China’s EVs could turbocharge recovery – but trade curbs threaten to stall growth at the starting line

Name: China’s BYD overtakes Tesla as world’s largest EV maker
Uploaded: 2024-02-03T12:00:18.000Z
Duration: 1 min 11 s
Description: China’s BYD overtakes Tesla as world’s largest EV maker

Comments from US Commerce Secretary suggest country is eyeing restrictions on China’s rapidly growing electric vehicle (EV) industry

Promising figures from last year show EVs could become new growth driver as usual stalwarts lose their reliability

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Comments from US Commerce Secretary Gina Raimondo suggest action may be taken to limit China’s presence in the electric vehicle market. Photo: AFP

Kandy WongandRalph Jennings

Published: 8:00pm, 3 Feb 2024

Possible US restrictions on Chinese imports of electric vehicles (EVs) – a potential base of growth in the years to come as the industry develops – may deal another blow to Beijing’s efforts to regain momentum in its economic recovery, analysts said.

US Commerce Secretary Gina Raimondo said on Tuesday that China’s EVs could pose a risk, as they collect a “huge amount of information about a driver”.

The remarks came as the Joe Biden administration is considering heavier import tariffs on some Chinese goods, including EVs. Currently, they are set at 25 per cent – a by-product of tariffs levied during the tenure of his predecessor Donald Trump, as well as the present “high fence small yard” strategy to restrict China’s access to hi-tech products.

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China’s BYD overtakes Tesla as world’s largest EV maker

“If [the industry is] unable to export products to foreign countries regularly, [it] will enhance China’s current deflationary environment [and] weaken household and enterprise sentiment for economic recovery,” said Dong Jinyue, a senior economist at BBVA Research.

Dong said that the EV issue, which has escalated into a question of national security in the US, will lead to another round of geopolitical tension and generate more uncertainty over China’s growth prospects.

The European Union’s October announcement that it would conduct an anti-subsidy investigation into Chinese EVs was the first major blow to a potential bedrock sector, one which has risen rapidly in recent years and could drive exports and growth for the world’s second-largest economy.