After Russia, does Italy depend on China? –

In my thirty-four years of work, I have ended up accepting a law of the press that my ego has resisted for so long: when I come to understand a “new” idea, the smartest people in Europe have known it for a long time. I received confirmation of this last month when I received the same message about China from Jens Stoltenberg, Secretary General of NATO, and from the Ukrainian Senior Director who ran Azovstal. He said in brutal terms: It is time to ask ourselves whether we are moving from a dependence on Russia to a more nuanced dependence on China.

Energy and Raw Materials: Are we moving from dependence on Russia to dependence on China?

New adoption: batteries, photovoltaics, turbines

The graph you see above, taken from the US administration’s National Renewable Energy Laboratory website, makes us understand that there is clearly a risk: the transition from fossil to renewable sources on which Europe is betting its future – for indisputable reasons explained here by Sara Gandolfi – makes us We rely on the country at the center of the process of extracting and processing the necessary raw materials Electric vehicle batteries, photovoltaic panels or wind turbines (Federico Rambini talks about ‘Corriere’ here.) However, the danger is greater than it appears because China often has a dominant position even when the source of a particular strategic material, in and of itself, does not make us think. case for example Cobalt, a metal that weighs about 14 kilograms in a typical electric car battery: 70% of the cobalt mined in the world comes from the Democratic Republic of the Congo, the International Monetary Fund explains. But you go take a better look and realize that there Fifteen of the 19 active mines are owned or controlled by Chinese entities. In short, China understood everything before us: it understood where we were going, as we struggled in the financial crisis, in the disputes between Italy and Germany over the euro, between populists and globalization in all major countries. It’s annoying to even say, but the Chinese leadership has strategically read our future ahead of us and now it looks like we’re on the cusp of becoming a next-generation energy superpower.

photovoltaic cells

The following chart contains a financial message that we haven’t fully grasped yet: In the next two decades, until 2040, we will likely transfer over $10 trillion to Beijing (and its dependencies) In dollars similar to those that the West has paid in the past two decades to Russia or the Gulf states for gas and oil.

Energy and Raw Materials: Are we moving from dependence on Russia to dependence on China?

This dominance also has informational advantages for Beijing, because only those who produce photovoltaic panels know, for example, how polluting they really are in making and selling them around the world. That is, frankly, he has insider knowledge and can take us by the nose. I was very impressed by reading the results of a study conducted by an independent analyst such as Enrico Mariotti: China dominates the photovoltaic industry (Again, take a quick look at the chart above), but the production and distribution process is so ambiguous that the electricity produced by these panels can eventually have a carbon density—that is, it can pollute—much like a gas station. Today only the Chinese know this. But if confirmed, it would be the biggest scandal in the industry since Dieselgate seven years ago. But the most problematic thing for me is that neither NATO’s Stoltenberg nor Yuri Raginkov, the CEO of Ukrainian Metinvest who owns legal ownership of Azovstal, told me about this form of Europe’s dependence on China. But others.

5 grams

Stoltenberg posed a problem Chinese companies (primarily Huawei and Zte) are penetrating 5G networks into NATO countries: a topic we know well in Italy as well. But above all, it was Ryzhenvov who electrocuted me at the end of an interview I gave him a few weeks ago. As a side-by-side process in the steel industry, he explained, Azovstal was producing significant shares of neon gas needed by the global microchip supply chain. It has supplied the giants in this sector, the Taiwanese TSMC and the American Intel Corporation. But, after a stage of adaptation, according to Ryzhinkov, this place will be occupied by large Chinese steel plants. I translate in my own words: One of the side effects of the war in Ukraine will be Beijing’s conquest of a key position in an overarching strategic sector such as the semiconductor sector. That is, the Chinese are already working to occupy the dominant position of Azovstal in this critical part of semiconductor manufacturing that is in our cars, in our refrigerators, in the devices you read from. Is this what we want? Is there really nothing we Europeans (and Italians in Taranto) can do to produce some neon in our steel plants that will no longer arrive from Ukraine? Did we leave a modest dose of strategic thinking skills in the “free world” or did we pass that on to China? In this post, I promised, with no ready answers, to at least ask some right questions and this is my honest attempt to do so. Not without involving Christine Lagarde, the head of the European Central Bank, who was on hold last week, in the exercise.

Energy and Raw Materials: Are we moving from dependence on Russia to dependence on China?

What you see above is my attempt, as usual raw and handmade, to show how The euro exchange rate began to decline Especially quickly since last Thursday when Lagarde opened her mouth at her last press conference. In fact, the exchange rate rose quite a bit when the ECB note to announce a rate hike was issued in July, September and thereafter. It was Lagarde’s words that caused the euro to fall (on Friday it devalued 25 out of 31 currencies in the ECB’s reference basket). Why interesting? Because Lagarde’s announcement, which unleashed volatility and caused sovereign bond yields for half a dozen countries in the eurozone to skyrocket, succeeded in producing the opposite of what he had reasonably expected: the euro slid precisely into ingi, rather than self-esteem. It is clear that the market fears that the ECB will bring a recession even when there is no recession yet. Now, because Lagarde does not react to excessive domestic demand inflation, but above all Inflation of imported oil, gas and food leads to a depreciation of the counter-exchange rate – Variation of ends – because it pushes up inflation by specifically increasing the price of imported goods in euros. The most telling sign that the European Central Bank floundered last Thursday seems to me: by lowering the euro, rather than fighting the rising cost of living, it is highlighting Putin’s price influence that is fueling inflation today. or not?

This article is from Federico Fobini’s “Whatever It Takes” newsletter, Powerful Data, Facts and Opinions: The Week’s Challenges for Economy and Markets in an Unstable World.(Here is the link to subscribe to .’s newsletters Corriere della Sera).

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