GOOD MORNING FROM LONDON
22 AUGUST 2024. CHINA POST #526
CHINA AND THE FOREIGN MEDIA
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TWO ARTICLES IN THIS ISSUE.
#1 CHINESE CAR MANUFACTURERS ARE TAKING MARKET SHARE IN CHINA AWAY FROM FOREIGN MANUFACTURERS.
#2 CHINA SURPRISES THE WEST WITH BIG PROGRESS IN REDUCING GAS EMISSIONS.
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#1 FOREIGN AUTOMAKERS IN CHINA LOSING OUT TO DOMESTIC MANUFACTURERS
WALL STREET JOURNAL
“How China Is Becoming a Money Pit for Foreign Automakers, in Charts
Volkswagen, GM and other big brands are losing their grip on a once-lucrative market as Chinese consumers embrace homegrown electric vehicles
China was a gold mine for global automakers a decade ago. Not anymore.
“Very few people are making money” in China, General Motors Chief Executive Mary Barra told investors in July.
A jarring new data point came earlier this month when Germany’s Volkswagon reported its first quarterly loss in at least 15 years from joint ventures and associates. These include its big Chinese JVs and have long been seen by investors as a proxy for its business in the country.
For the largest global automakers, profits in China have been hit by falling sales as consumers embrace electric vehicles from homegrown brands such as BYD, which last year supplanted Volkswagen as China’s best selling carmaker.
In July, EVs and plug-in hybrids accounted for over half of all cars sold in the country for the first time, while the share shipped to dealers by non-Chinese brands slipped to 33%, down from 50% two years earlier.
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Another problem is falling prices in a marketplace besieged by new entrants. Like for like, Chinese vehicle prices in June were more than 6% lower than a year before, according to brokerage Bernstein.
Volkswagen has been spending heavily to regain ground, with a focus on local partnerships under the strategic banner “in China, for China.”
GM was another giant of the Chinese car market, selling more than four million vehicles at the 2017 peak, similar to Volkswagen. By 2023 GM’s annual sales had almost halved, and this year its JVs have reported their first consecutive quarterly losses since its 2009 bankruptcy.
Chrysler owner Stellantis pulled out of manufacturing cars in China in 2022 after its JV that made Jeeps files for bankruptcy. But it returned to the country a year later by buying a roughly 20% stake in Chinese EV startup Zheijiang Leapmotor Technology. Last month a new JV between the two companies shipped a first batch of Leapmotor EVs to Europe
Tesla’s China business, which took off in 2020 after Beijing gave it permission to open a wholly-owned factory near Shanghai, is also suffering.
Tesla’s share of revenue from China slipped to less than a fifth in the first half of 2024, down from more than a quarter at the 2021 peak.
GRAHAM PERRY COMMENTS
The evidence is there. The foreign car companies seeking to make big inroads in the China market are floundering. Volkswagen, GM, Chrysler and Tesla are all reporting setbacks. But why?
Is it the market in China – are car sales in China slipping overall because buyers lack funds? Is China becoming poorer? Has the China bubble burst? If that was the case many in the West would be pleased because they do not want to see China succeed. At the end of the day China is ruled by Communists not Capitalists and if China is suffering a setback in its automotive market generally it would be a damning indictment of the Communist Party’s development model.
But that is not what is happening. The sales of Chinese manufactured cars – as distinct from Western/Japanese manufactured cars – are growing not contracting. So is it customer loyalty? Are Chinese buyers being patriotic and buying Chinese vehicles in support of the Chinese flag?
Bernstein is a foreign brokerage and it notes that “Like for like, Chinese vehicle prices in June were more than 6% lower than a year before. Consumers, says Bernstein are embracing electric vehicles from homegrown brands such as BYD, which last year supplanted Volkswagen as China’s best selling carmaker. Chinese manufacturers are beating the foreign car makers at their own game. They are more efficient, more cost effective, more attractive.
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#2 CHINA GAS EMISSIONS HAVE PEAKED
THE UK GUARDIAN
“China added as much new clean energy generation in the first half of this year as the UK produced from all sources in the same period last year, data shows, as wind and solar power generation continued to surge in the world’s biggest emitter of greenhouse gases.
Electricity generation from coal and gas dropped by 5% in China in July, year on year, according to an update from the Centre for Research on Energy and Clean Air (CREA) thinktank, basing its analysis on data released by the Chinese government on Thursday.
The latest figures reinforce a clear trend – China is racing ahead in renewable energy, adding record-breaking amounts of solar and wind generation, eclipsing the rest of the world. It is a transformation that analysts are saying could be the world’s best hope yet of staving off climate catastrophe.
“China is leading against all of its competitors, when it comes to green technology,” said Li Shuo, the director of the China Climate Hub at the Asia Policy Institute in Washington DC. “China has a real advantage, and has established a huge green industry.”
Last year, China installed a record 293GW of wind and solar generating capacity. Last month, solar and wind capacity outstripped China’s coal-fired electricity capacity. By 2026, solar power alone will surpass coal as China’s primary energy source, with a capacity of more than 1.38TW, or 150GW more than coal, according to forecasts by Rystad Energy
Electric vehicles production is surging ahead, with hybrids and fully electric cars making up more than half of all new models sold in July, and the steel industry is also changing, with no permits for coal-fired plants issued in the first half of this year.
This continuing boom in clean technology has led some analysts to suggest China’s greenhouse gas emissions may have already reached a peak, perhaps as early as February this year. This would be momentous. For China, the world’s second biggest economy behind the US, to reverse its decades of almost unbroken rapid growth – nearly tripling from about 3.6bn tonnes of carbon emitted in 2000 to 11.4bn in 2022 – would have seismic implications for the global climate emergency.
China committed in 2020 to causing its emissions to peak before 2030, and that is still its official target. But analysts have long argued that the country has the ability to peak by 2025, if the government takes sufficient action. For the world to limit global heating to 1.5C above preindustrial levels, which scientists say is still technically feasible, global emissions must halve by 2030, which is unlikely to be possible unless China’s emissions can be made to peak in the first half of this decade and fall rapidly in the second.
GRAHAM PERRY COMMENTS;
China has been the bad boy of Climate Control according to the West. They are Coal Guzzlers focusing on their carbon intensive development without a care for the people of the world. “So long as China is OK, nothing else matters”
That is the Western narrative on China’s recent performance. In fact it is wrong. It was the railways of the US in the 1870s that used coal in great quantities to spearhead the development of the US economy worldwide just as the UK industrial revolution was so dependent upon the coal production to strengthen the UK Empire.
As the Guardian article states
China is racing ahead in renewable energy, adding record-breaking amounts of solar and wind generation, eclipsing the rest of the world. It is a transformation that analysts are saying could be the world’s best hope yet of staving off climate catastrophe.
Progress has been significant and it augurs well the future of efforts to control the climate. Generally speaking China does not make irresponsible claims. Its conduct tends to be measured and considered – in climate control and in politics generally.
There is another aspect; China, despite global tensions, has maintained an ongoing dialogue on climate control with the US. The world needs the two largest economies to maintain and strengthen their relationship. Jaw-jaw is always better than war-war.
Graham Perry
