Western Tariffs Won’t Dim Outlook for Chinese Automakers’ Global Expansion, Economist Says

China's automakers aim to continue their global expansion despite facing trade barriers from the European Union (EU) and the United States (U.S.) against Chinese-made electric vehicles (EVs). This sentiment was voiced by a senior economist from the State Information Center, affiliated with the National Development and Reform Commission [para. 1].

China became the world's largest auto exporter in 2023, with shipments reaching 4.91 million cars. This significant increase contrasts sharply with the static export numbers from 2013 to 2020, which hovered around 1 million units annually. The boost in exports began in 2021, with numbers soaring to 2.02 million that year and further increasing to 3.11 million in 2022 [para. 2][para. 4].

The recent export surge can be partly attributed to a global chip shortage during the COVID-19 pandemic. While established international automakers prioritized using limited chips for high-profit models in the European and U.S. markets, Chinese companies capitalized on the opportunity by finding alternative chips [para. 4][para. 6].

The rise in China’s auto exports also resulted from strong demand for Chinese new-energy vehicles (NEVs) and increased sales to Russia. Chinese automakers filled the gap left by Western competitors who withdrew from the Russian market following the Russia-Ukraine war [para. 7].

Despite growth, the EU and U.S. have enacted measures to protect their auto industries from Chinese imports, fuelling concerns that China’s global expansion could be curtailed. For example, the EU has decided to provisionally impose additional tariffs on battery-electric vehicles from China starting on July 4. SAIC Motor Corp. Ltd. will be most affected, facing an additional 38.1% tariff, while Geely Automobile Holdings Ltd. and BYD Co. Ltd. will see tariff hikes of 20% and 17.4%, respectively [para. 8][para. 9].

The Biden administration in the U.S. has announced plans to quadruple tariffs on Chinese-made EVs from 25% to 100%, emphasizing that the future of the auto industry should be American-made [para. 11]. Despite these hurdles, Xu suggested exploring markets in Africa and Southeast Asia to counteract the tariff impacts [para. 12].

Diversifying export destinations has already started; in 2023, China exported approximately 1.5 million vehicles to Asian countries, about 1 million to Europe, 908,000 to Russia, 610,000 to North America, 393,000 to South America, 237,000 to Oceania, and 230,000 to Africa [para. 13].

Industry experts like Jin Jun from PwC Mainland China and Hong Kong advocate for further globalization of Chinese automakers' production and operations. He predicted that two or three Chinese carmakers might become global industry leaders. However, some, like Jin Tao from Shanghai Rongnan Tech Co. Ltd., remain cautiously optimistic. He estimated that the combined total of exported and overseas-manufactured Chinese cars could reach 12 million units by 2035, which is lower than Xu's estimate of 20 million [para. 14][para. 15].

In the first five months of 2023 alone, China exported approximately 2.3 million cars, marking a 31.3% increase year-on-year, with some 519,000 being NEVs, up 13.7% from the previous year [para. 16].