Chinese carmakers are facing a dilemma as their plans to build overseas production facilities to overcome tariff blows in the US and European markets are being held back by authorities in Beijing for security and geopolitical reasons.
China has delayed approvals for BYD and Geely Auto to produce cars in Brazil and Mexico, according to a Reuters report last week, with officials cautioning the electric vehicle (EV) producers about trade and investment risks arising from policies pursued by US President Donald Trump.
While the latest tariff war was unlikely to discourage their global expansion, Beijing wants carmakers to adopt a more cautious approach and be selective in choosing their destinations, analysts said.
“I think Chinese policymakers are encouraging it,” said Cosimo Ries, an analyst at Trivium China. “But they want these decisions to be made in a more strategic way, by rewarding some countries that are more favourable towards China in a geopolitical setting and being more punitive to those countries that are not.”
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China raises tariffs on US goods to 125% as Xi calls on EU to resist ‘unilateral bullying’
China raises tariffs on US goods to 125% as Xi calls on EU to resist ‘unilateral bullying’
Beijing’s intervention in Geely and BYD’s plans is not peculiar. Last November, Leapmotor scrapped plans to produce a second EV model at its partner Stellantis’ plant in Poland in favour of factories in Germany and Slovakia, after China urged EV makers to halt investments in countries that supported extra tariffs on Chinese-made EVs.
