Germany fears white ships bringing Chinese EVs
In 1853, Japanese called the four American warships sent to force them to allow foreign trade “black ships”, from the black smoke belching from their coal-fired engines. They symbolised a change which the Japanese had no choice but to make.
Now Germans are starting to use the same term – white ships, this time – to describe the giant vessels used BYD to transport its electric cars to Europe. The first, BYD Explorer No 1, left Shenzhen for Europe in January carrying 7,000 vehicles. It is the first auto carrier built in a Chinese yard exclusively to export Chinese vehicles.
BYD chairman Wang Chuanfu said in February that his company was going to deploy seven such carriers in the next two years. They are imposing, painted white with the BYD logo in the middle and the hull painted black. The ships are designed for BYD and its EVs, with a special fire extinguishing system that uses gas, not water. Water would ruin the cars.
For the first time, Chinese automakers have a technological lead over their European competitors. Germany is the largest auto manufacturer in Europe. Last year it produced 4.1 million vehicles, up 18 per cent from 2022. The EU wants to convert the market to EVs and phase out internal combustion engines (ICE) by the 2030s.
But the transition is not going smoothly. Thousands of imported cars, many of them EVs made in China, are clogging up European ports. Some Chinese EVs have been sitting in the ports for 18 months. There are several factors. In Europe, EVs are more expensive than those using ICEs, especially if there are no government subsidies. A survey by S & P Global Mobility found that 45 per cent of consumers complained about the lack of charging stations and time required from charging EVs.
A third factor is that several Chinese exporters are building sales networks in Europe from scratch. This needs branches, staff and long-term contracts with haulage companies to move their vehicles.
Hanging over all this is a larger issue – over-capacity in China’s auto industry as in many sectors.
“Over-capacity has been a blight on China’s industrial landscape for many years now, affecting dozens of industries. It has been wreaking far-reaching damage on the global economy in general, and China’s economic growth in particular,” said Joerg Wuttke, Emeritus Chairman of the European Chamber of Commerce in China. The Chamber issued its first report on this topic in 2009.
“Unfortunately, after I had launched an updated report in late 2016, overcapacity in China has only continued to worsen. But unlike in 2009 and 2016, when China’s steel, aluminium and cement industries were struggling, this time the problem hits the world in more sophisticated products: green technologies, such as solar panels and automobiles,” he said.
China has 60 per cent of global manufacturing capacity, 31 per cent of global production and 14 per cent of global consumption. In cars, it sells 23 million per year and in 2023 exported three million. Its annual capacity is 41-50 million -- the 27 million is equal to the entire production of US and Europe.
Last Sunday, China’s Minister of Commerce Wang Wentao, said at a meeting with Chinese carmakers in Paris that accusations of over-capacity were “groundless”. Beijing has called an EU investigation into whether its EV makers receive state subsidies “protectionist”.
Wuttke said that the primary victim of China’s over-capacity was the Chinese economy itself, seriously affected the profitability of companies.
Factors driving this include local protectionism and a fiscal system that encouraged local governments to attract excessive investment: weak enforcement of regulations: and low input prices due to government policies and subsidies.
“The government’s current role in the Chinese economy is part of the fundamental problem,” Wuttke said. “Effective implementation of long-term solutions would require letting go and giving market forces a free-er rein. For a system that is often deeply wedded to government-led solutions, such reforms go against established instincts as well as a development model that had worked well in the past.”
Over-capacity was one of the issues raised by U.S. Treasury Secretary Janet Yellen in talks with Vice Premier He Lifeng last weekend in Guangzhou. “Excessive Chinese exports could undercut American interests and lead to global spillovers,” she said.
In response, the Xinhua news agency said that Beijing had responded fully “to the production capacity issue” and expressed serious concerns about U.S. trade restrictions against China.
-
Cooling the city with integration of science and technology Dr. Winnie Tang
Hong Kong is still enduring the heat during late October. Among us, the life of more than 200,000 residents living in subdivided units must be even more miserable. Under global warming, how to cool
-
The Perils of Insincere Flattery Brian YS Wong
I had the fortune of receiving an email, whose name shall not be specified. It was sent to me by a journal with a suspicious title and publisher, with three paragraphs of copious praise piled onto me
-
Hong Kong Ballet’s new Butterfly Lovers & Gala Kevin Ng
Hong Kong Ballet’s second programme this season was the premiere of “The Butterfly Lovers’ choreographed by Ricky Hu, the company’s choreographer-in-residence, and his wife Mai Jingwen. This new work
-
Hong Kong: A Tale of Three Cities? Michael Chugani
It is eye-opening to see Hong Kong from both within and from afar. Doing that can make a single city morph into a tale of three cities. In one tale, all of Hong Kong’s freedoms are intact. In the
-
The hidden heroine behind GPS Dr. Winnie Tang
According to a report by investment bank Goldman Sachs, there has been an upward trend of women in the workforce around the world over the past 25 years, especially in Japan and Germany. However,