China’s Auto Boom Faces Global Pushback Amid Economic and Diplomatic Challenges
A man talks on his mobile phone as he walks past the cars displayed for sale at an auto market in Beijing. Photo: Andy Wong/ AP Photo
China’s burgeoning auto-manufacturing industry has experienced notable success, especially compared to its other struggling sectors, such as the real estate bubble burst and the weakening national currency. As part of an initiative to enhance its economic prowess, China is strategizing its auto-exports to grow its global consumer market share and increase the country’s diplomatic influence. The 35% increase from 2022, reaching 8.1 million electric vehicles registered, seemed to reflect positively on the government’s $231 billion investment in an electric vehicle (EV) subsidy program that has been in place since 2009.
Compared to the US’s progress in normalizing EV use, China shines in its ability to quickly expand. For instance, charging stations in China are offering standardized charging plugs, with the amount available increasing by 54% within a year, compared to the US that has lowered its national EV sales target by half.
China’s head start in the green auto-technology field can also be reflected in its foreign policies. Chinese companies like Neta have set up production sites for mass EV rollout in 21 African countries with Morocco taking the lead and surpassing South Africa’s EV production, setting a 420,000 unit target by 2030.
Despite the seemingly assured progress, China’s economic and foreign strategies have a catch with western powers starting to push back on China’s growing industry. US President Joe Biden recently announced his propositions to limit Chinese software implementations in U.S car imports as the final verdict following an investigation launched by the administration in February. White House national security adviser Jake Sullivan said, “We’ve already seen ample evidence of the PRC pre-positioning malware on our critical infrastructure for the purpose of disruption and sabotage.” The European Union has also announced a vote on whether tariffs should be imposed on China’s EV imports. The two have gone into talks to discuss pre-emptive settlements to avert triggering a trade war by limiting import volume and mitigating impacts on EU domestic auto-production.
These events could potentially hamper China’s ambitions in an auto revolution. With an economy supported by the auto-industry making up at least 7.4% of their GDP, green technology is proven to be a crucial part of China’s tactics in expanding its global presence. The US is the world’s highest consumer expenditure, with almost $16 trillion in the market. China’s failure to break into the American consumer market due to the US federal government’s constraints can result in losing out on a hefty margin of global EV profits.
Visitors walk by McLaren car models on display at the China Auto Show in Beijing. Photo: Andy Wong/AP News
Although China has been able to take advantage of the US’s lukewarm investment approaches in Africa, the recent China-Africa summit may reveal some shortcomings of the cross-continental relations. In Beijing, Sub-Saharan leaders revisited the unfulfilled $300 billion dollar pledge from the last summit, China has not made enough imports from Africa. Infrastructure investments often come incredibly costly, which China has seemed to shift their focus to green tech exports as their strategy to pursue these newfound friendships.
Nevertheless, economists are concerned with a possible EV “dumping” phenomenon dawning upon African nations amidst these new Chinese investments. Previous examples of Chinese export overhauls, such as Chile’s concerns with China’s price advantage in steel overtaking domestic production, the country imposed tariffs to mitigate those circumstances. In Africa’s case, Beijing’s continual interest in sub-saharan natural resources, including lithium for car batteries, may lead to further aggression on the investment and trade aggression. It will be interesting to see what policies the Chinese government implements to support these interests.
China is facing an age-old dilemma, grappling with an unstable domestic economy while trying to fulfill investment promises to Africa. Recent events have seen global resistance to China's EV expansion initiatives, as its economic dependencies become wary of the superpower's aggressive tactics, which threaten to saturate domestic markets and undermine local industries. Given the current state of global relations with China, questions arise about the future of its auto-export-driven economy.