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Lessons for India? Xi Jinping's CCP has given Chinese electric vehicle makers more than $231 billion in aid over the past 15 years

Lessons for India?  Xi Jinping's CCP has given Chinese electric vehicle makers more than 1 billion in aid over the past 15 years
Lessons for India?  Xi Jinping's CCP has given Chinese electric vehicle makers more than 1 billion in aid over the past 15 years


Despite the recent reduction in the amount of aid per vehicle, this significant investment has played a crucial role in the growth and development of the sector.
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China's electric vehicle (EV) industry has received substantial government support, totaling at least $231 billion in subsidies and aid between 2009 and the end of last year.

Despite a decrease in the amount of aid per vehicle, this significant investment played a crucial role in the growth and development of the sector, according to a study by Scott Kennedy, China specialist at the Center for Strategic and International Studies.

Kennedy's research highlights that more than half of this financial support came from sales tax exemptions. The remaining aid included nationally approved buyer rebates, government funding for infrastructure such as charging stations, public purchases of electric vehicles and research and development (R&D) support programs, according to a report of Bloomberg.

This research follows the European Union's announcement to increase tariffs on Chinese imports of electric vehicles by up to 48% to counteract these subsidies. The move follows similar actions by the United States, which quadrupled tariffs on Chinese cars, and Canada, which is also considering new tariffs.

Kennedy pointed out that Chinese electric vehicles have benefited significantly from this massive industrial policy support, leading to improvements in quality and making them attractive to domestic and international consumers. He insisted that any effective response from the United States, Europe and other regions must recognize both the substantial support these vehicles receive and their increasing quality.

Kennedy called his data “very conservative,” pointing out that it doesn't take into account local rebate programs in cities like Shanghai and Shenzhen that encourage conventional car owners to switch to electric vehicles. Additionally, it excludes other forms of support such as low-cost land, electricity and credit that some electric vehicle manufacturers can access, as well as support for battery manufacturers and other links in the supply chain.

From 2018 to 2023, support per vehicle decreased significantly, from $13,860 to just under $4,600. That's significantly less than the $7,500 credit given to U.S. buyers of qualifying vehicles under the Inflation Reduction Act. Sales tax exemptions alone accounted for nearly $40 billion last year, a big increase from less than $10 billion in 2020 due to the rapid increase in electric vehicle sales.

Kennedy stressed that if Chinese electric vehicles were of poor quality, they would not pose a serious challenge to global automakers. He criticized Western automakers and governments for their slow and insufficient response to the competitive threat posed by Chinese electric vehicles.

The findings highlight the impact of China's aggressive support for its electric vehicle industry, which has not only fueled domestic adoption but also positioned Chinese electric vehicles as strong competitors in the global market. This broad support framework includes direct financial incentives, infrastructure development and regulatory measures aimed at fostering a robust electric vehicle ecosystem.

The increasing quality and competitive prices of Chinese electric vehicles have made them attractive to consumers around the world, sparking concerns among global automakers about maintaining their market share. The increase in tariffs by the EU, US and Canada represents an attempt to level the playing field and protect their domestic industries from what they perceive as unfair competition due to substantial subsidies from China.

The government's strong support has been the cornerstone for the rapid growth and international competitiveness of China's electric vehicle industry. As Chinese electric vehicles continue to improve and capture more market share, it remains crucial for global automakers and policymakers to develop strategic responses that take into account both the economic and technological advances of that sector. This dynamic highlights the broader implications of industrial policy and international trade in shaping the future of the global automotive industry.




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