The Financial Times reported that Shenzhen, China’s southern technology hub and home to the world’s largest electric vehicle maker BYD, has announced plans to expand automobile exports. This plan raises concerns in the West about China’s increasing competition with domestic manufacturers.
According to a statement by the Shenzhen Municipal Bureau of Commerce, the local government will implement 24 measures, including supporting factory construction, opening new sea routes, and allowing 20 other companies to export used cars.
The statement said that this policy is designed to “seize the opportunity of automobile export development” and build an automotive industry cluster connecting production, transportation, and trade, aiming to transform Shenzhen into a “new world-class automobile city”.
Local officials also said that they will launch services to support automobile exporters, including improving export insurance, expediting the tax refund process, and encouraging Chinese banks to provide consumer financing for foreign car buyers. The plan also calls on car exporters to purchase additional car carrier ships to create a fleet owned by China.
In fact, BYD has recently started to increase global exports. The electric vehicle manufacturer put into operation its first vessel carrying 7,000 vehicles in January. On Monday, after a month-long journey from Shenzhen, the Chinese-made cars started rolling off BYD’s Explorer No. 1 ship at the port of Bremerhaven for the first time. The company plans to expand its fleet to eight ships in the next two years.
Shenzhen’s plan comes as concerns grow worldwide that China’s automotive industry has built excessive capacity domestically, and many cars produced on domestic production lines will flood into Western markets.
Brussels launched an anti-subsidy investigation into Chinese electric vehicles in September, accusing them of “distorting” the EU market. Meanwhile, US officials warned Beijing this month that Washington and its allies will take action if China tries to reduce excess industrial capacity by dumping goods at discount prices on the international market.
Last year, China surpassed Japan to become the world’s largest exporter of cars, exporting 5 million vehicles. According to China’s customs data, the country’s auto exports have increased by 74% to $78 billion compared to a year earlier.
Analysts at Bernstein research group estimated that China has the capacity to produce nearly 40 million vehicles per year, but the domestic demand is only for 20 to 25 million vehicles. Moreover, the number of car factories in China continues to rise.
While local governments like Shenzhen want to increase exports to support the local economy, the central Chinese government has urged a more cautious approach. The Ministry of Commerce called for “sound development” in expanding the country’s electric vehicle exports, including more cooperation with foreign partners and leveraging free trade agreements.
Zhang Xiang, an auto analyst at the World Digital Economic Forum, said Shenzhen’s plan serves as an example for other local governments. He said, “This guidance is timely as Chinese automakers, including BYD, are trying to transform into global companies from domestic ones.”
Source: Financial Times
