Chinese battery companies spy a South Korean loophole to skirt US subsidy rules

Name: An unwinnable conflict? The US-China trade war, 5 years on
Uploaded: 2023-07-31T03:42:28.000Z
Duration: 14 min 45 s
Description: An unwinnable conflict? The US-China trade war, 5 years on

Some US$4 billion of investments in new battery factories have been unveiled by Chinese companies and their Korean partners over the past four months

The firms want to take advantage of Seoul’s free-trade agreement with the US so that they can qualify for tax breaks under the Inflation Reduction Act

Reading Time:3 minutes

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A worker checks machinery at a battery parts maker in South Korea. Analysts say partnerships with Chinese firms can be risky for Korean companies because the US could still block joint ventures from any IRA tax benefits. Photo: Bloomberg

Bloomberg

Published: 11:42am, 31 Jul 2023

Chinese firms are lining up to invest in South Korea’s battery industry because they want to use it as a gateway to the US market, undermining Washington’s efforts to limit China’s involvement in the electric-car supply chain.

Over the past four months, Chinese companies and their Korean partners have announced some 5.1 trillion won (US$4 billion) of investments in five new battery factories in South Korea. And at least one local government is in talks for more projects, officials from the Saemangeum Development and Investment Agency say.

The Chinese – and Korean – firms are looking to take advantage of South Korea’s free-trade agreement with the United States, considering that batteries made in the East Asian nation and then installed in US-made electric cars are likely to qualify for tax breaks under President Joe Biden’s Inflation Reduction Act.

Ningbo Ronbay New Energy Technology Co. announced last week that it had been approved to set up a factory in South Korea that will eventually produce about 73,000 tonnes of ternary precursors, an ingredient from which a cathode is formed, a year.

14:45

An unwinnable conflict? The US-China trade war, 5 years on

“The product produced by the company’s Korea base meet the relevant requirements for qualified key minerals in the IRA bill and can enjoy the benefit of tariff policies when exporting to European and US markets,” Ronbay New Energy said.

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