Earlier today I visited the site 'Inside China Business'
and watched the video titled 'America's factory boom now a bust as
China cuts off graphite sales, likely to push tariff repeals'.
'Made in USA' EVs, one industry alone, is already stuttering after all
the song and dance that Biden is making about how the USA is trying to
lure EV manufacturing back to the country with a factory building boom
going on. Even foreign manufacturing icons like TSMC and Samsung are
jumping on the factory building frensy bandwagon, with all the subsidies
thrown in for them.
The reality is that the USA is putting the
cart before the horse and hoping the carriage can move forward. What the
USA is doing is building factories first and then sourced for the raw
materials to feed those factory production capacity and needs, not
realizing who is controlling the raw materials. This is a going to be a
certainty for failure. USA Commerce Secretary refers to China as 'the
enemy', so China's response must be mutual at best.
The future of
global transport is still going to be dominated by EVs. The USA wants
to build its own EV building hub and betting big on it. But first, it
has to get rid of competition from China, which is what it is doing now,
with the 100% tariffs on EVs made in China. China is retaliating by
cutting off its graphite sales for making EV batteries, without which
the building of the EV hub in the USA is facing a stillborn situation.
Without the means to build EV batteries to support its EV building hub,
resulting from China's graphite sales ban, what is the USA going to do?
Sure,
the USA can also start building from scratch their graphite supply
chains, but time is not on its side. Such EV factories being built
cannot wait for, maybe three years optimistically, for those EV battery
builders to start their production schedule. By that time, costs
constraints will just kill them both off without the ability to find a
global market to absorb the EV battery output that will still be
dominated by China with its control of graphite production as well.
You
see, China's overcapacity in every sector is a massive asset in times
of need to retaliate against those out to destroy China's manufacturing
base. It was an investment strategy that only the Chinese could have
thought about long ago. China thinks decades ahead before embarking on
its mission to dominate, in all sectors I would say.
Anonymous
1 comment:
Building factories in the USA is akin to closing the stable doors after the horses have bolted. It is an exercise in futility. China controls the raw materials, the refining logistics and is expanding its domination. Investors intending to help to build the USA manufacturing hub will have to live with the possibility of losing their pants trying to compete. The alternative is moving their operations to China, simple and more realistic to avail themselves of the supply chains at hand. They can always produce to cater to the Global South market, not necessarily the USA or EU market.
From now until the election in November, every little news about the USA is going to be rosy or as pink as their swimmers at the Paris Olympics. The stock market is shooting up, jobs are plentiful, manufacturing is coming back to the USA, inflation is manageable, and a rate cut in September is likely to happen. All these are spins to give the Democrats a lift in November.
Money printing of about US$3 trillion was reported in 2020, providing the growth in every sector of the USA economy. Ask Professor Richard Wolff and he will tell you it is all a mirage. Most of that money goes into the stock market on Wall Street, not into productive endeavors. Today's printing is even more intense, with the USA making hay while the sun still shines for the US$ hegemony. When it ends, the story ends as well.
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