Demand for British models such as the Jaguar XFL could surge if Chinese import tariffs are reduced
World’s biggest new car market looks set to slash import costs; UK industry could be one of the biggest beneficiaries
The Chinese Government will remove ownership limits on foreign car companies by 2022, opening the world’s largest car market to more global investment and providing non-national brands with their best opportunity yet to crack the region.
Currently, non-Chinese brands can only build cars in China via joint ventures, such as FAW-Volkswagen and Chery Jaguar Land Rover. But new plans outlined by president Xi Jinping will ditch the requirement for them to partner with a Chinese firm and own no more than 50% of the venture.
Such a change is expected to especially benefit companies interested in invested into the China’s electric car technology sector, which is considered to be among the most advanced in the world. China’s strict emissions limits have encouraged the rapid growth of an electric car sector. Dozens of technology start-ups have been established in recent years to create zero-emission models.
Jinping’s new plans also include lowering tariffs on imported vehicles, which currenty stand at an unusually high 25%.
Britain could be one of the biggest beneficiaries of this. UK-built car exports to China surged by 19.7% last year, but a tariff reduction could see that figure quickly dwarfed.
Such a change could drastically boost the number of car sales in China that come from exported vehicles. The impact this could have would be substantial, not least because the Chinese market is vast. Last year, 23,900,000 cars were sold in China, which comfortably beat the 15,630,000 sold in European Union and European Free Trade Association countries.
Boss of the UK’s Society of Motor Manufacturers and Traders, Mike Hawes highlighted the opportunity this presents for Britain, which recently tightened Anglo-Chinese relations following UK prime minister Theresa May’s visit.
“It’s encouraging to hear that China is considering reducing import tariffs on cars as this will certainly encourage demand for Britain’s ever-growing range of premium, luxury and sports vehicles,» he said.
“China is a crucial bilateral trading partner in terms of materials and components and, with automotive companies in both countries investing heavily in each other’s countries, a strengthened UK-China trading relationship, which respects free and fair trade can only deliver greater dividends.”
The news has also been cautiously welcome by Ford vice-president Jim Farley. Asked at the new Focus launch about the potential impact of a trade war between the US and China, he said: «Obviously the trade relationship with the US and China is critical, especially for Ford. We’re optimistic the governments will work through any difficulties. We’re intrigued by the news that there may be a reduction in the tariffs in China. But it’s still early days.»
Growing Chinese demand for UK vehicles could be key in helping to offset dwindling domestic demand here. The UK new car market is set in a trend of decline, which saw sales tumble by 15.7% last month. But UK-built car exports have remained stronger, with January actually seeing foreign demand reach record levels.
Chinese president Jinping’s plans for tariff changes have been revealed at a time when he is engaged in an ongoing and very public war of words with US president Donald Trump. Trump recently Tweeted that China’s 25% tariff was an example of “stupid trade”. He said via Twitter that: «China will take down its trade barriers because it is the right thing to do. Taxes will become reciprocal and a deal will be made on intellectual property.»