China’s rise in global auto industry is complicated

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China has changed the global auto industry over the past couple of decades. But China itself has changed, too.

During the previous recession — the Great one — while the U.S. was stumbling and shepherding two automakers through a bankruptcy reorganization, China was growing like mad. It became the largest market in the world — by far — for motorized vehicles.

But if it seemed that China’s rise was going to be inexorable and all-encompassing, well, it hasn’t turned out exactly that way. But neither has China swollen up and collapsed under its own weight.

It’s complicated.

In this week’s print edition of Automotive News, we begin a five-part series that explores what is working in China and what isn’t — and what it means to the North American auto industry. This idea didn’t appear to me fully formed. Reporters kept suggesting enterprising stories about Chinese companies adapting to the economic contraction triggered by COVID-19. It didn’t take a genius to start putting two and two together.

This week, we’re looking at Chinese efforts to enter the U.S. market with their own brands or with new ones. A Chinese “invasion” — like the Japanese and Koreans before them — once seemed inevitable. But startups continue to face challenges and their entry is again delayed.

That’s not the case with automated driving. While automakers are revisiting the viability of the technology relative to their cash needs during the recession, China’s tech giants are raising more money and doubling down on the pursuit of Waymo, Cruise and other leaders in the field.

China’s rise and ensuing slump are important to global automakers, especially General Motors and Volkswagen. As the country pushes toward electrification dominance as part of its 2025 plan, it’s no coincidence that those companies have both made big bets on the technology. Without it, they could lose out on their biggest market.

President Donald Trump, of course, has raised the volume on China. His use of tariffs and trade-policy tweets have made business harder to do — and that was before he started calling COVID-19 the “kung flu.” How his policies toward China — combined with the new trade agreement for North America — change the shape of the global supply network will be fascinating to watch unfold.

Joe Biden beats Trump in the November election, policies and tone are certain to change. Whether that’s good or bad for the U.S. auto industry, or for China’s, is far from clear.

In the auto industry, we often talk about how change takes time — the old line that big ships turn slowly. China isn’t like that: It’s very large, but things can change very quickly there. So keep your eyes open and look again. What’s happening with China may surprise you.

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Saurabh Shukla

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