Alicia García Herrero: “If China has a climate crisis and stops exporting renewable technology, what do we do?” | Economy | EUROtoday
The seek for nearer suppliers and their diversification to keep away from breaks within the provide chain has been normalized as one of many penalties of the pandemic. The industrial disruptions attributable to the Red Sea disaster have solely inspired this phenomenon amongst firms, giving rise to the popularization of a time period, deglobalization, which displays a sure tendency to prioritize the safety of the provision chain as a substitute of worth, as occurred till now. The rise of options to China resembling Mexico, Vietnam or India is there, however that doesn’t imply that China's reign because the world's largest manufacturing unit has ended, and because the chief economist for Asia Pacific at Natixis, Alicia García, defined this Tuesday Herrero, the important dependencies of the West with respect to the Asian big are nonetheless quite a few.
Beyond the scary geopolitical conflict round Taiwan, the dangers are many. Among them are local weather catastrophes, as already confirmed by the drought in Taiwan, which elevated the dearth of semiconductors, that are key to the car trade. “We ignore the most obvious risk, which is chance. In the West we don't ask ourselves whether China can produce enough green technology for everyone. For now they export two-thirds of what they manufacture and keep the rest, but if they have a major climate crisis and stop exporting, what do we do? Maybe then the prices of solar panels are going up because they need them. We have to think about these types of problems,” he mentioned throughout a convention at Esade beneath the title The finish of the worldwide provide chain?.
90% of photo voltaic panels come from China. Basically as a result of they’re cheaper. There are those that argue that in an environment friendly system China ought to produce 100%, as a result of if the target is to decarbonize shortly, the logical factor is to make use of the most affordable know-how. But as geopolitical concern good points weight, the path is the alternative: giving extra significance to its arrival, above the financial situation. “All of that is expensive. This decoupling means taking steps backwards in what we have been building for decades. It impacts the margins of companies, it is a management challenge,” summarized one other of the audio system, Miguel López Quesada, former president of Alcoa Spain.
One of the methods to do that has been the decision friendshoringthe English time period with which the artwork of strengthening industrial ties with nations thought of allies has been baptized, which is probably not the best option if the chilly numbers are noticed, however with which there aren’t any political or army tensions.
Belén Romana, Independent director of Santander, Werfen, Six and BME, is important of the European response. “She has been slow to understand how the game was changing, she has been a bit naive. There are two types of changes: structural ones that have to do with China and the emergence of a group of countries that can play a more important role in a multipolar world. And the shocks In the short term, the most obvious was the pandemic, which was a wake-up call for Europe because we realized the dependencies and what happens when value chains suffer.”
For López Quesada, there’s an important distinction in the way in which the economic system is conceived between Europe and China. “Our politicians want to reinvent the world every four years, while in China there is a roadmap. They are decisions of the country, not of enlightened ones. In Europe, Competition policy has slowed down the scale of some strategic sectors such as telecommunications, energy or banking… We do not have European-sized giants that can compete on an equal footing,” she laments.
García Herrero believes, nevertheless, that we must always not idealize the whole lot that China does, a lot much less copy its errors, amongst which he cites an inefficient industrial coverage, little assist to residents, low consumption and deflation. “They are going to end up like Japan,” he predicts.
India is probably probably the most anticipated actor on this industrial reconfiguration. Among its benefits, López Quesada identifies two: the usage of English, which makes the employability of its workforce superior to that of China. And that of know-how, as proven by the truth that many know-how firms have Indian managers. “It is a place to invest. The automotive sector has done it. And enormous infrastructures remain to be developed, which is an opportunity for Spanish companies.”
García Herrero, based mostly in Taiwan, however who has simply been to New Delhi, provides context. “India is one-fifth of China in size, but it already has a larger population. The urbanization rate is one third, so it will have minimal growth for 20 years. My impression is that it is creating manufacturing capacity. It has learned a lot from China in its industrial policies, which are very powerful, and the US is going to give technology to India to act as a counterweight to China. Not only civil, but also military, so that it does not depend so much on Russia.”
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