“A protectionist policy towards China could harm the business of Western automakers”

Le cargo Explorer-1 entered the port of Bremerhaven, Germany, at the end of February, with some 3,000 electric cars in its holds. Photos of the parking lot full of vehicles from the Chinese manufacturer BYD made headlines in the press in the United States, accompanied by horrified comments. According to Foreign Policythe docking would have inaugurated a new era in the global economy ». The Atlantic Council think tank presented these cars as a threat to the economy and even national security. Gina Raimondo, the American Secretary of Commerce, explained, for her part, that these cars, equipped with cameras and sensors, could spy on American military installations on behalf of the Chinese government. At the same time, Joe Biden announced a 100% tax on Chinese electric cars. As for the European Commission, it revealed the first results of an investigation into the public subsidies received by BYD and those of its British counterpart MG, suggesting a possible tripling of taxes (from 10% to 30%).

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The most interesting thing in this affair is the gap between the reaction of governments and that of manufacturers. In terms of foreign trade, it is, in general, industrialists who request customs protection; in this case, it was the opposite, and we could hear the leaders of Volkswagen and BMW reminding the European Commission of the virtues of free trade. A protectionist policy towards China could harm their business. Firstly, thermal cars still represent more than 60% of cars sold in China and German brands would have a lot to lose if this market were to close.

New episode of the story

Second, China has certainly become the leading exporter of cars in the world, but Europe still exports more cars to China (24 billion euros in 2022) than the opposite (9.7 billion). As for accusations of Chinese industrial overcapacity, it should be noted that Europe exports a greater proportion of its automobile production than China. Third, a good portion of electric cars imported from China are, in reality, manufactured by Western companies based there. Finally, as far as the United States is concerned, the threat is frankly non-existent, with China exporting almost no cars there…

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Rather than a “new era in the global economy”, the arrival of Chinese electric cars is just another episode in the centuries-old history of the internationalization of the automobile sector. As told by Patrick Fridenson and Kazuo Wada in the chapter devoted to automobiles in the collective work The Routledge Companion to the Makers of Global Business (Routledge, 2020, untranslated), industrial countries have constantly pursued two objectives: protecting their national manufacturers and encouraging the establishment of foreign manufacturers to acquire know-how and productive capacities.

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