A press report in an American magazine considered the arrival of Explorer 1 last Monday, a Chinese ship carrying 5,000 BYD electric cars, to the German port of Bremerhaven on the North Sea, as the beginning of a new era in the global economy. According to a Foreign Policy report, China, and in particular BYD, is rapidly emerging as a dominant force in the electric car market, which poses a major challenge to Western competitors, and the West is struggling to respond effectively.
BYD’s export ambitions are a growing challenge for Europe
According to Foreign Policy, Explorer 1 is just the beginning; Soon, it will carry 7,000 vehicles on each trip, with plans to operate 8 ships of this type over the next two years. This rise in BYD exports is causing European automakers to face a radically changed landscape, forcing them to confront the growing threat posed by Chinese competition in the electric vehicle sector.
In response to attractive and competitively priced Chinese-made electric vehicles, European manufacturers are focusing on radical savings in vehicle production costs. The European market is dominated by small cars, and Chinese offerings are not only well-designed, but also remarkably affordable, prompting European automakers to form partnerships to achieve ultra-low prices.
China’s economic strategy: Export is a way to recovery
Foreign Policy claims that China’s support for strategic industries, especially electric cars, has led to effective results in the country’s rapid rise as the world’s leading electric car manufacturer. Massive subsidies, including subsidized loans, research assistance, land concessions, and tax incentives, have flooded the market with Chinese electric vehicles at unprecedented low prices.
The magazine notes that in the face of economic challenges at home, President Xi Jinping is leveraging high-value-added goods such as electric cars and microchips to drive export-led growth. The Chinese state’s commitment to subsidizing key sectors raises concerns about unfair trade practices, with little incentive to address complaints from weaker competitors.
The West’s response: a struggle for innovation and market share
The magazine indicates that a noticeable denial is emerging in the United States of the changing terrain of international trade, with automakers reducing the production of electric cars. Unlike Europe, the American industry has been slow to adapt to the global shift toward smaller, cheaper cars.
The Biden administration has used protectionist measures, offering tax breaks for domestically manufactured electric vehicles and portraying Chinese electric vehicles as a national security threat due to their reliance on data networks. While President Biden’s focus on protecting the future auto market for US automakers highlights the challenge, the strategy’s impact on innovation remains unclear.
Structural challenges: China’s dilemma
The magazine confirms that China’s manufacturing prowess, supported by subsidies, has made it a global manufacturing superpower, but it faces challenges in rebalancing towards domestic consumption, as Chinese economists suggest.
The United States, once an industrial powerhouse, has seen a steady decline in manufacturing, relying on barriers and financial support from the state. The deep structural problems in both China and the United States raise questions about the sustainability of their approaches.
As China accelerates its global push toward higher value and value-added goods, and the United States struggles to protect its auto industry, both countries must address fundamental structural issues to ensure long-term competitiveness and innovation in the evolving landscape of international trade.
