Rejecting Western criticism of China's industrial strategy, the country's head of government said the world's second-largest economy's exports benefit global trade.
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| Chinese Premier Li Qiang stressed the openness of the country's market at the WEF in Dalian. (Source: Bloomberg) |
"Win the big piece, get the small piece"?
Speaking at the World Economic Forum in the city of Dalian, Li said China’s output of new energy products such as lithium batteries and electric vehicles, which has surged in recent years, “enriches global supply.” His comments came weeks after the EU announced tariffs of up to 38% on Chinese-made electric vehicles and tensions between Beijing and the West escalated.
China's market opening comes at a time when complaints about foreign market access are growing and the government's role and massive industrial subsidies are under scrutiny in Washington and Brussels, he said.
“The Chinese market is vast and open. Multinational and domestic companies compete on a level playing field, exchange information and cooperate,” he said, adding that together they “have become an important force in promoting the development and growth of emerging industries.”
Beijing has placed a heavy emphasis on its industrial strategy this year, backing everything from artificial intelligence to renewable energy, as a prolonged property slump weighs on growth. Li said the economy was on track to meet its target of around 5% growth this year.
Over the weekend, Chinese Commerce Minister Wang Wentao began tariff talks with the EU, following an investigation into state subsidies that has yet to be finalized. The United States, which imports much smaller volumes of electric vehicles from China, announced a 100% tariff on electric vehicles earlier this year.
German Vice Chancellor Robert Habeck, who has been to Beijing and Shanghai in recent days, welcomed the talks and said the door was “open for discussions”.
The German auto industry, which has a large presence in China and is already facing domestic competition, is now also being hit by tariffs. Trade tensions with China have increased after a period of worsening geopolitical relations with the West, including a reduction in supply chain dependence on China.
Echoing comments made at last year’s WEF conference, Li said that “regressive actions of decoupling” would drag the world into a “destructive spiral” in which “fierce competition for a bigger pie will lead to a smaller pie.”
He stressed that the rise of Chinese industry was part of a global technological revolution, adding that the country's products were helping to tackle climate change.
There is a need for a “fairer, non-discriminatory technology business environment,” he said.
In a separate panel at WEF, BMW Vice Chairman Patrick Mueller said they still want to increase investment in China, citing a recently announced multibillion-dollar investment in a battery factory.
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| Chinese electric cars entering Europe are highly competitive. Illustration photo. (Source: Financial Times) |
Unbeatable competitiveness
The EU’s announcement of a sharp increase in tariffs on electric vehicles imported from China marks a major setback. The planned tariffs were decided despite warnings from Beijing that imposing sanctions would disrupt trade and economic cooperation.
The tariffs will vary from company to company but will be as high as 38% for automakers judged to be failing to cooperate with the EU investigation. While that is much lower than the 100% imposed by the US last month, it represents a new barrier to the fast-growing Chinese car market.
The question, though, is whether tariffs will slow the advance of Chinese electric cars into Europe?
Former Chrysler China chief Bill Russo, founder of Shanghai-based consultancy Auto Mobility, said tariffs are spurring localisation of electric vehicle production in Europe and could be a positive for competition.
Chinese companies have begun investing heavily in car and battery manufacturing in Europe, including multibillion-dollar factories in China-friendly Hungary.
However, Mr Russo said the EU tariffs would not hinder sales growth at BYD, the Chinese group that is competing with Tesla for the title of world's largest electric car maker.
“Will it slow them down? No. If you factor that tariff on top of China’s cost structure, it’s still going to be better cost-wise than anything the European carmakers are currently able to do,” he said.
Analysts estimate that even with the expected tariffs, BYD's European export operations could still achieve a net profit margin of more than 8% at current production levels - making it more profitable than its domestic operations.
“Even if Chinese EV brands sell their cars in Europe at a 50% premium to their domestic retail prices, they are still very competitive,” said Yale Zhang, CEO of Shanghai-based consultancy Automotive Foresight.
Source: https://baoquocte.vn/xe-dien-trung-quoc-vao-chau-au-buoc-tien-kho-can-276450.html
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