“Deglobalization” has entered the narrative zeitgeist. But what’s happening on the ground? This weekly series seeks to answer that question with a round-up of deglobalization developments from the week that’s done.
1. Stellantis is scaling back its China ambitions, shrinking its factory footprint in the country as a result of geopolitical tensions, competition with Chinese players, and complications with a local partner, Guangzhou Auto. “I’m only making red ink, so if I move out of China, I’m only improving my financials” said Stellantis CEO Carlos Tavares. Chinese-owned brands accounted for 48% of the country’s vehicle sales in 2022, up from 38% in 2020.
2. Australia’s $130 billion sovereign wealth fund is projecting that war, geopolitical tension, and deglobalization will continue to push inflation upward in the coming year. The fund is responding by betting on gold and other commodities.
3. In a New York Times op-ed, former US Trade Representative Robert Lighthizer argues that the US needs to “adopt an explicit policy of strategic decoupling” from China, to include: Tariffs on all of China’s imports into the US, expanded export controls, restrictions on high-tech manufacturing in China, support for US companies moving out of China, and limits on investment going into China.
4. Battery company Redwood Materials is investing some 3.5 billion USD in a new recycling and manufacturing campus in South Carolina, projected to produce enough components to power a million electric vehicles. Redwood recycles and processes anode and cathode materials that are otherwise made almost exclusively in China. This is just the latest in a set of recently announced domestic investments in EV-relevant battery production: At least 21 US battery gigafactories, totaling some 54.3 billion USD, have been announced since the beginning of 2021.
5. Apple has announced it will start making MacBooks in Vietnam by mid-2023 – part of a larger effort to diversify its production base away from China amid escalating geopolitical tension and continuing uncertainty surrounding China’s industrial environment.
6. China has released new policy guidelines tightening control over cross-border information flows. These guidelines will increase government oversight of data processing, cross-border data transfers, and mergers and acquisitions activities involving foreign capital that Beijing determines could affect national security.
(Photo by Pexabay/Pexels)