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EE (Structure of EE, Global Economics, Ideas, Research Question, RPPF) -…

- - - - I have been interested in the feud between US and China for quite sometime. Though I never do a deep research into the topic, I always try to keep up with the relations between the two. This caused me to wonder where the tension started and how it related to me. Being in a family that owns two BYD cars, an EV designed and manufactured in China, I realized that the US and China fight for technological supremacy might relate to me through this. Therefore, I researched and found out about the phase one trade deal, an economic and trade agreement enacted in 2020 used to resolve tariff tension between the two nations, which deals with a variety of topics including automotive. Particularly, it causes China to voluntarily import more US cars and I wonder how it affected the industry of EVs in China. Hence, I decided to research about the extent at which the trade deal affected the industry (research question still to be narrow down).
  - - - Impact on stakeholders in the industry. Do they benefit? Do they lose?
      - Analysis of price of different EV and vehicles. Sales (consumption) and profit made by different suppliers (US and Chinese)
- - - - Lower price and lower quantity sold for domestic suppliers (disadvantage)
      - Lower price for importers
        
        Benefits to domestic consumers
        
        The trade deal involves the voluntary increase of imports of US products into China. With this idea, the price of goods (particularly agricultural and manufactural) in the nation should be cheaper
      - Increased competition and efficiency
      - Greater choice of products (substituents)
        Advantage to consumers
        Disadvantage to producers
      - Access to more resource for production
        
        Cheaper cost of production and greater economies of scale (firm's ability to produce at lower average cost when they grow in size)
      - Foreign currency exchange for hard currencies
    - - Exporters sells more quantity at higher prices
        
        Benefits for the US with increased exports to China
      - Consumers faced higher prices (disadvantage)
  - - - The trade deal involves artificial increase in imports of US products, therefore, it might distort absolute advantage
        
        China excels at manufactured products but importing more might disrupt it
    - - A measure of a nation's export prices compared to import prices
        
        Affects the benefits nations gain or lose from trade
        
        Might be able to apply to the trade deal as there're only two nations involve. It still has limitations however and many factors has to be accounted for as well
  - - - Tax per unit on price of imported products
        
        Uses:
        
        protect domestic industry
        
        Effects on stakeholders:
        
        Domestic consumers faced higher prices and lower quantity demanded; does not benefit
        
        Domestic producers benefit as they receive higher prices and quantity demanded for domestic products
        
        Foreign producers doesn't benefit as they sell less products
        
        The range of lost depends on the elasticity of demand and supply
        
        Government benefits from money earned from tariffs
        
        Society faced welfare loss due to inefficient allocation of resources to inefficient domestic producers
        
        Taxes are still applied from the tariff war even after the trade deal is in effect, though at a much lower rate than during the war
        
        Based on data from the Ministry of Industry and Information Technology, U.S.-made vehicles exported to China face the same 15% tariff China applied to most major trading partner
        Trade deal "offering tariff exceptions and opening potential opportunities for U.S. exporters"
        source
        
        From 2018 to 2021, China’s imports of motor vehicles decreased from 1,130,000 to 940,000 units, while those from the United States decreased from 170,858 to 155,337 units
        
        As part of the trade deal, Trump Administration agreed to lower tariffs imposed in September 2019 from 15 percent to 7.5 percent on an announced $120 billion worth of U.S. imports from China
    - - Quota is a physical limit on the volume of a particular good entering the country from abroad
        
        Uses:
        
        slow imports without severe consequences to foreign producers like tariffs and giving too big of an advantage to domestic firms
        
        Effect on stakeholders
        
        Domestic producer benefits as they receive higher prices and higher quantity sold than without quotas
        
        Foreign producers exports less product, however, receives higher prices, therefore, they'll benefit
        
        Depends on the elasticity of demand and supply
        
        Domestic consumers faced higher prices and lower quantity demanded; does not benefit
        
        Government doesn't benefit; no direct impact
        
        Society faced welfare loss due to inefficient allocation of resources to inefficient domestic producers
    - - Payment per unit of output from the government to a specific industry to help lower production costs and boost production
        
        Uses:
        
        Increased production of certain products in the domestic market
        
        Effects on stakeholders:
        
        Domestic producer benefits as they receive higher prices of world price + subsidy and higher quantity sold
        
        Foreign producers are worse off due to lower imports
        
        Consumers don't benefit or lose as they still receive the same price and quantity demanded, just buying more from domestic firms rather than foreign
        
        Government is worse off as they have to pay for subsidy equal to subsidy price x domestic quantity sold
        
        Society faced welfare loss due to inefficient allocation of resources to inefficient domestic producers
        
        China has been subsidizing multiple industries including automotive, however, this wasn't directly addressed in the trade deal
      - Export subsidies are payment per unit of exports
        
        considered illegal by WTO due to nations being able to export products below world price and destroying other nation's domestic market
    - - Types pf trade protection that doesn't involve the use of tariffs or subsidy
        
        Product standards
        
        Laws or regulations to protect the quality of a product and the health and safety of consumers in the domestic market
        
        Though doesn't directly impact foreign producers, it can be used to lower imports due to strict regulations that has to be met
        
        China has a strict and slow process of foreign product regulations, especially for agricultural goods (genetically modified food) and technology. This has been addressed in the trade deal.
        
        Under the new agreement, Chinese import authorities will now permit the import of beef, pork, and processed meat that passes inspection by the U.S. Food and Drug Administration (FDA) Food Safety and Inspection Service.37 China also committed to reduce the review and approval period for genetically modified products to “no more than 24 months”—down from the current approval period of five to seven years.
        
        Voluntary export restraint (VER)
        
        A policy where the exporting country voluntarily agrees to reduce the volume of exports
        
        Similar to quotas in the aspect that it limits the quantity of products, however, VER can be more effectively used without incurring tension and conflict between nations. It also serves as a way to form diplomatic relationships
        
        A major core of the trade deal involves the use of voluntary import expansion (VIE) which is the counterpart to VER. This means that China voluntarily increases its imports from the US
        
        The deal includes commitments by China to purchase an additional $200 billion worth of U.S. products over 2017 levels in four sectors (manufactured goods, services, agricultural products, and energy) over the next two years (2020-2021)
        
        Buy national policies
        
        A campaign encouraging consumers to buy goods produced domestically instead of those imported from abroad through the use of patriotic feelings and attachments to the nation
    - - National security: Protect production of goods deemed necessary to the development of the nation
      - Maintenance of health and safety through product standards
      - Protection of the environment through environmental standards
      - Protection against dumping (exporting of goods below market price which can severely harm domestic market)
      - Balance of payment corrections to help solve trade deficits (when value of imports is greater than that of exports)
      - Protection against unfair competition and when intellectual properties are stolen
        
        For the topic of IP in the trade deal, much of the emphasis is on procedural changes that work to bring China’s administration of the IP lifecycle—from patenting, to licensing, to administrative and criminal enforcement—in line with norms of developed countries. Other provisions aim to create a level playing field for foreign firms and ensure better protections in specific high-value markets, namely pharmaceuticals
      - Government revenue
      - Protection of sunrise or infant domestic industry
      - Protection of domestic jobs
      - Economically least developed country (ELDC) diversification
    - - Creates misallocation of resources
      - Conflict between nations; can lead to trade wars
      - Increased cost of production
      - Higher prices
      - Less choice for consumers
      - Lack of competition to drive domestic firms to be efficient
- - - - Introducing the topic and research question, and then relating it to personal connection and interest
    - - Talk about all the sources of information accessed and the processed of processing data (how data is use; i.e for comparison to extrapolate data or confirm relationship etc.)
        How I chose the timeframe of 2020-2023 (because that's when the subsidy ended)
    - - subsidy policies applied since year 2020 to 2023 (when it ended), how it's changed and what it does
        
        theoretical impact of subsidies (i.e shift supply line, and demand line for consumption subsidy) and the empirical impact of subsidies; also in relation to exports and global economics
        
        Theories should be supported by real statistics when applied to the scenario (i.e NEVs production in each year with different subsidies)
        
        The decreasing subsidize amount and how it impact producers to innovate and make NEVs more efficient (thereby increasing supply of NEVs and exports); also impacts of dual credit system
        
        Statistics of NEVs production and consumption domestically and worldwide (i.e in Thailand), decreasing costs of NEVs through the years in country and out
        
        Adjust price to inflation
      - Note: Can use graphs for statistics from outside sources (no need to create our own); economic graphs doesn't necessarily have to as well but must explain why it is included and applied to the scenario
    - - Subsidy has no direct link to exports, however, its overall impacts on the NEVs industry has indirectly led to the increase in exports over the years
  - - - Development Plan for New Energy Vehicle Industry (2021–2035) which focuses on deepening the supply-side structural reform and multitude of other areas. Relates to macroeconomics and exports of NEV
        
        Can analyzed the changes in supply-side industry and look at changes in price and quantity sold of Chinese NEVs in Thailand as evaluation
      - Subsidy policies since 2010 for NEVs such as pure electric vehicles and plug-in hybrid vehicles. Starting in 2019, subsidy policies have gradually shifted towards fiscal incentive policies guided by technological innovation. Relates to global economics and exports
        
        Can analyzed subsidy policy in year 2021 to now (or around this period) and the changes in price and exports in Thailand as evaluation (seems like the path to head in)
- - - - challenges right now: It seems that the phase one trade deal has limiting effects on the automobile industry of both nations as not only was the benchmark not achieved but China is already focused on domestic market at that time while US automobile can already be produced inside the country, limiting VIE impact, so it might not be worth it to investigate further.
        Maybe specifically investigate Tesla as it seems to benefit from the trade deal a bit (building gigafactory and lower tariffs)