zephyreks @ zephyreks @lemmy.ml

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2 yr. ago

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I agree, dumping is well-defined. Here's the problem, though:

Chinese EV manufacturers are selling their cars domestically for far less than they are in Europe. They're already price-gouging their European customers. Moreover, only something like 10% of Chinese car production is made for export, and much of that is by European/American brands that are only producing in China because of the cost advantage. This is compared to 70% or more in the case of Germany and Japan.

There's a far stronger case for overcapacity and dumping from Germany and Japan than there is for China. It's an absurd bending of WTO rules to align with, as you said, protecting EU carmakers.

It's protectionist policy, and that's fine, but it should be clear to everyone that dumping and overcapacity are bullshit justifications for it. I absolutely agree with you that it should be a part of the EU mandate to protect EU workers and EU businesses. I don't disagree with the tariff, I just don't like the justification being given for it.

Except... That's not what UNCLOS says.

Article 56.2

the coastal State shall have due regard to the rights and duties of other States and shall act in a manner compatible with the provisions of this Convention

Article 58

In the exclusive economic zone, all States, whether coastal or land-locked, enjoy, subject to the relevant provisions of this Convention, the freedoms referred to in article 87 of navigation and overflight and of the laying of submarine cables and pipelines, and other internationally lawful uses of the sea related to these freedoms, such as those associated with the operation of ships, aircraft and submarine cables and pipelines, and compatible with the other provisions of this Convention.

In exercising their rights and performing their duties under this Convention in the exclusive economic zone, States shall have due regard to the rights and duties of the coastal State and shall comply with the laws and regulations adopted by the coastal State in accordance with the provisions of this Convention and other rules of international law in so far as they are not incompatible with this Part.

Article 73

The coastal State may, in the exercise of its sovereign rights to explore, exploit, conserve and manage the living resources in the exclusive economic zone, take such measures, including boarding, inspection, arrest and judicial proceedings, as may be necessary to ensure compliance with the laws and regulations adopted by it in conformity with this Convention.

Let me bold the points in question.

Valid operations in the EEZ are: freedoms referred to in article 87 of navigation and overflight and of the laying of submarine cables and pipelines, and other internationally lawful uses of the sea related to these freedoms, such as those associated with the operation of ships, aircraft and submarine cables and pipelines, however states shall have due regard to the rights and duties of the coastal State and shall comply with the laws and regulations adopted by the coastal State in accordance with the provisions of this Convention and other rules of international law in so far as they are not incompatible with this Part. The coastal state has the right to take such measures, including boarding, inspection, arrest and judicial proceedings, as may be necessary to ensure compliance with the laws and regulations adopted by it in conformity with this Convention.

Military action (and, indeed, enforcing sanctions with surveillance using military ships is almost certainly military action) is not a directly permitted operation (it's neither navigation nor overflight). It's not an operation involved with "operating ships or aircraft", and it's not an operation explicitly allowed under UNCLOS by any means. UNCLOS does not specify that all surface traffic is permitted. Given that, UNCLOS specifies that states should defer to the coastal states rules and regulations. However, UNCLOS only directly gives the coastal state right to intervene in matters regarding living resources and does not explicitly allow intervention for non-resource interests.

Again, so? China's household savings rate is notoriously high because Chinese consumers do not consume at Western rates. Real estate should not be an investment and the people that got burned knew what they were signing up for. Everyone can easily invest in the stock market, but stock market returns do not go up infinitely because value is extracted by the government rather than passed down to shareholders. The safest investment has always been bonds, and municipal bonds in particular often have outsized returns relative to inflation.

Anyway, the market corrected 30% (after rising hundreds of % over the past decade), some people who could afford multiple homes lost some money, woe is them.

If you have a single home, you're in the same position you always were: you can sell your house and buy a new one, because at the end of the day you need to live somewhere. If you have multiple homes, you took a sizable loss, but you were buying up multiple homes and nobody likes landlords.

Basically, you're saying that the rich should get richer at the cost of housing access for the poor. Not very socialist of you, eh?

https://www.zillow.com/homedetails/445-Bradley-Ave-San-Jose-CA-95128/19585003_zpid/

https://www.redfin.com/CA/San-Jose/445-Bradley-Ave-95128/home/731757

That was a whole lot of words to say "I don't know what I'm talking about about."

Below the profitable rate? Last I checked, Chinese EV manufacturers were either making money hand over fist or getting BTFO's of the market by those that could.

Basically, government officials knew that at some point they needed to aggressively overbuild real estate capacity in order to meet the urbanization demands. I think they predicted an incorrect curve: whereas they perhaps anticipated that urbanization would follow a trend more like Korea (74% at a similar stage in their urbanization trajectory), instead China is following a curve similar to Taiwan (~66%). A mistake in policy, yes, but it has localized effects.

Plus, I think you're missing a far more essential point: China doesn't give a fuck if every real estate developer goes bankrupt. That's just a cost of doing business. Instead, China's just swooping in and buying up distressed assets to turn into public housing. Homeowners aren't left holding the bag: developers are.

Again, your claim is that if something isn't explicitly specified, then it's allowed. This is the difference between common law (popular in the UK, US, Canada, Australia, etc.) and civil law (used everywhere else, including most of Europe, South America, China, Russia, etc.)

The question isn't about the concept of international law, but whether international law should follow civil, common, customary principles (or even Sharia, Halakhah).

Fremont factory, Nevada Gigafactory, Texas Gigafactory, Berlin Gigafactory...

Gee, Tesla sure outsourced all production to China.

Urbanization is expected to hit 75% by 2030... This is analysis corroborated by Morgan Stanley and others, so, unironically, yes.

I'm confused. Why would policymakers want to halt the decline in real estate as contribution to GDP? GDP growth is still 5% YoY even as the real estate industry is in freefall. Big Chinese developers want kaput, and still GDP growth is projected to be 5%. Basically: who cares? Sector rotation is normal, isn't it?

Lmao have you seen the new builds in California? It's not that you can punch through walls, but that you can literally fall through them. "Fire codes" nominally exist, but good luck enforcing them. All the work is shoddily done, things leak (for the one time a year it rains), the garage has exposed nails everywhere, and the doors are barely slapped together. Cabinets are basically an afterthought, the floors are basically hollow, and you can hear everything from your neighbour, your upstairs floor, and the street. A 2b1b in San Jose rents for $3700 a month, but sells for $1.2 million. Your mortgage is a $6400 monthly payment, plus $1200 in monthly property tax, plus home insurance and maintenance. US homes in prime real estate markets are profitable solely because of housing appreciation.

If you're talking about a place in Detroit? Yeah, ROI is high, but so is risk, and housing appreciation is low.

Think about it. If rent was more than the corresponding mortgage, everyone with any amount of capital would acquire infinite homes to fill the gap. The efficient market hypothesis isn't perfect, but it applies here.

Edit: if you do things yourself, unfortunately you don't get the luxury of corrupt and negligent officials so you probably have to build a proper home. Such is life.

This is, again, just a plainly incorrect take. Basically everyone in China is housed, yes, but a vast proportion of them still live in rural villages. The rural-to-urban transition does need to be planned for, and it's been a huge factor in China's real estate market. China's urbanization rate today is 66%, compared to 75% in Russia and 83% in the US.

Lmao if you can build a reliable car engine for $100 I'll give you a billion dollars for a car startup that will outcompete everyone else.

"Subsidized until their cars are at a better price"

What do you think subsidies are? Do you think China is paying $10k for each export sale? Do you think China is just hemorrhaging money so that they can bump sales numbers up?

China dumped billions of dollars into a domestic fast charging network that aggressively stimulated domestic demand and dumped billions of dollars into clean energy initiatives to make sure that electricity prices hover around 1RMB/kWh ($0.14/kWh). How much is electricity in Europe? How much is it in the US?

China offered $1750 in purchase-side tax incentives that have since been phased out. How much are the American purchase-side tax incentives passed by the IRA? Are they still ongoing?

Shanghai gave Tesla hundreds of millions in low-interest loans to set up a factory in Shanghai as opposed to, say, Jiangsu, in exchange for billions of dollars in investment. How much did Tesla's Nevada Gigafactory receive in subsidies?

Plus, let's take a look at who's actually exporting cars to Europe:

MG (SAIC), Volvo (Geely), Tesla, and European joint ventures (BMW, Renault, Volkswagen, etc.)

China has been subsidizing the infrastructure for EVs, absolutely, but subsidizing infrastructure is not illegal. If Europe wants to protect its domestic car manufacturers, the first thing it should look at is Tesla. There's also a reason BMW, Volkswagen, and Mercedes oppose tariffs: these risk retaliation against their currently rather unfettered access to the highly profitable, rapidly growing premium car market in China. They're seeing upwards of 10% YoY growth in their luxury car lineups.

The EU Commission is stabbing itself in the chest to save its face. von der Leyen is pursuing a personal vendetta against the best interests of German automakers, completely forgetting the fact that while 10% of Chinese car production is exported, about 70% of German car production is exported. Meanwhile, while Chinese cars predominantly target the lower end of the market, German cars for export are overwhelmingly premium and luxury vehicles. Just an insane policy that seems to be more political pandering than anything else.

It doesn't help that they're getting absolutely eaten out of the Chinese ICE market. It's a rough time to be an ICE car manufacturer.

"Dumped"?

The fuck do you think China is doing? Donating EVs to charity?

I'll tell this story in three parts:

1. Tesla's US subsidies
2. China's EV exports
3. China's "overcapacity"

Part 1.Tesla's US subsidies. Under the US' Inflation Reduction Act, purchases of new EVs made in the USA were given a tax incentive of $7500. Previously, states such as California has other incentives such as the $7500 incentive under CVRP. How much in subsidies has Tesla received from tax credits alone under the IRA in 2023, ignoring state-level benefits and carryover from pre-2023 benefits? 654000 sales, for a total of almost $5 billion dollars in purchase-side government subsidies. For 2023. We also know that Tesla has received billions in state-level government funding to set up factories in California, and billions more in government funding for their other various efforts. In comparison between 2009 and 2022, China handed out about $28 billion in EV subsidies, much of that at the state-level to encourage companies to set up factories. In fact, Tesla received huge subsidies to set up it's factories in Shanghai. By the end of 2022, China had phased out most purchase-side subsidies (except some lingering programs that are not set for renewal). Note that the maximum purchase-side subsidy was about $1750. China's most significant subsidy today is in it's expansion of the domestic charging network: China makes up 68% of the world's charging stations, with a huge number of them being fast chargers. Much of that expansion came out of government coffers and is a huge driver for EV adoption in China.

Part 2. China's EV exports. In 2022, China's EV exports were as follows, sorted by volume:

270k - Tesla

140k - SAIC (mostly under the British brand MG)

72k - European joint ventures

55k - BYD

(others)

So, let's be more clear about what the EU means: they don't like that foreign companies (including European ones, but mostly Tesla, and almost all European/American brands) are setting up shop in China to produce cars for export.

Part 3. China's "overcapacity". It's no secret that China has pitiful O&G reserves. Oil, notably, is needed for ICE vehicles, but not for EVs. That is, the switch to EVs is a matter of national security for China as it reduces Chinese reliance on foreign oil supplies. Indeed, a huge proportion of Chinese EV production is going to the domestic market, and exports make up only about 10% of total sales (for reference, this number is more like 70% for Toyota).

To sum it up: unlike Toyota/Japan (and others), China is consuming the vast majority of its production. Meanwhile, a huge number of it's exports are from foreign companies. It's most notable exporter is Tesla, which is notable for having received $5 billion in purchase-side tax incentives in 2023 in the US... Alone. This is compared to $28 billion between 2009 and 2022, most of which have been phased out, and for which a big proportion was to encourage setting up factories in specific provinces or to build out a domestic charging network.

Edit: to clarify, China does have more car factories than they know what to do with. This is because ICE companies are getting fucked by EV companies. All those factories dedicated to producing ICE cars? Fucked. Idling. Useless. Sales of all cars in China: Volkswagen (-0.2% YoY), Toyota (-3.8% YoY), Honda (-12.3% YoY), Nissan (-14.3% YoY). The only foreign brands that are staying alive in China are EV brands like Tesla (+20% YoY) and luxury cars like BMW (+7.8% YoY) and Audi (+11.3% YoY). These idling ICE factories are currently being closed by the government and the government is limiting licenses handed out for new factories.

Ironically, Tesla is a large part of the reason why Chinese EVs are so cheap because they started the price war... They just couldn't win it.

According to UNCLOS, which the US isn't signatory to? Some "international" ass law

Unlikely

I mean, how many BYDs do you see on European streets? How many Teslas?