After weeks of unpleasant trade talk and posturing between Washington and Beijing, China’s lead economic planner announced the country would be easing limits on foreign ownership of automotive ventures. While an official metric was not posted, it will be less than the current 50-percent cap non-Chinese automakers have been limited to since 1994. But, for all we know, China may be seeking to scrap the mandate entirely.
We did, however, get a timeline. On Tuesday, the People’s Republic announced it would remove foreign ownership caps for companies making fully electric and plug-in hybrid vehicles this year — followed by commercial vehicle manufacturers in 2020 and the rest of the car market by 2022.
Nobody seems to be able to figure out why China decided to extend an olive branch. Presumably, it’s to alleviate the growing trade tension with the United States. But European automakers have just as much to gain, if not more, from the move. BMW sends more vehicles from the U.S. to China than anyone and Volkswagen sells the most cars inside the country through its joint-venture partnerships with FAW Group.
Ford and General Motors still move their fair share of metal, though — and a lot of it is built in China. Perhaps the nation’s government simply felt enough foreign automakers had made sufficient investments within the country already, and didn’t want to risk a full-blown trade war with the U.S. just to get a few more jointly owned factories. It’s not like anybody is going to abandoning the market anyway; the country is far too big for businesses to ignore.
We’re hoping China has more to say on the matter soon.
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