1/6
Even as the EU and the US gear themselves for a surge in Chinese EV sales as Chinese producers overwhelm their foreign competitors, the profitability and share prices of Chinese EVs have plummeted this year.
cnb.cx/48IMGYd
Even as the EU and the US gear themselves for a surge in Chinese EV sales as Chinese producers overwhelm their foreign competitors, the profitability and share prices of Chinese EVs have plummeted this year.
cnb.cx/48IMGYd
2/6
That's because their expansion in sales is more a reflection of weakness in the domestic economy than it is a reflection of production strengths. With Chinese households unable to buy a significant portion of what they produce, but with investment nonetheless being poured...
That's because their expansion in sales is more a reflection of weakness in the domestic economy than it is a reflection of production strengths. With Chinese households unable to buy a significant portion of what they produce, but with investment nonetheless being poured...
3/6
into the manufacturing sector, the result is not a brisk, profitable market for EV producers but rather widening overcapacity and a struggle to stay profitable. This overcapacity is being shifted abroad through the trade account.
into the manufacturing sector, the result is not a brisk, profitable market for EV producers but rather widening overcapacity and a struggle to stay profitable. This overcapacity is being shifted abroad through the trade account.
4/6
While EU and US policymakers focus on the EV market, they should really be focusing more generally on the role of trade in externalizing the cost of increasing production subsidies in surplus economies at the expense of demand. Trade should boost total demand, not repress it.
While EU and US policymakers focus on the EV market, they should really be focusing more generally on the role of trade in externalizing the cost of increasing production subsidies in surplus economies at the expense of demand. Trade should boost total demand, not repress it.
5/6
There's nothing wrong in principle with heavily subsidized EVs, as a recent Economist article notes, but they don't seem to understand why it matters that exporting more EVs abroad does not lead to an equivalent boost in imports.
economist.com/leaders/2024/0…
There's nothing wrong in principle with heavily subsidized EVs, as a recent Economist article notes, but they don't seem to understand why it matters that exporting more EVs abroad does not lead to an equivalent boost in imports.
economist.com/leaders/2024/0…
6/6
It is not exports that expand global production. It is trade, which means countries exporting and importing goods from each other to maximize comparative advantage and economies of scale. Large, persistent surpluses imply repressed domestic demand, not the benefits of trade.
It is not exports that expand global production. It is trade, which means countries exporting and importing goods from each other to maximize comparative advantage and economies of scale. Large, persistent surpluses imply repressed domestic demand, not the benefits of trade.
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