Economy

China Gets Its Wires Crossed With Electric Car Boom

A rash of state subsidies in China has helped multiply electric car sales, but it has also warped industrial policy and undercut the market.

An electric fueling station in Beijing
An electric fueling station in Beijing
Geng Huili, Wang Guoxin and Li Fang

BEIJING â€" China established itself as the world leader of plug-in electric and hybrid cars in 2015, with production and sales of more than 330,000 units, a three-fold increase over the previous year.

The numbers are a direct result of the "New Energy Vehicle" support plan that the Chinese government introduced three years ago. The initiative involves heavy subsidies for those producing electric automobiles, and has had the effect, on the whole, of upgrading China's sustainable automotive technology level to current international standards. Still, at the same time, the initiative has also generated much speculation among carmakers, and exposed widespread examples of dangerous battery production.

The problem, for starters, is that the subsidy policy tries to tackle the issue with too broad a stroke and thus contains loopholes that manufacturers tend to exploit. It has also been slow adapting to automotive industry developments.

For commercial vehicles, including medium-size vans or public buses, for example, the subsidies are classified depending on the length of the car body, explains Ouyang Minggao, a professor at Tsinghua University. "So automotive companies swarm to build whatever model squeezes out the most subsidy," he said. "For two years it was the 10- to 12-meter commercial vehicles, whereas last year nearly 80% rushed to build 6 to 8-meter vehicles."

The 2013-2015 subsidy policy established sums of 300,000 RMB ($45,600) per 6 to 8-meter electric vehicle and 400,000 RMB ($60,800) per 8 to 10-meter vehicle. Local governments add their own matching subsidies, meaning automakers were getting as much as 600,000 RMB (more than $90,000) per 6 to 8-meter vehicle, which is more than the cost of manufacturing. Producers, as a result, have been able to sell electric vehicles for lower prices than conventional ones.

Throughout the world, no other country has been so financially generous in encouraging electric cars. In the West, most electric vehicle promotion policies are implemented through "green tax" measures. Subsidies in those countries are mainly used to encourage research and development, and to build public charging points.

Safety concerns

In an effort to close these loopholes, the Chinese government revamped its subsidy policy effective Jan. 1. The first change in its new five-year plan was to raise the subsidy threshold by requiring electric passenger cars to have a top speed of 60 miles per hour and longer mileage effeciency.

But as Zhu Jun, deputy director of SAIC Motor, points out, producers can meet the efficiency requirement simply by increasing the number of battery packs, an added security risk that the regulations fail to account for.

"China's electric vehicle industry may have seen explosive growth in 2015, but there was also an increase in false claims of mileage efficiency, and in questionable practices such as blindly increasing the number of battery packs," he says.

In recent years there have been various reports of batteries causing fires in cars and public buses. "Not only does this do great harm to companies that strive to raise quality through research and design, but it also puts China's electric car development into a vicious circle," says Zhu Jun.

The government's new plan also calls for reducing direct subsidies to electric vehicles and encouraging nation-wide construction of charging facilities, particularly in areas with high levels of air pollution. State subsidies have to be "withdrawn gradually," Xin Guobin, the deputy minister of industry and information technology, said during a recent electric vehicle forum. "The companies themselves need to become the main driving force of industrial development."

Zhu Jun reckons that China, which has been unable to compete with U.S. and European automakers with regards to conventional vehicles, will be able to match up on the electric car front. "But the imperative will be to grasp core technology and not rely on subsidies," he says. "Only if our products are competitive can our development be sustainable."

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Art installation "Greetings From Giza" by French artist and photographer JR faces the pyramids of Giza in Egypt

Anne-Sophie Goninet, Jane Herbelin and Bertrand Hauger

👋 你好*

Welcome to Tuesday, where violence erupts after Sudan's military coup, Australia finally gets onboard with climate change goals, and Harrison Ford stars in Raiders of the Lost Credit Card. From Bogota, we also see what the capture of drug kingpin Otoniel means for Colombia, a country long stained by cocaine trafficking.

[*Nĭhǎo - Mandarin Chinese]

💡  SPOTLIGHT

Saving the planet is really a question of dopamine

The elite of the ecologically minded are set to descend on Glasgow next week for the Cop 26 conference on climate change. But beyond debating policy prescriptions, French daily Les Echos explores the role our own brains have on making the right choices for the planet:

Almost every week, a new scientific study alerts us to the degradation of the environment. And yet, we continue not to change anything fundamental in our systems of production and habits of consumption. Are we all suffering from blindness, or poisoned by denial?

In his popular books Le Bug humain (The Human Bug) and Où est le sens? (Where is the Sense?), Sébastien Bohler, a journalist in neuroscience and psychology, provides a much more rational explanation: The mechanism responsible for our propensity to destroy our natural environment is in fact a small, very deep and very primitive structure of our brain called the striatum.

This regulator of human motivation seems to have been programmed to favor behaviors that ensure the survival of the species.

Since the dawn of humanity, gathering information about our environment, feeding ourselves, ensuring the transmission of our genes through sexual intercourse and asserting our social status have all been rewarded with a shot of dopamine, the "pleasure hormone."

Nothing has changed since then; except that, in our society of excess, there is no limit to the satisfaction of these needs. This leads to the overconsumption of food and addictions to everything from sex to social media — which together account for much of the world's destructive agricultural and energy practices.

No matter how much we realize that this is leading to our downfall, we can't help but relapse because we are prisoners of the dopamine pump in the striatum, which cannot be switched off.

According to Bohler, the only way out is to encourage the emergence of new values of sobriety, altruism and slowness. If adopted, these more sustainable notions could be recognized by the striatum as new sources of dopamine reward. But there's the challenge of promoting inspiring stories that infuse them with value.

Take the photo-collage exhibition "J'agis ici... et je m'y colle" ("I'm taking action here... and I'm sticking to it"), a collection of life-size portraits of residents committed to the energy transition, displayed on the walls of the French coastal city of La Rochelle.

Backed by the French National Center for Street Arts, photographer Martin Charpentier may be employing artistic techniques, but he's also tinkering with neuroscience in the process.

Stefano Lupieri / Les Echos

🌎  7 THINGS TO KNOW RIGHT NOW

• Sudan in chaos following military coup: After Sudan's military seized power from the transitional government, defiant anti-coup protesters have returned to the streets of the capital city Khartoum, for a second consecutive day. At least seven people have been killed and 140 injured. Coup leader General Al-Burhan has announced a state of emergency across the country, while the military cut off access to the internet and closed roads, bridges, and Khartoum's airport. Washington condemned the coup and suspended aid, and the U.N. Security Council was expected to discuss Sudan behind closed doors later today.

• Egypt lifts state of emergency in force since 2017: Egyptian President Abdel Fattah el-Sisi, announced the end of a four-year-old state of emergency, undoing powers that had given the government sweeping authority to quash protests, make arrests, search people's homes without warrants, and control everyday life in the most populous Arab country.

• Platforms take down Bolsonaro video linking vaccine and AIDS: Facebook, Instagram and YouTube have removed an anti-vaccine video from their respective platforms posted by Brazilian President Jair Bolsonaro. Beyond blocking the video, in which Bolsonaro falsely linked the COVID-19 vaccine with developing AIDS, YouTube went further and suspended the far-right leader for a week.

• COVID update: The U.S. will launch a new travel system on November 8, imposing new vaccine requirements for most foreign national travellers and lifting severe travel restrictions over China, India and much of Europe. Meanwhile, authorities in northern China are reimposing lockdown, and other emergency measures as COVID-19 infections spread to 11 provinces.

• Australia pledges net zero emissions by 2050: As one of the world's largest emitters of greenhouse gases per capita and a major exporter of fossil fuels such as coal, Australia has finally committed to becoming carbon-neutral by 2050. This is a target already adopted by most nations heading to next week's COP26 international climate conference, but that Australia had so far refused to pledge.

• Japanese princess loses royal status over wedding: Japan's Princess Mako married her boyfriend Kei Komuro, giving up her royal status. Under Japanese law, female imperial family members lose their status upon marriage to a "commoner" although male members do not.

Raiders of the Lost Credit Card: A tourist returned the credit card of American actor Harrison Ford, who had lost it in Sicily while shooting scenes for the latest Indiana Jones movie.

🗞️  FRONT PAGE

"Out of control," titles German daily Süddeutsche Zeitung, reporting on the release of a series of articles by a consortium of 17 U.S. news outlets, called the "Facebook Papers," that reinforce whistleblower Frances Haugen's claims that the social media giant is prioritizing profits over the well being of its users and society.

#️⃣  BY THE NUMBERS

$1.01 trillion

After striking a deal to sell 100,000 electric vehicles to car rental firm Hertz, Elon Musk's Tesla has joined Apple, Microsoft, Amazon and Google's Alphabet in the club of companies that have reached a $1 trillion valuation.

📰  STORY OF THE DAY

What the capture of a drug kingpin means for Colombia

While the capture of Otoniel, Colombia's most wanted drug trafficker, made global headlines, Bogotá daily El Espectador writes about the significance of the news for a country that has battled narcotrafficking for decades.

👮 The arrest of the Colombian mobster Dairo Antonio Úsuga David, a.k.a. "Otoniel," is a victory for Colombian intelligence, law-and-order forces and the broader fight against crime. Details of the eight-year-long pursuit of the head of the Gulf Clan, of the tireless and meticulous work, testify to the capabilities that the police and army have managed to develop in the fight against the narco-trafficking that has long been a stain on Colombia.

🇨🇴🇲🇽 Otoniel is responsible for a criminal organization with more than 3,800 members and influence on 12 departments and 128 districts in Colombia (though data from the Bogotá-based Peace and Reconciliation Foundation counts 211 districts). The Gulf Clan sends half the drugs going out of Colombia, and is the main exporter to Mexico. Its ties to the Mexican cartel chief Joaquín "el Chapo" Guzmán are well-documented — and Otoniel had aspired to fill the power vacuum left by Guzmán's capture.

⚖️ Some have observed that the ensuing power vacuum will engender more violence, which is true. But we are, in any case, far from eliminating drug trafficking in Colombia or cutting its tentacles across public life. That shows the limitations of the hard-line response to drugs, when we have seen it is not enough. Still, it is essential in any fight against crime for the state to show its operational capabilities. The message is clear: not even drug overlords are above the law in Colombia.

➡️ Read more on Worldcrunch.com

📣 VERBATIM

"I love Mako. I would like to spend my one life with the person I love."

— Kei Komuro said during a news conference after his wedding with Japan's Princess Mako, the niece of the current emperor and the sister of the likely future sovereign. The princess lost her royal status as a result of her marriage with Komuro, a "commoner."

📸  PHOTO DU JOUR

An art installation "Greetings From Giza" by French artist and photographer JR faces the pyramids of Giza in Egypt, as part of the 2021 exhibition "'Forever Is Now," the first international art exhibition to take place there — Photo: Balkis Press/Abaca/ZUMA

✍️ Newsletter by Anne-Sophie Goninet, Jane Herbelin and Bertrand Hauger

Send all commoner and royal well wishes to Mako and Kei — and let us know what the news looks like from your corner of the world! info@worldcrunch.com

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