Global auto firms expand investment in China market as cooperation is needed to boost global green transition
Published: Apr 27, 2024 09:57 PM
A product launch event by Geely at the Beijing International Automotive Exhibition on April 25 
Photo: Zhang Yiyi/GT

A product launch event by Geely at the Beijing International Automotive Exhibition on April 25 Photo: Zhang Yiyi/GT

While US-led Western countries are taking unilateral and protectionist actions against China's booming new-energy vehicle (NEV) sector, the world's leading automakers such as BMW Group have briskly increased their investment in the China market for greater opportunities, expressing their confidence in the world's second-largest economy and consumer market.  

Chinese observers said multinationals' active investment in China's automobile industry, especially in the NEV sector, debunks the US' accusation of "overcapacity" in China's new-energy products. They said that from a global perspective, there is a shortage of production capacity in the new energy industry, blasting Washington's false "overcapacity" narrative and saying it aims to damage China's NEV industry for its own benefits.

German automaker BMW Group announced its plans to invest an additional 20 billion yuan ($3.12 billion) into its production base in Shenyang, Northeast China's Liaoning Province on Friday, according to a press release.

The investment underlines China's pivotal role in BMW's transition toward intelligent connected vehicles, and shows the group's confidence for years ahead, said Oliver Zipse, chairman of the board of BMW.

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

Buick, one of the fast-growing US car brands, put up two booths to showcase its products. One of the booths, close to that of Chinese new powers in the NEV industry such as Xiaomi and IM Motors, is designed to show its NEVs, according to media reports. 

It indicated Buick's resolve to get a 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, US luxury carmaker Cadillac launched a new electric sport utility vehicle under the IQ series, whose prices and product performance are attractive.

Unlike previously, when many audience members flocked to a booth when a foreign CEO appeared, this year's Auto China is seeing Chinese local NEV brands make a splash, Feng said, noting that Chinese NEV brands' strong innovations and high-growth potential are making them stand out in international competition.

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

US anxiety in excess

However, ignoring China's contribution to global green and low carbon transition, the US is attaching the label of "overcapacity" to China's exports of new-energy products. US Treasury Secretary Janet Yellen claimed that the Biden administration is not taking any options off the table to respond to China's "excess industrial capacity", Reuters reported. 

"The US' unilateral move of labelling 'overcapacity' on Chinese new energy exports is politicizing normal international trade, which will do harm to global carbon neutrality and delay global green transition," Zhang Xiang, director of the Digital Automotive International Cooperation Research Center of the World Digital Economy Forum, told the Global Times on Saturday.

"The US exports 80 percent of its chips, and it is a large exporter of aircraft, automobiles, computers, soybeans and agricultural products to China. Are these 'overcapacity' according to US logic?" Zhang asked. 

Zhang said the proportion of export to production for Chinese new-energy vehicles is far lower than that of Germany, Japan and South Korea. "If these countries haven't seen overcapacity, the US shouldn't put the label on China," he said.

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

What's "excessive" is not China's capacity, but the US' anxiety, he said when briefing the media on US Secretary of State Antony Blinken's visit to China.

According to a forecast by the International Energy Agency in 2023, the world's total sales volume of electric vehicles is set to reach 45 million in 2030, about 4.5 times the sales volume recorded in 2022, underscoring that global supply of new-energy products is not excessive but insufficient.

Advantages boosted by innovation

In today's world, supply and demand are both global, and the capacity of each country is determined by comparative advantages. Thus, Western countries hyping up so-called "overcapacity" in China's new energy industry will not help the development of their domestic green industries, analysts said.

Technological innovation, globally competitive industrial clusters, full-market competition and agile supply chains make the Chinese NEV industry strongly competitive in the international venue, Li Yong, a senior research fellow at the China Association of International Trade, told the Global Times.

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

The development of NEVs has given a boost to the development of Chinese car brands globally. Public data has shown that more than 60 percent of NEVs are produced in China, Chinese NEV patents accounted for about 70 percent of global total and over 63 percent of the world's power batteries are supplied by China, which has mastered the core technologies and complete industrial chains of NEVs.

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

"We are willing to conduct cooperation with them in any mode, for example, component manufacturing, investment for facilities or car exports. The key is that they themselves should realize that China is very advanced and they should abandon their decoupling mentality," Zhao said, noting that ordinary people in the West will have to pay the price if they continue their containment of China.