China to open up auto sector, even as it slaps new tariffs on animal feed

China to open up auto sector, even as it slaps new tariffs on animal feed
From CBC - April 17, 2018

China announced plans Tuesday to allow full foreign ownership of automakers in five years, ending restrictions that helped to fuel its trade dispute with U.S. President Donald Trump as it promotes electric car development.

The change would scrap rules that require global automakers to work through state-owned partners, an arrangement that forces them to share technology with potential competitors. It was unclear whether that might mollify Trump, who has threatened tariff hikes on $150 billion US of Chinese goods in response to complaints Beijing pressures foreign companies to hand over technology.

The step reflects growing official confidence in China's young but fast-growing automakers and a desire to make the industry more flexible as Beijing promotes development of electric cars.

Automakers had been waiting for details since President Xi Jinping announced in a speech last week that ownership restrictions would be eased and auto import duties reduced.

Some private sector analysts saw Xi's promise as an attempt to placate Trump, but Chinese government spokespeople said the plans had nothing to do with the trade dispute.

Tariff on U.S. sorghum imports

Tuesday's announcement coincided with a Commerce Ministry order to importers of U.S. sorghum to post bonds to pay possible anti-dumping duties in a separate dispute. It said preliminary results of a trade probe found U.S. sorghuma grain used as animal feed and in liquor distillingwas sold at improperly low prices that hurt Chinese farmers.

Starting on Wednesday, importers of the cropwill be required to pay deposits of up to 179 per cent.

The director the White House's National Economic Council, Larry Kudlow, said China's move on autos was a step in the right direction.

"So far, though, the Chinese are coming back with more constructive reaction," Kudlow said during an interview on CBS This Morning."

Limits on foreign ownership of electric vehicle producers will be eliminated this year, the cabinet's planning agency said. That will be followed by a similar repeal for makers of commercial vehicles in 2020 and passenger vehicles in 2022.

"Following a five-year transition period, all ownership restrictions will be lifted," said the announcement by the National Development and Reform Commission.

Until now, global automakers such as General Motors Co. and Volkswagen AG have been allowed to own no more than 50 per cent of a joint venture with a Chinese partner and were limited to two ventures.

Automakers complied because they gained access to China's populous market, which passed the United States in 2009 as the world's biggest by number of vehicles sold. Sales of sedans, SUVs and minivans last year totalled 24.8 million units, about 55 per cent of which was U.S., European, Japanese and Korean brands.

Independent domestic brands such as Geely, which owns Sweden's Volvo Cars, SUV maker Great Wall and electric car brand BYD Auto are developing technology and increasing exports.


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