Automotive industry in China
In the 2020s, the automotive industry in mainland China has experienced a rise in market dominance by domestic manufacturers, with a growing focus on areas such as electric vehicle technology and advanced assisted driving systems.
However, the Second Sino-Japanese War hampered the progress of the Chinese auto industry, as seen by the relocation of the Changan Automobile factory from Shanghai to Chongqing in the wake of the city's bombing and attack.
Most domestically produced vehicles were primarily the Jiefang trucks for military or industrial departments and the Hongqi sedans used by a limited number of government officials.
[25][33] In June 1958, the Nanjing Automobile, previously a vehicle servicing unit of the People's Liberation Army, began making China's first domestically produced light-duty trucks.
[35][36] Changan Automobile traces its origins back to 1862 when Li Hongzhang set up a military supply factory, the Shanghai Foreign Gun Bureau.
[42] As this spending binge began to lead to a severe trade deficit, the Chinese leadership put on the brakes through the adjustment of import and foreign exchange policies.
[47][48] The Chinese automotive industry gradually moved away from the manual workshop model and adopted Western advanced technologies and quality control management.
[60]Apart from mainstream joint venture brands dominating the mid-to-high-end market, there was a substantial presence of local state-owned and private small and medium-sized automotive companies.
[70] In 2009, the State Council of the People's Republic of China issued the "Automobile Industry Adjustment and Revitalization Plan," which emphasized, "Using new energy vehicles as a breakthrough, strengthening independent innovation to establish new competitive advantages.
[81] On 28 July 2018, China lifted foreign ownership restrictions on new energy vehicle production, which benefited American electric car manufacturer Tesla, Inc.
[100][101] In mid-2023, Bloomberg News reported most top Chinese automakers, except BYD and Changan, suffered a decline in profits as a result of the price war, hitting its lowest since the beginning of the COVID-19 pandemic in 2020.
BYD, which specialized in electric vehicles, became an outlier as it experienced record profits and deliveries in this period, securing its position as a key player in the market.
[103][109] In the 2020s, foreign global manufacturers started seeking technological assistance from its Chinese counterparts and invested in China through joint ventures or other forms of partnerships,[91] including Renault-Nissan, VW, BMW, Mercedes-Benz, Toyota, Stellantis, and Jaguar Land Rover.
The Chinese automotive industry holds a dominant position in the electric vehicle supply chain, with more than 600,000 EV-related enterprises operating in the country as of 2022[update].
[105][133] Industry analyst Chris Berry stated that China has a 10 to 15-year head start on the rest of the world in terms of EV battery supply chain.
[136] China's domestic brands lead the market in the development and implementation of advanced assisted driving systems, capitalizing on their early-entry advantages in the electric and intelligent vehicle sector.
[146] Due to serious air pollution problems and ever-increasing traffic, alternative-energy vehicle production is an area of strong focus for the Chinese government, and several electric vehicle-friendly policies have appeared at the national and local levels as a result.
[167][168][164] As of 2022[update], major electric vehicle players in the Chinese industry include BYD Auto, Tesla China, SAIC-GM-Wuling, GAC Aion, and Changan Automobile.
In ten major cities such as Beijing and Xi’an, Chinese EV producers worked closely with taxi companies to formulate operational solutions that would improve core battery technologies, such as implementing multiple shifts.
[172] On November 2, 2020, the Chinese government introduced the "New Energy Vehicle Industry Development Plan (2021–2035)" to achieve a sustainable automotive future with reduced emissions.
However, their presence abroad has led to heightened tariffs and restrictions, attributed to allegations such as dumping, state subsidies, production overcapacity, national security, and forced labor.
[196] In December 2023, the U.S. government rolled out rules for electric vehicle tax credits so that any car using parts that comes from company which has more than 25 percent of board seats controlled by China will be disqualified from a US$7,500 subsidy.
[201][202] In April 2024, when the U.S. Treasury Secretary Janet Yellen visited China, she accused the Chinese automotive industry of having overcapacity and tilting the playing field away from American workers and firms.
[191] The International Monetary Fund criticized the Biden administration's decision to raise tariffs on Chinese goods, including EVs, urging the U.S. to maintain open trade policies.
[205] In September 2023, European Commission President Ursula von der Leyen announced EU would launch an anti-subsidy investigation into Chinese electric vehicle manufacturers.
[219] In October 2024, EU leaders approved additional tariffs on Chinese EVs, despite opposition from five countries, including Germany, which warned the decision could harm its auto industry.
The European Commission, having provisionally backed the tariffs after finding unfair state aid to Chinese manufacturers, was set to impose duties of up to 35.3% for five years starting in November 2024.
While ten member states, including France and Italy, supported the tariffs, Germany and Hungary opposed them, citing potential damage to local carmakers.
The criticism centered around the government's joint venture policies, which required technology transfer in exchange for access to the country's sizable domestic market.
[240] In 2019, in an effort to attract additional foreign investors and respond to criticism, the National People's Congress passed a law making forced technology transfers illegal.
