Decades of heavy government subsidies have created an overcapacity of vehicles that even Chinese automakers can’t cope with, and now they’re exporting the pain.
During the golden age of the 2010s, China was General Motors’ largest market, with sales reaching a peak of 1.2 billion yen. 4 million in 2017Since then, the dream of China’s continued great growth has faded year by year. A major shift for American automakers It plans to partner with China’s state-owned automaker SAIC.
But GM is not the only foreign automaker struggling to make a profit in the Chinese market. Numerous other automakers, including Chinese ones, have gone bankrupt due to ballooning government subsidies.
In 2023, Only a third Which Chinese automakers achieved their annual sales targets? Zombie Factory What is tarnishing China’s manufacturing ecosystem is Billions of dollars Beijing has been pumping money into the auto industry while ignoring consumer demand.
Unfortunately, all this has led to a global glut of cheap Chinese cars. european union and united states of america They are trying to fight back with tariffs.
As the Federation of American Manufacturing February warningChina has used every trick in the book to give unfair advantages to its domestic automakers and dump surplus industrial production overseas.
The surplus poses an “existential threat” to the U.S. auto industry, it warned in a report ahead of the Biden administration’s inauguration. investigation Concerned about the national security risks of connected cars made in China and other countries, Beijing is seeking to enter the U.S. market through third countries such as Mexico. According to our report:
“China’s EV excess capacity is estimated at 5 to 10 million units per year. With significant implicit government support for Chinese auto companies, current U.S. tariffs will eventually be overcome. China is in the midst of its own overseas investment boom, similar to the one undertaken by Japanese auto giants in the 1980s, which allows Chinese automakers to benefit from regional trade agreements and avoid import restrictions.”
Alarmingly, American companies like GM may end up contributing to Chinese auto dumping in the near future, China auto industry analyst Michael Dunn warned in a recent article. Newsletter:
“Global automakers have set up joint ventures and built massive factories in China to sell to Chinese consumers. Now, with sales of brands outside of China falling sharply, the U.S. and Europe are finding they need to convert those factories to ship products to markets around the world.”
But upcoming new measures could make dumping in the US more difficult, at least for more advanced vehicles. In the coming weeks, the Commerce Department is expected to release proposed rules that would ban Chinese software in US self-driving and connected cars, according to Reuters. Reported The move was announced earlier this month, but it will take much more to prevent cheaper Chinese cars from dramatically changing the playing field in the U.S. market.
Failure to stop the flood of Chinese-made cars sweeping the world puts the jobs of millions of American auto workers at risk. Enacting legislation like the Level Playing Field Act 2.0 and restoring Section 421 import surge protections would go a long way to stopping some of Beijing’s most insidious and harmful trade practices.
Check out our Automotive Report Further policy proposals Listen to Dan’s conversation Manufacturing Report Listen to the podcast to learn more about how Beijing has positioned its auto industry to dominate global markets and exclude foreign competitors.
