Chinese direct investments abroad in 2023 are set to set new records along the value chain of electric vehicles, whose development model is increasingly in the sights of Western countries.
A large study by Rhodium Group estimated that Dragon companies have allocated $28.2 billion to the sector, a figure lower than the $29.7 billion in 2022, but which does not include several large projects whose price is unknown, such as Byd's Hungarian plant and the 25% taken over by Gotion in a Slovakian battery manufacturer.
The study highlighted the growing alarm over the Dragon's industrial overcapacity which is flooding the EU with low-cost products, such as electric cars, which is opening a new front in the West's trade war with Beijing, which began with Washington's import tariffs in 2018 While, as reported by the NYT, US President Joe Biden has asked for an investigation into internet-connected vehicles and trucks arriving from the Dragon due to possible risks to national security in sending sensitive information to Beijing.
China could produce 10 million excess vehicles a year, the consultancy Automobility estimates, equivalent to two-thirds of North American production in 2022.
Brussels' trade policy is also becoming more protective of Beijing.
In September, the Commission launched an investigation into whether Chinese automakers enjoy improper state subsidies.
And in December, the White House unveiled plans to cut China off from its battery supply chain.
These are dynamics that have stimulated greater foreign investment by Chinese producers, remarked Rhodium, a New York research group known for its coverage in China.
While, to get around the obstacles, South Korea and Morocco could benefit, as they boast free trade agreements with the USA, thus becoming production countries for China.
Another factor, according to the New York company, is that of "reverse technology transfer" given Beijing's relative advantage in the sector and the overseas operations of Chinese manufacturers that threaten the profitability of electric vehicle and battery plants at home.
“Just as in other advanced economies, we may begin to observe a divergence between business and government interests in China,” the study concluded.
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