Interview with Liu Mengjun · Part 2｜Russian-Ukrainian conflict detonated multiple fronts: energy, food and chips

The Russian-Ukrainian war has been going on for more than a month since the conflict broke out on February 24. This change not only intensified the game of great powers, but also induced mixed conflicts in the financial, technological and industrial fields. All countries outside the region were hit by the storm. On this topic, "Multidimensional News" interviewed Liu Mengjun, director of the First Research Institute of Taiwan's "China Economic Research Institute", to discuss the changes in the global financial, energy, and food sectors caused by the Russian-Ukrainian sanctions. This is the second part of a series of interviews (two in total). articles).

The first of a series of interviews: Interview with Liu Mengjun, Part 1｜What does Russia's resistance to SWIFT's "financial nuclear bomb" teach China?

Multidimensional: The energy issue is another major focus of this conflict. Since the start of the war, oil prices have been soaring, and inflation in the United States will also be linked to it. Biden intends to call on all parties to boycott Russian oil and gas, but he is also eager to seek new oil sources, reduce oil prices, and allow those who are highly dependent on Russian oil and gas (such as oil and gas). Germany) alternatives are available. At present, it seems that persuading the Organization of the Petroleum Exporting Countries (OPEC) to increase production, lifting the ban on Venezuelan crude oil, and lifting the ban on Iranian crude oil (involving the nuclear deal negotiation) are all the directions of the United States. I wonder what you think of this development?

Liu Mengjun: In the OPEC part, the United States will not give up negotiations, otherwise it will give up space to China and Russia. The Middle East has always been a sensitive place, and China, the United States and Russia have certain influence. Venezuela involves the control of the "backyard" by the United States. From the perspective of the Monroe Doctrine, Latin America has always been a sphere of influence that the United States cannot abandon. It is the United States that has made a strategic mistake when it will come to the current situation with Venezuela. Seeing that Washington is negotiating "oil-for-debt" with Venezuela's Nicolás Maduro authorities is actually a sign that the United States intends to rebuild the "backyard fence".

From another perspective, these efforts by the United States should be prepared to prevent a global oil shortage crisis after the protracted conflict between Russia and Ukraine; but we cannot ignore the industrial interests of American shale oil producers, although the United States seems to continue Looking for new oil sources, but will not let this move override their own national interests. A while ago, due to the low oil price and the relatively high cost of shale oil extraction, shale oil producers did not actively increase production, but in the future It's hard to tell.

From the perspective of the United States, in order to stabilize international oil prices, in addition to OPEC, Venezuela, and Iran, there are actually several options. The first is to release the reserves of war reserves to the international market, which can not only slow down the surge in oil prices, but also explain to European allies; Wind direction, oil prices will not rise disorderly. But in all fairness, the United States and its European allies are not too struggling at the moment, after all, the winter is over.

Duowei: Germany is highly dependent on Russian oil and gas. After the outbreak of the conflict, it was forced to cut off the gas of the Beixi No. 2, but there is no follow-up on the US oil embargo on Russia. Although the United Kingdom has partially followed up, Prime Minister Boris Johnson It also immediately flew to Saudi Arabia to seek new oil sources. In your opinion, how long will it take for Europe to significantly reduce its dependence on Russian oil and gas without compromising its climate goals?

Liu Mengjun: After this crisis, I believe that the EU will also speed up the energy transition process, hoping to reduce its dependence on Russian oil and gas.

But a major obstacle to the energy transition is the relatively unstable supply of new energy sources, whether wind or solar. To solve this problem, we can start from two aspects: the first is to develop energy storage technology, for example, when the solar power generation is sufficient, the unused electricity can be stored, and the same is true for wind power; the second is to develop new energy, For example "hydrogen". However, hydrogen energy also has storage problems. If hydrogen is placed in a steel cylinder, the bottle body will easily become brittle. In addition, the steel cylinder also has a certain weight. If the storage container is too heavy, the benefits of using hydrogen energy will be greatly reduced. Difficult to run around with bulky cylinders. The above directions all have certain technical and conditional limitations, but in short, they are also options.

As for how long it will take for Europe to significantly reduce its dependence on Russian oil and gas, it is not easy to calculate, but we can estimate it based on existing standards. What I immediately think of here is the Carbon Border Adjustment Mechanism (CBAM) announced by the European Union on July 14, 2021. This mechanism regulates carbon footprint and carbon emissions. In the future, if carbon-intensive products are to be exported To the EU, you must first purchase certificates (CBAM Cerificates); cement, steel, aluminum, fertilizer and power products imported to EU member states also need to declare the carbon emissions of their products to the importing country.

The EU was the norm at the beginning, and from January 1, 2023, the mechanism will begin a three-year transitional phase, which will be officially implemented in 2026. After the Russia-Ukraine conflict, the EU may speed up the process and shorten the transition period. This part can be observed again. But if it really goes in this direction, it may put pressure on China and other countries. After all, carbon reduction does require the cooperation of China, the United States and Japan to be effective, not to mention the pressure from OPEC and other oil exporting countries.

Duowei: The Russia-Ukraine conflict and subsequent sanctions have unexpectedly affected regions that imported a large amount of food from Russia and Ukraine, and North African and Middle Eastern countries are likely to be the biggest victims. Russia is the world's largest exporter of wheat. Although the sanctions did not directly target food commodities, they affected Russia's grain exports due to factors such as payment and freight. Do you think Russia's status as a food hub will decline in the long run? If it develops like this, what country has the ability to fill this space?

Liu Mengjun: In fact, Russia has already made a move, which is to require countries to buy food in rubles. On March 30, the Chairman of the Russian State Duma already mentioned that in addition to requiring countries to pay for natural gas in rubles, future Russian exports of oil, grains, metals, fertilizers, coal and timber may also be priced in rubles. This shows that Russia's strategic thinking is very clear.

So what I am more worried about is not Russia's grain export problem, but the impending harvest crisis this autumn and winter. Russia and Ukraine are both big exporters of grain, but now part of the labor force of the two countries is fighting on the battlefield. It is impossible for people to wear steel helmets while cultivating the farmland. At present, grain prices in spring and summer may not rise significantly, but this year's winter wheat harvest will inevitably lead to a decline in production due to the decline in planting rates.

In this context, to assess global food security, it is necessary to grasp the harvesting situation of other major food exporting countries. In the southern hemisphere, it is mainly Brazil, Argentina, and Australia. According to the data in 2021, they are the world's second, fifth and eighth largest grain exporters; in the northern hemisphere, the United States, China and Canada are the world's first. , three or four. If it is estimated that the crop failure in Russia and Ukraine will be serious, in fact, the above-mentioned countries can start to increase planting now, or can effectively prevent the food crisis from detonating this autumn and winter.

Duowei: In addition to the Russian-Ukrainian conflict, the interaction of the Sino-US trade war is also eye-catching. On March 23, the Office of the United States Trade Representative (USTR) stated that it re-exempted 352 tariffs on imports from China. How would you rate this move? Is it related to the U.S. intention to ease Sino-U.S. relations after the outbreak of the Russia-Ukraine conflict?

Liu Mengjun: This statement may be due to the expectation that the confrontation between China and the United States will end. In fact, this move by the United States is not a gesture of goodwill to China, because the tariff exemption for these imported goods has been decided as early as 2022. This move is only a "renew", which is the original agreement between the two parties. The exemption period has expired, and after review and evaluation, it is decided to continue the exemption. However, this action cannot affect the long-term trend of the Sino-US trade war.

The outside world may have some misunderstandings, thinking that this is related to the second video summit between Xi and Bai on March 18, that is, it seems that after the talks between the two sides, Sino-US relations have eased, so the United States "released goodwill". In fact, as far as the Sino-US trade war itself is concerned, there has not been any positive progress. Because Sino-US relations have not substantially improved significantly, it is difficult to stop the trend of trade wars. After the Sino-US trade war broke out in 2018, China has continued to amend the law, strengthened security review and foreign investment review, and actively enhanced its ability to fight against long-arm jurisdiction. It can be said that the measures taken by the United States to confront external forces with laws in the past have also been learned by China in recent years. a lot.

Duowei: This time, Taiwan has also followed up with economic sanctions against Russia, but so far it seems that only the named ASUS (ASUS) has clearly suspended shipments to Russia, and the rest "prohibit import and export trade with the two places in the east of Ukraine; Groups, enterprises and military-related groups export products such as semiconductors: products exported to Russia will be severely reviewed; if necessary, Russian ships and flights will be detained.” It seems that no clear action has been seen. I wonder what you think of Taiwan's response? At present, it is rumored that Russia intends to transfer TSMC's orders to Chinese foundries. What do you think of this information?

Liu Mengjun: Taiwanese seem to still drink vodka. In fact, the United States may not expect much, what role Taiwan can play in sanctions.

The context of the ASUS incident is like this. Ukraine's Deputy Prime Minister and Minister of Digital Technology tweeted on March 12, alleging that the reason why Russian tanks and missiles can continue to launch precise attacks "because of the use of ASUS technology", and asked ASUS to do so. Terminate business in Russia.

For a long time, ASUS and Acer have been known as "Taiwan Double A" and have a certain brand image in the world. This time being named by Ukraine, although it will impact ASUS's business in Russia, it also unexpectedly increases its brand awareness. . However, Ukraine's naming is actually somewhat untenable. It implies that ASUS provides positioning technology (GPS) to the Russian army, but most of the chips used in the ASUS GPS system are not manufactured by itself; secondly, the ASUS GPS system is only used by itself. On the mobile phone products, its nature is civilian rather than military.

Even if Russia's own GPS system really fails and ASUS has to be used as a last resort, civilian GPS will not be able to guide missiles at all. Perhaps it is because ASUS personal computers have a high market share in Russia (15.6%), ranking third after Lenovo (18.5%) and Acer (16.8%), so it provided the "Russian army commander because of the local computer failure, so the Imagine using an ASUS laptop to command"? But in short Ukraine finally got a donation from ASUS. I personally think that Ukraine may still hope that the outside world will strengthen sanctions against Russia to achieve the effect of breaking the supply chain, so it will be named like this.

As for whether Russia may transfer chip orders produced by TSMC to China? I think if TSMC really cuts off supply to Russia, then this is an inevitable development. Looking at the world, there are not many companies that can do chip foundry. Taiwan is TSMC (TSMC), United Microelectronics (UMC), the United States has GlobalFoundries (GlobalFoundries), and Intel (Intel) also has some production capacity for foundry. South Korea Samsung (Samsung) can also, China is SMIC (SMIC).

If Taiwanese manufacturers don't help Russia as a foundry, based on the current international situation, it is impossible for Russia to go to Intel. What about Micron? Neither does Micron, because Micron makes memory ICs (DRAM); although Samsung does both, it is also unlikely to accept Russian chip contract orders for political reasons, as does GlobalFoundries. Therefore, the last one who can take over should be SMIC. But the key is, what level of chips does Russia need? Now the United States is also keeping an eye on SMIC. Even if the latter really wants to take orders from Russia, I am afraid it cannot be too high-profile, because this will affect SMIC's acquisition of new process equipment in the future.

In fact, from the overall data, Taiwan's trade ties with Russia are quite weak, so even if it participates in sanctions this time, it is unlikely to have a strong lethality. However, for Taiwan, the sources of technology and products should be diversified and globalized. The Taiwan market cannot only be the technology of the United States, Japan, the European Union, and Israel. Others such as Central and Eastern Europe and even Russia should also become the global procurement of Taiwan's technology market. Sourcing) one of the important sources. Russia's scientific and technological strength is not weak, and it still has its particularities, which Taiwan should not ignore.

The original text was published on 2022/4/1 " Multidimensional News "