China Battery Inc.’s deepening US foothold
China Battery Inc. continues to make inroads into the US market, and further embedding itself in the global EV supply chain.We’ve already discussed at length the inherent risks of Ford’s planned Michigan EV battery plant with China’s CATL. This week, CATL secured another foothold in the US: a deal to supply Dallas-based HGP Storage with 450 megawatt-hours of lithium-ion batteries for a Texan energy storage project.
This comes after a similar deal inked in October, which has CATL as a sole supplier of lithium battery packs to a large battery storage facility in Las Vegas. As a Chinese industry outlet put it: CATL is “using energy storage to accelerate overseas expansion.”
Separately, Ford just signed deal to jointly invest with PT Vale Indonesia and China’s Zhejiang Huayou Cobalt in a 4.5 billion USD nickel processing plant in Indonesia. Ford is separately developing a supply agreement with Huayou for battery materials.
We wonder: Will the involvement of a Chinese company—a “foreign entity of concern”—disqualify Ford from IRA tax breaks under newly tightened rules unveiled on Friday?
Speed bumps ahead for the global economy
In the three decades since 1990, productivity and incomes rose while inflation fell. Now, “nearly all the economic forces that drove economic progress are in retreat,” warns the World Bank in a new report. Growth in total factor productivity is slowing. Investment growth is weakening. The global workforce is aging. Covid’s health shocks and disruptions have triggered reversals in human capital.
The result: the threat of “a lost decade in the making” as global GDP growth is forecast to slow to a three-decade low of 2.2%. And the remedy, per the World Bank: increase investment, cut trade costs, double down on services, raise labor force participation, and strengthen global cooperation.
One piece of good(ish) news that could be a sign of where global inflation is headed: Increases in eurozone consumer prices slowed sharply in March to 6.9% year-on-year, even as the core rate excluding food and energy accelerated to 5.7%.
Eurozone CPI, year-on-year percent change
Europe sharpens its trade defense tools
The EU is adding a new tool to its trade defense arsenal, just several months after another defensive measure aimed at distortive foreign subsidies entered into force in January. The new tool is called an anti-coercion instrument, designed to “deter third countries from targeting the EU…with economic coercion through measures affecting trade or investment.”
With the new instrument, Europe can sidestep the World Trade Organization and directly hit back at coercive economic behavior. Among the measures the instrument allows for are increased customs duties, import and export restrictions, and restrictions on services and procurement.
All this is happening as Europe reckons with an assertive and aggressive China. As Ursula von der Leyen, president of the European Commission, said in a speech on Thursday: China’s “imperative for security and control now trumps the logic of free markets and open trade.” The implication is that competing requires reassessing the economic orthodoxy of globalization — or, at least, having options when other players distort that orthodoxy.