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General Motors CEO Mary Barra blamed a supplier of automation equipment for the slow ramp-up of its new electric vehicles.
The automaker produced just 50,000 units through the first half of this year.
Forthcoming EVs will eventually include a next-generation version of the Chevrolet Bolt EV, GM said.

GM Chair and CEO Mary Barra addresses investors Oct. 6, 2021 at the GM Tech Center in Warren, Michigan.
Photo by Steve Fecht for General Motors

DETROIT — General Motors CEO Mary Barra on Tuesday blamed a supplier of automation equipment for the slow ramp-up of GM’s new electric vehicles, after Wall Street criticized the rollout amid bold predictions the company would catch up to industry leader Tesla.
Shares of GM were down roughly 4% in morning trading Tuesday despite quarterly results that topped year-ago performance. Analysts during the call questioned the company’s pricing strategies, EV profitability guidance and ability to hit previously announced targets for the vehicles.

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“We have experienced unexpected delays in the ramp because our automation equipment supplier has been struggling with delivery issues that are constraining module assembly capacity,” Barra said during the company’s second-quarter earnings call Tuesday.
GM produced 50,000 EVs through the first half of this year for North America, in line with internal targets but far slower than many expected. A majority of that production was its outgoing Chevrolet Bolt models, rather than new EVs that utilize the automaker’s “Ultium” batteries and technologies.
Barra, a former plant manager and auto engineer, said she has been “disappointed” with the unnamed supplier and that she has personally been involved with problem solving and updating the automated lines. She said GM was “surprised” how little progress the supplier had made.
The automaker expects significant improvements in production through the end of this year, Barra said, with constraints “primarily” being behind the company by then, if not sooner.
“We’ve already seen a lot of improvement from, I’ll say, you know, the last four to six weeks; we’re going to continue on that path,” Barra said.

Despite the holdup with the battery modules, which house the vehicles’ battery cells, Barra said the company still plans to produce 100,000 vehicles in North America during the second half of this year, leading to 400,000 cumulative vehicles produced by mid-2024.
“We’re not walking away from any of the targets we put out,” Barra said.

Reviving the Bolt

Those forthcoming EVs will eventually include a next-generation version of the Chevrolet Bolt EV, GM said.
In April, GM said it would end production of the mainstream Bolt EV models by the end of this year to transfer production of the plant where it’s produced to electric trucks.

A Chevrolet Bolt EUV on display at the New York Auto Show, April 13, 2022.
Scott Mlyn | CNBC

Barra said plans to build a next-generation Bolt follow increased consumer demand for the vehicles after significant price cuts last year that made the vehicles the least expensive EVs in the U.S.
Barra said GM will be updating the vehicle with technologies from its new battery and software programs, known respectively as Ultium and Ultifi.
GM declined to release additional details about the next-generation Bolt, such as timing, price and production location. More

General Motors is raising its 2023 guidance for a second time this year after the automaker reported second-quarter results Tuesday that were up sharply year over year.
The Detroit automaker also said it is increasing cost-cutting measures through next year and now plans to cut $3 billion in expenditures compared with previous guidance of $2 billion.
GM’s earnings included an unexpected $792 million charge for new commercial agreements between GM and LG Electronics and LG Energy Solution.

Mary Barra, CEO, GM at the NYSE, November 17, 2022.
Source: NYSE

DETROIT — General Motors is raising its 2023 guidance for a second time this year after the automaker reported second-quarter results Tuesday that were up sharply year over year.
The Detroit automaker also said it is increasing cost-cutting measures through next year and now plans to reduce $3 billion in expenditures compared with previous guidance of $2 billion.

GM CFO Paul Jacobson said the reductions will include sales and marketing spending, salary employment, and other costs.
GM shares were initially up following the results but were down by more than 2% in premarket trading ahead of markets opening.
Here’s what GM reported for its second quarter:

Adjusted earnings per share: $1.91. (This is not comparable to $1.85 analysts expected due to one-time items.)
Revenue: $44.75 billion vs. $42.64 billion expected, according to Refinitiv consensus estimates

GM’s earnings included an unexpected $792 million charge for new commercial agreements between GM and LG Electronics and LG Energy Solution. The cost is a result of the automaker sharing costs with the companies for a recall of its Chevrolet Bolt EV models in recent years, which were previously expected to be paid by the LG companies.
Taking that charge into account, the company reported adjusted earnings before interest and taxes of $3.23 billion.

On an unadjusted basis, the company reported net income attributable to stockholders of $2.57 billion, or $1.83 per share, up nearly 52% from a year earlier when it earned $1.69 billion, or $1.14 per share.
Revenue during the quarter jumped 25% compared to $35.76 billion a year earlier.
For the full year, GM is raising its adjusted earnings expectations to a range of $12 billion and $14 billion, up from a previous range of $11 billion to $13 billion. GM also raised expectations for adjusted automotive free cash flow to a range of $7 billion and $9 billion, up from $5.5 billion and $7.5 billion, and for net income attributable to stockholders of $9.3 billion to $10.7 billion, compared to the previous outlook of $8.4 billion to $9.9 billion.
Jacobson said the raise is a result of stronger-than-expected pricing, demand and capital discipline.
However, the guidance raise is contingent on GM successfully negotiating new labor agreements with the United Auto Workers and the Canadian Unifor unions this year without a work stoppage or strike. The UAW has new leadership that has publicly been far more confrontational than prior union officers. The current contracts covering roughly 150,000 union workers for the Detroit automakers are set to expire Sept. 14.
“We have a long history of negotiating fair contracts with both unions that reward our employees and support the long-term success of our business. Our goal this time will be no different,” GM CEO Mary Barra said Tuesday in a shareholder letter. “That’s the best possible outcome for all our key stakeholders, including our team, plant communities, dealers, suppliers and investors.”
A work stoppage would add to the auto industry’s yearslong production problems results from the coronavirus pandemic and significant supply chain constraints such as semiconductor chips.
During the last round of bargaining in 2019, a breakdown in negotiations between the Detroit automakers and UAW led to a national 40-day strike against GM. The automaker has said the strike cost it about $3.6 billion that year.
For GM specifically, a work stoppage could cost it hundreds of millions of dollars a week and delay the production ramp-up of its new electric vehicles, which the automaker has already been slow to produce. Jacobson said GM achieved North American production of 50,000 EVs during the first half of the year, however acknowledged “it’s been a little bit challenging.”
He said the automaker will disclose more about the slow production of its new EVs during an analyst call Tuesday.
Prior to reporting results Tuesday, GM’s earnings beat expectations 86% of the time, according to Bespoke. However, the stock only averages a 0.17% gain on earnings day.
Shares of GM are up roughly 16% this year. They closed Monday at $39.30 per share — off from a 52-week high of $43.63 per share, notched in February. More

The Biden administration wants to push health insurance plans to offer patients better access to mental health care and substance abuse treatment.
A proposed rule would require insurers to add therapists and other services if an evaluation finds they are not complying with the Mental Health Parity and Addiction Equity Act.
Insurance plans often do not provide enough therapists in network, which requires patients to seek care out of network and pay more for their health care.

A young woman sits on a couch with her therapist.
Sdi Productions | E+ | Getty Images

The Biden administration plans to crack down on health insurance plans that discriminate against people who need mental health care and substance abuse treatment.
A proposed rule published Tuesday by the Health and Human Services, Labor and Treasury departments aims to push health insurers to comply with the Mental Health Parity and Addiction Equity Act.

That law, which was passed in 2008, requires insurance plans that cover mental health care and substance abuse treatments to offer the same level of coverage for these services as they do for other illnesses.
White House domestic policy advisor Neera Tanden told reporters in a call Monday that too many insurers are evading the law and making it difficult for patients to access mental health care.
Insurance plans often do not provide enough therapists in network, which forces patients to seek care out of network and pay more. Patients also often have to get permission from their insurer to seek treatment or have their claims denied leaving them with the bill.
“This has meant millions of people who have insurance are paying out of pocket when they shouldn’t have to,” Tanden said.
More than 1 in 5 adults in the U.S., or 58 million people, live with a mental illness, according to the National Institute of Mental Health.

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The proposed rule would require insurance plans to evaluate how their coverage policies impact patients’ access to mental health and substance abuse treatment, Tanden said.
Insurers would be required to take action if they are not in compliance with the law, she said. This could include adding more therapists to the insurance network if patients are seeking care out of network too often, Tanden said.
The proposed rule will undergo a 60-day public comment period before it is finalized.
A survey published in July of nearly 2,800 patients found that people with insurance face more challenges accessing mental health services than other types of medical care.
Nearly 40% of people enrolled in insurance through their employer had to seek more costly mental health care or substance abuse treatment out of network, according to the survey conducted by the research institute NORC. By comparison, 15% of people seeking physical health care went out of network.
More than 50% of patients reported that their insurance denied coverage three or more times for mental health or substance abuse services, compared with 33% who reported the same for physical health care.
And nearly 60% of those surveyed who sought mental health care or substance abuse treatment did not receive any care in at least one instance. More

Biogen said it expects to axe 1,000 jobs, or about 11% of its workforce, to save costs as the biotech company prepares to launch its newly approved Alzheimer’s drug Leqembi.
The layoffs are part of an ongoing cost-cutting plan, which also involves shaving down the company’s research and development pipeline to prioritize Leqembi and other drugs. 
Biogen, in its second-quarter earnings report, said the plan will result in $700 million in net operating expense savings by 2025. 

A Biogen facility in Cambridge, Massachusetts.
Brian Snyder | Reuters

Biogen on Tuesday said it expects to cut approximately 1,000 jobs, or about 11% of its workforce, to save costs as the biotech company prepares to launch its newly approved Alzheimer’s drug Leqembi.
It’s the latest round of layoffs after Biogen slashed nearly 900 jobs last year. Biogen had 8,725 employees worldwide as of the end of 2022.

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The job cuts are also part of the company’s ongoing cost-cutting and reorganization plan, which also involves shaving down its research and development pipeline to prioritize Leqembi and other drugs. Biogen, in its second-quarter earnings report, said that R&D pipeline prioritization is “substantially complete.”
The larger plan is expected to generate approximately $1 billion in gross operating expense savings by 2025, according to Biogen.
About $300 million of those savings will be reinvested into product launches and R&D programs. 
The company also said the plan will result in $700 million in net operating expense savings by 2025. 
Biogen’s stock price rose more than 1% in premarket trading Tuesday. 

The new layoffs follow landmark approvals of Leqembi and the company’s ALS drug Tofersen this year.
Investors are pinning their hopes on the new medicines as Biogen’s blockbuster multiple sclerosis and spinal muscular atrophy treatments face fierce competition from cheaper versions and similar drugs. 
Biogen CEO Chris Viehbacher said during an earnings call that the cost-cutting plan is “an opportunity really to make sure that this year, before we get into the product launches, that we are truly fit for growth.” 
“There are an awful lot of patients who depend on Biogen products,” he said during the call. “There’s a need, obviously, to have a strong investment in our new product launches. It’s important, clearly, to manage costs, but shareholder value is most optimized if we can really make a success of these launches.”
Wall Street analysts were pleased with the layoff announcement.
Wells Fargo analyst Mohit Bansal said in a Tuesday research note that the broader cost-cutting plan is “in line with our expectations and was the reason for our bullish stance on the name.”
“We expect the stock to be up on this news as investors were waiting for this move,” he said.
Biogen on Tuesday also reported second-quarter revenue and adjusted earnings that topped Wall Street’s estimates. 
Biogen posted $2.46 billion in revenue for the quarter, down 5% from the same period a year ago. Analysts had expected second-quarter sales of $2.37 billion. 
The company reported net income of $591.6 million, or $4.07 per share. Excluding certain items, adjusted earnings per share were $4.02 for the period. Analysts had expected adjusted earnings of $3.77 per share.
Biogen also reiterated its full-year guidance. The company is forecasting a “mid-single digit percentage decline” in 2023 revenue compared with last year, and full-year adjusted earnings of $15 to $16 per share. More

Warner Bros.’ “Barbie” tallied around $155 million during its first three days in theaters, the highest opening of 2023.
Universal’s “Oppenheimer” snared $82.4 million during its debut.
Analysts expect this weekend to be the highest-grossing weekend of the year at the domestic box office.

“Barbenheimer” exploded over the weekend, generating more than $235.5 million in ticket sales and reinvigorating the domestic box office.
“Barbie” tallied around $155 million during its first three days in theaters, the highest opening of 2023. Its counterpart “Oppenheimer” made $82.4 million over the weekend, according to numbers released Monday.

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“I don’t think anyone could have reasonably predicted this kind of confluence between ‘Oppenheimer’ and ‘Barbie,'” said Shawn Robbins, chief analyst at BoxOffice.com. “If you’re going to a theater right now, the communal experience is reminiscent of major Marvel and Star Wars films, but without those franchises remotely involved.”

Cillian Murphy in Oppenheimer and Margot Robbie as Barbie
Julien De Rosa | AFP | Getty Images; Stuart C. Wilson | Getty Images

More than 18.5 million tickets were bought for the combination of Warner Bros.’ “Barbie” and Universal’s “Oppenheimer,” 12.8 million for “Barbie” and 5.8 million for “Oppenheimer,” according to data from EntTelligence.
“It was a truly historic weekend and continues the positive box office momentum of 2023,” said Michael O’Leary, president and CEO of the National Association of Theatre Owners. “More importantly, it proves once again that America loves going to the movies to see great films.”
Both films hold a rating of more than 90% “Fresh” on Rotten Tomatoes and inspired moviegoers to dress head-to-toe in pink or don suits and hats during their screenings.
“People recognized that something special was happening and they wanted to be a part of it,” O’Leary said. “Our partners in the creative community and at the studios gave audiences two uniquely different, smart and original stories that were meant for the big screen and movie lovers responded by gathering friends and family and heading to their local movie houses across the nation.”

With additional ticket sales from Paramount’s newest “Mission Impossible” film, Sony’s “Spider-Man: Across the Spider-Verse” and Angel Studios’ “The Sound of Freedom,” the weekend box office is expected to reach $302 million, the highest of any weekend in 2023, according to data from Comscore.
“The unprecedented performance of these two films, and the boost it gave to the overall movie marketplace, solidified the movie theater as a cultural hub and epicenter of social interaction,” said Paul Dergarabedian, senior media analyst at Comscore.
“Barbenheimer” weekend is currently set to be the fourth-highest weekend haul of all-time, just below the three-day stretch when Disney’s “Star Wars: The Force Awakens” arrived in theaters in December 2015 and helped boost the overall weekend haul to $313 million. The second-highest is $314 million from April 2018’s opening weekend of “Avengers: Infinity War.”
Some box office analysts project that Monday’s official weekend numbers could be quite a bit higher than Sunday’s estimates, and push “Barbenheimer” weekend up the charts. However, they won’t come close to the highest-grossing weekend ever, which occurred in April 2019 when “Avengers: Endgame” hit theaters, drumming up $357 million on its own, and leading to a $402 million overall weekend tally.
The success of “Barbenheimer” comes at a time when the domestic box office has faced some hurdles. A slew of adult-aimed blockbusters have underperformed, leading many in the industry to question if consumer tastes have shifted away from Hollywood.
Warner Bros.’ “The Flash” has fizzled, Pixar’s “Elemental” failed to lure in family audiences and even the return of Harrison Ford as Indiana Jones wasn’t enough to pack cinemas.
However, the combination of bombs and blonde bombshells seems to have inspired plenty of moviegoers to leave their couches for the cinema.
“It’s a historic result that showcases the enthusiasm audiences have for a variety of fresh content,” Robbins said. “These films have exquisitely tapped into the cultural zeitgeist. They’ve reignited the summer box office flame, and they’ve proven that studios can be a little more aggressive with counter-programming strategies in the future.”
Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal is the distributor of “Oppenheimer” and owns Rotten Tomatoes.
For more, check out CNBC Select’s story on how to save money on movie tickets. More

When Amazon announced the $13.7bn acquisition of Whole Foods Market in 2017, it followed some oddball attempts to strengthen its grocery business, some conceived by Jeff Bezos himself. One was to develop an “ice-cream truck for adults”, driving into neighbourhoods with lights flashing and horns honking, to sell porterhouse steaks, Shigoku oysters, Nintendo games and other goodies. It was quietly shelved. Another was to create a product so unique that only Amazon could supply it. The answer was the “single-cow burger”, a Wagyu beef patty made from the meat of one animal. You can still find them on its website—though they are now permanently out of stock.Amazon’s purchase of Whole Foods signalled it would take a more conventional approach to the supermarket business. That is probably why, when the deal was announced, Amazon’s share price soared and those of its rivals, such as Walmart, fell. But since then Amazon has treated grocery more like a science experiment than an exercise in seduction, with weak results at Whole Foods and in other formats. Its best-known addition to the retail experience is the “just walk out” technology in physical stores, equivalent to its one-click shopping online. Yet cashierless supermarkets sound like something more beloved of geeks than grocers. What may cut down on time-wasting queues also minimises what some people love about shopping: the human interaction at the till, the hunter-gatherer instinct as they jostle at the meat counter, the Columbian exchange between fellow foodies at the spice rack. Amazon is trying to refresh the experience. Last year it recruited Tony Hoggett, a former executive from Tesco, a British supermarket chain, to bring grocery nous to a business hitherto obsessed with overhead cameras, QR codes and data collection. The Brit, who started out as a Tesco “trolley boy” aged 16, has a big job. When Schumpeter visited an Amazon Fresh store in Los Angeles recently, the fresh meat and fish counters were so barren they looked like part of a going-out-of-business sale. He bought one of the three rotisserie chickens on display out of sympathy, because he feared they had been there all day. Under Mr Hoggett, Amazon is trying to make the Fresh stores less soulless. Human cashiers and self-checkouts are back for those who prefer them. Whole Foods’ expertise is being used to rethink store location. It is part of an effort to make grocery shopping as habitual on Amazon as it is at a Walmart. Andy Jassy, the CEO, says it is aiming to build a “mass grocery format” commensurate with Amazon’s size. Yet if anything Walmart looks more likely to invade Amazon’s territory than the other way around.Neither firm thinks of itself as competing head-to-head with the other. But they are, because both have big growth ambitions. For Walmart, that means expanding its e-business beyond grocery into general merchandise, as well as attracting higher-income online customers. Both of these are Amazon’s forte. For Amazon, it means a bigger presence in grocery, both online—where food shopping still accounts for only about 10% of America’s $800bn supermarket business—and offline. In bricks-and-mortar, Walmart’s lead is huge. It has the largest footprint in America, with about 4,700 outlets, compared with 530 Whole Foods, 44 Amazon Fresh and 22 Amazon Go shops. Grocery accounts for most of its sales, whereas for Amazon they are a sliver. Its “everyday low prices” work: a survey by MoffettNathanson, a research firm, found equivalent products at Amazon Fresh were far pricier. Walmart’s speed of delivery matches Amazon’s. What Amazon lacks in stores, it hopes to make up for in membership of its Prime loyalty programme, which is estimated at 170m in America, compared with about 22m for Walmart+. Eventually, it hopes that online grocery shopping, combined with three different formats—Whole Foods for posh nosh, Fresh for general grub and Go for grab-and-go—will enable customers to buy everything they need via a single app. Amazon has two other advantages: a whopping marketplace platform for third-party sellers, which adds to the range of products available on its website, and an advertising business with a hefty $38bn of revenues last year, which supplements its supermarket business. Yet because shoppers like to see, feel and smell their groceries before buying them, the scarcity of stores is a problem. Dean Rosenblum of Bernstein, a broker, calculates that Amazon Fresh is accessible to just over a third of Americans. In contrast, 90% of them live within ten miles (16km) of a Walmart. If Amazon opened 50 new Fresh stores a year, in a decade’s time it would reach only the size of Whole Foods’ current tally. And that would be a “near criminally irresponsible use of Amazon capital”, Mr Rosenblum says. That view is spreading. Terry Smith, a British fund manager, recently dumped his Amazon stock, arguing that its move into grocery retail risked misallocating capital.Moreover, Walmart appears to be making more headway with online selling and advertising than Amazon is with its real-world stores. Walmart’s online sales were estimated at $82bn last fiscal year, more than four times Amazon’s physical-store sales. It appears to be borrowing Amazon’s model of attracting third-party sellers to its site in order to increase the assortment of products, raise logistics revenue and boost advertising. Last year Walmart’s ad sales grew by 30%, to $2.7bn. That is still a fraction of Amazon’s total. But there is no reason why Walmart should not catch up, thinks Simeon Gutman of Morgan Stanley, an investment bank.One-click M&AAmazon could leap up the league table by buying a large supermarket chain. Given the antitrust pressure on big tech, though, this is probably off the table. If a build-rather-than-buy approach is its only option, it will have to do a much better job of explaining how it will make it profitable. As it continues to waste time experimenting, Walmart is ably copying its best moves. ■ More

Johnson & Johnson on Monday said it plans to reduce its stake in Kenvue by at least 80% via an exchange offer.
The offer will allow J&J shareholders to swap all or a portion of their shares for Kenvue’s common stock at a 7% discount.
J&J said it received a waiver that dismisses the share lockup period associated with Kenvue’s initial public offering in May.

Kenvue, a unit of Johnson & Johnson’s consumer health business.
CFOTO | Future Publishing | Getty Images

Johnson & Johnson on Monday said it plans to reduce by at least 80% its stake in Kenvue, the consumer health business it spun out as an independent company earlier this year, via a stock exchange offer.
J&J owns 89.6% of Kenvue’s common stock, which amounts to more than 1.72 billion shares. 

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The exchange offer, also known as a split-off, will allow J&J shareholders to swap all or a portion of their shares for Kenvue’s common stock at a 7% discount. The offer is expected to be tax-free, J&J said in a release. 
The company noted that the split-off is voluntary for investors and is slated to close on August 18, which is far earlier than expected.
J&J said it received a waiver that dismisses the share lockup period associated with Kenvue’s initial public offering in May. That lockup agreement would have required J&J to wait 180 days to sell any of its shares. 
“We believe now is the right time to distribute our Kenvue shares, and we are confident that a split-off is the appropriate path forward to bring value to our shareholders,” J&J CEO Joaquin Duato said in a statement. 
Duato added that the split-off with sharpen J&J’s focus on its pharmaceutical and medtech businesses – both of which helped the company beat on second-quarter revenue and adjusted earnings last week. 

Shares of J&J rose about 1% in premarket trading Monday, while shares of Kenvue fell nearly 3%
J&J first announced its intent to launch an exchange offer in its second-quarter earnings report on Thursday, but the company provided few details on the plan. Shares of Kenvue fell following that announcement, despite second-quarter results that also topped Wall Street estimates. 
When asked about J&J’s planned exchange offer on Thursday, Kenvue CEO Thibaut Mongon told CNBC’s “Squawk on the Street” that the company is “pleased with the way that the IPO has been received by shareholders.”
“We see a lot of alignment among our new investors in seeing the potential of Kenvue, but I can tell you that we are fully ready to leave as a fully independent company,” he said.  More

IN 2019, AS China’s trade war with America was heating up, the People’s Daily predicted that China’s monopoly on rare earths, minerals crucial to the production of most modern hardware, would become a tool to counter American pressure. “Don’t say we didn’t warn you,” the Communist Party mouthpiece thundered. For years the bluster was just that. Between 2009 and 2020 the number of Chinese export controls on the books ballooned nine-fold, according to the OECD, a club of mostly rich countries. Yet these restrictions were haphazard, informal and aimed at narrow targets—random warning shots rather than a strategic offensive.As America ratchets up its sanctions against China, which among other things make it impossible for Western chip companies to sell Chinese customers cutting-edge semiconductors and the machines to make them, new volleys from Beijing are coming thick and fast. Earlier this month, after China announced its latest export controls, this time on a pair of metals used in chips and other advanced tech, a former commerce ministry official declared that the measures were “just the beginning” of Chinese retaliation. On July 20th Xie Feng, China’s new ambassador to America, said that his country “cannot remain silent” in the escalating war over technology. A response, he hinted, was coming.This time it looks much more deliberate. To counter America’s effort to contain China’s technological ambitions, Xi Jinping, China’s paramount leader, has called on regulators to fight back against Western coercion in what he has called an “international legal struggle”. The result is a flurry of lawmaking that is creating a framework for a more robust Chinese reaction to America’s commercial warfare.The list of recent laws is long. An “unreliable entities” list, created in 2020, punishes any company undermining China’s interests. An export-control law from the same year created a legal basis for an export-licensing regime. In 2021 year an anti-sanctions law enabled retaliation against organisations and individuals who carried out the sanctions of other countries. A sweeping foreign-relations law enacted this year, and prompted by Western sanctions against Russia over its invasion of Ukraine, permits countermeasures against a wide range of economic and national-security threats facing the country. It came into effect on July 1st. The same day an anti-espionage statute came into force, extending the reach of Chinese security agencies. All the while, China has tightened various data and cyber-security rules.The new rules are already being used, as opposed to merely brandished. In February Lockheed Martin and a unit of Raytheon, two American armsmakers with non-weapons business in China, were placed on the unreliable-entities list after shipping weapons to Taiwan (which China regards as part of its territory). The companies are blocked from making new investments in China and from trade activity, among other restrictions. In April Micron, an American chipmaker, was hit with an investigation by China’s cyberspace regulator, based on a new cybersecurity law. After Micron failed a security review, regulators banned its chips from critical infrastructure. The laws’ vague wording makes it difficult for Western companies to assess their potential impact on their business in China. The “mother of all sanctions laws”, as Henry Gao of Singapore Management University describes the foreign-relations law, vows to hold accountable anyone acting in a manner deemed “detrimental to China’s national interests…in the course of engaging in international exchanges”. Several foreign law firms in China have been asked by their Western clients to evaluate the risks of being hit by investigations. One lawyer looking into potential Chinese cyber-probes notes that American tech companies producing commodified hardware components, such as Micron’s memory chips, should be on guard for sudden investigations. China’s new laws allowing the government to restrict a broad range of minerals and components, meanwhile, are injecting similar uncertainty into the businesses of their foreign buyers. One affected group, notes David Oxely of Capital Economics, a research firm, is Western manufacturers of green-energy technologies. Battery-makers, in particular, are highly dependent on China across the supply chain (see chart). Last year the commerce ministry proposed a ban on exports of ingot-casting technology used in making solar-panel wafers. If imposed, such a prohibition could hold back the development of indigenous solar-power technology in the West, which would hurt Western manufacturers while increasing foreign demand for finished Chinese solar panels. The restrictions on the two chip metals, gallium and germanium, could pose a strategic headache to America. The rules, which come into force on August 1st, require exporters to apply for licences to sell the metals to foreign customers. China produces 98% of the world’s raw gallium, a key ingredient in advanced military technology. This includes America’s next-generation missile-defence and radar systems. A shock to the supply of gallium could cause long-term problems for the American defence industry, reckons CSIS, a think-tank in Washington. Moreover, a gallium-based compound, gallium nitride, may underpin a new generation of high-performance semiconductors. Keeping it out of foreign hands would stymie Western efforts to develop the technology while furthering Mr Xi’s policy goal for China to control it. China needs to tread carefully. The country reimports many of the finished products that are made abroad using rare earths, notes Peter Arkell of the Global Mining Association of China, a lobby group, so prohibitions could come back to bite Chinese firms. Outright export bans would also prompt the West to build its own relevant production capacity and seek substitutes, observes Ewa Manthey of ING, a Dutch bank. This would in the longer term weaken China’s hand. And labelling as unreliable entities big Western firms with large Chinese operations could jeopardise thousands of Chinese jobs. That may explain why rather than blacklisting all of Raytheon, whose aviation subsidiary, Pratt & Whitney, employs 2,000 people in China, the commerce ministry limited its ban to the American company’s defence unit.So far the relatively pragmatic ministries of commerce and foreign affairs have led the implementation of the various laws. One fear among Western businesses is that more hardline agencies supplant them. If the tech war escalates further, China’s National Security Commission, chaired by Mr Xi himself, may take the lead, fears Mr Gao. If that happens, concerns about potential blowback for Chinese commerce are likely to carry less weight. The consequences are scary to contemplate—and not just for Chinese and American CEOs. ■ More