12

It is reported:

China announced a timeline for lifting ownership limits on foreign automakers Tuesday, meeting a longtime demand of the United States and other countries seeking better access for their companies in the world’s biggest car market.

The country will end shareholding limits for new energy vehicle firms such as those that produce electric cars this year, according to the National Development and Reform Commission (NRDC).

The move will be followed by commercial vehicles in 2020 and passenger cars in 2022, when it will also do away with the restrictions limiting foreign automakers to two joint venture partners, the NRDC said in a statement.

  • Is this a capitulation and a direct result of Trump's trade war? Or is it just a latest development of China's preexisting trade policy?
  • From the Chinese perspective, how is China going to be benefited from this reform?
  • Point 2: (potentially) cheaper cars – Caleth Jun 21 '18 at 11:25
3

Trump used tariffs to get Neo-Liberal policies in place with China, now, US and other nations can now take in 100% of the profits when manufacturing and selling cars in China whereas before they were limited to 50% of the profit. This is a pretty big win for those US companies and the stock owning class. There is no mention of the tariff going away, however, foreign car companies will now just set up shop in China and produce locally saving on shipping.

At the moment, overseas carmakers that want into the Chinese market have to either import their wares or form 50-50 joint ventures with local, state-owned partners.

As for how the Chinese benefit from this, it isn't so much a benefit now as it was previously. With the prior arrangement, foreign automotive companies which wanted to avoid the 25% tariff had to share their intellectual property along with 50% of the profits. China has mandated electric cars and appears to have caught up to foreign electric car companies in technology or perhaps even exceeded it which is the reason they are willing to offer this up to Trump. Another win for the Chinese is that it will keep the jobs in China since the manufacturing will remain local.

The latter option avoids those big tariffs, but it means giving those local partners access to the intellectual property needed to make the cars.

The move suggests particular confidence in China’s electric car industry. The country said last year that it was moving towards complete electrification of its automobiles, and would be phasing out the production and sale of cars that run on fossil fuels.

http://fortune.com/2018/04/17/china-foreign-auto-ownership-tariffs/

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy