China Tightens Used-Car Export Oversight Amid Surging Shipments and Domestic Oversupply

Economic

Summary:

China has introduced stricter regulations on used-car exports to improve transparency, ensure technical compliance, and address concerns over inventory manipulation linked to oversupply and “0 km used cars.”...

China Moves to Standardize Booming Used-Car Export Sector

China’s Ministry of Commerce (MOFCOM) has announced new measures to tighten regulation of used-vehicle exports, aiming to support the industry’s nationwide expansion while preserving market order. The move marks a shift from a pilot phase launched in 2019 to a broader regulatory framework as the sector experiences exponential growth.

Spokesperson He Yadong stated that MOFCOM will continue coordinating with related agencies following its February 2024 directive, which formalized the transition to a national program. The intent is to structure the burgeoning used-car export trade in line with both domestic quality standards and international import requirements.

Explosive Export Growth Drives Regulatory Response

China exported 275,000 used vehicles in 2023, generating $6.88 billion in export revenue. In the first half of 2024, that number surged by 58.5% to over 436,000 units, underscoring the urgency for improved regulatory infrastructure.

All used vehicles designated for export must now comply with technical standards WM/T 8-2022 for passenger vehicles or WM/T 9-2022 for commercial vehicles and trailers. Each unit requires inspection by an accredited third-party agency, and exporters must submit corresponding certification reports.

Additionally, exporters must adhere to destination market import requirements and provide declarations of conformity where necessary. MOFCOM has encouraged exporters to utilize China’s national “electronic maintenance health record system” to validate each vehicle’s service history.

These measures reflect a causal response to rapid growth: as volumes rise, regulatory oversight is being scaled to ensure product quality, traceability, and compliance.

Combatting “0 km Used Car” Practices and Market Manipulation

The tightening of controls also seeks to address a peculiar domestic phenomenon: the rise of “0 km used cars.” These are essentially new vehicles registered and reclassified as used, often sold at discounts to avoid inflating new car inventory data. Analysts suggest this practice is linked to prolonged overproduction and excessive inventory levels.

As of April 2025, China’s passenger car stockpile reached 3.5 million units. Some factories are reportedly operating at under 50% capacity. The reclassification of unsold vehicles as “used” helps automakers mask inventory pressure but undermines data transparency and erodes consumer trust.

To curb this, MOFCOM convened meetings with manufacturers and used-car platforms in May to explore legal frameworks that would improve data integrity and monitoring mechanisms. This suggests a structural problem: oversupply is fueling market distortion, prompting policymakers to intervene.

Balancing Export Growth with Domestic Stability

Industry experts believe that controlled expansion of used-car exports may help ease inventory pressure while enhancing market discipline. The focus on mandatory inspections, digital service history, and regulatory harmonization is expected to elevate China’s global credibility in the used-car trade.

At the same time, these policies may restore domestic consumer confidence by curbing practices that blur the line between new and used vehicles. Ensuring transparency is critical in a market where buyers increasingly seek reliability, value, and post-sale support—elements that can be compromised by inconsistent classification and documentation.

China’s decision to tighten used-car export rules marks a turning point in how the country manages one of its fastest-growing automotive sectors. By reinforcing technical standards and targeting opaque sales practices, the government aims to both protect the global reputation of its auto industry and address domestic inefficiencies. As export volumes continue to rise and overcapacity persists, the success of these policies will hinge on how well they balance industrial growth with accountability and long-term market trust.

Source: CarNewsChina

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Final Countdown Triggers Urgency in Global Trade Talks

With just days remaining before a 90-day tariff grace period ends on July 9, global economic powers are intensifying negotiations with Washington in a bid to avoid sweeping tariff hikes ranging from 10% to 50%. President Donald Trump has made clear that if deals are not finalized by the deadline, letters imposing new tariff rates will be sent immediately to defaulting trade partners.

U.S. Treasury Secretary Scott Bessent reaffirmed this position on July 2, stating that tariffs could revert to aggressive April 2 levels unless foreign governments concede to U.S. terms. The statement reinforces the administration’s transactional approach, where cooperation is rewarded and resistance penalized.

Mixed Progress as Negotiation Strategies Diverge

Thus far, only limited progress has been made. The U.S. has sealed a modest agreement with the United Kingdom and, according to Trump’s July 2 post on Truth Social, a deal with Vietnam. However, the president continues to warn that non-compliant nations will simply receive tariff notifications.

The European Union has emerged as one of the most proactive negotiators. EU Trade Commissioner Maros Sefcovic traveled to Washington on July 1, expressing tentative approval of U.S. proposals. The EU appears willing to accept a general 10% tariff on exports but is pushing for exemptions or reductions in key sectors such as pharmaceuticals, aircraft, semiconductors, alcohol, and automobiles. In exchange, the EU has proposed easing U.S. auto part and steel tariffs that currently stand at 25% and 50%, respectively.

Japan, meanwhile, is under pressure over its auto exports—a long-standing grievance for Trump. Despite ongoing talks, the administration has signaled little intention to ease the existing 25% tariff on Japanese cars and has criticized Japan for not importing enough U.S. rice. Trump publicly named Japan on July 2 as a country likely to receive a tariff notice.

India’s negotiations have stalled amid disputes over steel, agricultural goods, and auto parts. The U.S. wants India to open its market to American dairy, nuts, and soy products, while New Delhi is demanding lower tariffs on its steel and auto exports. Indian negotiators have extended their stay in Washington in hopes of overcoming the deadlock.

Alternative Bargaining Tactics and Bilateral Flexibility

Some nations are opting for a conciliatory approach. Indonesia, for example, announced import license relaxations and trade incentives on June 30, including joint mining ventures with U.S. firms. These gestures appear calculated to secure tariff leniency.

South Korea has adopted a legalistic route, requesting more time to negotiate. Although Seoul and Washington already share a near-zero tariff free trade agreement, South Korea’s lack of leverage has shifted the U.S. focus to broader issues such as defense spending and currency management. Trump continues to criticize the cost-sharing agreement for maintaining 28,500 U.S. troops in the country.

Thailand remains optimistic, proposing to lower its own import duties, purchase more American goods, and boost U.S.-based investment. However, as the U.S. begins locking in deals with major partners, slower countries risk facing punitive tariffs by default.

U.S.–China Talks Follow a Separate Timeline Amid Resource Tensions

Unlike other nations, China’s talks with the U.S. operate on a separate schedule, with a deadline set for August. Their negotiations are complicated by Beijing’s earlier halt on exports of rare earth elements and magnets—a retaliatory move against Trump's April tariff threat that disrupted global supply chains.

Although the U.S. recently announced a breakthrough in securing China’s commitment to resume those critical exports, the broader agreement remains elusive. The standoff between the two largest economies continues to ripple across global trade and manufacturing systems.

As the July 9 deadline approaches, the global trading system finds itself in a race shaped by pressure, compromise, and brinkmanship. While some nations have secured deals or offered concessions, others are struggling with structural trade imbalances or political hesitations. The Trump administration’s aggressive use of tariff threats as leverage has prompted both urgency and unpredictability, with markets watching closely for who secures relief and who faces the cost of delay. The aftermath of this negotiation wave may redefine global trade alignments and the role of tariffs as a political instrument in a volatile economic era.

Source: Yahoo Finance

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Political

Satellite Evidence Reveals Expansion but Output Stalls

According to a Newsweek report citing satellite images from Planet Labs, Russia has visibly expanded its Kazan aircraft manufacturing facility in the Republic of Tatarstan throughout the past year. As the only plant capable of producing new strategic bombers to replace those allegedly destroyed by Ukraine in its recent “Pautina” campaign, Kazan has taken center stage in Russia’s defense production efforts.

Imagery indicates at least five new buildings have been added to the site since mid-2024, supporting production and maintenance of aircraft such as the Tupolev Tu-160M, Tu-160M2, Tu-22M3, and various helicopters and civilian planes. However, the increase in physical infrastructure has not translated into a rise in output.

Labor and Parts Shortages Undermine Production Goals

The Institute for the Study of War (ISW) reports that the Russian aerospace sector is being held back by a dual constraint: a deepening shortage of skilled labor and a lack of critical components. The latter issue stems largely from international sanctions that have disrupted the import of aviation-grade materials and technology from neighboring countries.

Intelligence analyst Oliver Ruth emphasized that sanctions have “crippled” Russia’s ability to scale up military aircraft production, with impacts expected to persist over both the short and medium term. As a result, the production timeline for key platforms remains vague. Even in 2024, only two Tu-160M2s and two Tu-160Ms were inducted, and these were likely built over several prior years, not newly assembled under current timelines.

The causal chain is clear: disruptions in supply chains and brain drain from the aerospace industry are directly delaying production, despite state rhetoric about expansion.

Sukhoi Output Sluggish Despite Strategic Push

Russia’s largest military aviation contractor, United Aircraft Corporation (UAC), has announced plans to boost production of Sukhoi fighter jets by 30%. However, the effort is being undermined by internal restructuring, including the recent layoff of 1,500 managerial personnel.

Ukrainian military analyst Oleksandr Kovalenko stated that current output at Sukhoi facilities is extremely limited, with production rates down to one aircraft every one to two months. This figure suggests a severe mismatch between Moscow’s strategic objectives and its actual manufacturing capabilities.

Furthermore, ISW suggests that the layoffs and slow production may reflect a policy shift within the Kremlin—possibly deprioritizing manned aircraft production in favor of expanding drone programs and other weapons systems that require fewer specialized parts and personnel.

Broader Industry Fragility Reflects Legacy Weaknesses

Underlying these constraints is a deeper structural weakness: Russia’s military aviation industry has lost many of its core facilities and personnel since the collapse of the Soviet Union. Even with modernization programs and renewed state contracts, decades of underinvestment and attrition have left the sector fragile and slow to respond to war-time demands.

The inability to reach sustainable production rates despite visible facility expansion reveals a gap between ambition and capacity. It also raises questions about the long-term viability of Russia’s air force modernization plans amid a prolonged military campaign and rising defense spending.

While satellite data confirms that Russia is investing heavily in expanding military aircraft infrastructure, real production is being choked by supply shortages, labor constraints, and structural inefficiencies. Sanctions have curtailed imports of essential components, and decades-long erosion of manufacturing capacity is now severely limiting Russia’s ability to replenish and modernize its fleet. As the Kremlin appears to shift priorities toward unmanned systems and more agile defense technologies, the future of Russia’s manned military aviation remains uncertain, defined more by its constraints than its ambitions.

Source: Newseek

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Forex

Euro Appreciation Emerges as a New Threat to ECB’s Inflation Strategy

The European Central Bank (ECB) is facing growing internal concerns over the rising value of the euro, which could derail its inflation target and influence future policy decisions. François Villeroy de Galhau, a member of the ECB Governing Council and Governor of the Bank of France, cautioned on July 4 that the euro’s recent surge poses a tangible risk to the central bank’s inflation objective.

Speaking at a conference in Aix-en-Provence, Villeroy emphasized that policymakers can no longer afford to “look away” from the euro’s appreciation, which has gained about 14% since January 2025. He noted that sustained appreciation of 10% could reduce annual inflation by 0.2 percentage points over three consecutive years, gradually dragging it further below the ECB’s target.

Strong Currency Exerts Deflationary Pressure Despite Target Being Met

Inflation in the euro area reached the ECB’s 2% target in June 2025. However, the euro’s rise since the start of the year has introduced downward pressure, raising the likelihood that inflation may fall below target again over the next 18 months. According to ECB forecasts, price growth is expected to remain under target until at least 2027, partly due to external trade factors, such as US tariffs, dampening sentiment.

France is already showing signs of disinflation, with consumer price growth falling to just 0.7% in May 2025—the lowest in more than four years. These developments underscore a clear causal relationship between currency strength and falling inflation: a stronger euro reduces import costs and compresses export competitiveness, both of which weaken price momentum.

Policy Caution Amid Currency Volatility and Global Uncertainty

While ECB Vice President Luis de Guindos warned earlier this week that a euro exchange rate above $1.20 could complicate monetary conditions, Villeroy refrained from commenting directly. He reaffirmed that the ECB does not target a specific exchange rate and emphasized that monetary flexibility remains essential, particularly after eight rate cuts in one year.

Villeroy reiterated that the ECB's easing cycle is not yet complete. If further action is needed in the coming six months, he implied that it would likely take the form of continued loosening rather than tightening—though he avoided linking any decisions to current exchange rate movements.

This approach reflects an awareness that while the exchange rate is not an official target, its effects cannot be ignored. The ECB must now balance domestic inflation stabilization with external risks that stem from currency shifts and global policy divergence.

Euro’s Impact on Exporters and Domestic Confidence

The ECB’s June meeting minutes also highlighted concerns over how a stronger euro affects European exporters. As the currency rises, eurozone goods become more expensive abroad, weakening demand and potentially harming industrial output. This, in turn, lowers employment and wages—further reinforcing the disinflationary cycle.

These export-linked concerns are particularly acute in economies like Germany and France, where industrial sectors rely heavily on global competitiveness. The broader implication is that currency appreciation can induce economic softness even when other indicators, such as consumer demand or employment, remain relatively stable.

The euro’s appreciation has transitioned from a passive background factor to an active threat to the ECB’s inflation mandate. While the central bank maintains that it does not target exchange rates, the economic consequences of a strong currency are forcing policymakers to remain cautious. With inflation projected to remain subdued for the next 18 months and France already showing signs of deep disinflation, the ECB may need to maintain or even intensify monetary easing. The challenge lies in supporting the eurozone economy without sparking financial imbalances—an increasingly delicate task as global conditions remain fluid.

Source: ECB

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Commodity

Sharp Decline in Oil and Gas Revenues Signals Mounting Economic Stress

Russia is experiencing one of the steepest declines in its most vital revenue stream, with oil and gas budget income plummeting to its lowest level in 18 months. According to a July 3 report from the Russian Ministry of Finance, oil and gas revenues in June dropped to just $6.3 billion (494.8 billion rubles), representing a 33.7% year-on-year decrease.

This downturn is not isolated. In the first half of 2025, total oil and gas revenue amounted to only $60 billion (4.73 trillion rubles), nearly 17% lower than the same period in 2024. This sustained contraction in energy earnings is placing severe pressure on the Russian state budget, especially amid historically high military expenditures.

Converging Domestic and Global Factors Undermine Energy Sector Performance

The revenue slump stems from a combination of internal and external pressures. Domestically, a strengthening ruble is diminishing the value of dollar-denominated energy exports when converted to local currency, eroding fiscal intake. At the same time, global oil prices have remained subdued, particularly for Russia’s benchmark Urals crude, which has hovered around $50 per barrel since April.

While the geopolitical tension between Israel and Iran temporarily lifted global oil prices in mid-June, the effect was short-lived and insufficient to reverse the downward trend in Russia’s earnings. This illustrates a causal connection between macroeconomic variables—such as currency appreciation and commodity price fluctuations—and the weakening fiscal health of an energy-dependent economy.

Export Volumes Remain Flat Despite Market Volatility

Adding to the concern is the stagnation in Russia’s seaborne oil exports. Data from late June shows export volumes have remained flat and near a two-month low. This stability in volume, despite market disruptions, underscores that price—not supply—is the dominant factor affecting revenue shortfalls.

Meanwhile, Russian oil and gas corporations are facing declining profits. Net income for the sector fell by nearly half in Q1 2025 compared to the same period last year. The twin forces of falling oil prices and a rising ruble have diminished both corporate and public financial capacity.

The relationship here is direct and compounding: reduced corporate profits translate into lower tax receipts, exacerbating fiscal imbalances just as defense spending climbs to post-Cold War highs.

Structural Fiscal Risks and Energy Dependency

Currently, one-third of all Russian government revenue originates from oil and gas. This deep dependency exposes the budget to volatility whenever external energy dynamics shift. Despite efforts to diversify trade routes and secure alternative markets, structural exposure remains high.

The forecast from late April already anticipated a 24% shortfall in 2025 energy revenue compared to initial estimates. That projection now appears increasingly realistic, or even conservative, given June’s figures and stagnant export activity.

Russia's sharp drop in oil and gas revenues in June represents more than a temporary setback—it reflects the growing vulnerability of an economy tethered to energy exports in a volatile geopolitical and financial environment. With a stronger ruble cutting into returns and oil prices struggling to recover, the state faces tightening fiscal space at a time of escalating military costs. Unless mitigated by policy shifts or a rebound in energy markets, this trend could strain Russia’s economic stability and fiscal resilience in the months ahead.

Source: OilPrice

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South Korea’s Future at Risk as Population Decline Accelerates

South Korea, Asia’s fourth-largest economy, is grappling with a rapidly worsening demographic crisis. According to a long-term projection released on July 2 by the Korean Peninsula Population Institute for Future, the nation’s population could decline to just 7.53 million by the year 2125, down from 51.68 million today. That figure would be smaller than the current population of Seoul alone.

Even under the most optimistic scenario, the population is forecasted to drop to 15.73 million less than one-third of today’s number. The median projection estimates 11.15 million by 2125. These projections were calculated using the cohort component method, a globally recognized model that factors in fertility, mortality, and immigration trends.

This dramatic shift is not only due to low fertility rates but also a cumulative compounding effect: with each generation shrinking, the pool of future parents becomes even smaller, accelerating the decline further.

From “Ray” to “Cobra”: The Collapse of the Population Pyramid

Historically, South Korea’s population pyramid resembled a broad-bottomed shape often referred to as a “ray fish,” symbolizing a youthful society. By 2125, demographers now predict it will resemble a “cobra,” where every age group narrows and the elderly dominate the structure.

In a worst-case scenario, for every 100 working-age people (aged 15–64), there will be 140 senior citizens aged 65 and older by 2125. Today, the same number of workers support only around 30 seniors, which underscores the scale of the demographic inversion taking place.

This shift creates a direct strain on public resources and labor markets. With fewer workers supporting a growing dependent population, economic productivity and fiscal stability are likely to face severe pressure.

Young Koreans Prioritize Money Over Marriage

The study also incorporates a large-scale sentiment analysis of around 60,000 posts on the workplace app Blind, revealing that many young South Koreans now prioritize financial security and home ownership over love and relationships when discussing marriage. The most frequently cited concerns regarding childbirth were financial burdens, underscoring the interconnection between economic anxiety and fertility decisions.

This generational pessimism highlights a feedback mechanism: low confidence in future prosperity leads to delayed or foregone marriage and childbirth, which in turn exacerbates population decline. What once was a cultural expectation has now become a source of economic stress and social hesitation.

Policy Recommendations Amid a National Emergency

To mitigate the impending demographic disaster, the Institute proposed several urgent policy interventions. These include financial subsidies to reduce childrearing costs, promotion of work-life balance, delayed retirement age, and labor force participation reform. Importantly, immigration policy reform is also seen as a necessary step to stabilize workforce numbers.

While South Korea saw a modest uptick in fertility to 0.75 in 2024, the figure remains dramatically below the replacement rate of 2.1. Without more aggressive and innovative policy responses, the current trajectory could lead to irreversible socio-economic contraction.

South Korea stands on the brink of a demographic cliff. With youth disillusioned about marriage and parenthood, and an aging population placing unprecedented demands on social systems, the country faces one of the most severe population crises in the world. The transformation from a “ray-shaped” to a “cobra-shaped” population pyramid is more than a statistical curiosity it is a warning signal of a future that may include labor shortages, stagnation, and deep societal strain. If unaddressed, this could reshape the nation's economy, culture, and geopolitical standing for generations to come.

Source: The Korea Herald

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Escalating Pressure as Trump Sets Tariff Deadline for Trade Partners

On July 3, President Donald Trump declared that the United States would impose new tariffs starting August 1 on all trade partners that have not reached a tax agreement with Washington. Speaking to reporters, he confirmed that official notification letters would be dispatched beginning July 4, marking a final phase in what has become a tense negotiation process with multiple countries.

This announcement comes just days before a previous delay on implementing tariff hikes is set to expire on July 9, signaling a strategic shift from postponement to enforcement. The administration’s message is clear: failure to comply with US trade terms will result in substantial economic penalties.

Tariff Range Signals Varied Diplomatic Stakes

According to Trump, the retaliatory tariffs could fall within a wide spectrum—from 10–20% at the lower end to as high as 60–70% for countries deemed to be non-compliant or resistant to current negotiations. This flexibility reflects both tactical leverage and the uneven progress in talks with different partners.

While specific nations were not named, the implication is that those engaged in prolonged or stalled discussions are now under intense pressure to finalize terms. The causal relationship is direct: unresolved tax negotiations will lead to immediate punitive tariffs.

Anticipation Builds Around Pending Trade Deals

US officials have hinted that a series of tax agreements may be announced within the coming days. However, no further details were provided, and it remains unclear which countries are closest to finalizing deals and which remain at risk.

This uncertainty adds volatility to global trade dynamics, as investors and foreign governments await clarity on whether they will fall into the exempted or penalized category. The impending deadline is expected to force faster concessions or countermeasures, depending on each nation’s economic position and political priorities.

President Trump’s ultimatum to trade partners intensifies existing tensions and introduces new urgency into international tax negotiations. By tying unresolved talks directly to high-impact tariffs, the administration is signaling a willingness to escalate economic pressure unless deals are swiftly reached. As the August 1 deadline approaches, the global trade landscape may witness both last-minute agreements and renewed conflicts, reshaping bilateral and multilateral ties in the process.