wallstreetjournaleurope_20170111_The_Wall_Street_Journal___Europe

THE WALL STREET JOURNAL. Wednesday, January 11, 2017 |A

three employees.

Automotive manufacturing

now ranks as Mexico’s second-

biggest sector, behind food pro-

cessing. Ten foreign-owned auto

the Ford plant was supposed to

be built. Mr. Rocha, 44, said he

had planned to open a welding

shop nearby, sure of a prosper-

ous future for himself and

associated jobs won’t be coming.

“Trump killed this com-

pletely,” said Rubén Rocha as

he sat in his flatbed truck star-

ing gloomily at the site where

WORLD NEWS

makers and their 1,300 suppli-

ers—as well as a dozen makers

of heavy trucks and buses—em-

ploy 730,000 people directly, in-

dustry officials say.

The auto and auto-parts in-

dustry also accounts for much of

the U.S.’s $60 billion trade defi-

cit with Mexico, according to the

International Organization of

Motor Vehicle Manufacturers.

Americans buy more than three-

quarters of Mexico’s car exports.

That may explain why Mr.

Trump has focused on the car

industry. Last week, he went af-

ter Toyota Motor Corp. for its

plans to use Mexico to export

some Corolla cars to the U.S.,

vowing to slap a border tax on

the vehicles.

For now, Toyota and others

say they are staying put. “This is

a long-lead business with highly

capital-intensive investments—

decisions that were made two,

three and four years ago,” Gen-

eral Motors Co. Chief Executive

Mary Barra said Sunday.

tence are on the line,” Sergio

Marchionne told reporters at a

Detroit auto show.

Mexico won 9 of 11 new au-

tomotive plants in North Amer-

ica announced over the past six

years, according to the Center

for Automotive Research in De-

troit, creating tens of thou-

sands of new jobs and trans-

forming Mexico into the

world’s fourth-biggest exporter

of cars, behind Germany, Japan

and South Korea.

But at least one of those new

plants—and more, if Mr. Trump

has his way—won’t be built now,

after Ford Motor Co. last week

said it was scrapping plans for a

$1.6 billion factory in this central

Mexican city 250 miles north of

the capital. Ford’s cancellation of

its San Luis Potosí plant un-

nerved many people in a region

that has grown accustomed to a

constant drumbeat of factory

openings and help-wanted ads.

Now some 2,800 positions at the

Ford plant and thousands more

SAN LUIS POTOSÍ, Mexico—
Mexico faces fears of a sudden
downturn in its booming car
industry as several auto mak-
ers in recent days scrapped
plans for new investments or
said they would consider doing
so in response to President-
elect Donald Trump’s threats of
punishing tariffs.
Making the stakes for the
U.S.’s neighbor and second-
largest trade partner clear, the
CEO of Fiat Chrysler Automo-
biles on Monday said his firm
could pull out of Mexico en-
tirely if the incoming Trump
administration delivers on a
pledge to impose tariffs on
cars exported to the U.S.
“The reality is that the Mexi-
can automotive industry has
been now—for a number of
years—tooled up to try and deal
with the U.S. market. And if the
U.S. market were not to be there,
then the reasons for its exis-

BYDUDLEYALTHAUS

Trump Attacks on Car Exports Unnerve Key Mexico Sector

Mexican light vehicle

production

Build Them and Ship Them

Mexico’s car-manufacturing sector has grown solidly in recent years, largely

on the strength of foreign investment and exports to the U.S.

Source: Mexican Automotive Industry Association THE WALL STREET JOURNAL.

4

0

1

2

3

million

2008 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’

Foreign direct investment

in Mexican auto sector

Mexican car exports

2008

2016

11.1%

Other

8.9%

Canada

77.1%

U.S.

2.9%

$8 Germany

0

2

4

6

billion

’09 ’10 ’11 ’12 ’13 ’14 ’

own requisite supervision,

and its potential for corrup-

tion becomes greater,” Mr. Lu

wrote. Such an approach to

fighting graft, lacking checks

and balances from an inde-

pendent judiciary and a free

press, is akin to “swatting

flies beside a pile of feces.”

Rather, observers say, the

new commission stands to

give more room to Mr. Xi and

his party disciplinarians to

enforce loyalty and compli-

ance with the Chinese leader’s

policy agenda while extending

a popular anticorruption

lawyers, who say the commis-

sion may aggravate the prob-

lems it is meant to solve.

“Those in power think that

corruption stems from the

lack of effective supervision

over the use of power, so

they create a more powerful

authority to manage officials

who may turn corrupt,” Lu

Liangbiao, a Beijing-based

senior partner at interna-

tional law firm Dentons,

wrote in an essay about the

new commission.

“Yet this more-powerful

authority similarly lacks its

withering crackdown on graft

that has sidelined rivals, bol-

stered his popularity and

helped raise his stature as

China’s most dominant

leader in decades. Last week,

Mr. Xi told top party discipli-

narians that “the spread of

corruption has been effec-

tively contained.” But he

urged more efforts to im-

prove institutional safe-

guards, including tougher su-

pervision mechanisms.

The prospect of a new,

powerful party-linked watch-

dog is worrying some Chinese

with a powerful disciplinary

agency that answers to Mr.

Xi’s 89-million-strong Com-

munist Party.

“To use a Chinese saying,

it’s ‘one group of personnel,

two plaques,’” Xiao Pei, vice

minister at China’s Ministry of

Supervision, said Monday at a

news briefing. “Our aim in

deepening reforms of the na-

tional supervisory system is to

strengthen the party’s central-

ized and unified leadership

over anticorruption efforts.”

Since taking power in late

2012, Mr. Xi has pursued a

crackdown. His targets, ob-

servers say, are rivals and

foot-dragging bureaucrats

who hamper his policy edicts,

particularly at lower tiers of

government.

The creation of the super-

visory commission seems to

be an attempt to increase the

anticorruption system’s “inde-

pendence from local party or-

ganizations and strengthen its

accountability to the central

leadership,” said Andrew

Wedeman, a professor at

Georgia State University who

studies governance in China.

Party officials dismissed

criticism of China’s lack of in-

dependent checks on party

power, saying new data show

the party’s success in fighting

graft. Public complaints

against alleged official wrong-

doing fell in 2016 from a year

earlier, the first annual de-

cline since the antigraft cam-

paign began, while the pro-

portion of party members

disciplined rose to 0.43% last

year from 0.18% in 2012, ac-

cording to Mr. Xiao.

The national supervisory

commission will likely be set

up in 2018 during an annual

parliamentary session, typi-

cally held in March, said Wu

Yuliang, deputy chief of the

party’s Central Commission

for Discipline Inspection.

BEIJING—China’s govern-
ment is introducing a new cor-
ruption watchdog to enforce a
cleaner civil service, but some
legal experts worry it will
boost President Xi Jinping’s
already substantial clout.
Officials say a national su-
pervisory commission will tar-
get graft and dereliction of
duty from lowly functionaries
to top government figures,
with powers to interrogate
and detain suspects, freeze
assets and, in some cases,
render punishment.
The commission, which is
undergoing regional trials
ahead of a nationwide rollout
next year, aims to merge the
roles of several government
supervisory departments and
prosecutorial offices, central-
izing oversight of China’s vast
bureaucracy.
On paper, the watchdog
will answer directly to a rub-
ber-stamp parliament. But in
practice, officials say, the
commission will share per-
sonnel and responsibilities

BYCHUNHANWONG

Beijing Rolls Out a New Graft Watchdog

National commission

will share resources

with a party agency

President Xi controls

Xi Jinping speaks at the panel session on discipline inspection.

LI TAO/XINHUA/ZUMA PRESS

Number of party members

disciplined

Number of public

complaints against alleged

disciplinary violations

Graft Graphed

China says its corruption crackdown is curbing wrongdoing within the

now 89-million-strong Communist Party.

Source: Central Commission for Discipline Inspection THE WALL STREET JOURNAL.

600,

0

100,

200,

300,

400,

500,

2013 ’14 ’15 ’

3.

0

0.

1.

1.

2.

2.

million

2013 ’14 ’15 ’

slowed, and the bureau said

comparatively high prices a

year ago weighed on inflation.

The producer-price index,

meanwhile, rose 5.5% in De-

cember, compared with No-

vember’s 3.3%, continuing the

inflationary upswing that be-

gan in September after being

stuck in a deflationary trend

for more than four years. For

all of 2016, producer prices

dropped 1.4% on average from

a year ago, while consumer

prices rose 2%.

While consumer inflation re-

mains below Beijing’s targeted

maximum of 3% in 2016, econo-

mists said rising prices are

likely to lead the central bank

to continue its more recent cau-

tious approach, after flooding

the financial system with credit

in early 2016 to boost growth.

“With inflation on an up-

ward trend, this constrains the

central bank’s room to loosen

monetary policy,” said Stan-

dard Chartered Bank Ltd.

economist Ding Shuang, add-

ing that he expects the econ-

omy to remain stable in com-

ing months.

After fretting about growth

at the start of last year and

doubling down on policies to

boost the economy, China’s

leaders signaled in December

that they are shifting gears to

try to deal with debt and high

property prices and other po-

tential speculative bubbles.

Higher prices, in part fueled

by speculation, complicate the

government’s task of managing

the economy, economists said.

“While in Jan. 2016 the

common fear was deflation

and hard landing, now the

concerns are inflation and fi-

nancial risks,” said Macquarie

Group Ltd. in a research note.

Standard Chartered expects

consumer inflation to average

2.2% this year, while UBS

Group AG has a 2.3% forecast

and Macquarie pegs it at 2.4%.

Expectations that inflation

will move higher in coming

months are being fueled by ris-

ing rental costs, after last

year’s sharp jump in housing

prices in major markets, as well

as elevated commodity prices.

Raw-material prices rose 9.8%

on year in December compared

with 5.8% in November.

Consumer prices also are ex-

pected to rise this month

ahead of the Lunar New Year

holiday, or Spring Festival,

which starts Jan. 28 this year,

when Chinese spend lavishly on

food, travel and entertainment.

In December, food and alco-

hol prices rose at a less-rapid

pace than in November, while

nonfood prices accelerated,

fueled in part by higher re-

fined-oil prices in China’s con-

trolled energy market.

Wang Quanjie, a 28-year-

old Beijing civil servant, said

vegetable prices at his local

market have increased notice-

ably, prompting him to hunt

for discounts. “I am trying to

spend less on food by cooking

myself and eating out less of-

ten,” he said. “I could really

use a raise, and food prices

will keep rising with Spring

Festival coming.”

—Liyan Qi

contributed to this article.

BEIJING—Consumer-price
inflation in China decelerated
in December while prices at
the factory gate jumped more
than expected, as government
pro-growth policies continued
to steady the world’s second-
largest economy.
China’s consumer-price in-
dex rose 2.1% in December
from a year earlier compared
with 2.3% in November, the
National Bureau of Statistics
said Tuesday. The key inflation
reading matched market expec-
tations. It was the first time in
four months that the rate

BYMARKMAGNIER

Rising Prices Seen as Likely to Keep China Cautious

WORLDWATCH

FIFA

Soccer Body Votes

To Expand World Cup

Professional sports’ irresistible
urge to expand their most suc-
cessful events spread to the
World Cup on Tuesday when
FIFA, soccer’s global governing
body, voted to add 50% more
teams to the tournament start-
ing in 2026.
The World Cup will feature 48
teams instead of 32, meaning
that nearly a quarter of FIFA’s
211 member associations will
qualify. FIFA’s decision was ru-
mored for weeks, but the organi-
zation’s top committee gave its
unanimous approval only on
Tuesday morning, citing the need
to be more inclusive.
—Joshua Robinson

MEXICO

Country Won’t Pay for

U.S. Wall, Official Says

Mexico’s newly appointed For-
eign Minister Luis Videgaray said
his country won’t pay for a wall
U.S. President-elect Donald Trump

wants to build along the border

between the two countries.

Mexican President Enrique Peña

Nieto named Mr. Videgaray last

week as foreign minister, as Mex-

ico braces for a complex relation-

ship with its neighbor and main

trade partner under Mr. Trump.

Mr. Trump last week said any

money spent by the U.S. in build-

ing the wall would be paid back

later by Mexico.

“There is no way that’s going

to happen,” Mr. Videgaray said in

an interview on the Televisa net-

work. “It’s not a matter of how

much does it cost, or where’s the

money coming from, it’s a matter

of dignity and national sover-

eignty.”

—Anthony Harrup

TURKEY

Bank Falls Short in Bid

To Stem Lira’s Drop

The Turkish central bank failed

to stop the lira’s free fall with its

limited step to boost liquidity in fi-

nancial markets, amid political

pressure to keep interest rates low.

The Turkish currency tumbled

as much as 1.9% during trading

in Istanbul on Tuesday, its fourth

straight record low.

Instead of touching interest

rates, the bank loosened foreign-

currency reserve requirements by

half a percentage point, saying the

measure would inject about $1.5 bil-

lion of liquidity into financial mar-

kets. It promised more steps to

maintain prices and financial stabil-

ity, without providing further details.

With the currency under

pressure since the state of emer-

gency called after July’s failed

coup attempt, the central bank

has largely refrained from push-

ing for a rate increase that

would stem the currency’s losses

but also challenge the govern-

ment’s desire to keep rates low

as a boost for the economy.

—Yeliz Candemir

GERMANY

Ex-President Herzog

Has Died at Age 82

Roman Herzog, who as presi-

dent pressed Germany to em-

brace economic reform in the

1990s and also stressed the im-

portance of remembering the Nazi

Holocaust, has died. He was 82.

President Joachim Gauck an-

nounced Mr. Herzog’s death

Tuesday without giving details.

Mr. Herzog served as chief jus-

tice of Germany’s highest court

before winning the presidency in

1994, four years after reunification.

He was one of the first lead-

ers to address Germany’s resis-

tance to reform and its growing

economic stagnation at a time

when conservative Chancellor

Helmut Kohl’s 16-year tenure

was coming to a close. Germany

was struggling with double-digit

unemployment, amid worries

that its labor market was too in-

flexible.

Mr.Herzogdrewanunfavor-

able comparison between the dy-

namism of Asia and the stagna-

tion in Germany.

—Associated Press

ICON: The Parthenon temple is seen atop a whitened Acropolis Tuesday after a rare snowfall in Athens.

ANTONIS NIKOLOPOULOS/EUROKINISSI/REUTERS

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