“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. Collaboration between Chinese and Saudi academic institutions on artificial intelligence research could put at risk the Gulf kingdom’s ability to access US-made chips, the Financial Times reports. The Chinese University of Hong Kong, Shenzhen (CUHK-SZ) and King Abdullah University of Science and Technology (Kaust) recently launched AceGPT—a large language model trained on Arabic, Chinese, and English—as Saudi Arabia seeks to lead regional development in AI. But people at Kaust who spoke to the FT are worried that there is a tradeoff between cooperating with China and securing continued access to critical US technology.
2. The European Union is planning to launch an investigation into Beijing’s subsidies for Chinese domestic steelmakers as part of a joint effort by Brussels and Washington to address unfair competition from China. For its part, China warned that the probe would disrupt global supply chains. The expected EU probe comes after the bloc began investigating Chinese subsidies for its homegrown EV makers
3. China is for the first time prohibiting domestic brokerages and their overseas units from taking on new mainland clients for offshore trading, and requiring new cross-border investments by existing mainland clients to be “strictly monitored,” Reuters reports. The move will further restrict capital outflows at a time of mounting downward currency pressure on the renminbi. According to an official notice seen by Reuters, activities deemed illegal now include cross-border securities broking, securities lending, fund sales, and investment consulting.
4. Major British banks are studying and preparing for the impacts of heightened Western sanctions on China, including by studying sanctions placed on Russia, Reuters reports. The effort is led by lobby group UK Finance, which represents around 300 firms and has convened a series of meetings to study the transparency of asset ownership and control and how easily Chinese products can be traced.
5. Chinese EV suppliers are eyeing Morocco as a location for factories to produce battery-related products, viewing the North African nation and US free trade partner as a workaround to Inflation Reduction Act rules that exclude products and inputs from “foreign entities of concern” from government subsidies, the Wall Street Journal reports. South Korea is also seen as a backdoor entry into the US market, as we note this week in our factors and markets briefing.
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