The Chinese Government to remove the ownership limits of foreign car manufacturers by 2022, opening up to the world’s largest automotive market, the global investment and non-national brands with their best opportunity to break the region.
Currently, non-Chinese brands can only build cars in China through joint ventures, such as FAW-Volkswagen and Chery Jaguar Land Rover. But the new plans outlined by president Xi Jinping will ditch the requirement for them to collaborate with a Chinese company and own not more than 50% of the joint venture.
Such a change is expected in particular for the benefit of the interested enterprises invested in China’s electric car industry technology, which is considered among the most advanced in the world. China’s strict limits on emissions, have encouraged the rapid growth of the electric car industry. Dozens of technology start-ups have been established in recent years to create zero-emission models.
Jinping new plans also include the lowering of tariffs on imported vehicles, which currenty stay in an unusually high 25%.
Britain might be one of the major beneficiaries of this. UK-built car exports to China increased by 19.7% last year, but a reduction in the price could see that figure quickly resized.
Such a change could dramatically increase the number of car sales in China come from exported vehicles. The impact that this could have would be remarkable, because the Chinese market is huge. Last year, 23,900,000 cars were sold in China, which comfortably beat the 15,630,000 sold in the European Union and the European Free Trade Association countries.
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The bosses of the UK’s Society of motor Manufacturers and Traders, Mike Hawes highlighted the opportunity that it presents for the Uk, which has recently entered the Anglo-Chinese relations, BRITISH prime minister, Theresa May.
“It is encouraging to hear that China is considering reducing import tariffs on cars such as this will certainly encourage the demand for Britain’s ever-growing range of premium, luxury and sports vehicles,” he said.
“China is an important bilateral trading partner in terms of materials and components, with the companies of the automotive sector in both the countries that invest heavily in other countries, a strengthening of UK-China trade relations, which respects the free and fair trade can only offer higher dividends.”
The news was also cautiously welcomed by Ford vice president Jim Farley. Asked the new Focus launch about the potential impact of a trade war between the US and China, he said: “Obviously, the commercial relationship with the US and China is critical, especially for Ford. We are optimistic the governments will work through any difficulty. We are intrigued by the news that there may be a reduction of rates in China. But it is still too early.”
The growing Chinese demand for UK vehicles may be the key to help offset the decrease in domestic demand here. The UK new car market is set in a trend of decline, which saw sales fall 15.7% in the last month. But UK-built car exports have remained strong, with January, actually seeing the foreign demand reach record levels.
The chinese president Jinping plans to changes in tariff rates, have proved to be, in a moment in which he is engaged in an ongoing public war of words with the american president Donald Trump. Trump recently Tweeted that the China of 25% of the tariff was an example of “stupid business”. He said via Twitter that: “China to break down trade barriers, because it is the right thing to do. Taxes will become mutual, and an agreement will be made on the intellectual property.”
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