marking a compound annual growth rate of 7%.
  • 2023 Slowdown in Apparel Industry: However, 2023 presents a downturn for this key sector. A global slowdown is anticipated to heavily impact Bangladesh’s garment industry, with export growth expected to fall by approximately 3 percentage points. This reduction is attributed to a deceleration in global clothing demand, which is set to add pressure on Bangladesh’s GDP and its dwindling foreign exchange reservess.
  • Wage Protests and Increases: The Bangladeshi government announced a 56% increase in the monthly minimum wage for garment workers, raising it to $113 from the previous $75. Despite this increase, workers have continued to protest, demanding further wage increases. These protests have sometimes turned violent, with instances of vandalism and clashes with police​.
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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.

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