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China May Make Life a Little Easier for American Electric Automakers

September 25, 2017

But is America likely to show reciprocal good will?

Both Bloomberg and the Wall Street Journal have reported that China is mulling a relaxation of rules (in some parts of the country, at least) that currently require foreign automakers to partner with a domestic firm to build electric cars in the country. The move, thought by sources to be spurred by President Trump’s recent decision to investigate China’s trade practices, would make it far easier for manufacturers to set up shop in the world’s largest electric-car market. Last year, 352,000 new electric vehicles were registered in China, compared to just 159,000 in the U.S.

The move wouldn’t be a universal green light for Western automakers. It’s thought that cars sold in China by firms setting up shop independently would still attract a 25 percent import tax. That would leave their vehicles expensive compared with local alternatives. But even small gains may appeal to firms like Tesla, whose vehicles are in demand among wealthy Chinese buyers. Indeed, Elon Musk’s company is widely believed to desire its own factory in China.

Even if it is a largely symbolic gesture, though, it is at least a positive one. Meanwhile, many people in clean-energy circles fear the same may not be said for Trump’s forthcoming trade policies regarding Chinese solar manufacturers. The International Trade Commission ruled Friday that imported solar panels, largely from China, are damaging U.S. firms that produce similar hardware. That provides Trump with a chance to introduce tariffs to slow imports of foreign solar cells. As Forbes argues, that could hurt America's solar industry and cost more jobs than it saves. And such tariffs are also likely to slow the adoption of solar.

Perhaps unsurprisingly, China’s ministry of commerce has urged America to “exercise caution” with plans to introduce tariffs, reports the South China Morning Post. It seems, then, that China is bracing for a fight—so it will be interesting to see what Trump’s next move is.

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