Is China's Electric Vehicle and Green Technology Revolution Set to Dominate the Global Market? Delving Into the Recent US-China Trade Tensions
China’s rapid expansion in the production of electric cars and other green technologies has sparked a fresh trade dispute between the United States and China, as highlighted by Treasury Secretary Janet Yellen during her recent visit to China. The surge in China’s production of affordable electric vehicles, solar panels, and batteries comes at a time when the Biden administration in the U.S. is pushing legislation to support similar industries domestically. This has raised concerns not only in the U.S. but also in Europe and Mexico about the potential for China to flood the market with exports, undercutting factories abroad.
The auto industry in China has been identified as posing an “Existential threat” to U.S. carmakers, according to a recent report. Former President Donald Trump, known for his incendiary remarks, suggested at a rally in Ohio that China might attempt to export cars to the U.S. through Mexico. Currently, the U.S. has imposed a 25% tariff on cars imported from China, effectively limiting imports from the country. However, Mexico enjoys a free trade agreement with the U.S., which could provide an avenue for Chinese exports to enter the American market.
For over a decade, China has heavily subsidized its automakers, leading to the development of a robust car industry that now commands 60% of global electric vehicle sales, as noted by the International Energy Agency based in Paris. Treasury Secretary Yellen pointed out that in the past, companies in various industries had to shut down due to being unable to compete with the influx of Chinese goods sold at artificially low prices. Furthermore, China has lodged a complaint with the World Trade Organization, alleging that some of the subsidies provided by the Biden administration for electric car purchases violate international trade regulations.
Despite mounting concerns raised by the U.S. and other countries, China has not committed to addressing these apprehensions. The Chinese government argues that its production of low-cost solar panels and other green products plays a crucial role in the global fight against climate change. Huang Hanquan, an industrial policy expert, emphasized the necessity for China to enhance policy coordination to promote the development of new technologies without causing provinces to engage in excessive industry promotion or companies to overinvest in certain sectors.
As China solidifies its position as the world’s largest producer of solar cells and a significant player in the electric vehicle market, the dynamics of global trade are being reshaped. The clash between the U.S. and China over green technologies underscores the complexities of international trade relations and the challenges associated with balancing economic interests with environmental concerns.
