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INTERNATIONAL COMPETITION LUXURY PRODUCTS / GALILEO SPACE TECHNOLOGY BlowMeAI: China Just HIT France Where It HURTS... & France Is SCRAMBLING! PLAY YOUTUBE VIDEO Original article: https://www.youtube.com/watch?v=GSM01RbsYVg Peter Burgess COMMENTARY Peter Burgess
China Just HIT France Where It HURTS... & France Is SCRAMBLING! BlowMe AI 63.2K subscribers Oct 15, 2024 German trucks are losing their dominance in Russia as Chinese manufacturers take over the market. With affordable and durable options like Sitrak and Howo, Chinese trucks now control over 62% of Russia’s truck industry. Learn why Russian drivers are turning away from German brands and what this means for global truck markets. Join this channel to get access to perks: / @blowmeai Transcript 0:00 the eu's tariffs on Chinese electric cars have triggered a trade war that could devastate Europe's economy France is buried in 3.2 trillion EUR of debt while Italy faces a 100 billion Euro deficit and China's retaliation is now targeting their Lifeline luxury exports with 11 billion e in luxury goods and 61.5 million bottles of French cognac sold to China at risk France and Italy's economies are nearing the brink if Beijing retaliatory measures expand Europe could face a financial meltdown it cannot afford here are some of the areas that would hit Europe the hardest I just mentioned about alcohol well France is the biggest producer of Brandy a wine would could also be targeted in those Mediterranean Nations particularly France Italy and Spain would be hit very hard Brandy the European Union's recent decision to impose tariffs on Chinese electric vehicles EVS has ignited a potential trade war that threatens to intensify the already precarious economic situations of France and Italy 1:05 France's trade Minister says that the action by China seems to be retaliatory that's because 99% of the brand de that China Imports comes from France and the context of this is just just one week ago uh the European Union decided to hold a vote on whether it should impose tariffs on Chinese electric vehicles being voted being imported into the European Union a lot of countries abstained Germany voted no against that France emphatically voted in favor and now one week later a very French product an iconic French product which is seen as the sort of highend of French uh exports is now being hit with these tariffs by the Chinese uh trade uh Ministry the EU has implemented additional tariffs of up to 38% on Chinese EVS on top of the 2:01 existing 10% tariff on vehicles this measure has prompted Swift retaliation from Beijing China's Commerce Ministry spokesperson haad dong stated China reserves the right to file complaints to the World Trade Organization and called on the EU to correct its wrong practices this escalation in trade tensions comes at a time when both France and Italy are grappling with significant economic challenges France's fiscal crisis has reached alarming proportions with the country's total debt ballooning to a staggering 3.2 trillion EUR surpassing its entire economic output according to Inay the National Institute of statistics and economic studies France's debt to GDP ratio now stands at an alarming 112% raising serious concerns about fiscal sustainability and potential default the trade deficit currently exceeding €6 billion EUR each month has contributed significantly to this dire situation president Emanuel macron faces 3:00 the critical challenge of revitalizing the economy while navigating the potential Fallout from the trade dispute with China Jean pizani Ferry a prominent Economist and former adviser to the French government stated the structural weaknesses in the French economy High public spending low productivity growth and stagnating reforms have created a ticking Time Bomb this assessment underscores the severity of France's economic predicament and the urgent need for comprehensive reforms similarly Italy under the leadership of Georgia Maloney is struggling with a persistent gap between expenditures and revenues amounting to approximately 100 billion EUR the country's efforts to enhance trade revenues are hampered by structural inefficiencies and a lack of competitiveness issues that could be further exacerbated by the looming trade War Italy's debt to GDP ratio stands at a staggering 138% the second highest in Europe according to eurostat Sandro GOI an 4:03 Italian politician and Economist remarked Italy's economic woes are not isolated they reflect broader Trends across Europe exacerbated by the energy crisis and shifting trade Dynamics the country's Reliance on tourism which constitutes 10% of its GDP makes it particularly vulnerable to global economic shifts and potential retaliatory measures from China China's potential retaliation extends beyond the EV sector the country has already launched anti-dumping investigations into European Brandy pork and dairy products of particular concern is the Georgia Maloney where China has imposed provisional measures requiring importers to provide security deposits ranging from 30.6% to 39% on producers such as Remy Martin Mo at Hennessy and Martell this move is seen as a direct swipe at France one of the main champions of imposing higher tariffs on Chinese electric vehicles the French cognac 5:02 sector which exported 61.5 million bottles to China in 20123 according to the bureau National interprofessional du conyac bnic now faces a significant threat to its second largest market after the United States Anthony Brun president of France's AOC cognac producers expressed the industry's concerns we are the first to pay the piper China is trying to demonstrate that it is always giving priority to negotiate the potential loss of the Chinese market could have catastrophic consequences for the KAC industry which was already facing challenges due to Soaring inflation and declining foreign sales the impact on the European luxury goods sector a crucial component of both the French and Italian economies could be severe lvmh the French luxury giant led by Bernard Arno is particularly vulnerable the 75-year-old CEO of lvmh who is is worth $340 billion frequently 6:02 interacts with top Chinese government officials and has become a prominent figure in Chinese business circles the group's 24 billion EUR of fashion exports accounted for 4% of France's total exports in 20123 according to a study by consultancy asteres with European luxury goods exports to China valued at 11 billion EUR in 2023 including leather bags perfume jewelry shoes suits and other apparel any retaliatory measures could have significant consequences for this sector a third of the eu's $ billion worth of leather and plastic handbags exported to China last year originated in France highlighting the country's vulnerability to potential Chinese retaliation China's rationale for targeting luxury goods is multifaceted luxury products are non-essential to Chinese productivity and any price increases would have a limited impact on the broader Chinese population according to Bane and Company 7:02 the wealthiest 2% of customers typically account for about 40% of luxury sales moreover targeting this sector aligns with internal European Dynamics given France's vocal support for Ev tariffs and its significant luxury goods exports to China there's a reason also that these measures are targeted right are there any products that China might avoid retaliation because they actually need those items sure I'm sure there's going to be an exclusion list and in particular let's bring up airplanes uh Airbus is one of two main suppliers globally obviously uh and also look the Chinese right now are said to be in negotiations for about a 100 new widebody aircraft from Airbus those are not the single aisle planes that they assemble in t they would have to buy them from Europe they're not about to put a tax or tariff on items that they're about to buy an 8:00 import into China also any penalty against Airbus would be a benefit to Boeing we all we all know that Boeing and China right now have their difficulties and the US and China are in that uh trade spat as well so this this is an area that would probably not see tariffs at this time the mechanisms for Chinese retaliation are varied and complex since joining the World Trade Organization in 2001 China has been gradually reducing tariffs currently handbags from the EU are subject to only a 6% tariff when imported into China according to Chinese Customs Brokers however Beijing has other tools at its disposal including the potential expansion of its consumption tax China currently levies a consumption tax on 15 categories of goods with six falling into the luxury category high-end watches Cosmetics jewelry Yachts golf equipment and sports cars these items are taxed at varying rates on top of the standard 133% value added tax for 9:01 instance watches exceeding 10,000 when or $149 are taxed at 20% while diamonds face an additional 5% Levy extending this consumption tax to other luxury items such as leather bags could be a relatively straightforward way for China to Target European exports without violating WTO rules joh Hong way a senior researcher at The chongyang Institute for financial studies at renman University of China has even suggested that China should Institute a 100% luxury tax to teach the EU a lesson the implementation of such measures could be relatively simple most luxury goods are sold in physical stores and companies like lvmh typically maintain detailed customer records receipts are often necessary for customer service making the logistical challenge of collecting taxes minimal whether at Customs or point of sale the implications for luxury companies like lvm H and curing are significant while neither company discloses specific sales 10:04 figures for China the country accounts for a substantial portion of their Asian market which represents about a third of global revenue for each company passing on increased costs to Chinese consumers would be challenging especially given the current economic slowdown in China Bank of America analysts predict that most luxury companies will have to choose to raise prices significantly one potential risk of of increased taxes on luxury goods in China is that it could prompt more Chinese consumers to shop for these items overseas in Japan for example a surge in Chinese tourists in a weak Yen led to a 57% increase in sales for lvmh in the 3 months to the end of June however even this scenario could be less favorable than the status quo as prices in Japan are on average 12% lower than in China according to JP Morgan analysts while costs such as labor are high in Japan the broader economic context of this trade dispute is crucial 11:04 to understanding its potential impact both France and Italy are already facing severe economic challenges France's projected deficit for this year is expected to exceed 6% of GDP outpacing even the United States Italy's situation is equally precarious under prime minister Georgia Maloney the country's fiscal deficit has reached approximately 3.8% % in 2024 Rising inflation and energy costs threaten to worsen the already fragile economic landscape the potential impact on the German automotive industry adds more complexity to the situation China is considering increasing tariffs on Imports of EU cars with large engines a move that would primarily affect German manufacturers the global times quoted a leading Chinese Auto industry expert calling for raising the Tariff on imported vehicles with larger engin to reduce carbon emissions a move that would hit high-end German exports from Mercedes and BMW 12:06 research firm Sanford C Bernstein noted that the impact on German makers would be muted by the fact that most of their cars sold in China are made locally only 2% of Volkswagen's China sales are Imports vulnerable to higher tariffs along with 15% for BMW and 19% for Mercedes-Benz however given that the EU exports €18 billion EUR worth of vehicle to China annually with even more money tied up in local joint venture operations any retaliatory measures could be very painful for European manufacturers Volkswagen expressed concern about the eu's decision stating the negative effects of this decision outweigh any potential benefits for the European and especially the German automotive industry the company warned that the EU tariffs on Chinese electric vehicles could escalate trade conflicts and promote an ongoing Trend toward protectionism nationalism and 13:02 isolationism other European sectors at risk of Chinese retaliation include agricultural products such as wine from France Italy and Spain pork from Spain and dairy products from Denmark Spain is particularly vulnerable to potential duties on pork as China is its second largest market for pork exports speaking to Politico Spain's Minister for economy and trade Carlos quero said the EU needs to keep negotiating with China to avoid an escalation of these protectionist measures that in the end provide for a lose-lose situation and wine right now is at a historical Global glut so again other producers could fill the void there now pork Spain is the you know number two Market to China is the number two market for Spain in pork that could be targeted also Dairy that would hit Denmark the automotive sector faces a potential 25% tax on large engine European cars which could significantly 14:01 impact German manufacturers this move would align with China's stated goal of reducing carbon emissions but it would also serve as a strategic response to the eu's EV tariffs and then cars we're already hearing from State media saying that the Chinese car makers are pushing Beijing government to employ about a 25% tax on large engined European cars that's going to hit Germany pretty hard yence escalin the president of the European Chamber of Commerce in China aptly described the situation it's a little bit like seeing a slow motion traffic accident unfolding the accident has not happened yet and it is still possible to find an offramp it is getting urgent the tariffs range from 17.4% to 38.1% depending on the car maker the China Chamber of Commerce to the EU stated that these new rates would pose a serious Market barrier to Chinese EV exports however calculations by the rodium group found that five of six models from byd 15:05 China's largest ev maker would still earn a profit with a 30% tariff while a made in China Tesla Model 3 would sell it a loss some Chinese companies might still be able to make a profit even with duties as high as 30% however the new rates undoubtedly pose a significant challenge to Chinese EV manufacturers looking to expand their presence the European market the long-term consequences of this trade dispute for European Industries and global trade relations are yet to be fully understood if the situation escalates it could lead to a fragmentation of global trade systems impacting growth and prosperity worldwide as G gopath Chief Economist of the IMF warned Europe must tread carefully a misstep could lead to a fragmentation of global trade systems impacting growth and prosperity worldwide back in 1999 the European Union had a brilliant idea they wanted 16:03 to create their own Global navigation satellite system one that could rival the US GPS and Russian g n this system named Galileo after the famous Italian astronomer was meant to be a GameChanger in the world of satellite navigation the EU had big plans for Galileo they wanted it to provide an independent High Precision positioning system reducing their Reliance on the US and Russian systems the basic Services would be free and open to everyone while an encrypted higher Precision service would be available for government authorized users they even plan to include a new Global search and rescue function as part of the mosar system the project was officially agreed upon on May 26th 2003 by the European Union and the European Space Agency the system was intended primarily for civilian use unlike the more military focused systems of the US Russia and China however the European 17:04 system could be subject to shutdown for military purposes in extreme circumstances such as an armed conflict but creating a satellite navigation system from scratch is no small feat it requires enormous resources both in terms of funding and Technical expertise the EU realized they needed Partners to make this ambitious project a reality and who did they turn to none other than China in September 2003 China joined the Galileo project with great enthusiasm they invested a whopping €230 million e $32 million us5 million pound or 2.34 billion Chinese yuan in the project it seemed like a match made in heaven or should we say in space however the Friendship period didn't last long after China had paid all the cooperation costs the EU did something unexpected they excluded 18:00 China from the development of Galileo satellites citing the need to protect core Secrets just like that China lost its investment and gained nothing in return while the EU was busy pushing China out they were also struggling with their own issues the situation was so dire that on January 17th 2002 a spokesman for the project stated that as a result of us pressure and economic difficulties Galileo is almost dead the initial cost estimates were blown out of the water and the project seemed to be on life support despite these setbacks the EU pressed on a few months later European Union member states decided it was important to have a satellite-based positioning and timing infrastructure that the US could not easily turn off in times of political conflict the European Union and the European Space Agency agreed in March 2002 to fund the project pending a review in 2003 the devel velopment timeline of Galileo is a testament to the Project's complexity 19:03 and the challenges faced the first test satellite goova was launched on December 28th 2005 this was followed by the launch of the first operational satellite on October 21st 2011 Galileo started offering early operational capability on December 15th 201526 providing initial services with a weak signal Galileo goes live it took 17 years and cost around 10 billion euros Europe's answer to GPS has gone into operation with the launch of four more satellites from French Guyana it aims to produce the most accurate satellite navigation system in the world with real time positioning down to 1 meter or less compared to the 10 m range of its American rival many will be saying that this is a case of better late than never for the galile satellite navigation system when 20:00 the contract was first signed it was due for completion in 2008 here we are at the end of 2016 and the services have finally begun something to underline with Galileo though is that its competitors GPS and glonass the American and Russian versions are actually run by the military Galileo is not only a lot more accurate it's also run by the European commission which means that it's civil and in that sense it has great strategic importance for Europe the first Services free to users are limited to smartphones and car navigation units already fitted with Galileo compatible progress was slow but steady by October 2018 they had 18 active satellites and as of September 2024 there are 25 launch satellites in the constellation it's expected that the next generation of satellites will begin to become operational after 2026 to replace the first generation now here's where the story takes another unexpected turn while the 21:01 EU was struggling with Galileo China didn't sit idle they took their investment loss and turned it into motivation in November 2006 China opted instead to upgrade its Bayo navigation system which was then a regional satellite navigation system the decision was due to security concerns and issues with Galileo financing the beo system has grown by Leaps and Bounds as of 2024 it has provided services to users in countries and regions around the world 149 space cooperation agreements or memorandums of understanding with 46 National Space agencies and four International organizations signed satellite cooperation agreements with China the system's daily usage has exceeded 600 billion B's positioning accuracy can reach a range of 25 M to 30 m and its speed measurement accuracy is higher than 0.2 m/s the these are impressive figures that put beo in 22:01 direct competition with Galileo and GPS the Galileo system on the other hand claims to have greater accuracy than GPS with an accuracy of less than 1 meter when using broadcast ephemeris GPS 3 m and a signal in space ranging error cire of 1.6 CM GPS 2.3 CM when using realtime Corrections for satellite orbits and clocks now here's where the irony kicks in the Galileo system has faced numerous technical challenges in January 2017 news agencies reported that six of the passive hydrogen MERS phm and three of the Rubidium atomic clocks had failed four of the full operational satellites have each lost at least one clock but no satellite has lost more than two then from July 11th to July 18th 2019 the whole constellation experienced an unexplained signal outage with all active satellites showing not usable 23:04 status on the Galileo status page the cause of the incident was an equipment malfunction in the Galileo ground infrastructure that affected the calculation of time and orbit predictions in December 2020 there was another systemwide performance degradation that lasted for 6 hours gnss receivers ignoring a marginal status flag in the Galileo data could have experienced a pseudo range error of up to almost 80 km these technical defects and failures have made the EU realize something important they need help to improve the stability and reliability of Galileo and guess who they're looking to for that help that's right China and its Advanced Bayo system the implications of be's success go far beyond just satellite navigation it represents China's growing technological prowess and its ability to compete on the global stage beu enhances China's strategic autonomy and extends its influence across the world for instance in 2018 24:05 Pakistan was the first state to receive full access to B's military grade positioning navigation and timing pnt data which enhances the Precision of missiles ships and aircraft this move has significant implications for the balance of power in the region similarly Iran has had a memorandum of understanding with China about beo since 2015 it provides for Bayo ground stations in Iran access for Iran to high Precision services and establishment of an Iranian Center for space data collection in 2021 Iran was granted full access to China's beu satellite system for military purposes the completion of B also has economic implications Beijing sees it as a commercial coup for China's fastrowing Market in satellite navigation services for cars mobile phones and other applications the Chinese cabinet approved a blueprint envisioning beu capturing 60% of a 25:03 projected 400 billion un or 65 billion market for satellite navigation services in China the success of beu has not gone unnoticed by other countries Arab Nations have shown significant interest in the system Muhammad benamore Secretary General of the Tunisia based Arab information and communication technology organization stated cooperation on the BDS is of special signif signicance for the belt and road construction the next step of the China Arab cooperation is to achieve further connectivity and both sides can apply the BDS to promote Regional technological and economic development the development of beu marks a significant shift in the global balance of technological power as Xi Jinping himself said it's one of the important achievements China has made in the past 40 Years of Reform and opening up this statement underscores the importance China places on this achievement seeing it as a symbol of their growing Global 26:02 influence and technological capabilities meanwhile the EU finds itself in a challenging position with Galileo the system while operational has faced significant technical challenges and delays the clock failures in 2017 and the system outages in 2019 and 2020 have raised questions about its reliability these issues combined with the systems high cost and the competition from beu have put pressure on the EU to improve Galileo's performance and justify its expense the total cost of Galileo has far exceeded initial estimates in 2010 the think tank open Europe estimated the total cost of Galileo from start to 20 years after completion at 22.2 billion EUR borne entirely by taxpayers Under the original estimates made in 2000 this cost would have been 7.7 billion EUR with €2.6 billion EUR born by taxpayers and the rest by private investors let's 27:04 not forget that this isn't just about the EU and China the United States with its GPS system is still a major player in this field Russia's GLS system is also in the mix each of these systems represents not just a technological achievement but a projection of national power and influence on a global scale the development of beu in particular was driven by China's desire for strategic autonomy Chen Fang Yun the founder of Radio Electronics in China originally conceived of building a Chinese satellite navigation system in the 1980s but the impetus to actualize this idea came after the United States first tested GPS in combat during Operation Desert Storm a further Catalyst was the yin incident in 1993 the US government had been given intelligence that the Chinese container ship Yin was transporting chemical weapons materials to Iran and instructed nearby Middle 28:02 Eastern countries to prevent it from docking in the ensuing standoff during which Yin was stranded in the Indian Ocean for 24 days China alleged that the United States had deliberately jammed the ship's GPS navigation system and prevented its ability to navigate work on an independent Chinese satellite navigation system began immediately afterwards in 1994 China felt Vindicated by this decision during the third Taiwan Straits crisis in 1995 to 96 when it claimed that GPS interference had made it lose control over one of its ballistic missiles fired over the Taiwan Strait the program progressed quickly in December 2000 China launched its first satellite beu 1A which provided domestic positioning Services by 2012 the second generation of B satellites extended services Beyond China to the Asia Pacific 2020 B further expanded its reach with the full launch of its third 29:02 generation which provides coverage around the world as of February 2024 beo comprises 58 satellites compared to GPS's 31 China also seeks to expand its presence in low earth orbit where it is possible to launch satellites more cheaply and plentifully the state-owned China satellite Network group aims to challenge the dominance of the US Company starlink by EST lishing a mega constellation comprising approximately 13,000 satellites 10% will be launched between mid 2024 through 2029 B's success also extends China's reach in global politics economics and Military Affairs the capital cities of 165 out of 195 countries or 85% are now observed more frequently by beo satellites than by those operated by GPS this gives China unprecedented Global coverage and 30:00 influence Richard Wolf the renowned American Economist and professor emeritus at the University of Massachusetts has some strong words about the US tariffs on Chinese electric vehicles they tell themselves in Washington that they're isolating the Chinese they're not they're isolating themselves and the rest of the world is watching in bemused the Germans have a word for it called Shaden fo the rest of the world looking at the United States and they see an Empire going down and they get the pleasure that comes from that and we ought to wake up as a nation and figure this out China's economic rise over the past few decades has been nothing short of extraordinary in the last 30 to 40 years the Chinese achieved a level of economic development that took sever centuries in Western Europe and it took 31:02 a good century and a half counting conservatively here in the United States this rapid development isn't just about GDP growth or industrial output it's about fundamentally changing the lives of billions wolf emphasizes this point let's remember 1.4 billion people four to five times the population of the United States they were able to do it this feat of lifting hundreds of millions out of poverty is unprecedented in human history we've never seen anything like it what the Chinese did was to mobilize borrow from the rest of the world no question but put all that together in a successful mix if your measuring Rod is economic growth lifting people out of poverty and let's remember 1.4 billion people four to five times the population of the United 32:04 States they were able to do it but China's economic Miracle isn't just about catching up they're now competing at the highest levels of Technology wolf gives us a concrete example I'll give you an example 10 or 15 years ago every major car producing company in the world undertook a program to develop the electric car the electric vehicle to replace the fossil fuel burning oil and gas vehicle okay everybody did that and we have many examples of that being produced however one example outranks everybody else the electric cars of China are better and cheaper than anybody else's they won the competition this success in the EV Market is a prime example of China's technological prowess but how has the United States responded to this challenge with tariffs not just 33:05 any tariffs but a staggering 100% tariff on Chinese EVS wolf breaks down the Maths for us the current rate of tariff applied by the Biden government is 100% so for example if the electric car from China cost you $30,000 that have to be sent to China to pay for the car you've got to give them the car dealer 30,000 to pay off the Chinese and another 30,000 100% goes to Uncle Sam so that the cost to an American would be $660,000 for that $330,000 car the results of this policy are Stark as wolf notes there are no electric cars from China on the road in the United States a quarter of the electric cars on the road in Europe are the Chinese cars he adds the Great producer the most successful the most rapidly growing car company in the world most Americans have never 34:04 heard of it has three initials b as in boy Y and d as in dog byd Corporation wolf doesn't mince words when it comes to his assessment of this policy this is self-defeating he States and to be an economist for a moment stupid he elaborates on why everywhere else in the world as the transition to electric vehicles is underway every competitor of the United States across all Industries will be able to buy the best car at $30,000 with which to compete with the American company whereas the American company is going to have to pay more than $30,000 for the non-tariff equivalent which will cost you $40 to $50,000 for an inferior vehicle okay there are no electric cars from China on the road in the United States a quarter of the electric cars on the road in Europe are the Chinese cars the greatest producer the most 35:03 successful the most rapidly growing car company in the world most Americans have never heard of it has three initials B is in boy why and D is in dog byd Corporation to drive home his point wolf shares a personal anecdote when I got my PhD in economics at Yale years ago my classmate was a woman there weren't very many women taking those courses then so I remember her she was unusual her name was Janet Yellen okay she's now the Secretary of the Treasury in the United States government I know that she knows what I just mentioned to you as the case she knows it's self-defeating she knows it's stupid she's out there advocating it because that's the position of the government the response of the United States is to freeze them out this is self-defeating and to be an economist for a moment stupid why everywhere else in the world as the transition to electric vehicles 36:05 is underway every competitor of the United States across all Industries will be able to buy the best car at $30,000 with which to compete with the American company whereas the American company is going to have to pay more than $30,000 for the non-ar equivalent which will cost you $40 to $50,000 for an inferior vehicle

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