A factory of Chinese electric vehicle maker Li Auto Inc. in Changzhou, east China's Jiangsu Province, January 10, 2024. /Xinhua
Editor's note:John Gong, a special commentator on current affairs for CGTN, is a professor at the University of International Business and Economics (UIBE). The article reflects the author's views and not necessarily those of CGTN.
When it comes to the Europe Union's implementation of the climate agenda, there is the issue of "us" against "them." It goes without saying that the same can be said of Washington. Yes, Europe and the U.S. are serious about addressing the climate issue, but only with their products, by their companies, and on their terms.
The issue of the so-called overcapacity in China's automobile industry is a case in point. The "overcapacity" chorus was first initiated by U.S. Secretary of the Treasury Janet Yellen, and later echoed in a few capital cities in Europe, and finally culminated in the joint statement at the G7 summit in Italy a few days ago. Of course, they expressed concerns.
Washington has already slapped a 100 percent tariff onto Chinese electric vehicles, even when the actual number of Chinese cars exported to the United States barely breaks a three-digit number per month, according to information I obtained privately from industry experts. The European Union has just announced sizeable provisional tariffs (18-38 percent) on electric cars made by Chinese companies.
When it comes to Western customers embracing new energy cars from China, all of a sudden the climate agenda is thrown out of the window. This kind of wanton hypocrisy has descended to such a low level that any pretense of defending the free trade tenet can now be totally sacrificed. Now I give it a new name: green protectionism. Protectionism is already bad enough. Protectionism in the name of the green cause adds a dose of hypocrisy, and is thus even worse.
Finally, the Chinese government is standing up against that green protectionism. At the 15th World Economic Forum Annual Meeting of the New Champions, also known as Summer Davos 2024, held in northeast China's coastal city of Dalian, Chinese Premier Li Qiang said the following when addressing the opening plenary:
"We (countries and regions) need to … deliver on our respective emission reduction responsibilities. We cannot slow down our pace in green transition in exchange for short-term growth, or practice protectionism in the name of green development or environmental protection."
Chinese Premier Li Qiang addresses the opening plenary session of the World Economic Forum's 15th Annual Meeting of the New Champions, also known as Summer Davos 2024, in Dalian, northeast China's Liaoning, June 25, 2024. /Xinhua
Premier Li mentioned the word "protectionism." Obviously, what is to be protected by all these free trade barriers put up by Western politicians is their automobile industries in this case. The underlying motivation is the recognition that the current automobile powerhouses are crumbling under the rising competitiveness of Chinese cars that are more intelligently-equipped, more fuel-efficient, and more cost-effective. They simply can't compete.
I will use the latest unveiled BYD car, Seal 06, as an example. This is the equivalent of a Toyota Camry and Honda Accord in size, falling into the B-segment market that has been traditionally the largest market segment in the United States. This is not even a pure electric car, but a plug-in hybrid, which functions more or less like a car powered by an internal combustion engine that the gas-loving American consumers are accustomed to. But the BYD Seal 06's fuel efficiency is 2.9 liters per 100 kilometers, to the equivalent of over 80 miles per gallon, which is about three times what the Toyota Camry and Honda Accord can achieve, the two cars being the most popular models in North America. Now that is what I call "overcapacity"!
The BYD Seal 06, with its gas tank full and fully charged, has an official range of 2,100 kilometers (real open tests by several auto experts have shown the range to be over 2,400 kilometers!), which means people can keep driving, driving and driving from New York City, non-stop, all the way to Miami! The Toyota Camry and the Honda Accord may be able to make it to Washington, D.C., or maybe Richmond, Virginia for god's sake, but definitely no way of reaching any city in the Carolinas. That is what I call "overcapacity"!
The BYD Seal 06 retail price starts at 99,800 yuan here in China, or around $13,700, which is about half of the price of a Toyota Camry or Honda Accord. Even with the 100 percent tariff imposed by the Joe Biden administration, I think it will still sell like hotcakes in America. Now that is what I call "overcapacity"!
In the late 1980s when China's automobile market was decades behind the West, we opened up our market and invited companies such as Volkswagen, PSA, General Motors, Ford, Toyota and Honda to come to China and set up joint ventures. Later we allowed Elon Musk to set up his wholly-owned Tesla operation in Shanghai. Maybe it is time for the American automakers and Washington to take a page from China's automobile history.
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