Geopolitics Daily
Posts
📰 Trade war brewing

📰 Trade war brewing

and China’s nuclear surge

Billy Robinson
August 21, 2024

Hello,

Today's coverage highlights key developments across Southern and Southeast Asia: In Pakistan, security forces have killed insurgents in Baluchistan province. Meanwhile, India and Malaysia have deepened their bilateral ties.

In the Middle East, efforts to broker a Gaza ceasefire remain stalled, with Hamas accusing the US and Israel of hindering negotiations. In the US, former President Obama has endorsed Kamala Harris at the Democratic National Convention.

The main story today focuses on the European Union's planned tariffs on Chinese electric vehicles, which are expected to provoke a new appeal to the World Trade Organization from Beijing.

This, and more, below ⤵️

Top 5 Stories

1️⃣ 🇮🇱 🇵🇸 Gaza ceasefire remains elusive: U.S. Secretary of State Antony Blinken emphasised the urgency of securing a ceasefire in Gaza as he concluded his Middle East tour, with no agreement yet between Israel and Hamas. Blinken stressed that the deal "needs to be done in the days ahead" and urged Hamas to accept a "bridging proposal" that Israel has already agreed to. Mediators from Egypt and Qatar, along with Blinken, are focusing on this proposal to close the gaps in the 10-month conflict, with ceasefire talks expected to continue this week. Hamas has accused the U.S. and Israel of deliberately sabotaging the deal, claiming they had agreed to the original terms but became disillusioned when additional conditions were introduced.

2️⃣ 🇵🇰 Insurgents killed in Pakistan’s southwest: Pakistani security forces have killed three insurgents linked to the recent assassination of a senior official in the southwest, the military reported Tuesday. The raid occurred in Mastung, Baluchistan province, where members of the outlawed Baloch Liberation Army (BLA) ambushed and killed Deputy Commissioner Zakir Baloch on August 12. The military confirmed the insurgents were behind Baloch's death and other attacks. Prime Minister Shehbaz Sharif praised the operation and reaffirmed the government's commitment to eradicating terrorism. The BLA, which claimed responsibility for the killing, has not yet responded but is expected to retaliate. Authorities noted that the BLA has allied with the Pakistani Taliban, which, along with other militant groups, remains active in Balochistan, a province long plagued by insurgency and violence.

3️⃣ 🇮🇳 🇲🇾 Delhi and Kuala Lumpur enhance previously sour bilateral relations: India and Malaysia have signalled a renewed focus on trade and defence cooperation. During a three-day visit to New Delhi, Malaysian Prime Minister Anwar Ibrahim held talks with Indian Prime Minister Narendra Modi. Modi, speaking at a joint press briefing, noted that the partnership had gained significant momentum over the past two years and announced plans to elevate their relationship to a comprehensive strategic partnership. He emphasised Malaysia's importance as a partner in the Indo-Pacific region and within the ASEAN bloc. Relations between the two countries had soured in 2019 following comments by then-Malaysian Prime Minister Mahathir Mohamad criticising India's decision to revoke the autonomy of Kashmir, its only Muslim-majority region. This tension led to a decline in India's imports of Malaysian palm oil, a key commodity for Malaysia.

4️⃣ 🇺🇸 Barack Obama endorses Kamala Harris at Democratic National Convention: Former U.S. President Barack Obama made a strong public endorsement of Kamala Harris at the Democratic National Convention, rallying support for her presidential campaign in the final stretch before the November election. Taking the stage in Chicago to enthusiastic applause, Obama joined a lineup of speakers that included his wife Michelle, Harris’s husband Doug Emhoff, and notable Democrats, as well as disillusioned Republicans distancing themselves from Donald Trump. In his speech, Obama acknowledged the challenging road ahead for Harris and her running mate Tim Walz, urging voters to rally behind their vision and turn out in force to "fight for an America we can believe in."

5️⃣ 🇹🇷 Turkiye’s economic woes linked to geopolitical instability: After 21 years in power, President Erdoğan faces major economic challenges, with scepticism high about his pledge to control runaway inflation by year-end. The crisis has been exacerbated by conflicts with Kurdish separatist groups in Syria and Iraq, as well as instability in the Middle East and Ukraine. Turkiye is grappling with soaring inflation, a crashing lira, and declining investor confidence, with the currency dropping from 3.8 per USD in 2018 to 33.7 in 2024. Despite a decrease in inflation from 71% in June to 61% in July, it remains alarmingly high, straining many citizens as wages lag. Over half the population survives on about $500 USD per month, while most pensioners get just $356. The situation worsened in 2023 when Erdoğan, defying conventional wisdom, cut interest rates to fight inflation. Turkiye’s central bank experienced rapid leadership changes, with five different chiefs in five years resigning or being dismissed over disagreements with rate cuts. Erdoğan later allowed rates to rise, reaching 65% by December, but even with a reduction to 45% in June, doubts persist about its effectiveness in curbing Turkey's severe inflation.

Major Story

🇪🇺 🇨🇳 EUROPEAN UNION POISED TO IMPLEMENT 37% EV TARIFF ON CHINA

The European Commission announced on Tuesday its plan to impose five-year import duties of up to 36% on Chinese electric vehicles (EVs), unless Beijing can propose an alternative to address concerns over state subsidies. Tesla EVs produced in China will face a reduced duty of 9%, due to lower levels of Chinese subsidies compared to other manufacturers.

Last month, Brussels imposed provisional tariffs on Chinese EVs, in addition to the existing 10% duty, after finding that they were unfairly undermining European competitors. The Commission has now proposed making these tariffs permanent, with rates subject to review by interested parties until the end of August and final approval by EU member states by October.

The proposed tariffs would be 17% for BYD (revised from 17.4%), 19.3% for Geely (down from 19.9%), and 36.3% for SAIC (down from 37.6%). Other Chinese producers cooperating with Brussels will face a tariff of 21.3%, up slightly from 20.8%, while those not cooperating would be subject to the maximum 36.3% duty.

China has strongly opposed these tariffs and appealed to the World Trade Organization, which Brussels believes its measures comply with. The EU is open to alternative solutions that align with WTO rules but insists it is up to China to propose them.

The provisional duties, which have been in place since July 5, were provided as bank guarantees but will be released once the definitive measures are finalised. This trade dispute comes amid broader tensions between China and the EU over trade, technology, and national security issues.

China's rise as an EV leader, fueled by substantial state investment, has given its manufacturers a competitive edge, with exports to the EU surging by 70% in 2023. The EU is now grappling with the challenge of protecting its automotive industry while navigating its complex trade relationship with China.

Promotion

Please subscribe to our YouTube channel too ⤵️

Horizon Geopolitics

Geopolitics explained 🌍

www.youtube.com/@HorizonGeopolitics

Other News

1️⃣ 🇨🇳 China pursues significant nuclear power investment: China has fast-tracked its nuclear power expansion by approving five new projects worth over 200 billion yuan (US$28 billion) as part of efforts to boost investment and meet its annual economic growth targets. The projects, located in Shandong, Zhejiang, Jiangsu, Guangdong, and the Guangxi Zhuang autonomous region, were approved during a State Council meeting chaired by Premier Li Qiang on Monday. These projects include 11 reactors, marking the largest number of units approved since 2019.

2️⃣ 🇺🇸 🇰🇷 Washington earmarks $3.5 Billion arms sale for South Korea: The Pentagon announced that a proposed arms sale to South Korea aims to enhance its ability to address both current and future threats, thereby deterring adversaries and supporting regional operations. Boeing and Lockheed Martin will handle the contract, pending Congressional approval, following the State Department's green light. This announcement coincides with the start of annual U.S.-South Korea military drills. The sale comes amid rising tensions on the Korean Peninsula due to North Korea's expanding nuclear capabilities. Approximately 19,000 South Korean troops are participating in the Ulchi Freedom Shield exercises, which are set to continue until August 29, with the goal of increasing readiness for potential North Korean aggression.