Tag: China

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European Union vote to slap tariff charge on Chinese EV imports

EU EV Charge

On Friday 4th October 2024, the European Union voted to implement definitive tariffs on battery electric vehicles (BEVs) made in China

‘The European Commission’s proposal to levy definitive countervailing duties on imports of Chinese battery electric vehicles has garnered the requisite support from EU Member States to proceed with the imposition of tariffs,‘ stated the EU.

Initially, the EU announced in June its intention to impose higher tariffs on imports of Chinese electric vehicles, citing substantial unfair subsidies that threaten economic harm to European electric vehicle manufacturers.

The EU disclosed specific duties for companies based on their level of cooperation and the information provided during the bloc’s investigation into China’s EV production, which commenced last year. Provisional duties have been in effect since early July.

Following the receipt of ‘substantiated comments on the provisional measures‘ from stakeholders, the European Commission updated its tariff strategy in September 2024.

A spokesperson from China’s Ministry of Commerce indicated that Beijing maintains its stance that the EU’s investigation into China’s electric vehicle industry subsidies has led to predetermined outcomes – suggesting that the EU is fostering unfair competition.

China responded by vowing a suitable response.

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What is China’s equivalent to Nvidia?

AI microchips

Chinese firms are reportedly intensifying their efforts to develop a competitive alternative to Nvidia’s AI chips, as part of Beijing’s ongoing initiative to reduce its reliance on U.S. technology.

China faces several challenges that are impeding its technological progress, including U.S. export restrictions that limit domestic semiconductor production. The lack of technical expertise is also reported to be a problem.

Analysts have identified companies including Huawei as the principal competitors to Nvidia in China

China’s counterparts to Nvidia, such as Huawei, Alibaba, and Baidu, are actively developing AI chips to compete in the same market. Huawei’s HiSilicon division is known for its Ascend series of data centre processors.

Huawei’s HiSilicon division is known for its Ascend series of data centre processors, and Alibaba’s T-Head has produced the Hanguang 800 AI inference chip. Other significant players include Biren Technology and Cambricon Technologies.

Alibaba’s T-Head has developed the Hanguang 800 AI inference chip. Other significant players include Biren Technology and Cambricon Technologies.

These Chinese firms are intensifying their efforts to create alternatives to Nvidia’s AI-powering chips. This is a big part of Beijing’s broader initiative to reduce its reliance on U.S. technology.

Nvidia’s surge in growth is attributed to the demand from major cloud computing companies for its server products, which incorporate graphics processing units, or GPUs.

These GPUs are crucial for entities like OpenAI, the creator of ChatGPT, which requires substantial computational power to train extensive AI models on large datasets.

AI models are crucial for chatbots and other AI applications

Since 2022, the U.S. has limited the export of Nvidia’s top-tier chips to China, with further restrictions imposed last year.

The U.S. sanctions and Nvidia’s market dominance pose significant obstacles to China’s ambitions, particularly in the short term, according to analysts. The U.S. has curbed the export of Nvidia’s most sophisticated chips to China since 2022, with increased restrictions implemented last year.

China’s GPU designers rely on external manufacturers for chip production. Traditionally, this role was filled by Taiwan Semiconductor Manufacturing Co. (TSMC). However, due to U.S. restrictions, many Chinese firms are now unable to procure chips from TSMC.

As a result, they have shifted to using SMIC, China’s largest chipmaker, which is technologically several generations behind TSMC. This gap is partly due to Washington’s limitations on SMIC’s access to essential machinery from the Dutch company ASML, necessary for producing the most advanced chips.

Huawei is driving the development of more sophisticated chips for its smartphones and AI, which occupies a significant portion of SMIC’s capacity.

Nvidia has achieved success not only through its advanced semiconductors but also via its CUDA software platform. The system enables developers to build applications for Nvidia’s hardware. This has fostered an ecosystem around Nvidia’s designs, which will be challenging for competitors to emulate.

Huawei leading the pack for China

Huawei is at the forefront as a leading force in China for its Ascend series of data centre processors. The current generation, named Ascend 910B, is soon to be succeeded by the Ascend 910C. This new chip may come to rival Nvidia’s H100.

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China’s tech stocks rally to 13-month high on new stimulus

Tech stocks up China

Chinese technology stocks, such as the previously underperforming Alibaba, have surged this week, reaching peaks not observed in over a year

The stock surge follows the announcement of stimulus measures by China’s central bank to boost the world’s second-largest economy.

On Thursday 26th September 2024 in the U.S., Alibaba’s shares closed above $100 for the first time since August 2023.

Tencent’s shares ended at their highest point in over two and a half years.

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Chinese stocks up sharply after Beijing confirms stimulus measures

China stocks up

Chinese stocks continued to rise following state media reports that China’s top leaders have endorsed the government’s recent measures to bolster their economy.

The CSI 300 index in Mainland China continued its rally for a seventh consecutive day, reaching its highest point in about four months, subsequent to a meeting of China’s highest officials confirming the government’s latest economic stimulus actions.

South Korea’s Kospi index surged by 1.9%, driven by advances in semiconductor company SK Hynix, which declared the commencement of mass production of the world’s inaugural 12-layer HBM3E chip, utilised in AI applications.

See SK Hynix Newsroom report here

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The AI Race between China and the U.S.

AI development in China and U.S.

Artificial Intelligence (AI) has become a pivotal battleground in the technological race between China and the United States.

“AI is expected to become a crucial component of economic and military power in the near future,” Stanford University’s Artificial Intelligence Index Report 2023 stated.

Both countries are significantly investing in AI research and development, striving to achieve a leading role in this revolutionary sector. This post looks at the major figures in China’s AI scene, their progress, and their comparison with their American counterparts.

China’s AI Landscape

China’s AI aspirations are propelled by a number of significant technology firms, each forging their own AI models and applications.

Baidu: Often referred to as the ‘Google of China,’ Baidu leads in AI development. Its premier AI model, ERNIE (Enhanced Representation through Knowledge Integration), fuels the Ernie Bot, a chatbot aimed to compete with OpenAI’s ChatGPT. Baidu asserts that ERNIE 4.0 matches GPT-4’s capabilities, demonstrating sophisticated understanding and reasoning abilities.

Alibaba: Alibaba’s AI model, Tongyi Qianwen (commonly known as Qwen), is a comprehensive set of foundational models adept at a range of tasks, from generating content to solving mathematical problems. Select versions of Qwen are open-source, enabling developers to utilize and modify them for various uses. Alibaba has announced that Qwen models are in use by over 90,000 enterprise clients.

Tencent: The Hunyuan model from Tencent is a prominent component of China’s AI landscape. Offered through Tencent’s cloud computing division, Hunyuan is tailored to facilitate a broad spectrum of applications, encompassing natural language processing and computer vision.

Huawei: In spite of considerable obstacles stemming from U.S. sanctions, Huawei persists in AI innovation. The firm has created its own AI processors, like the Kunlun series, to diminish dependence on international technology. Huawei’s AI features are incorporated into a diverse array of products, including smartphones and cloud solutions.

Comparison to the U.S.

The U.S. continues to be a dominant force in AI, with leading companies such as OpenAI, Microsoft, Google, Anthropic and Meta spearheading advancements.

Generative AI: U.S. firms have advanced significantly in generative AI, with OpenAI’s GPT-4 and Google’s Gemini at the forefront. These models excel in creating text, images, and videos from user inputs. Although Chinese models like ERNIE and Qwen are strong contenders, the U.S. maintains a slight lead in capabilities and market penetration.

Semiconductor Design: The U.S. leads the semiconductor design industry, vital for AI progress. U.S. companies command an 85% global market share in chip design, crucial for AI model training and system operation. China’s dependence on imported semiconductors is a notable obstacle, but there are ongoing efforts to create homegrown solutions.

Research and Innovation: Both nations boast strong AI research sectors, yet the U.S. edges out slightly in generating state-of-the-art AI products. U.S. tech giants frequently introduce AI breakthroughs to the market, with Chinese firms quickly gaining ground.

Government Support: The Chinese government ardently backs AI advancement, enacting strategies to spur innovation and lessen foreign tech reliance. Such support has spurred China’s AI industry’s rapid expansion, positioning it as a strong rival to the U.S.

Conclusion

The competition in AI development between China and the U.S. is escalating, as both countries achieve significant breakthroughs. Although the U.S. maintains a marginal lead in some respects, China’s swift advancement and state backing indicate that the disparity might keep closing. The quest for AI dominance by these nations is set to influence the worldwide technological and innovative landscape profoundly.

As of September 2024, it is estimated that China’s AI development is approximately nine months behind that of the U.S.

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China’s exports up by 8.7% in August 2024

Exports data China

August 2024 saw China’s exports increase more than expected however, imports fell short of forecasts

Exports expanded by 8.7% in U.S. dollar terms compared to the previous year, while imports saw a marginal increase of 0.5%.

The export volume of China’s rare earths decreased by 1% from the previous year, imports experienced a more significant drop of 12%.

China’s exports to its major trading partners, the U.S., European Union and Association of Southeast Asian Nations all reportedly rose in August from a year ago.

Exports to the EU grew the most, up by 13% according to preliminary calculations.

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China’s Consumer Price Index (CPI) climbs by 0.6% – less-than-expected

China flag and charts

On Monday 9th September 2024, China announced that its consumer price index (CPI) increased by 0.6% year-on-year in August 2024, falling short of expectations and due mainly to decreasing costs in transportation, home goods, and rents.

The consumer price index was projected to rise by 0.7% year-on-year in August 2024, based on a poll. However, the producer price index experienced a decline of 1.8% year-on-year in August, exceeding the analysts’ forecast of a 1.4% decrease.

China’s inflation rate increased by 0.6% year-on-year, which was below the 0.7% economists had anticipated according to a Reuters poll. Month-on-month, the Consumer Price Index (CPI) saw a rise of 0.4%, also falling short of the expected 0.5%.

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U.S. introduces new microchip-related export controls

U.S. chip rules

The Biden administration is reportedly implementing new export controls on essential technologies, such as quantum computing and semiconductor materials, in response to China’s progress in the global chip market

These controls encompass quantum computers and their components, sophisticated chipmaking tools, semiconductor technologies, certain metal and metal alloy components and software, and high-bandwidth chips, which are vital for AI applications.

While the U.S. intensifies its measures to curb China’s expansion, there is noticeable hesitancy within the global industry.

The U.S. Department of Commerce issued new regulations on Friday, 6th September 2024, encompassing quantum computers and their components, sophisticated chipmaking tools, certain metal and metal alloy components and software, as well as high-bandwidth chips, which are vital for AI applications.

See report details here

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Black Myth Wukong – China’s first global gaming hit sells millions in a week

Black Myth

China’s inaugural venture into high-end video gaming has smashed global records, enhancing the industry’s international aspirations despite the gaming restrictions imposed by Beijing.

Black Myth: Wukong, an action-adventure game rooted in Chinese mythology, surpassed 10 million units sold just three days following its release on 20th August 2024. A week and a half later, it continued to hold the second spot in revenue rankings in the U.S., and remained the top-selling game worldwide, according to the Steam video game platform where it sells for around $60.

Hero Games co-published the game and was an early investor in its developer Game Science.

About the game

The game Black Myth: Wukong is an action RPG rooted in Chinese mythology. The story is based on Journey to the West, one of the Four Great Classical Novels of Chinese literature. You shall set out as the Destined One to venture into the challenges and marvels ahead, to uncover the obscured truth beneath the veil of a glorious legend from the past.

Black Myth: Wukong
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U.S. and China reportedly reach agreement to cooperate on financial stability

U.S. & China flags

The U.S. and China recently signed an agreement to cooperate on financial stability. This agreement was part of a meeting of the U.S. – China Financial Working Group held in Shanghai. 

The discussions were reportedly described as professional, pragmatic, candid, and constructive.

The agreement includes measures for both countries to collaborate on capital markets, cross-border payments, and monetary policy. Representatives from various financial institutions and regulatory bodies from both nations participated in the meeting.

This cooperation aims to enhance financial stability and address potential financial risks more effectively. It’s a significant step towards fostering economic collaboration between the two largest economies in the world.

See full report here

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Over half of new cars sold in China are electric or hybrid

Electric, hydrogen, gas and petrol hybrid vehicles

China has seen new energy vehicles surpass traditional fuel-powered cars in monthly sales for the first time.

(Data as per the China Passenger Car Association’s July 2024).

New energy vehicles, comprising solely battery-operated and hybrid-powered cars, represented 51% of China’s new passenger car sales as registered in July 2024 as reported by China Passenger Car Association.

This marks an increase from a 36% market share the same time in 2023, and a rebound from just under one-third in January 2024.

Report accuracy

The accuracy of the association’s data has previously faced scrutiny. July’s report revealed that battery-only vehicles had higher sales than hybrids, achieving a 28% market share.

But sales and delivery reports from companies like BYD suggest a growing consumer preference for hybrid vehicles in China which sits in line with the China Passenger Car Association data.

As the largest global automobile market, China has experienced a slowdown in overall economic growth, leading to strong competition and a price war within the new energy vehicle sector.

Policy

For over ten years, the Chinese government has ‘supported’ the local new energy vehicle industry with subsidies and beneficial policies. The most recent trade-in initiative aimed at stimulating consumption has particularly encouraged the purchase of new energy vehicles.

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China’s rival to Elon Musk’s Starlink internet launches satellites to low Earth orbit

Internet satellites

On Tuesday 6th August 2024, China launched its inaugural batch of internet satellites, which are expected to be part of a constellation designed to compete with SpaceX’s Starlink.

The constellation, named “Thousand Sails,” comprises over 15,000 satellites in low-Earth orbit that are anticipated to provide worldwide internet coverage.

China plans to have 648 satellites in orbit by 2025 as part of the first phase of the constellation’s deployment, aiming to establish a global internet network, as reported by state media CCTV.

The satellite system will be in direct competition with Elon Musk’s Starlink.

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Apple’s iPhone crown slips again in China

Mobile

Apple has been ousted from the top five smartphone vendors in China during Q2, as local brands like Huawei continue to escalate competition

Apple is no longer among the top five smartphone vendors in China as local brands take over the market.

Apple’s market share in China has declined, falling to 14% in the second quarter from 15% in the first quarter and 16% 2023.

For the first time in history, domestic vendors have taken over all top five positions in China.

According to reports, incorporating Apple’s Intelligence systems in its products in mainland China will be crucial over the next 12 months, as Chinese brands are rapidly integrating generative AI into their designs.

This is not good news for Apple. The company is facing challenges, notably lagging behind in the AI innovation race, and compounded by a rapidly falling share of the mobile market in China.

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Which governments hold the most Bitcoin?

Bitcoin cartoon

U.S., UK and Germany hold more Bitcoin than you may think.

According to the Arkham website, the United States’ government holds some 212,847 BTC making it one of the biggest holders of Bitcoin, while the treasuries of the U.K. and Germany reportedly hold around 61,245 BTC and 49,858 BTC each. (These values alter daily).

In addition to Bitcoin, the U.S. government also holds around $200 million in other cryptocurrencies like Ether (ETH), as well as major stablecoins like USDC.

U.S. Bitcoin holding by current value according to Arkham

Data from Arkham (as of 12th July 2024)

Arkham, a crypto intelligence platform focused on deanonymizing entities on the blockchain network, has introduced a dashboard featuring the governments with the largest crypto holdings.

The U.K. government, reportedly ranked second, holds around $3.5 billion worth of Bitcoin at current valuations, according to Arkham’s data. The German government owns roughly $2.5 billion.

UK Bitcoin holding by current value according to Arkham

Data from Arkham (as of 12th July 2024)

Other world governments holding Bitcoin

China, Russia, Ukraine, El Salvador, Finland, Bhutan and many others.

In 2021, El Salvador became the first country to make Bitcoin legal tender and mandated all local businesses to accept payments in BTC. 

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China’s exports beat forecast – but imports drop

Bust container port

In June 2024, China’s imports fell by 2.3% year-on-year in U.S. dollar terms, missing the expected 2.8% growth forecast by analysts.

However, exports rose by 8.6%, surpassing the anticipated 8% growth. This resulted in a 2% increase in year-to-date imports and a 3.6% rise in exports for the first half of the year compared to the same period last year.

Additionally, China’s trade with the Association of Southeast Asian Nations (ASEAN) surged by 7.1% in the first half of the year, solidifying ASEAN as China’s largest regional trading partner, followed by the European Union.

Trade with Brazil grew rapidly in the first half of the year, with Chinese exports to the country surging by 24.4%.

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China’s inflation data missed projections – rising 0.2% in June 2024

China CPI data

China’s consumer price inflation rose by 0.2% in June 2024 from a year ago, falling short of expectations. Meanwhile, producer prices remained in line with forecasts.

Main points

Consumer Price Index (CPI)

China’s CPI was expected to rise by 0.4% year-on-year in June, according to poll conducted by Reuters. However, the actual increase was only 0.2%. Lacklustre domestic demand has contributed to keeping inflation subdued in China, unlike major economies such as the U.S., where prices have remained elevated.

Producer Price Index (PPI) 

The PPI, which measures factory-gate prices, dropped by 0.8% from a year ago, aligning with expectations. This reflects the ongoing challenges faced by manufacturers and businesses.

Core CPI

Stripping out more volatile food and energy prices, core CPI rose by 0.6% year-on-year in June. While this is slightly slower than the 0.7% increase for the first six months of the year, it indicates a relatively stable inflation trend.

Pork and beef

Notably, pork prices surged by 18.1% in June compared to a year ago, while beef prices fell by 13.4%.

In summary, China’s inflation remains subdued due to weak demand, even as other global economies experience higher price pressures. Policymakers will closely monitor these trends to ensure economic stability.

Note: this information is based on data from the National Bureau of Statistics and reflects the situation as of 10th July 2024.

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An important rare Earth metal

Tungsten rare Earth metal

Tungsten is a critically important rare earth metal, renowned for its unique and valuable properties.

Tungsten has the highest melting point among all metals, which makes it exceptionally suitable for high-temperature applications.

Key aspects of its importance

Industrial and technological applications

Tungsten is used in many industries where hardness, high density, high wear resistance, and high-temperature resistance are required. This includes mining, construction, energy generation, electronics, aerospace, and defence sectors. It is used in weapons, autos, electric car batteries, semiconductors and industrial machinery.

Fact: approximately 2Kg of tungsten goes into every electric vehicle.

Alloys

Metals are frequently alloyed with Tungsten to enhance their strength without substantially adding to their weight. This property is vital for uses like arc-welding electrodes and heating elements in high-temperature furnaces.

Significance

Tungsten is acknowledged as a critical metal because of its economic significance and the scarcity of its sources. It is reported that China produces the majority of the world’s tungsten, controlling approximately 80% of the supply of this rare earth metal.

Durability and flexibility

Tungsten’s durability, flexibility, and resistance to corrosion contribute to its popularity across various industries and applications. It ranks among the hardest and most resilient materials found in nature.

These characteristics render tungsten not just crucial but also indispensable for numerous high-tech applications. The rarity of tungsten and the intricate nature of its extraction and refinement processes enhance its value even further.

World suppliers of tungsten

According to Statista.com the global tungsten market was valued at over $5 billion USD in 2022. It’s projected to grow significantly, with estimates suggesting it could reach over $9.5 billion USD by 2030

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China manufacturing and Japan’s GDP contracts – Asia markets mixed

Economic data

Over the last weekend of June 2024, China released its official PMI figures, with the manufacturing PMI remaining at 49.5, the same as in May 2024, indicating a second consecutive month of contraction.

On Monday 1st July 2024, Japan adjusted its first-quarter GDP figures, showing a contraction of 2.9% year-on-year, a revision from the previously reported 1.8%.

Asia markets started the second half 2024 mixed as investors assessed June business activity data from China as well as Japan’s GDP revision.

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Chinese auto sales overtake U.S. for the first time

EV competition

For the first time, automotive companies in China surpassed their U.S. counterparts in car sales last year, driven by BYD and expansion in emerging markets, according to a data released Thursday 13th July 2024.

Chinese brands such as BYD now at the forefront, reportedly sold 13.4 million new vehicles last year. In comparison, American brands sold approximately 11.9 million units. Japanese brands remained at the top with 23.59 million sales.

China’s sales growth rate surpassed that of the U.S., with a 23% rise from the previous year compared to the U.S.’s 9% increase.

The consistent high pricing by legacy automakers has inadvertently steered consumers towards more affordable Chinese alternatives.

No surprise here then as manufacturers milked profits from legacy lineups!

Tariffs have now been introduced on China to curb their automakers runaway success.

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The EU imposes higher tariffs of up to 38% on Chinese EVs

EU and EV's

In a significant development that may affect the electric vehicle (EV) market, the European Union (EU) has tentatively agreed to levy tariffs on Chinese EV manufacturers.

This decision reportedly follows an inquiry into the surge of inexpensive, government-subsidized Chinese vehicles entering the EU market.

From 4th July 2024, Chinese EV producers who participated in the investigation will incur an average duty of 21%, while those who did not will face a substantial 38.1% tariff. Specific rates will be imposed on firms such as BYD, Geely, and SAIC.

Additionally, non-Chinese automobile companies manufacturing some EVs in China, including those based in the EU like BMW, will also be impacted. Tesla might receive a specially calculated duty rate upon request.

These levies are on top of the current 10% tariff on all electric cars manufactured in China. The EU’s action comes after the United States’ drastic measure last month to increase its tariff on Chinese electric cars from 25% to 100%.

Some critics view this anti-subsidy probe as protectionist, potentially harming China-EU economic relations and the worldwide automotive production and supply chain. The German Transport Minister has reportedly cautioned about the possibility of a trade conflict with Beijing.

Although the tariffs are intended to shield the EU’s own industry, they highlight the challenges of maintaining a balance between free trade and competitiveness in the swiftly changing EV sector.

Unless a qualified majority of EU nations opposes it, the tariffs will become permanent in November 2024. The European car industry stresses the need for free and fair trade but recognizes that promoting the adoption of electric cars requires a diverse strategy.

As the dispute over tariffs persists, the repercussions for the EV market are yet to be determined.

One thing is for sure, the consumer will suffer through these tariffs and also through extra road tax levies yet to be introduced, especially in the UK.

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China’s exports up by 7.6% in May – more than expected

China exports increase

China’s exports in May increased more than anticipated, whereas imports fell short of expectations, according to customs data released on Friday 7th May 2024.

Exports increased by 7.6% in May from the previous year, surpassing the analysts’ expectations of 6% growth. Imports, however, increased by 1.8% during that time, missing forecasts of an expected 4% growth.

According to analysts’ calculations based on official data, China’s imports and exports to the U.S. and EU declined during that period. However, trade with the Association of Southeast Asian Nations (ASEAN) increased, with a 4.1% year-on-year rise in China’s exports to the region from January to May.

China’s exports to Russia decreased, but its imports from Russia grew by 7.5%. Despite trade tensions with the U.S., China’s exports have remained robust, contributing to the country’s overall economic growth.

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IMF upgrades China’s growth forecast to 5%

China GDP

On Wednesday 29th May 2024, the International Monetary Fund increased its projection for China’s economic growth this year to 5% from the previous 4.6%, citing robust first-quarter figures and recent policy actions.

This revision reportedly came after the IMF’s routine evaluation visit to China. The institution now predicts that China’s economy will expand by 4.5% in 2025, an increase from the earlier estimate of 4.1%.

However, by 2029, the IMF expects China’s growth to slow to 3.3%, influenced by an aging demographic and a decline in productivity growth. This is a decrease from the previous medium-term growth forecast of 3.5%.

China’s economy experienced a stronger-than-anticipated growth of 5.3% in the Q1, bolstered by robust exports. Meanwhile, April’s data indicated that consumer spending continued to be weak, although there was a resurgence in industrial activity.

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Chinese EV makers continue their BIG push into European markets

EV

This expansion occurs as the European Union investigates subsidies provided to Chinese electric vehicle manufacturers, a situation that may lead to the imposition of tariffs.

In May 2024 Nio opened a new EV showroom in Amsterdam, while Xpeng introduced its G9 and G6 sports utility vehicles in France.

Over the years, China’s electric vehicle industry has flourished due to the government’s incentives and support, raising concerns among politicians in Europe and the U.S.

Public marketing campaigns are unfolding against the backdrop of a European Commission investigation into subsidies provided to Chinese electric vehicle manufacturers. The outcome of this inquiry may result in EU tariffs being imposed on Chinese EV imports.

The United States has preempted such measures, with the Biden administration enacting a 100% tariff on Chinese EV imports.

Meanwhile, Chinese EV producers are intensifying their international expansion efforts, aiming to compete with Elon Musk’s Tesla on a global scale and secure an early advantage over traditional car manufacturers.