Renewed US-China ties bode well for climate action

The relationship between the US and China is the most important in the world, and it has been unstable and sometimes under extreme stress in recent years. But a recent meeting between presidents Joe Biden and Xi Jinping in California may bring new momentum for global climate action.

Climate change is a priority area of cooperation for the two countries, and a key document was released just ahead of the presidents’ meeting. The Sunnylands Statement on Enhancing Cooperation to Address the Climate Crisis reaffirms the two countries’ support for climate action and further institutionalizes their cooperation.

The leaders of both countries understand that solving the climate crisis requires global collective action – especially from the world’s two largest polluters, who between them account for 44% of the world’s carbon emissions. Even during a time of crisis in their bilateral relations, the US and China still tried to maintain regular exchanges on climate change thanks to strong personal ties between their climate envoys.

With Israel-Gaza and the long-lasting Ukraine-Russia war both creating problems for US foreign policy, Biden wants to rebuild the relationship with China. At the same time, China eagerly wants to reduce tensions in order to remove trade and investment restrictions imposed by the US. Climate change is a way for the two countries to rebuild trust.

Climate envoys Xie Zhenhua and John Kerry at the 2021 climate conference in Glasgow. Image: Alamy via The Conversation / Jane Barlow

Strengthening climate cooperation

The Sunnylands statement notes a working group will be set up to accelerate climate actions. This group was initially planned in 2021 but stalled after senior Democrat Nancy Pelosi visited Taiwan in the summer of 2022.

Its establishment will provide additional guarantees to continue cooperation on climate change amid possible political turbulence in both countries, especially around next year’s presidential election in the US.

The statement also supports cooperation between cities, provinces and states in China and the US. Several Chinese provinces have already learned from California’s experiences to set up emissions trading programs of their own, while California has signed agreements with various cities and provinces – including Guangdong province on industrial decarbonization, and Jiangsu province on offshore wind.

Agreements like these can ensure climate action continues when cooperation at the national level is interrupted, perhaps due to future political changes. Plans to reduce non-CO₂ greenhouse gas emissions also represent important progress. Most important of these is methane, which has strong greenhouse effects.

The US has been pushing China to address methane since 2021 – and just a week before the Biden-Xi meeting, China announced its first methane action plan. The Sunnylands statement sent a signal to the rest of the world that the planet’s two largest emitters intend to make more efforts to reduce these emissions.

Implications for COP28

The statement also reaffirms the two superpowers’ support for the UN’s official climate processes, including the Paris agreement – the success of which depends on the ambition of each country’s pledge to reduce emissions. Crucially, the two biggest emitters have reaffirmed their determination to be more ambitious when the pledges are next updated in 2025.

The current UN climate conference, COP28 in Dubai, will also conclude the first global “stocktake”, which is likely to find there has not been enough progress towards the goal of limiting warming at 1.5°C. That’s why many countries and other stakeholders – even including big businesses – have called for a global agreement to phase out fossil fuels to be made at the conference.

The success of this initiative is likely to depend on the political will of China, which – despite already burning the most coal in the world – has continuously expanded its coal-fired power plants.

While the Sunnylands statement has no explicit mention of ending fossil fuels, it says both countries intend to “sufficiently accelerate renewable energy deployment in their respective economies […] so as to accelerate the substitution for coal, oil and gas generation.”

As China is also a global leader in clean technologies with the largest solar and wind capacity in the world, further cooperation between the two countries on renewables is good news.

China has about half of the world’s solar panels. Picture: Shutterstock via The Conversation / Jenson

The two countries also agree that the global stocktake should “send signals with respect to the energy transition”. This implies they may be willing to discuss the phaseout of fossil fuels at COP28, and potentially support an agreement.

Finally, being respectively the largest developing and developed countries in the world, China and the US have also shown commitment to building consensus in contentious negotiations on climate finance – money paid to poorer countries to help them adapt to climate change or cut their own emissions.

On the first day of the conference the establishment of a so-called loss and damage fund was announced, to help more vulnerable countries cope with the consequences of climate change. This is a good start. This is a good start.

However, existing pledges remain insufficient, and funds will still need to be equitably distributed to developing countries impacted by climate change. Cooperation between the two superpowers will be instrumental in building effective and just institutions to deliver that money.

As China and the US have restarted their climate cooperation with strong commitments, the world can raise their expectations for COP28. Global policymakers must seize their last remaining opportunities – and this is a promising start.

Yixian Sun is Associate Professor in International Development, University of Bath

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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China’s dominance in green energy is beacon for investors

As 70,000 political and business leaders, diplomats, financiers and activists have flown to Dubai to talk about ways to avoid environmental disaster due to climate change at COP28, the annual international climate summit convened by the UN, China has emerged as a global leader in renewable energy.

With an impressive surge in clean energy infrastructure, China now boasts more significant solar generating capacity than the rest of the world combined. 

This remarkable feat not only positions the country of 1.4 billion people as a pioneer in sustainable energy, but also signals a promising future that is likely to attract investors from around the globe.

However, China remains by far the world’s biggest carbon-dioxide polluter, pumping out nearly a third of annual emissions, or more than the US, the European Union, and Africa combined.

But despite this, the People’s Republic’s commitment to renewable energy is evident in the rapid expansion of its solar and wind power capacities. 

The country has strategically invested in the development of large-scale solar farms, harnessing the abundant sunlight across its vast landscapes. 

The result is a substantial increase in solar energy production, outpacing any other nation on Earth. Wind power has also seen significant growth, with the construction of expansive wind farms contributing to the diversification of China’s clean energy portfolio.

The country’s success in renewable energy is not solely attributed to its scale of production but also to its relentless pursuit of technological advancements and innovation. 

It has invested heavily in research and development, generating breakthroughs in solar-panel efficiency, energy storage solutions, and smart grid technologies. 

These innovations have not only improved the overall effectiveness of renewable energy systems but have also made them more economically viable, further enticing investors from around the world seeking sustainable and profitable opportunities.

The government has also set aggressive goals to increase the share of renewable energy in its overall energy mix, aiming to peak carbon emissions by 2030 and achieve carbon neutrality by 2060. 

Such long-term objectives provide a stable and predictable regulatory environment, reducing uncertainties for investors. 

ESG investment

Additionally, Beijing’s willingness to offer financial incentives and subsidies for renewable projects enhances the attractiveness of the sector for both domestic and international investors seeking to boost the ESG-oriented (environmental, social and governance) investments in their portfolios.

People are increasingly drawn to ESG investments for a multitude of reasons, spanning ethical considerations to financial prudence.

Investors are increasingly aware that their capital can be a force for positive change. ESG investments allow them to channel funds toward companies that actively contribute to a sustainable and socially responsible future.

Far from being a sacrifice for the moral high ground, ESG investments are proving to be financially astute. 

Numerous studies suggest that companies with high ESG scores tend to outperform the market; and Reuters has reported that ESG-positive funds outperformed globally over five years.

Not only are companies with high ESG ratings often better positioned to weather market volatility and capitalize on emerging opportunities, ESG factors are increasingly recognized as critical elements in risk assessment. 

Companies with robust environmental, social, and governance practices are better equipped to navigate regulatory changes, reputational risks, and operational challenges. Investors are, therefore, drawn to ESG investments as a way of fortifying their portfolios against unforeseen risks.

As such, China’s advances in the area of green energy position it to be extremely attractive for investors moving forward – something that delegates at COP28 will inevitably discuss.

Nigel Green is founder and CEO of deVere Group. Follow him on Twitter @nigeljgreen.

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Parting paths: from Deng’s vision to Xi’s divergence

Had Deng Xiaoping not sought and received advice from Japan and Singapore in his creation of “socialism with Japanese and Singaporean characteristics,” China’s economic miracle would have been less miraculous. China’s current economic woes stem largely from Xi Jinping’s abandonment of this paradigm.

When Mao Zedong died in 1976, China was the second poorest among 140 countries. Deng Xiaoping proclaimed a remedy of “reform and opening up” to foreign countries, drawing from previous Asian success stories. During an October 1978 trip to Japan, Deng met with business leaders, toured a Nissan auto plant and saw China’s future. 

“We are a backward country and we need to learn from Japan,” he told a press conference in Tokyo. His first official foreign economic advisor was Saburo Okita, one of the legendary architects of Japan’s economic miracle. Over the years, 22,000 advisors from Singapore came to China.

Instead of Mao’s command economy dominated by state-owned enterprises (SOEs), the government adopted a Japan-style industrial policy. Deng combined various governmental measures to direct resources to modern industry, leveraging the efficiency of private firms.

To avoid the pitfalls associated with economies favoring a single “national champion” across assorted industries, it becomes imperative for private companies to engage in healthy competition. By 2018, SOEs dwindled to 12% of urban employment and exports and one-third of business investment. 

SOEs never could have created the economic miracle. Nearly half of SOEs regularly run losses, causing the economy to shrink every time they make a product. Even profitable SOEs create less growth than private companies for every yuan invested.

In a reversal of that record, Xi is resurrecting SOE dominance. In 2012, before Xi ascended, only 32% of bank loans went to SOEs. By 2016, SOEs received 83%, but these loans took a while to translate into a stronger presence in investment and employment. 

Xi Jinping delivers a speech at a ceremony marking the hundredth anniversary of the founding of the Chinese Communist Party in Beijing, China, on July 1, 2021. Photo: Xinhua / Ju Peng

This policy reversal stemmed from the Chinese Communist Party’s (CCP) worries that private companies could become a separate locus of power. In addition, Xi has compelled many private companies to accept interference from CCP branches in their management decisions, resulting in declining efficiency, as measured by return-on-assets.

Equally indispensable to growth are the foreign companies that transfer technology and drive exports. As in Japan, exports facilitated industrialization because, when Deng began, China’s people were still too poor to buy modern factory goods and could not yet produce goods that were competitive in the global market.

Singapore proposed to Beijing its own strategic solution — bringing foreign companies to China to make and export products. By 2000, according to the International Monetary Fund, foreign multinationals produced half of China’s exports, especially high-tech items. 

Foreign companies exported 100% of computer products, compared to 40% of clothing. This process transferred knowledge to all new private companies that supplied 80% of the content of these exports and even to unrelated firms.

While Xi does not want to isolate China, he believes China would be more secure if it were less dependent on foreign technology and firms. He asserts that China no longer needs foreign technology as much as before.

Xi is miscalculating. In 2015, he launched a “Made in China 2025” program aimed at becoming self-sufficient and achieving global supremacy in several pivotal technologies and products. The program has fallen short. 

For example, China’s tax breaks for companies issuing lots of patents caused them to shift from high-quality patents to lower-quality ones. That has actually reduced innovation, according to a study by Chinese academics. 

While China has made tremendous strides in some technologies and created some world-class companies like Huawei, driving away foreign firms hurts innovation and growth.

Before Xi’s rise, foreign firms suffered procurement discrimination and intellectual property theft, but the situation has escalated in both frequency and severity. It now includes arrests of foreign personnel on dubious charges of espionage, along with demands that foreign firms involve CCP branches in business decisions. 

As sales in China decrease, companies are less willing to tolerate such impositions. Foreign direct investment into China from all countries plunged by 8% in the first eight months of 2023.

The clampdown on private and foreign companies couldn’t come at a worse time. With the labor force shrinking and private investment decelerating, China cannot grow well unless it increases growth in total factor productivity (TFP) – more output from those labor and capital inputs. 

A worker stands near a stainless steel product line at a factory in Dalian, Liaoning province. Photo: Reuters / China Daily
A worker stands near a stainless steel product line at a factory in Dalian, Liaoning province. Photo: China Daily

During 1980–2010, TFP accounted for about 40% of the growth in GDP per worker. Under Xi, the TFP growth rate has plunged by two-thirds, which is one of the biggest drivers for China’s per capita GDP growth halving from 9% in the decade before Xi ascended to a forecasted 4% or less in the coming five years.

Rather than correct this productivity drop, Beijing tried to boost growth by building a surplus of “apartments for no one,” financed by excessive debt. This has resulted in financial turmoil and demonstrations from buyers still waiting for their homes.

Xi is either deceiving himself about the causes of China’s economic headwinds or demonstrating his willingness to sacrifice economic growth to pursue political goals at home and abroad. The effect of weaker growth on political stability is yet to be determined.

Richard Katz is Senior Fellow at the Carnegie Council for Ethics in International Affairs.

This article was originally published by East Asia Forum and is republished under a Creative Commons license.

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China, Russia to be significant participants in COP28

This week Dubai welcomes COP28, an annual UN conference on combating global warming. The significance of the climate-change issue is underscored by the fact that this October marked the hottest month ever recorded in the history of meteorological observations, and scientists predict that the year 2023 may set a new historical temperature record.

COP28 is taking place amid escalating geopolitical conflicts worldwide and a slowdown in global economic growth, partly due to changes in the energy market. Nevertheless, even contentious political issues such as US and EU protectionism regarding green goods from China, such as solar panels and electric cars, or economic sanctions against Russia, are being set aside.

Climate transcends politics. Preventing an increase in the average global temperature by more than 1.5 degrees Celsius by 2050 is a global imperative achievable only through international cooperation and coordinated efforts by all countries.

Sultan Al Jaber, the president of COP28, has stated that one of the summit’s tasks will be a “global inventory” of progress in fulfilling the commitments, nationally determined contributions (NDCs), that countries have undertaken within the framework of the Paris Climate Agreement.

He also emphasized the importance of fulfilling a long-standing commitment by wealthy nations, which historically accounted for the majority of greenhouse gas emissions, to provide US$100 billion annually to support poorer countries in their efforts to combat climate change and transition to renewable energy sources.

This year, China will be one of the most active participants in COP28. Despite the challenges posed by its rapidly expanding industrial output, President Xi Jinping committed in 2020 to achieving net-zero emissions by 2060.

The country is making significant strides toward this goal. China has led the world in electric-vehicle production for eight consecutive years and boasts the highest installed capacity of solar and wind power plants globally, aiming to surpass 1.2 billion kilowatts by 2030.

China is also assisting 40 developing countries, particularly in Africa and small island states, in addressing climate-change effects and adopting green energy solutions based on Chinese photovoltaics (solar panels).

Russian involvement

Russia will also be a significant participant in COP28, with a high-level delegation and its own pavilion at the conference. In October, President Vladimir Putin signed the Climate Doctrine outlining a concrete action plan to achieve carbon neutrality by 2060.

Many Russian companies are already at the forefront of implementing climate programs. For instance, Rusal is the world’s leading producer of low-carbon aluminum, much of which is supplied to China.

The state corporation Rosatom plays a crucial role in Russia’s climate agenda, not only operating nuclear power plants, which account for 20% of Russian electricity supply, but also constructing nuclear power facilities in other countries, promoting decarbonization.

SIBUR, a leading Russian producer of polymers and rubber, is also actively pursuing a climate strategy. SIBUR is the first Russian company to receive carbon units through the implementation of climate projects, which it monetizes in both domestic and international markets. 

In September, it was it was reported that SIBUR was in discussions with Chinese firms regarding the sale of carbon units. By purchasing carbon units in Russia, Chinese companies interested in supplying eco-friendly products to global markets can reduce their carbon footprint. As environmental regulations tighten worldwide, the volume of such transactions is expected to increase.

Russia established a national register of carbon units last year and is gradually developing a carbon-unit trading system. Trading carbon units provides economic incentives for investment in modernizing production and transitioning to green technologies.

Russia is drawing inspiration from China, where the carbon-unit trading market was established in 2021 and has already become the world’s largest, with a total transaction volume exceeding 365 million tons of carbon dioxide. Moreover, the price range for carbon units in China, ranging from 50 to 70 yuan ($7 to $11) per ton of emissions, is lower than in Europe.

While national carbon markets are important, the fight against climate change must be waged on a global scale. Thus carbon markets in different countries should ultimately become interconnected.

Pilot cross-border trade agreements are crucial steps in this regard. To achieve this, international validation, mutual recognition of carbon units from different countries, and the use of blockchain platforms that enable secure and legally significant transactions are required.

Russia’s SIBUR is collaborating with Chinese partners and plans to negotiate one of the pilot cross-border carbon unit sales in the coming months.

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Fusion Diary: the magnet wizards

This is the eighth and final installment in Asia Times Science Editor Jonathan Tennenbaum’s series “Fusion Diary.” Read part 1part 2part 3part 4Part 5Part 6 and Part 7.

In colloquial language, one might say, “When it comes to tokamaks, its all about magnets.” That is not literally true, but certainly the design and performance of a tokamak reactor are inseparably connected with those of its magnet system.

A tokamak utilizes a multitude of magnetic field-generating coils: toroidal coils and poloidal coils to contain and control the plasma, and a central solenoid that induces the required electrical current in the plasma.

Cutaway diagram of Tokamak Energy’s ST40 reactor showing its system of magnet coils: toroidal (TF) coils, poloidal (PF) coils, divertor coils, central solenoid coil and coils for the ‘merging compression’ heating method. Image: Tokamak Energy Ltd

Improvements in magnet technology have been a major driver of progress in tokamak reactor performance. Alongside greatly improved computer modeling techniques, the development of powerful magnets utilizing high-temperature superconductors (HTS) provided one of the main grounds for optimism that the goal of economically viable fusion power is now within reach. 

Among other things, HTS magnet technology makes it possible to achieve extremely high magnetic fields in a compact device, greatly reducing the size and cost of a fusion reactor.

Another private fusion company, Commonwealth Fusion Systems (CFS) also follows the pathway of compact high-magnetic-field tokamaks, but with the important difference, that Commonwealth’s devices are based on the classical toroidal design, as opposed to the spherical tokamak design pursued by Tokamak Energy Ltd and the UK government’s STEP program.

High-temperature superconducting tape revolutionizes magnet design 

The technology of high-temperature superconducting magnets has progressed rapidly over the last 10 years, marked by ever-higher magnetic field strengths. To be usable in a fusion reactor, however, HTS magnets must be able to operate reliably for long periods under extreme conditions, including intense neutron and gamma radiation, as well as large mechanical stresses.

Developing HTS magnets that can meet the requirements of future fusion power plants is a central focus of Tokamak Energy’s efforts. The company is a leading international player in this area.

Tokamak Energy magnet experts with superconducting coils for the company’s ‘Demo4’ device  Photo: Tokamak Energy Ltd

During my visit to the Tokamak Energy’s Milton Park facility in Oxford, I had the opportunity to see the company’s HTS magnet laboratory and to talk with one of its specialists, Matt Bristow. He explained to me the challenges of developing compact, high-field HTS magnets for fusion reactors, and some of the company’s ground-breaking innovations.

Tokamak Energy’s magnet coils are wound from tape made from the high-temperature superconducting material REBCO (rare earth barium copper oxide). REBCO is superconducting at temperatures below about -180° C, as long as the current is not too high. To be able to carry large currents with zero resistance, REBCO must be cooled down even further.

The REBCO-based magnets in Tokamak Energy’s next spherical tokamak reactor are designed to operate at about -25C. That doesn’t sound like a “high temperature” – but it is significantly higher than the -270°C required for ordinary superconducting magnets and it requires five times less cooling power. 

REBCO in bulk is a brittle material, and large-scale applications first became possible thanks to the development of flexible tapes containing thin layers of REBCO. Today, more than 1000 kilometers of REBCO tape are manufactured yearly and the per-kilometer price has decreased more than 10-fold.

The tapes Tokamak Energy has been using are less than 0.1 mm thick, with a micron-thin layer of the REBCO superconductor material sandwiched between several layers of other materials that protect it and lend it favorable electrical and mechanical properties Incredibly, these thin tapes are capable of conducting thousand of amperes of electric current – with zero resistance!

For experimental and demonstration purposes Tokamak Energy is currently building a full-set magnet coil system similar to those that will be used in future spherical tokamaks. Christened “Demo4,” this system will achieve a magnetic field strength of over 18 Tesla, nearly a million times stronger than the Earth’s magnetic field, and over five times the field strength in the Joint European Torus (JET) reactor.

Left: Magnet expert Matt Bristow (l) with the author, who’s holding a sample of REBCO high-temperature superconducting tape. Right: HTS magnets, which are used for testing purposes. Photos: Tokamak Energy Ltd

In the discussion with Matt Bristow, I was particularly interested in the problem posed by the phenomenon called “quenching.” This is one of the areas where Tokamak Energy has made ground-breaking innovations.

What is a quench?

Under certain circumstances, a superconductor can lose its superconducting properties and become resistive. When this happens in a superconducting coil, it is called a “quench.” As the current continues to flow, the resistive areas heat up.

Quenching typically begins at a small location and propagates in a kind of chain reaction, referred to as a “thermal runaway.” The heat spreads to the adjacent regions, driving the temperature up and causing them to become resistive in turn. 

In this context, one should keep in mind the elementary fact that the inductance of a coil opposes any change in the current. Shutting down the current in a large high-field magnet is like trying to stop a 10-ton truck. One way or the other, the energy will end up as heat; the key question is: How fast does this happen and where does the heat go?

An unmitigated quench in a coil carrying a large current can lead to a rapid conversion of the magnetic field energy into heat. Sudden heating can severely damage the coil, which may then have to be replaced. The danger of severe damage is especially acute when the heating is concentrated in a few locations rather than distributed evenly over the whole coil.

Given the large mechanical stresses in a tokamak, a heat-provoked deformation in one coil might endanger the whole supporting structure. 

Preventing or at least mitigating the effects of a quench is essential to the safe and reliable operation of any device using superconducting magnets. That includes not only tokamaks but also NMR medical imaging devices, high-energy particle accelerators, etc. 

A quench could be extremely costly for a tokamak fusion power plant with its powerful superconducting magnets, requiring a long downtime for repairs and replacement of components. The ability to prevent or mitigate quenches is thus a precondition for tokamaks to become economically viable sources of energy. 

Quenching can occur for a variety of reasons. An obvious one is a failure of the cooling system, causing the temperature of the superconductor to rise over its critical temperature. But quenching can also occur due to anything that affects the internal structure of the material, such as excessive bending, mechanical shock, radiation damage, etc.

Fortunately, a quench typically takes some time to develop. If an impending quench can be detected early enough, measures can be taken to halt it or at least avoid major damage to the coil. Today there are numerous means for quench detection. Sensors can identify tell-tale signs such as small changes in voltage and the magnetic field, temperature increases, mechanical strains and even acoustical signals.

But what do you do if there are signs of an impending quench or if the quench has already begun? The time may be so short that an automatic response is required.

In the conventional approach, the current in the magnet is deliberately “dumped” in a controlled fashion, by discharging (short-circuiting) the current through an external resistor that dissipates the energy as heat. This approach has disadvantages, however, and can risk damaging the magnet. 

In one variant of this strategy, multiple resistors are installed, permitting the current to be discharged at several points along the coil simultaneously. Here the aim is to insure a uniform discharge of the coil. Another way to deal with the danger of hot spots is to use heaters, installed inside the coil at regular intervals, to cause the entire coil to quench simultaneously. 

The best solution, of course, is to avoid quenches altogether.

Prevention, early warning and mitigation of quenches comprise a key focus of Tokamak Energy’s activity. Here the company has made ground-breaking innovations and accumulated valuable intellectual property.

I shall just mention one of them, which is a potential game-changer.

Partial insulation technology ensures ‘soft landing

Winding magnets from REBCO high-temperature superconducting tape. Photo: Tokamak Energy Ltd

Commonly the tapes or wires from which tokamak coils are wound are fully insulated. In case of a quench, the insulation gives the current no alternative but to continue flowing through the entire length of the coil, aggravating any and all hotspots along the way.

The opposite approach is to leave out the insulation entirely. The “non-insulation” tactic permits the current to bypass an initial hot spot by flowing into adjacent turns in the winding. Unfortunately, this process increases the time required to charge up the magnet and has other operational drawbacks. 

Tokamak Energy’s scientists have developed an alternative approach called “partial insulation” (PI): Instead of being 100% insulating, the material used to separate the coil windings has a small, but non-zero resistance.

During normal, steady-state operation of the magnet, as long as the windings remain superconductive, the current has no compulsion to leak across this partial resistance. But when a quench begins to develop in one winding, the partial insulation permits some current to flow to the neighboring windings. This reduces the amount of current flowing through the hot spot, preventing it from heating up more and thereby decreasing the danger of a thermal runaway.

More importantly, however, partial insulation provides for a  “soft landing” of the whole coil. When a quench process is detected, automatic systems interrupt the flow of current through the power supply, creating an open circuit.

As I noted above, in analogy to the momentum of a 10-ton truck, the self-inductance of the coil forces the current to continue circulating.  Since its normal spiral pathway through the whole coil is blocked, the current, in order to complete its circuit, has no alternative but to cross over from one winding to an adjacent one.

In doing so, it passes through the partial insulation, where part of the energy is converted into heat. As this occurs throughout the coil, the heating is uniformly distributed, while the current gradually drops off. 

The key benefit of this method is that it avoids the damage that might occur if some areas in the coil were to become much hotter than neighboring ones. Also, the “soft landing” occurs through a natural process within the coil itself, with no need to connect it to the outside. 

Tokamak Energy has pioneered other innovations, that render the HTS magnets so robust that some of these magnets have retained their operating characteristics even after holes have been drilled into them. (View a technical presentation on Tokamak Energy’s magnet technology.)

Demo4

Construction is scheduled to be completed next year on the next big step forward: Demo4, an integrated structure containing 44 high-temperature superconductor magnets. The structure imitates the magnet configuration of a real tokamak but without other tokamak components such as the reactor chamber.

Schema of Demo4.   Image: Tokamak Energy Ltd

Demo4 is intended to demonstrate the full range of Tokamak Energy’s innovations in HTS magnet technology, to inform the design of the company’s prototype HTS reactor, STX and the subsequent demonstration fusion power plant, ST-E1.

Among other things, Demo4 will emulate the mechanical stresses that the HTS tape and the entire magnet structure will experience in the operation of these devices.

In parallel, Tokamak Energy magnets are presently undergoing irradiation testing to optimize their operation in conditions of intense gamma radiation.

In the future, experiments with neutron irradiation will be carried out.

All in all, my visit to Tokamak Energy left me in a very optimistic mood. One can never be sure of the future but Tokamak Energy’s strategy and projected timeline seem quite credible. In the meantime, the company has already contributed significantly to the worldwide fusion effort.

Jonathan Tennenbaum, PhD (mathematics) is a former editor of FUSION magazine and has written on a wide variety of topics in science and technology, including several books on nuclear energy.

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The climate change health emergency

A few years ago, while doing research in the highlands of Ethiopia, a medical professional explained how cases of malaria were spreading each year up the mountains. Rising temperatures were allowing the parasite-carrying mosquitoes to survive at higher altitudes, and infect new communities.

It is a story repeated across the world as we witness the impact of the climate emergency on global health ever more directly.

At COP28, the annual United Nations conference on climate change, which is under way in Dubai this week, a full day has been allocated to a discussion on the global health challenges of the climate emergency.

While it might be the first time health has received such attention at a COP meeting, evidence for the impact of the climate emergency on health is clear and growing. The World Health Organization estimates that an annual 250,000 additional deaths will occur as a result of climate-change-induced undernutrition, malaria, diarrhea and heat alone.

Climate change impacts on health in two main ways. First, the direct impact from heatwaves, storms, floods and other extreme weather events.

For example, the US city of Phoenix saw a 50% increase in heat-related deaths as a result of the summer heatwave that scorched large parts of the United States. As storms rage more intensely and frequently, as wildfires burn more often and across wider areas, as floods appear more suddenly, more people will be injured or killed as a result.

Second, climate change can exacerbate and spread existing diseases. Dengue fever, for example, was found in only nine countries in 1970. Now it is present in more than 100.

Rising temperatures on land and sea can facilitate the spread of cholera and other diseases. Air pollution, which not only contributes to rising temperatures but is made worse by that increase, causes around 6.7 million deaths every year.

Where food production is undermined by increased salinity in the soil as a result of rising sea levels, or too much heat or rain, it can lead to undernutrition and hunger.

Stress issues

Attention has only relatively recently turned to the impact of climate change on mental health, but it now appears that the scale of the problem is significant. The stress of living through climate-emergency-linked disasters is a major cause of depression, post-traumatic stress disorder and anxiety.

And a new term, “solastalgia,” has been coined to describe the distress caused by witnessing and living through profound changes to the environments in which we live.

As climate change threatens health, the capacity of health systems to respond is also challenged by the worsening climate.

Hit by two hurricanes in quick succession in 2017, one-fifth of Puerto Rico’s health facilities in the most affected areas were severely damaged. Less than half of health facilities in neighboring Dominica were operational.

In the Philippines, Super Typhoon Rai in 2021 damaged more than 220 health facilities in the space of a few hours. There is an urgent need to build greater resilience for health systems.

The terrible toll of the climate emergency on global health is clear and already occurring. But it is an unbalanced one, with poorer countries suffering the most despite contributing the least amount of harmful gases into the atmosphere.

Those who are most vulnerable to the physical and mental health impacts are those contributing least to the processes that cause climate change. And as the temperatures rise, that toll increases inexorably.

Giving greater prominence to the health impacts of the climate emergency at COP28 is, then, long overdue. The talks will be focusing on three important areas: how health systems can be made more resilient; increasing the proportion of climate financing targeted specifically at public health; and on mainstreaming health into climate policies. 

Finance shortfalls

But while these are all worthy goals, there are also some concerning gaps. The scale of financial resources needed to address the growing impact of climate change on health and health systems is immense. With the richer countries already reneging on previous promises of climate finance, few hold out hope of sufficient resources being made available in this round of talks.

The absence of a planned discussion during COP28’s health day on reducing fossil-fuel use also feels like a missed opportunity.

This matters because the same emissions that create climate change also have direct health impacts in their own right. Any delay to reducing reliance on fossil fuels and shifting to renewable energy will mean continued preventable deaths from those pollutants.

Diarmid Campbell-Lendrum, head of the WHO Climate and Health team, has argued any delay will put such deaths in the millions.

While important, as critics rightly note, the focus on adaptation (how health systems can cope with climate change), should not come at the expense of an equally important and urgent debate on mitigation (how climate change can be slowed and reduced).

COP28 could be an important moment for integrating global public health into discussions, policy, and finance for climate change. And whatever the limitations of the discussion to be held on Sunday, it is hoped that it will lead to momentum in better integrating health into global and local responses to the climate emergency. 

In the end it will be the phasing out of fossil fuels that will improve the health of us all, but especially the poor and most vulnerable who have done so little but are enduring so much of the climate emergency’s worst impacts.

This article was provided by Syndication Bureau, which holds copyright.

Follow this writer on Twitter @mikejennings101.

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Gaza war an irritant to Biden’s bigger China plan

While Israel focuses on hostage rescue in Gaza and, eventually, on destroying Hamas, its main ally, the United States, is working to fashion a post-war peace solution that will support its own broader goals.

Washington fears that the Gaza war has placed a significant obstacle to one of President Joe Biden’s major foreign policy projects: to reduce America’s military resources in, and attention to, the Middle East and pivot them to East Asia to better contain and confront China’s threat.  

The need to shift attention to East Asia was first enunciated during the presidency of George W Bush in the early 2000s. But Bush’s post 9/11 wars in Afghanistan and Iraq derailed any significant shift of military resources eastward.

His successor, Barack Obama, made only minor transfers of military force from the Middle East to Asia. Finally, Donald Trump, though he launched a low-intensity trade war with China, found his main foreign achievement in the Middle East by convincing two Arab countries, the United Arab Emirates and Bahrain, to establish relations with Israel.

Almost three years into Biden’s term, US military officials are beginning to express the perceived need to increase America’s attention on a potential confrontation with China rather than obsess about terrorism and instability in the Middle East.

 Just four days before Hamas attacked Israel on October 7, Lieutenant General Alexus Grynkewich, the top US Air Force commander in the Middle East, warned that China was attempting to “displace” American influence in the region.

“Where economic interests start, military interests will follow to protect those economic interests,” he said. “There is a risk of Chinese expansion into the region militarily.”

He painted an alarming picture of China’s ability to block US air and naval movement from US bases in Europe and the Middle East to locations in the Indian Ocean and East Asia. “That could be critical, not just for things that happen in the Middle East, but things that would happen in the Indo-Pacific in the future,” he warned.

The Israel-Hamas war is also obstructing Biden’s effort to compete with China’s economic thrust toward Europe through its Belt and Road Initiative (BRI) global infrastructure-building program, US officials contend.

China recently announced eight steps to keep its Belt and Road Initiative growing for another decade. Image: Global Times

In September, during a Group of 20 summit meeting in New Delhi, India, the US and its partners unveiled plans to create an “India-Middle East-European” corridor to link East Asia to Europe via cable networks and pipelines through the Indian Ocean.

The initiative also included promises of trade deals, high-tech industrial development and renewable energy promotion to countries along the corridor. The proposal was widely viewed as a fledgling Western effort to compete with Beijing’s BRI.

The West’s corridor would link the Indian Ocean to the Mediterranean Sea running from the UAE on the Persian Gulf, through Saudi Arabia and Jordan, then into Israel to its Mediterranean port of Haifa.

It took but a single devastating attack by Hamas on Israel to put a hold on the entire India-Middle East-European enterprise.

“Despite its potential economic benefits, the corridor will be dependent on an integrated Middle East—which will also require the positive resolution of the Gaza conflict,” argued Daniel Mouton, a Middle East expert at the Atlantic Council, a Washington-based think tank.

The sudden block on Biden’s big geopolitical plan helped to explain his staunch backing of Israel and its Prime Minister Benjamin Netanyahu’s plans to crush Hamas. More recently, Biden has moved on to lecturing Israel about sparing civilian lives and expressing hope for a longer ceasefire.

Netanyahu has expressed frustration with the pressure, even as the truce provided space for the return of almost 100 hostages so far. Around 150 are still in captivity, according to reports.

“After this phase of returning our abductees is exhausted, will Israel return to fighting? So, my answer is an unequivocal yes,” Netanyahu said. “There is no way we are not going back to fighting until the end,” he said.

Beyond the battlefield and diplomatic advice, American officials have outlined post-war aims, something Israeli officials themselves have declined to do.

During an international conference in Bahrain on November 18, Bret McGurk, Biden’s Middle East national security coordinator, articulated Washington’s goal of resuscitating “two-state solution” negotiations, a three-decade-old path to a Palestinian state that would conceivably live in peace with Israel.

“No country can live with the threats of terror like what we saw from Hamas, unleashed on 7 October on their border,” McGurk said. “At the same time, Palestinians deserve, need and require safety and self-determination.”

McGurk laid out proposed limits on Israeli post-war treatment of Gaza and its Palestinian residents:

  • “There must be no forcible displacement of Palestinians from Gaza.”
  • “There must be no reoccupation of Gaza.” Israel abandoned the region in 2005.
  • “There must be no reduction of the territory of Gaza. This is Palestinian land, and it must remain Palestinian land.”
  • “There must be no besiegement of Gaza. The innocent people of Gaza must be separated from Hamas. They are not responsible for its crimes.”

For Israel, he pledged that “Gaza must not be used as a platform for terrorism or other violent acts. That means no threats to Israel from Gaza.”

Israeli troops on the hunt in Gaza. Photo: Twitter Screengrab

McGurk then produced a list of conditions to clear the way for a post-war settlement:

  • “The Palestinian people and their voices and aspirations must be at the center of post-crisis governance in Gaza.”
  •  “The West Bank and Gaza must return to unified governance, ultimately under a revitalized Palestinian Authority,” which rules parts of the West Bank.
  • “Israel must be secure. Terrorist groups and threats to Israel cannot be permitted to emanate and metastasize from the West Bank or from Gaza.”
  • “Resources must be provided, and we must prepare now to support the post-crisis phase in Gaza to include interim security resources as necessary.”

Finally, McGurk indirectly rebuked Netanyahu for an unwillingness to lay out Israeli goals beyond smashing Hamas. “I do not necessarily agree that until the fighting stops entirely, we really cannot focus on these fundamental questions,” he said.

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PBOC’s Pan telling hard, uncomfortable truths

At a moment of peak uncertainty about the direction of China’s economy, People’s Bank of China (PBOC) Governor Pan Gongsheng is surprising many by speaking in unusually direct terms.

Some of the ambiguity of the “Xi Jinping thought” era is a government big on soaring reform rhetoric and fuzzy on nuts-and-bolts specifics. It’s here where Pan’s burst of economic realpolitik is both refreshing and telling.

The bottom-line message: kindly give China some space and tolerance to pull off modern history’s greatest effort to transition away from property and infrastructure to new drivers of economic growth. Oh, and that period of 8-10% annual growth? It’s not coming back.

“The traditional model of relying heavily on infrastructure and real estate might generate higher growth, but it would also delay structural adjustment and undermine growth sustainability,” Pan told bankers in Hong Kong on Tuesday (November 28).

He added that “the ongoing economic transformation will be a long and difficult journey. But it’s a journey we must take.”

Pan went on to say that “China’s real estate sector is searching for a new equilibrium” to achieve “healthy and sustainable growth” of the “high-quality” variety.

Nor did Pan shy from discussing the biggest potential cracks in China’s financial system. He admitted, for example, that financially fragile regions in the west and north of the country may have “difficulties servicing local government debts.” Expect more defaults, in other words.

Such off-script admissions of turbulence to come are relatively rare in official Communist Party circles. Normally, the top-down impulse in the Xi era has been to project an image of economic omniscience and omnipotence. As such, Pan’s foray into straight talk is useful, intriguing and timely.

On Thursday, China’s National Bureau of Statistics released fresh signs that the manufacturing and services sectors shrank in November, fanning expectations for increased state support as the economy faces intensifying headwinds.

The manufacturing purchasing managers index dropped to 49.4 while non-manufacturing activity slid to weaker than expected 50.2.

Manufacturing data is down in a slowing Chinese economy. Photo: Asia Times Files / Imaginechina via AFP / Liang Xiaopeng

Granted, central bankers as a profession tend to speak in vague and non-committal ways. Obfuscation, in other words, is a monetary policymaker’s tool — their modus operandi — to keep all options open at all times.

A top practitioner of the discipline was Alan Greenspan, who chaired the US Federal Reserve from 1987 to 2006. As he once joked to a business forum: “If I’ve made myself too clear, you must have misunderstood me.”

Yet Pan is hardly playing rhetorical games as he telegraphs a long, bumpy road ahead. Naturally, this had PBOC watchers wondering if a new, more activist monetary strategy might be in store in Beijing.

Including, perhaps, a pivot toward quantitative easing (QE) with Chinese characteristics. Though the PBOC hasn’t officially gone the QE route, the central bank spent the last few months — Pan took the helm in July — expanding its balance sheet with aggressive lending to banks.

The PBOC’s total assets jumped 8.6% year on year in October to 43.3 trillion yuan (US$6.1 trillion), the biggest increase since at least 2014. Again, neither Pan nor his staff are talking explicitly about QE. And notable PBOC leaders of the past threw cold water on the prospects for Chinese QE.

In 2010, Zhou Xiaochuan, governor from 2002 to 2018, cautioned that QE policies, particularly in the US, were causing havoc globally.

In September 2021, Pan’s immediate predecessor, Yi Gang, warned that runaway, Japan-like asset purchases “would damage market functions, monetize fiscal deficits, harm central banks’ reputation, blur the boundary of monetary policy and create moral hazard.”

At the time, Yi said that “China will extend the time for implementing normal monetary policy as much as possible and there is no need for asset purchases.”

Yet the need for big asset purchases has gone full circle as China’s post-Covid rebound disappoints. China’s worsening property crisis is pushing the PBOC toward more assertive strategies to boost liquidity.

Some of this has been to absorb a boom in government bond issuance to add fiscal jolts to an ailing economy and to support green sector pursuits.

In a report earlier this week, the PBOC said it’s working to “unblock the monetary policy transmission mechanism, enhance the stability of financial support for the real economy, promote a virtuous economic and financial cycle, and keep prices reasonably stable.”

This has the PBOC mulling a strategy of providing upwards of 1 trillion yuan ($141 billion) in cheap financing for construction projects. Under Beijing’s Pledged Supplementary Lending (PSL) program, the PBOC will channel low-cost long-term liquidity to policy banks to boost lending to the infrastructure and housing sectors.

This plan is at least nominally QE-adjacent. Though more targeted than the QE employed by the Bank of Japan, which pioneered the technique in 2000 and 2001, and the Fed, the PBOC’s plan would make large-scale bond purchases behind the scenes aimed at depressing yields.

Economists can’t help but connect the dots and label this expansion of the PBOC’s balance sheet as “Chinese-style” QE.

Analysts are looking for signs of quantitative easing with Chinese characteristics. Photo: Facebook

“Beijing might have finally recognized the need to introduce quantitative easing or money printing for the collapsing property sector,” notes Nomura economist Ting Lu. “We believe Beijing will eventually need to reach into its own pockets, with printed money from the PBOC – such as PSL – to fill up the vast funding gap and secure the delivery of pre-sold homes.”

Economists at Goldman Sachs said in a recent note to clients “we think additional broad-based monetary policy easing is still needed to facilitate the large amount of government bond issuance and improve sentiment towards growth.”

It’s a controversial step, one that divides economists.

In an August note to clients, Robert Carnell, economist at ING Bank, warned that “QE would put the Chinese yuan under further weakening pressure, which it is very clear the PBOC does not want and would make it much harder for them to manage the yuan. It would also raise the risks of capital outflows, which they will also be keen to avoid.”

Count Carnell among economists who think the answer to China’s troubles lies with Xi’s reform team, not earlier PBOC policies. “As for government stimulus policies, these, we think, will tend to be along the lines of the many supply-side enhancing measures that we have already seen.”

Carnell adds that “the way through a debt overhang is not to print more debt, though it may be to swap it out for lower-rate central government debt, or longer maturity debt to ease debt service.

“Enhancing the efficiency of the private sector will also play a key role, though this and all the supply-side measures will take a considerable time to play out. The tiresome chorus clamoring for more stimulus is unlikely to stop in the meantime.”

This week, Xi made a rare visit to Shanghai just as his team unveiled a 25-point plan to reinvigorate private sector innovation and productivity.

Others argue that the end justifies the means. “Some traditionalists would argue that central banks should not engage in asset allocation, except through the interest-rate channel,” said Andrew Sheng at the University of Hong Kong.

“But QE has already proven to be a powerful resource-allocation tool capable of transforming national balance sheets. An innovative, well-planned QE program … could support China’s efforts to tackle some of the biggest challenges it faces,” he adds.

Like central banks in high-income countries after the 2008 financial crisis, “the PBOC could still avail itself of quantitative easing, with large-scale purchases of government bonds giving commercial banks more liquidity for lending,” notes Shang-Jin Wei, a former Asian Development Bank (ADB) economist.

Wei adds that “if the goal is to achieve higher inflation – as is the case in China today – there is no mechanical limit on the additional stimulus that can be applied to the economy through this channel.”

Wei channels Mario Draghi when he argues “China needs the ‘whatever it takes’ approach that the European Central Bank pursued a decade ago when it, too, was facing a debt-deflation spiral. The PBOC should publicly declare a strategy to monetize a big portion of government debt and to incentivize more private equity investment.”

Pan hasn’t done that, of course. And it’s debatable that he will. But as China grapples with an unprecedented property crisis, it will fall to the PBOC to grease the skids via liquidity as local governments dispose of bad debts.

The enterprise will echo the role the BOJ played in the early 2000s to facilitate the discarding of toxic loans undermining what was then Asia’s biggest economy.

Resolving local government debt troubles, made worse by an explosion of local government financing vehicles (LGFVs), is vital to stabilizing China’s $61 trillion financial sector while China Inc is already grappling with cratering real estate markets.

The idea, argues state-run Xinhua News, is to “optimize the debt structure of central and local governments” to improve the quality of national growth.

PBOC Governor Pan has markets dissecting his every move on rates. Image: BBC Screengrab

As China embarks on what Pan calls a “long and difficult journey” of disruption, the PBOC is on the frontlines. “Looking ahead,” Pan said, “China’s economy will remain resilient. I’m confident China will enjoy healthy and sustainable growth in 2024 and beyond.”

Yet as Pan just explained with unusual frankness, “China is experiencing a transition in its economic model” driven by a belief that “high-quality, sustainable growth is far more important” than rapid expansion.

Doing whatever it takes to get there may have China pivoting in ways most never expected – and in ways almost certain to unnerve global markets.

Follow William Pesek on X, formerly Twitter, at @WilliamPesek

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Henry Kissinger is dead

Henry Kissinger was the ultimate champion of the United States’ foreign policy battles. The former US secretary of state died on November 29 2023 after living for a century.

The magnitude of his influence on the geopolitics of the free world cannot be overstated. From World War II, when he was an enlisted soldier in the US Army, to the end of the Cold War, and even into the 21st century, he had a significant, sustained impact on global affairs.

From Germany to the US and back again

Born in Germany in 1923, he came to the United States at age 15 as a refugee. He learned English as a teenager and his heavy German accent stayed with him until his death.

He attended George Washington High School in New York City before being drafted into the army and serving in his native Germany. Working in the intelligence corps, he identified Gestapo officers and worked to rid the country of Nazis. He won a Bronze Star.

Kissinger returned to the US and studied at Harvard before joining the university’s faculty. He advised moderate Republican New York Governor Nelson Rockefeller – a presidential aspirant – and became a world authority on nuclear weapons strategy.

When Rockefeller’s chief rival Richard Nixon prevailed in the 1968 primaries, Kissinger quickly switched to Nixon’s team.

In the Nixon White House, he became national security advisor and later simultaneously held the office of secretary of state. No one has held both roles at the same time since.

For Nixon, Kissinger’s diplomacy arranged the end of the Vietnam War and the pivot to China: two related and crucial events in the resolution of the Cold War.

He won the 1973 Nobel Peace Prize for his Vietnam diplomacy, but was also condemned by the left as a war criminal for perceived US excesses during the conflict, including the bombing campaign in Cambodia, which likely killed hundreds of thousands of people.

That criticism survives him. The pivot to China not only rearranged the global chessboard, but it also almost immediately changed the global conversation from the US defeat in Vietnam to a reinvigorated anti-Soviet alliance.

US President Richard Nixon congratulates Henry Kissinger on being awarded the 1973 Nobel Peace Prize. Photo: AP via The Conversation / Jim Palmer

After Nixon was compelled to resign by the Watergate scandal, Kissinger served as secretary of state under Nixon’s successor, Gerald Ford.

During that brief, two-year administration, Kissinger’s stature and experience overshadowed the beleaguered Ford. Ford gladly handed over US foreign policy to Kissinger so he could focus on politics and running for election to the office for which the people had never selected him.

During the turbulent 1970s, Kissinger also achieved a kind of cult status.

Not classically attractive, his comfort with global power gave him a charisma that was noticed by Hollywood actresses and other celebrities. His romantic life was the topic of many gossip columns. He’s even quoted as saying “power is the ultimate aphrodisiac.”

His legacy in US foreign policy continued to grow after the Ford administration. He advised corporations, politicians and many other global leaders, often behind closed doors but also in public, testifying before Congress well into his 90s.

Criticism and condemnation

Criticism of Kissinger was and is harsh. Rolling Stone magazine’s obituary of Kissinger is headlined “War Criminal Beloved by America’s Ruling Class, Finally Dies.”

His association with US foreign policy during the divisive Vietnam years is a near-obsession for some critics, who cannot forgive his role in what they see as a corrupt Nixon administration carrying out terrible acts of war against the innocent people of Vietnam.

Kissinger’s critics see him as the ultimate personification of US realpolitik – willing to do anything for personal power or to advance his country’s goals on the world stage.

A man sitting at a desk gives directions to three other men at the desk
Former US Secretary of State, Henry Kissinger, leaves behind a controversial legacy. Photo: Shutterstock via The Conversation

But in my opinion, this interpretation is wrong.

Niall Ferguson’s 2011 biography, Kissinger, tells a very different story. In more than 1,000 pages, Ferguson details the impact that World War II had on the young Kissinger.

First fleeing from, then returning to fight against, an immoral regime showed the future US secretary of state that global power must be well-managed and ultimately used to advance the causes of democracy and individual freedom.

Whether he was advising Nixon on Vietnam War policy to set up plausible peace negotiations, or arranging the details of the opening to China to put the Soviet Union in checkmate, Kissinger’s eye was always on preserving and advancing the liberal humanitarian values of the West – and against the forces of totalitarianism and hatred.

The way he saw it, the only way to do this was to work for the primacy of the United States and its allies.

No one did more to advance this goal than Henry Kissinger. For that, he will be both lionized and condemned.

Lester Munson is non-resident fellow, United States Studies Center, University of Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Japan automakers falling behind China’s EV overdrive

Japanese automaker Mitsubishi Motors announced in October 2023 that it was pulling out of a joint venture with the Guangzhou Automobile Group (GAC) amid declining sales and fierce competition from electric and hybrid vehicles. 

The decision highlights the broader challenges that foreign automakers face in China and the significant shifts in the global automotive sector.

GAC is one of China’s leading automotive manufacturers that serves as a local partner for several Japanese automakers, including Toyota, Honda and Subaru. 

These joint ventures have enhanced GAC’s production capabilities while opening up China’s vast car market to foreign manufacturers. This collaboration aligns with the government’s “technology for market” strategy, introduced in the 1990s to bolster its domestic automobile industry.

Auto production surged as a result, climbing from a mere 500,000 units in 1998 to over 10 million by 2009, and will likely reach 30 million by the end of 2023. Electric vehicles (EVs) have fueled much of this growth. 

China is the world’s leading EV producer and boasts the largest EV market, accounting for nearly 60% of all EVs globally. The country’s stronghold on sector patents and dominance in battery supplies further solidifies its position.

Mitsubishi’s departure from China is a consequence of this market shift away from traditional combustion engine vehicles. As China becomes a prominent player in EV supply chains and production, it could disrupt nations reliant on the automobile manufacturing industry, as well as the embedded networks of component and parts suppliers.

Outside the mid-to-high-end market segments, foreign automakers face significant pressure from domestic competition. By September 2022, about 50% of the vehicles on China’s roads were from foreign brands, down from 62% in 2020 and 56% in 2021. 

EVs are largely responsible for this reallocation, which aligns with China’s goals of bolstering energy security, cutting down on carbon emissions and carving out a niche for indigenous auto brands.

The government rolled out a subsidy scheme for EVs in 2009, catapulting EV sales from a mere 5,000 units to an impressive 6.89 million in 2022. 

These subsidies supported production through direct financial backing, R&D investments and energy credits for EV manufacturers. China also targeted the consumer side, offering benefits like tax rebates and priority license plates for EV purchasers.

BYD is at the forefront of China’s EV boom. Photo: Twitter Screengrab.

The government has progressively phased out these subsidies since 2020, sidelining automakers that were heavily reliant on them. This change created an opportunity for competitive EV brands like BYD, Xpeng, Aion, Nio and Li Auto to thrive.

Aion, a brand under GAC, was the third top-selling EV brand in China through the first three quarters of 2023, trailing only BYD and Tesla.

As China rises in the EV sector, numerous global carmakers have grappled with the evolving landscape. A nation’s car production capabilities reflect its advanced manufacturing acumen. 

But the extensive experience of Japanese car manufacturers and their established supply chains have paradoxically become somewhat of a liability, making it difficult for them to adapt swiftly to the rapid embrace of EVs.

The paradigm shifts in the automotive industry highlight the evolutionary nature of production methods. Chinese EV production, characterized by hyper-flexible, customizable, super-connected and widely distributed supply chains, might pave the way for a pioneering mode of auto production. 

This could mimic the paradigm shifts seen in Ford’s assembly line production or Toyota’s just-in-time strategy.

While Mitsubishi has met this challenge by exiting the market, others hope to capitalize on China’s automotive industry transformation. In 2022, Toyota and BYD launched their first jointly developed EV model. 

In July 2023, Volkswagen entered a technology partnership with Xpeng Motors, aiming to release two Class B EVs in China. In this ‘reverse technology transfer’ agreement, Xpeng will levy a ‘technology service fee’ on Volkswagen, marking a pivotal change in China’s auto sector.

Meanwhile, German giants like Mercedes-Benz and BMW are considering moving their European EV production to China, attracted by its technological edge and cost-efficient supply chains. 

According to Stellantis CEO Carlos Tavares, such a move could shave as much as 40% off production costs thanks to economies of scale and innovation in production.

Mitsubishi’s withdrawal from China’s thriving auto market might not stem primarily from “unfair” competition with government-backed domestic brands, but rather their inability to quickly adapt to the evolving market dynamics.

A Mitsubishi Eclipse Cross is displayed at the China Auto Show 2018. Photo: AFP / Wang Zhao
A Mitsubishi Eclipse Cross is displayed at the China Auto Show 2018. Photo: Asia Times Files / AFP / Wang Zhao

Moving forward, it is crucial for China to keep its market open to foreign car manufacturers, especially in the EV sector where it has a competitive edge.

Foreign automakers must be agile and adaptive to succeed in the Chinese market. They need to adopt a pragmatic approach in their collaborative research and development (R&D) and product design endeavors with Chinese entities. 

Technological innovation and cost efficiency in production are driven by market scale, and China holds a dominant position in this regard.

Marina Yue Zhang is Associate Professor at the Australia-China Relations Institute, University of Technology Sydney.

This article was originally published by East Asia Forum and is republished under a Creative Commons license.

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