Direct Translation via Google Translate. Edited.
[RIA] Europe suffers its first losses in the economic standoff with China. The German concern Volkswagen AG is forced to close its factories due to the inability to compete with Chinese products. And this is largely Brussels' fault. RIA Novosti reports on how events are unfolding.
DISTURBING NEWS
This has never happened before in the history of the German auto giant, notes Bloomberg. The conditions are getting tougher, there are more and more players on the market, complains the CEO of the concern Oliver Bloom. It is simply unprofitable to do business in Germany: energy and labor are becoming more expensive. And purchasing power is not increasing - German electric cars are not being bought. Thus, in 2023, only ten million units were assembled with a capacity of 14 million.
Volkswagen Group's EU sales fell 2.2% year-on-year in July, according to a report from the European Automobile Manufacturers Association (ACEA).
So far, the talk is about stopping two enterprises - assembly and spare parts production. People will have to be sacrificed as well. Retiring some is not enough; the company is going to lift the 1994 moratorium on job cuts. And the concern employs about 300 thousand people.
The authorities are alarmed. Lower Saxony Prime Minister Stefan Weil agreed that "measures must be taken" but would prefer less radical options. "We hope it won't come to a closure," he said.
But Brussels has seriously increased import duties on electric cars from China: up to 38.1%. Moreover, the European Commission declared this "fair competition".
The Chinese are dumping "at the expense of huge state subsidies," claimed EC President Ursula von der Leyen.
Beijing was outraged and complained to the WTO.
China's Ministry of Commerce is currently auditing EU farm products - dairy products and pork - whose producers were subsidized by Brussels, covering 20% of the costs, Beijing claims.
"Formally, the payments will indeed be maintained until the end of the year, but due to the "green transition" it is becoming increasingly difficult to receive them. A farm that suffered from market shocks, including sanctions, may be allocated up to 280 thousand euros, and a fishing farm - up to 335," says Mikhail Khachaturyan, PhD in economics and associate professor of the Department of Strategic and Innovative Development at the Financial University. He believes that the subsidies will be extended, but the amounts will be reduced.
As practice has shown, China's retaliatory actions are extremely destructive. Associate Professor of the Department of Strategic and International Management at the Higher School of Business at the National Research University Higher School of Economics Igor Stroganov reminds us: sanctions against Californian farmers have ruined many.
"China avoids direct economic confrontation until the very end. But then it consistently and carefully presses on the main pain points. The blow to the dairy industry is quite unpleasant for the European Union: for many years, dairy products were the main driver of foreign sales," he comments.
Khachaturyan believes that protective duties will reduce European exports to China by 15-20%.
A PUNCH TO THE GUT
Another sensitive area is germanium and gallium, which are needed to make solar panels, fiber optics, night vision devices, and, most importantly, advanced microprocessors. The U.S. Geological Survey estimates that China produces 98 percent of the world's gallium and 60 percent of its germanium.
Last year, Beijing cut exports by nearly half in response to U.S. restrictions on semiconductor sales. And prices in the industry doubled.
The US was helped by cooperation with Vietnam. "In addition, America has its own deposits capable of providing 80-85% of needs, the rest can easily be bought in Canada, Japan and South Korea," Khachaturyan explains.
Except Greenies and Enviroloons will sue to stop any domestic mining. All indigenous sacred sites, I'm sure
But in Europe the situation is different. The deficit of rare earth metals can complicate the production of high-tech products, including for the military-industrial complex. "Microprocessors, fiber-optic products, solar panels and night vision devices for the mass market were made in China," Stroganov notes.
However, it will not be possible to increase its own capacities. "The Belgian concern Umicore is loaded to the limit, and there are no others. The technologies for obtaining gallium and germanium are specific, and are not suitable for every metallurgical or chemical enterprise," explains independent industrial expert Leonid Khazanov.
The US, Canada, Finland, South Korea and Japan will not help out - their deposits are small, experts add. In addition, the bulk goes to the domestic market, so Beijing can tighten the technological noose around the EU's neck as much as it wants.
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