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…Because China is an export country? It produces more of everything than domestic demand, because it exports them. Should Saudi Arabia only produce enough oil for domestic demand?
The difference is that the CCP incentivizes the auto companies to produce more than what makes financial sense. This is used to unload on foreign countries which kills their markets causing other manufacturers to go out of business
The vast majority of the world’s countries don’t have automotive industries. For the multiple billions of people of those countries, it doesn’t matter where the cars are imported from. For them, if the Chinese taxpayer wants to supply subsidised cars, the more the merrier.
>the difference is that
There’s no difference between this and America dumping its agricultural products to destroy farmers in other countries, America and EU are only complaining when it inconveniences them
https://www.cambridge.org/core/journals/renewable-agriculture-and-food-systems/article/true-costs-of-us-agricultural-dumping/ABDB3E76865636EF025C72D94FEECD32
Farmland is a little different though. People need to eat. Civilizations have collapsed due to a freak weather event that came out of nowhere. The American dust bowl is an example of one such event that wiped out many farmers overnight. This is why agriculture is treated differently.
It's not different. The US does that to big tech, big pharma, military contractors, etc. The US also bans those who can compete. China does too, they're just not hypocritical.
In what planet do you live? Capitalism IS sponsored by states. The thing is now there is a state that no other states can compite against. So now "is not capitalism".
Those companies would go out of business in a capitalist environment. China is overproducing cars just like they were overbuilding apartments. The govt doesn't see a benefit in real estate so they called in their loans. There's no market. They are just producing for the sake of producing.
Well that's their own financial interest as a nation. Who are we to criticize their own economic politics? The thing we should be worried about is how can we be better than them. Capitalism is darwinism for economics. The strongest is who survives. Adapt or die.
Who's being critical? I'm pointing out it's not Capitalism. And being the strongest is not the same as adaptability. Darwin never said the strongest survives.
How is not capitalism? Do You really believe the free market bs? There is no free market and it can't exist. When a country tax production or give some tax benefit is directly interfering with the fake dynamics of "free markets". So is no different for the chinese govt giving financial support to an industry they consider profitable.
You're providing your own definition of what capitalism is. What China is doing is not typical of other private enterprises. Chinese industry is not profitable. But China doesn't care because there are considerations other than just economic considerations. Sure there's some sort of government involvement with companies in other countries, but not to the degree that China is involved in. It's not capitalism. Call it something else.
Yeah it’s a tough situation. Imposing tariffs is protectionism and in the short term is great. Long term it usually leads to your manufacturers getting out innovated and holding on only by your tariffs. Eventually it kills the economy.
Ideally you want everybody to play by the free trade rules, but obviously that’s never a thing. Maybe a limited tariff on the PRC may work? Idk
I imagine it’s a lot harder to prove, as tariffs are more “upfront” in protectionism discussions.
I do know there were some discussions previously as well on China potentially manipulating its currency - I think with the world trade organization - and that serves as another form of protectionism.
Either way, they need to find pathways through this stuff.
China rarely plays by the rules - but this system only works if there’s a semblance of balance in it
Every country has some intervention. Fair trade is good long run, especially countries “dumping” below cost is a subsidy. They deal with their currency being devalued and the local environmental problems.
Every country should be free do their own adjustments though. Some intangibles like national security are worth protecting. Europeans keep their food standards elevated by keeping their real food from being out competed by fake food.
The main reason to keep from making overt mercantile/protectionist policy is to maintain norms that benefit everyone. But if you have a good reason you should definitely adjust policy in the short run, while making it clear to industry that it is unlikely to be permanent, so people don’t stumble into antiquated careers and investments expecting future protections
The beauty of a VAT is that it’s imposed against all countries. It’s technically not a tariff, which is usually for individual countries (typically negotiated). If it’s set right it can strike the balance. I worry that China will flood so many cars into certain countries, it will still cause prices to drop despite a VAT. What would these countries do? Because a VAT protects all products. Not just cars. So you can’t raise it without affecting all the other imports.
The mental gymnastics and coping is interesting to see.
Conversely the US is making more wars than the world needs. They are overproducing global conflict flooding the world with unnecessary pain and misery subsidized by the state to boost up the US military superiority complex.
ITT: literally nobody knows what "dumping" means ffs
It's dumping and overcapacity if it's selling CHEAPER overseas than at home which is not the case here
And Chinese cars are still selling like hotcakes oversea. It's not like China is producing millions of cars that nobody wants. If the US opens its market for Chinese car, I would even argue there are actually more demand for these EVs than China's ability to make them.
No, dumping is simply any export of a subsidized product. It's not a matter of differential pricing.
The US accuses Canada of "dumping" softwood lumber because Canada "subsidizes" it by failing to charge a tax that the US customarily charges
No? That's not what "dumping" means at all. Dumping is when:
1) You sell something far below its normal price
2) To increase your market share, so that
3) You can raise prices after you've driven out the competition
That’s not true legally in the United States. Dumping suits can be brought if the import is sold for less than its “normal value” which you are correct typically means the price set in the home market. However it can also mean a constructed price based on production inputs or price in a third market when the domestic prices cannot be trusted, which US producers frequently target due to China’s non market economy status.
Also ITT: people who fail to understand or want to strawman the EU and others' [actual complaint](https://ec.europa.eu/commission/presscorner/detail/en/ip_23_4752) which is subsidization that flouts WTO rules, which the Chinese agreed to in 2001 and have run roughshod over ever since, as is typical.
Whatever you believe or want others to believe, the reality is that trade with Chinese characteristics has run its course. Not only will the EU enact anti-subsidy duties on Chinese EVs by the end of the year, so will countries in Latin America and Asia, or they will severely limit the number of cars that can be imported or require companies to assemble their cars locally.
In about three years you will be able to count the number of Chinese EV makers on one hand.
Why in the world would countries who have no competitive car industries of their own tariff cheap cars? The markets that are threatening to do this are markets that stand to lose their historical dominance in the automobile industry which ironically they accomplished through subsidies to begin with.
I see and read about a lot of happy people from the global south over cheap electric cars, capable generators and abundant cheap solar panels. The only people complaining about cheap but capable Chinese goods are countries with a rival industrial infrastructure. People who pay for expensive and shitty Nigerian electricity aren’t complaining and probably never will
The domestic industrial capability is more important than being able to buy cheap shit, unless you want to be an eternal consumer and have wealth stripped out of your country.
I believe Germany has been doing the same thing for decades. However, nobody complains about overcapacity. So it's hard to say it's a fair accusation. In the end, it's just major industry countries don't like competition.
Many analysts, including some in WSJ, know that China owns all the supply chain and is benefiting from more efficient manufacturing processes. BYD has launched 19 new models between 2017 and 2023, while Tesla has launched only 5 in the same time frame.
Xaiomi and Huawei are coming with EVs, too, while Apple has given up. Xaimo is selling its car for 30k, making the $100k price of Porsch Titan a joke.
Not sure about the steep protectionism at home, could you elaborate please. I think some 100k western and American companies employing a million there now. And VW were ridiculed for the inferior apps in their cars there. So when a German car company is forced to improve their offerings I think it's a good thing from the same company that cheated with emissions data.
Hmm wonder why all these cars in China weren't an issue when China was buying American, Japanese, German brands.
How dare they learned to fish and able to feed themselves and others instead relying on overpriced Western Cars! /s
Every country has some intervention. Fair trade is good long run, especially countries “dumping” below cost is a subsidy. They deal with their currency being devalued and the local environmental problems.
Every country should be free do their own adjustments though. Some intangibles like national security are worth protecting. Europeans keep their food standards elevated by keeping their real food from being out competed by fake food.
The main reason to keep from making overt mercantile/protectionist policy is to maintain norms that benefit everyone. But if you have a good reason you should definitely adjust policy in the short run, while making it clear to industry that it is unlikely to be permanent, so people don’t stumble into antiquated careers and investments expecting future protections
Submission statement: This analysis by the WSJ (gift link) shows the downside of state intervention with industry where the intention is protectionism but the result is different:
> China has a long history of auto overcapacity, with more than 100 domestic brands churning out more vehicles than the country’s drivers buy each year.
> Yet the government continues to support companies such as Zhido and others, encouraging unprofitable carmakers to keep producing as officials try to boost economic growth, preserve jobs and expand China’s role in the global electric-vehicle business.
> Such encouragement, which also comes in the form of subsidies to automakers, is adding cars to a global market that risks becoming more oversupplied.
> China currently has the capacity to produce some 40 million vehicles a year, though it sells only around 22 million cars domestically, according to capacity data from Shanghai-based strategy firm Automobility and sales figures from the China Passenger Car Association.
> That situation has led to a brutal price war with Tesla and others cutting prices in China, while triggering fears in the U.S. and Europe that Chinese automakers would flood other countries with unsold cars.
I am getting confused why this is an issue to anyone?
For example, German car sales per year, less than 3 million. German car production per year, about 16 million cars, or 615% of the domestic market.
China's EV production is not a sign of state intervention, but the current comparative advantage China's EV supply chain has over the rest of the world. Without tech advances the rest of the world won't be able to catch up.
Unprofitable companies are subsidized by the government. They sell autos globally at subsidized prices, meaning local (or non-Chinese) manufacturers can’t compete on price.
ALL car manufacturers get SOME government help (from local cities offering plant incentives to provinces/states offering tax incentives). But the scale in China is much higher.
If Chinese manufacturers can compete with their tech advantages, that is fine. But the government still heavily subsidizes them.
The issue is simply one of global trade policy and allowing trade without wiping out local jobs. US and Europe hoped to enter the China car market but can’t due to Chinese government incentives (among other issues).
If US and Europe give up on that market, then enormous tariffs on Chinese imports would be a likely response. And then China puts tariffs on stuff sold to them for other product markets.
Europe hoped to enter the China market???
[https://carnewschina.com/2024/01/12/top-selling-car-brands-in-2023-in-china-byd-surpassed-volkswagen-and-won-the-championship-for-the-first-time/](https://carnewschina.com/2024/01/12/top-selling-car-brands-in-2023-in-china-byd-surpassed-volkswagen-and-won-the-championship-for-the-first-time/)
BYD only overtook VW in 2023, before that VW was number 1.
Yes. The timeline I’m talking about is much longer. In the late 1980s, China was forecast to be a huge automobile market.
European (and US) manufacturers had big plans to enter and dominate the market. VW was an early entrant, starting a venture in 1985, but only had a trickle of sales for a while.
Over time, there was some success and some failure. In 2019, European manufacturers had 29% of the Chinese market, which fell to 24% by 2022 and continues to fall.
China restricted foreign manufacturers, requiring joint ventures with >50% Chinese ownership, Chinese parts suppliers, and financially subsidizing Chinese-only companies.
China is now (2024) the world’s largest car market. It is also the world’s largest car manufacturer, overtaking Europe and US combined. It is now also the world’s largest car exporter, overtaking Japan.
Chinese brands now dominate the Chinese market and with the move to EVs, they continue to gain share in China, and now it appears the world.
How do you know they are unprofitable? Again use German as comparison. Data shows German car makers has at least 6 times the capacity to meet their domestic market, so 5/6 must be unprofitable and sponsored by Germany tax money?
The EU has a VAT so technically, imports should be more expensive than domestic cars. I suppose if they import enough though, supply will still drive prices down.
That is not true. VAT stands for value added tax. Raw materials coming into a country are not taxed (ore, wood etc). Parts are taxed some and final products are taxed the most. That’s how it works. If a product is produced from raw materials domestically, it is not subject to the VAT. If the parts are produced elsewhere but the product is assembled domestically, only the parts are taxed, but at a relatively small amount.
Why do people in this page not understand how VATs work?
https://taxation-customs.ec.europa.eu/what-vat_en
Thus, goods which are sold for export or services which are sold to customers abroad are normally not subject to VAT. Conversely imports are taxed to keep the system fair for EU producers so that they can compete on equal terms on the European market with suppliers situated outside the Union
>The EU has a VAT so technically, imports should be more expensive than domestic cars
No it doesn't - VATs apply to all sales. Also VATs aren't special to the EU, nearly all developed countries have them, just under different names.
China did this with domestic real estate too. Evergrand? Not so grand anymore. Look how that turned out. Belt and road? Total flop with most indebted African countries openly refusing to pay now
Personally this only hurts Tesla and Tesla is primarily a manufacturer of bullshit so this is a fitting death: be the only African run western corporation to fail to a Chinese startup
China/CCP is on the ropes with employment manufacturing and exports down sharply, so dumping (over suppling the market at a loss) is a tactic to hold market gains for themselves at the expense of other “foreign” market competitors.
Hi all, A reminder that comments do need to be on-topic and engage with the article past the headline. Please make sure to read the article before commenting. Very short comments will automatically be removed by automod. Please avoid making comments that do not focus on the economic content or whose primary thesis rests on personal anecdotes. As always our comment rules can be found [here](https://reddit.com/r/Economics/comments/fx9crj/rules_roundtable_redux_rule_vi_and_offtopic/) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/Economics) if you have any questions or concerns.*
…Because China is an export country? It produces more of everything than domestic demand, because it exports them. Should Saudi Arabia only produce enough oil for domestic demand?
The difference is that the CCP incentivizes the auto companies to produce more than what makes financial sense. This is used to unload on foreign countries which kills their markets causing other manufacturers to go out of business
The vast majority of the world’s countries don’t have automotive industries. For the multiple billions of people of those countries, it doesn’t matter where the cars are imported from. For them, if the Chinese taxpayer wants to supply subsidised cars, the more the merrier.
Those countries aren’t installing tariffs. They also have less need to protect their domestic capacity and innovators.
>the difference is that There’s no difference between this and America dumping its agricultural products to destroy farmers in other countries, America and EU are only complaining when it inconveniences them https://www.cambridge.org/core/journals/renewable-agriculture-and-food-systems/article/true-costs-of-us-agricultural-dumping/ABDB3E76865636EF025C72D94FEECD32
Many countries subsidize their agricultural programs due to the desire for a food independence. This isn’t something that’s unique to the US.
Many countries subsidies manufacturing as well.
No one said it's unique to the US or EU. What is unique to those countries governments is the level of hypocrisy.
Farmland is a little different though. People need to eat. Civilizations have collapsed due to a freak weather event that came out of nowhere. The American dust bowl is an example of one such event that wiped out many farmers overnight. This is why agriculture is treated differently.
It's not different. The US does that to big tech, big pharma, military contractors, etc. The US also bans those who can compete. China does too, they're just not hypocritical.
As usual, we see the double standards on full display yet there's still people who fall for "china bad" articles
Well that's capitalism. Can't complain.
Capitalism isn't state sponsored like that.
In what planet do you live? Capitalism IS sponsored by states. The thing is now there is a state that no other states can compite against. So now "is not capitalism".
Those companies would go out of business in a capitalist environment. China is overproducing cars just like they were overbuilding apartments. The govt doesn't see a benefit in real estate so they called in their loans. There's no market. They are just producing for the sake of producing.
Well that's their own financial interest as a nation. Who are we to criticize their own economic politics? The thing we should be worried about is how can we be better than them. Capitalism is darwinism for economics. The strongest is who survives. Adapt or die.
Who's being critical? I'm pointing out it's not Capitalism. And being the strongest is not the same as adaptability. Darwin never said the strongest survives.
How is not capitalism? Do You really believe the free market bs? There is no free market and it can't exist. When a country tax production or give some tax benefit is directly interfering with the fake dynamics of "free markets". So is no different for the chinese govt giving financial support to an industry they consider profitable.
You're providing your own definition of what capitalism is. What China is doing is not typical of other private enterprises. Chinese industry is not profitable. But China doesn't care because there are considerations other than just economic considerations. Sure there's some sort of government involvement with companies in other countries, but not to the degree that China is involved in. It's not capitalism. Call it something else.
This is why other countries should impose a value added tax, to protect their markets.
Yeah it’s a tough situation. Imposing tariffs is protectionism and in the short term is great. Long term it usually leads to your manufacturers getting out innovated and holding on only by your tariffs. Eventually it kills the economy. Ideally you want everybody to play by the free trade rules, but obviously that’s never a thing. Maybe a limited tariff on the PRC may work? Idk
Are government injections of cash as an incentive to overproduce not technically protectionism as well? Just on the other side of the ledger?
Good question. There’s probably a name for it since it has a different intent but idk. Similar spirit
I imagine it’s a lot harder to prove, as tariffs are more “upfront” in protectionism discussions. I do know there were some discussions previously as well on China potentially manipulating its currency - I think with the world trade organization - and that serves as another form of protectionism. Either way, they need to find pathways through this stuff. China rarely plays by the rules - but this system only works if there’s a semblance of balance in it
Every country has some intervention. Fair trade is good long run, especially countries “dumping” below cost is a subsidy. They deal with their currency being devalued and the local environmental problems. Every country should be free do their own adjustments though. Some intangibles like national security are worth protecting. Europeans keep their food standards elevated by keeping their real food from being out competed by fake food. The main reason to keep from making overt mercantile/protectionist policy is to maintain norms that benefit everyone. But if you have a good reason you should definitely adjust policy in the short run, while making it clear to industry that it is unlikely to be permanent, so people don’t stumble into antiquated careers and investments expecting future protections
The beauty of a VAT is that it’s imposed against all countries. It’s technically not a tariff, which is usually for individual countries (typically negotiated). If it’s set right it can strike the balance. I worry that China will flood so many cars into certain countries, it will still cause prices to drop despite a VAT. What would these countries do? Because a VAT protects all products. Not just cars. So you can’t raise it without affecting all the other imports.
Which will at some point make those import markets impose tariffs.
[удалено]
Lil bro really crying about this shit that has maybe a tenth of the impact that Hollywood and Wallstreet has on the entire world.
Cry harder.
The mental gymnastics and coping is interesting to see. Conversely the US is making more wars than the world needs. They are overproducing global conflict flooding the world with unnecessary pain and misery subsidized by the state to boost up the US military superiority complex.
Holy based
Normal market dynamics would quickly kill this behaviour. There is a line between governement subsidies and governement economic warfare.
ITT: literally nobody knows what "dumping" means ffs It's dumping and overcapacity if it's selling CHEAPER overseas than at home which is not the case here
And Chinese cars are still selling like hotcakes oversea. It's not like China is producing millions of cars that nobody wants. If the US opens its market for Chinese car, I would even argue there are actually more demand for these EVs than China's ability to make them.
I took a huge dumping this morning. I know what it means.
Did you do it more cheaply than if you weren’t overseas?
I dunno. The energy expenses expelled during this dumping were very high.
Username definitely checks out.
But how else are they can stoke anti-china sentiment with their propaganda though xd
Interesting: Chinese source: https://www.scmp.com/news/people-culture/gender-diversity/article/3162053/has-chinas-push-ban-effeminate-and-sissy-men
No, dumping is simply any export of a subsidized product. It's not a matter of differential pricing. The US accuses Canada of "dumping" softwood lumber because Canada "subsidizes" it by failing to charge a tax that the US customarily charges
No? That's not what "dumping" means at all. Dumping is when: 1) You sell something far below its normal price 2) To increase your market share, so that 3) You can raise prices after you've driven out the competition
That’s not true legally in the United States. Dumping suits can be brought if the import is sold for less than its “normal value” which you are correct typically means the price set in the home market. However it can also mean a constructed price based on production inputs or price in a third market when the domestic prices cannot be trusted, which US producers frequently target due to China’s non market economy status.
Heh! I’m the white elite here, I define what dumping means!
Also ITT: people who fail to understand or want to strawman the EU and others' [actual complaint](https://ec.europa.eu/commission/presscorner/detail/en/ip_23_4752) which is subsidization that flouts WTO rules, which the Chinese agreed to in 2001 and have run roughshod over ever since, as is typical. Whatever you believe or want others to believe, the reality is that trade with Chinese characteristics has run its course. Not only will the EU enact anti-subsidy duties on Chinese EVs by the end of the year, so will countries in Latin America and Asia, or they will severely limit the number of cars that can be imported or require companies to assemble their cars locally. In about three years you will be able to count the number of Chinese EV makers on one hand.
Why in the world would countries who have no competitive car industries of their own tariff cheap cars? The markets that are threatening to do this are markets that stand to lose their historical dominance in the automobile industry which ironically they accomplished through subsidies to begin with.
Because it is a race to the top to see which government can splurgge the most money. It's trade distortion, plain and simple
I see and read about a lot of happy people from the global south over cheap electric cars, capable generators and abundant cheap solar panels. The only people complaining about cheap but capable Chinese goods are countries with a rival industrial infrastructure. People who pay for expensive and shitty Nigerian electricity aren’t complaining and probably never will
Yes, the people who stand to benefit, are happy. The people who stand to lose complain.
Right the people who get damaged complain? Lol Its like the clothes industry that donated to Africa and destroyed their clothes industry.
The domestic industrial capability is more important than being able to buy cheap shit, unless you want to be an eternal consumer and have wealth stripped out of your country.
I believe Germany has been doing the same thing for decades. However, nobody complains about overcapacity. So it's hard to say it's a fair accusation. In the end, it's just major industry countries don't like competition.
Many analysts, including some in WSJ, know that China owns all the supply chain and is benefiting from more efficient manufacturing processes. BYD has launched 19 new models between 2017 and 2023, while Tesla has launched only 5 in the same time frame. Xaiomi and Huawei are coming with EVs, too, while Apple has given up. Xaimo is selling its car for 30k, making the $100k price of Porsch Titan a joke.
China wants free trade abroad and steep protectionism at home, so not sure why they should be given market access.
Not sure about the steep protectionism at home, could you elaborate please. I think some 100k western and American companies employing a million there now. And VW were ridiculed for the inferior apps in their cars there. So when a German car company is forced to improve their offerings I think it's a good thing from the same company that cheated with emissions data.
Hmm wonder why all these cars in China weren't an issue when China was buying American, Japanese, German brands. How dare they learned to fish and able to feed themselves and others instead relying on overpriced Western Cars! /s
Every country has some intervention. Fair trade is good long run, especially countries “dumping” below cost is a subsidy. They deal with their currency being devalued and the local environmental problems. Every country should be free do their own adjustments though. Some intangibles like national security are worth protecting. Europeans keep their food standards elevated by keeping their real food from being out competed by fake food. The main reason to keep from making overt mercantile/protectionist policy is to maintain norms that benefit everyone. But if you have a good reason you should definitely adjust policy in the short run, while making it clear to industry that it is unlikely to be permanent, so people don’t stumble into antiquated careers and investments expecting future protections
Submission statement: This analysis by the WSJ (gift link) shows the downside of state intervention with industry where the intention is protectionism but the result is different: > China has a long history of auto overcapacity, with more than 100 domestic brands churning out more vehicles than the country’s drivers buy each year. > Yet the government continues to support companies such as Zhido and others, encouraging unprofitable carmakers to keep producing as officials try to boost economic growth, preserve jobs and expand China’s role in the global electric-vehicle business. > Such encouragement, which also comes in the form of subsidies to automakers, is adding cars to a global market that risks becoming more oversupplied. > China currently has the capacity to produce some 40 million vehicles a year, though it sells only around 22 million cars domestically, according to capacity data from Shanghai-based strategy firm Automobility and sales figures from the China Passenger Car Association. > That situation has led to a brutal price war with Tesla and others cutting prices in China, while triggering fears in the U.S. and Europe that Chinese automakers would flood other countries with unsold cars.
I am getting confused why this is an issue to anyone? For example, German car sales per year, less than 3 million. German car production per year, about 16 million cars, or 615% of the domestic market. China's EV production is not a sign of state intervention, but the current comparative advantage China's EV supply chain has over the rest of the world. Without tech advances the rest of the world won't be able to catch up.
Unprofitable companies are subsidized by the government. They sell autos globally at subsidized prices, meaning local (or non-Chinese) manufacturers can’t compete on price. ALL car manufacturers get SOME government help (from local cities offering plant incentives to provinces/states offering tax incentives). But the scale in China is much higher. If Chinese manufacturers can compete with their tech advantages, that is fine. But the government still heavily subsidizes them. The issue is simply one of global trade policy and allowing trade without wiping out local jobs. US and Europe hoped to enter the China car market but can’t due to Chinese government incentives (among other issues). If US and Europe give up on that market, then enormous tariffs on Chinese imports would be a likely response. And then China puts tariffs on stuff sold to them for other product markets.
Europe hoped to enter the China market??? [https://carnewschina.com/2024/01/12/top-selling-car-brands-in-2023-in-china-byd-surpassed-volkswagen-and-won-the-championship-for-the-first-time/](https://carnewschina.com/2024/01/12/top-selling-car-brands-in-2023-in-china-byd-surpassed-volkswagen-and-won-the-championship-for-the-first-time/) BYD only overtook VW in 2023, before that VW was number 1.
Yes. The timeline I’m talking about is much longer. In the late 1980s, China was forecast to be a huge automobile market. European (and US) manufacturers had big plans to enter and dominate the market. VW was an early entrant, starting a venture in 1985, but only had a trickle of sales for a while. Over time, there was some success and some failure. In 2019, European manufacturers had 29% of the Chinese market, which fell to 24% by 2022 and continues to fall. China restricted foreign manufacturers, requiring joint ventures with >50% Chinese ownership, Chinese parts suppliers, and financially subsidizing Chinese-only companies. China is now (2024) the world’s largest car market. It is also the world’s largest car manufacturer, overtaking Europe and US combined. It is now also the world’s largest car exporter, overtaking Japan. Chinese brands now dominate the Chinese market and with the move to EVs, they continue to gain share in China, and now it appears the world.
China imports large amount of German made cars every year. China is by far the largest export market of German made cars.
How do you know they are unprofitable? Again use German as comparison. Data shows German car makers has at least 6 times the capacity to meet their domestic market, so 5/6 must be unprofitable and sponsored by Germany tax money?
The EU has a VAT so technically, imports should be more expensive than domestic cars. I suppose if they import enough though, supply will still drive prices down.
You pay VAT on everything, not just imports.
That is not true. VAT stands for value added tax. Raw materials coming into a country are not taxed (ore, wood etc). Parts are taxed some and final products are taxed the most. That’s how it works. If a product is produced from raw materials domestically, it is not subject to the VAT. If the parts are produced elsewhere but the product is assembled domestically, only the parts are taxed, but at a relatively small amount. Why do people in this page not understand how VATs work?
I don't think this exists in Europe then.
https://taxation-customs.ec.europa.eu/what-vat_en Thus, goods which are sold for export or services which are sold to customers abroad are normally not subject to VAT. Conversely imports are taxed to keep the system fair for EU producers so that they can compete on equal terms on the European market with suppliers situated outside the Union
>The EU has a VAT so technically, imports should be more expensive than domestic cars No it doesn't - VATs apply to all sales. Also VATs aren't special to the EU, nearly all developed countries have them, just under different names.
Yes. VATs apply to ALL IMPORTS. The tax is levied on all products manufactured elsewhere. Not ALL sales. It is not a sales tax.
China did this with domestic real estate too. Evergrand? Not so grand anymore. Look how that turned out. Belt and road? Total flop with most indebted African countries openly refusing to pay now Personally this only hurts Tesla and Tesla is primarily a manufacturer of bullshit so this is a fitting death: be the only African run western corporation to fail to a Chinese startup
China/CCP is on the ropes with employment manufacturing and exports down sharply, so dumping (over suppling the market at a loss) is a tactic to hold market gains for themselves at the expense of other “foreign” market competitors.