The remarkable global impact of the Chinese car industry: Trade beats war every time

Jan 17, 2024
Modern Assembly of cars at plant. automated build process of car body.

Around 25 years ago, wise commentators said China may, in due course, be able to produce acceptable basic, manufactured white-goods but making motor cars that would sell globally was not conceivable. Far too many complex inputs went into making a modern family sedan compared to a refrigerator. As for landing a rover on the Moon and Mars – unimaginable. Those rovers successfully landed in 2013 and 2021 respectively. And now China has become the largest builder and exporter of motor cars on the planet. The Global West, especially, is widely surprised, indeed, startled.

John Pilger provided an acute, extended explanation of this startlement, in the years prior to his recent untimely death. He nailed a set of crucial reasons the Western world maintains such distorted, low-success expectations of China. Pilger argued, convincingly, that the Global West – and its Mainstream Western Media (MWM) – unceasingly demonise Beijing because: “Today China has matched America at its own great game of capitalism – and that is unforgivable.” That same MWM has played a “new yellow peril” pivotal role, as Pilger says, in turning the extraordinary industrious community that is the real China into “a fantasy-based monster trying to take over the world.” “In less than a decade, the ‘good’ China has been airbrushed and a ‘bad’ China has replaced it: from the world’s workshop to a budding new Satan.”

Never-mind that the Chinese economy is 50 times larger than it was 50 years ago and that China has lifted around 850 million people out of abject poverty, China is still according to this (wishful) narrative, perpetually on the road to becoming a stalled, floundering state. Thus, celestial rovers and record-levels of successful car-making initially prompt how-can-this-be-happening exclamations, prior to comforting reversion to the stalled-floundering narrative.

The Economist, does an exceptional, Oxbridge-tuned job as a paramount mouthpiece for the Global West. Thus, denigration-inflation related to China flows smoothly and articulately week after week. But, when circumstances demand, this celebrated British Weekly can still draw on the founding free-trade principles, from 1843, espoused by Walter Bagehot. Very recently, one leading article argued that: “An influx of Chinese cars is terrifying the West – but it should keep its markets open to cheap clean vehicles”.

This leader observed how China is now the world’s biggest car exporter (electric, hybrid and conventional combined) – ahead of Japan and Germany. Five years ago, China only shipped 25% of Japanese automotive exports. Moreover, Chinese Electric Vehicles (EVs) are now “so snazzy, whizzy and cheap” that global demand exceeds supply. The Guardian, meanwhile, lately observed that recent figures confirm how leading Chinese maker, BYD (Build Your Dreams), is now outselling Tesla, globally, including, in 2023, with pure battery cars.

How though, has China managed this latest extraordinary achievement?

The EU (historically hyper-protectionist – think of the Common Agricultural Policy) and America (currently subsidising local EVs – and looking to lift tariffs on Chinese cars well north of the current 25%) both moan about claimed Beijing EV subsidies. But the primary reasons for Chinese success are grounded elsewhere.

China leads the world in high-tech (5G – with 6G on the way) and AI integrated manufacturing – thanks to the extraordinary performance of Huawei, inter alia. Plus, its supply-chain logistic-systems set the standard for the entire world. The vertical manufacturing success of BYD extends from lithium production through to the latest marketing innovations, for example.

China is now spending over US$550 billion on public education annually, which is 70% higher than its spending a decade ago. The result is an unequalled (in terms of size) still growing, educated workforce from top engineers through to the factory floor.

China’s new motorways today cover around 180,000 kilometres – approximately 2.5 times more than in 2010. China also has the most extensive EV charging regime in the world. Good roads are progressively reaching all corners of this vast country (9.6 million square kilometres – over 25% larger than Australia) which has landscapes that rival those of Europe and America. China’s population is close to double the size of the combined population of the EU and the US. It has a huge and growing, car owning middle class who have more accessible, arresting places to travel, in China, than ever before. China, itself, thus provides a vast, unrivalled test-bed for all the cars (EVs and others) coming off the production lines. This, as it happens, was a key to the success of early Japanese car exports to the world from the 1960s – they were first tried and tested at home.

The grotesque barbarity of the Japanese invasion and occupation of China, from 1931 to 1945 is burnt into the national memory. But candid, pragmatic understanding of the enduring excellence of Japanese manufacturing is almost equally recognised across China. Those quality-standards regularly provide the benchmark against which Chinese manufacturing excellence is measured. This, too, feeds into the ongoing development of China’s exceptional manufacturing regime.

One aim of all this conspicuously energised, comprehensive input, according to Hong Yong, from the Chinese Academy of International Trade and Economic cooperation, is to drive the transformation of “made in China” to “created in China.” China is not there yet. But the movement of China into first place in global car making – in less than a decade – signals how that next journey has surely commenced.

It is not – and will not be – all tailwind progress. Complex manufacturing on this huge scale is bound to expose certain, undetected problems in the making of cars – just ask Volkswagen, Toyota and Nissan, for example, about this reality (and Boeing, re aeroplanes – again). Moreover, the competition, especially in the EU, remains formidable. Plus, higher tariff-walls loom in the US, with the EU gearing up for a similar response.

But the ground-zero fact, highlighted by The Economist, is that mass produced Chinese EVs simply provide such excellent value for money – plus they are good for the planet. Moreover, they are also impressively safe according to Australian testing.

And while the EU and US remain very important markets, they are, comparatively, shrinking markets. As Kishore Mahbubani has explained, the entire Asian group of nations in the UN had a combined GDP (using a Purchasing Power Parity metric) of $32.8 trillion in 2020, well ahead of the US and EU, with the top five global economies in 2050 expected to be, in order, China, India, America, Indonesia and Brazil.

What we see here is further verification that China does not want, like some, to rule the world – it wants, above all, to transact comprehensively with a world that is also developing. In fact, China has been providing indisputable confirmation, for over 40 years, that trade beats war, every time. And now, with Chinese EVs, it has done it again.


For further reading we recommend:

Alan Kohler: How China’s car industry boom is transforming Australia


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