The basic complaint in the West is broadly that politics Industrial Beijing’s approach has granted Chinese companies Unfair advantages, leading to a wave of Exports At less than cost.
In turn, this has raised fears of an existential crisis for national brands including Volkswagen German And Toyota Japanese and general motors Ford American.
Western fears have deepened as China has overtaken Japan Last year as the world’s largest exporter of cars. This year it continues Exports Breaking new records – about one in five cars manufactured in the world is now shipped China To the outside.
In an article in the British Financial Times, writer Edward White said that although about 80 percent of Chinese car exports They are cars with internal combustion engines, so the boom in Chinese demand for Electric vehicles Low-cost, high-tech technology sparks protectionist reactions from the United States and the European Unionwhere they both raised Customs duties On electric vehicles made in China During the last few months.
But there is an embarrassing trend that more and more companies are turning to foreign cars to Export From China, hoping to find a way out. Competition severe financial pressures on its operations in China.
The article notes that on a recent visit to a site on the outskirts of Shanghai, the Financial Times found several thousand cars. Tesla In 40-degree heat, waiting to be shipped abroad, the lines of cars in the Yangshan Special Comprehensive Zone, about 10 kilometers from the multibillion-dollar factory Tesla built in 2019, are a reminder that Chinese consumers may be losing their love for even the most successful foreign brands.
Sales have stagnated. Tesla in China In recent years, about three out of every 10 cars the American company makes in Shanghai are now destined for overseas markets, mostly in Europe. However, Tesla is an outlier in that its factory in ShanghaiLocated near a major port, it is smartly positioned as a flexible manufacturing hub that can serve other parts of Asia and beyond when needed.
Almost all other foreign brands have set up operations in China over the past decades, targeting the rising middle class in a country of 1.4 billion people, the article said.
No one predicted the sharp decline in sales it is suffering, nor the speed at which China’s industry would evolve in the era of electric cars.
According to data from Shanghai-based Automobility Consulting, the share of foreign brands in Car sales market Chinese is heading for an all-time low of 37 percent in the first seven months of 2024, down from 64 percent in 2020. So far this year, U.S. brands have fallen more than 23 percent while automakers have suffered, the data showed. Japanese cars Korean and German also saw double-digit declines.
In contrast, sales of Chinese brands rose by about 22 percent as Chinese companies overwhelmingly dominated the electric vehicle market.
The decline in the group’s market share comes in the context of China’s diversified domestic auto market.
Automobility data also showed that sales of electric vehicles, including battery electric vehicles and plug-in hybrids, rose more than 30 percent this year while sales of gas-powered vehicles fell about 7 percent.
Against this backdrop, foreign brands from Hyundai and Nissan to Volvo and BMW have also begun shifting to exporting their China-made cars, according to company announcements and media reports in recent months. The Financial Times reported in June that Western and Japanese cars, including Tesla, Volkswagen and Honda, accounted for more than half of the electric cars made in China imported into the country. Europe In the first four months of the year.
Tu Li, founder of consultancy Sino Auto Insights, expects GM, Ford and Stellantis — which owns the Jeep, Peugeot and Fiat brands — to eventually “export their products from China.”
Moreover, he believes that as foreign groups come under greater financial pressure, they may need to increase their sourcing from Chinese suppliers in order to be competitive.
The article concludes by noting that Chinese companies, led by Warren Buffett-backed BYD, are rapidly expanding their global manufacturing footprint. Foreign companies will increasingly have to keep up with cheaper, more technologically advanced Chinese models around the world.
great dissatisfaction
For his part, economic expert Nihad Ismail from London said:
- There is great dissatisfaction in European and American circles towards Chinese policies and strategies in supporting the electric car and battery industry.
- The American and European position boils down to accusations against China of interfering in the free market and distorting competition through unfair practices, such as direct and indirect financial support for Chinese automobile industries, with the aim of capturing the largest possible share of global markets. China, of course, rejects these accusations.
Ismail continued: The British magazine “The Economist” published in January a warning of a massive flood of Chinese cars that will soon submerge Europe. It was based on estimates from the American Center for Strategic and International Studies (CSIS), which reported increasing government support for the Chinese car industry.
Regarding the Western response, Ismail explained that the United States and the European Union have taken punitive measures in the form of imposing customs duties on imported Chinese cars. Washington is threatening to impose fees of up to 100 percent, while the rates in the European Union range between 17.4 percent and 37.6 percent starting in July for four months, before becoming permanent starting in November.
Regarding Chinese companies, Ismail pointed out that companies such as BYD are considering setting up electric car factories in Mexico to overcome customs sanctions. He explained that the terms of the trade agreement between Canada, the United States and Mexico, which was signed in 2020, allow China to manufacture in Mexico, which could create difficulties for Washington. He added that the price of an American electric car reaches $55,000, while a Chinese car costs half that amount.
In a related context, Ismail noted that Western companies such as Volkswagen and Tesla manufacture electric cars in China and export them to Europe, which raises questions about whether these companies are subject to punitive customs tariffs. He revealed that Tesla is negotiating with Brussels to reduce the customs tariff rate to less than 9 percent, while the tariff on BYD is 17 percent, and on the Chinese state-owned company SAIC it reaches 37.6 percent.
Ismail concluded his speech by warning of the intensification of competition in the coming years between China and the West, stressing that if China continues to export its financially supported cars without imposing customs sanctions, this will lead to the collapse of the industry. Electric cars in Europe And AmericaHe added that there are proposals in Washington that include stopping the import of Chinese cars to protect national security, a dangerous development that could increase tensions between China and the United States and negatively affect the global economy and the American consumer.
Export support
In this regard, the Chief Economist at ACY, Dr. Nidal Al-Shaar, pointed out that the policy of supporting… Exports China is not new, it has been adopted by China for more than 70 years, which has allowed it to gain extensive experience in mass production and global expansion. He explained that China has exploited the nature of the ruling system to impose its policies on industrial facilities with little resistance.
He added that the impact of these export policies on other countries prompted them to impose duties and taxes on imports to protect their domestic industries. However, he said, the situation worsened when China responded to Protectionist policies in European Union The United States and Canada provided more financial and technological support to their exporting companies, with support sometimes exceeding 30 percent of the cost.
Al-Shaar pointed out that the imposition of customs duties by the European Union on Chinese electric cars is a natural reaction to the Chinese government’s industrial support policies, which have reached the point of dumping. He added that the political dimension plays a role in this conflict, as China is trying to form a competing economic and political pole, while the European Union seeks to maintain its industrial and political superiority, considering that Competition It’s not fair as long as Products Chinese are government-supported, especially since some of them are now close to the level of European technology.
Al-Shaar stressed that there is a disagreement within the European Union regarding these fees, as some members see them as exaggerated. He highlighted the position of the Prime Minister Spain Who called for starting a dialogue with China to avoid the expected trade tension, warning of the possibility of it turning into political tension, especially in light of the ongoing conflict in Ukraine and the escalation with Taiwan, all within the framework of the influence of the BRICS group and the Belt and Road Initiative.
Al-Shaar concluded by saying that China is facing a real challenge this time, as the United States and Canada have doubled tariffs on Chinese goods and cars, putting it in a difficult position. He pointed out that there are voices within major European companies that oppose the imposition of these tariffs, and prefer dialogue as an alternative solution, believing that European companies will not benefit in the long term from protectionist policies. He stressed that the issue is complex and will not be resolved in the short term, indicating that the solution may appear in the medium or long term through calm dialogue.
