Car companies expand investment in China market

Cooperation is needed to drive the global green transition.

As Western countries led by the US take unilateral and protectionist measures against China’s growing new energy vehicle (NEV) sector, the world’s leading automakers such as the BMW Group have rapidly increased their investment in the Chinese market in pursuit of greater opportunities, expressing its confidence in the second largest economy and consumer market in the world.

Chinese observers said multinationals’ active investment in China’s auto industry, especially the NEV sector, debunks the US accusation of “excess capacity” in China’s new energy products. They stated that, from a global perspective, there is a shortage of production capacity in the new energy industry, criticizing Washington’s false “overcapacity” narrative and asserting that it intends to harm the Chinese NEV industry for its own benefit.

German automaker BMW Group announced its plans to invest an additional 20 billion yuan ($3.12 billion) in its production base in Shenyang, northeast China’s Liaoning province, on Friday, according to a statement of press.

The investment underlines China’s key role in BMW’s transition to smart connected vehicles and shows the group’s confidence in the coming years, said Oliver Zipse, chairman of BMW.

BMW’s announcement comes amid increasingly fierce competition in the Chinese NEV market. At the 2024 Beijing International Automobile Exhibition, also known as Auto China, international car brands are rushing to showcase their electric models to embrace the Chinese market and the global electrification trend.

Buick, one of the fast-growing American automobile brands, set up two booths to showcase its products. One of the booths, next to those of new Chinese powerhouses in the NEV industry such as Xiaomi and IM Motors, was designed to showcase their NEVs, according to media reports.

This indicated Buick’s determination to gain market share in the sector, an auto industry analyst surnamed Feng, who attended this year’s Auto China, told the Global Times on Saturday.

In addition, American luxury carmaker Cadillac has launched a new IQ series electric sports utility vehicle, whose prices and product performance are attractive.

Unlike previously, when many members of the public gathered at a booth when a foreign CEO appeared, this year’s Auto China is seeing Chinese local NEV brands make noise, said Feng, noting that the strong innovations and high potential of Growth of Chinese NEV brands is making them stand out in international competition.

China’s vehicle market is off to a good start in the first quarter of 2024, with production and sales exceeding 6.6 million units, according to the latest data released by the China Association of Automobile Manufacturers. The market share of NEVs remained above 30%, the data showed.

US anxiety in excess

However, ignoring China’s contribution to the global green and low-carbon transition, the US is assigning the “excess capacity” label to Chinese exports of new energy products. US Treasury Secretary Janet Yellen said the Biden administration is not taking any options off the table to respond to China’s “industrial overcapacity,” Reuters reported.

“The U.S. unilateral move to label ‘excess capacity’ on Chinese new energy exports is politicizing normal international trade, which will undermine global carbon neutrality and delay the global green transition,” said Zhang Xiang, director of the Center for Digital Automotive International Cooperation Survey from the World Digital Economy Forum told the Global Times on Saturday.

“The US exports 80% of its chips and is a major exporter of planes, cars, computers, soybeans and agricultural products to China. Is this ‘excess capacity’ in line with US logic?” Zhang asked.

Zhang said the proportion of export to Chinese new energy vehicle production is much lower than that of Germany, Japan and South Korea. “If these countries have not seen excess capacity, the US should not put the label on China “, he said.

The so-called “excess capacity” claim is not a market-defined conclusion, but a man-made false narrative, and is also another example of US protectionism and suppression of China’s development, said Yang Tao, director-general of the Northern Department. American and Oceanian Affairs at the Ministry of Foreign Affairs, said on Friday.

What’s “excessive” is not China’s capability but the US’s anxiety, he said when briefing the press on US Secretary of State Antony Blinken’s visit to China.

According to a forecast by the International Energy Agency for 2023, the total global sales volume of electric vehicles is expected to reach 45 million in 2030, around 4.5 times the sales volume recorded in 2022, highlighting that the global product offering of new energy is not excessive, but insufficient.

Advantages driven by innovation

In today’s world, supply and demand are global and each country’s capacity is determined by comparative advantages. Therefore, Western countries that extol so-called “excess capacity” in China’s new energy industry will not help the development of its domestic green industries, analysts said.

Technological innovation, globally competitive industrial clusters, full market competition and agile supply chains make the Chinese NEV industry fiercely competitive on the international stage, Li Yong, senior researcher at the China International Trade Association, told the Global Times.

“Compared with some countries that failed to develop industrial chains or key technologies during the development of the NEV industry, China has achieved a global leadership position in innovations, technology application and interior design, enabling Chinese NEVs to meet the demand from international consumers,” he said.

The development of NEVs has boosted the development of Chinese car brands around the world. Public data shows that more than 60% of NEVs are produced in China, Chinese NEV patents account for about 70% of the global total, and more than 63% of the world’s power batteries are supplied by China, which dominates key technologies and completes industrial production. NEV chains.

Given the leading position of Chinese NEV manufacturers, what developed economies such as the US and EU need to do is increase cooperation with China, said Zhao Yongsheng, a researcher at the Institute of Regional and International Studies at the University of International Business and Economics. in Beijing, he told the Global Times on Saturday.

“We are willing to conduct cooperation with them in any modality, for example, manufacturing components, investing in facilities or exporting cars. The key is for them to realize that China is very advanced and should abandon their decoupling mentality,” Zhao said. , noting that ordinary people in the West will have to pay the price if they continue to contain China.

Via Global Times.