If it's really about fighting climate change, let cheap Chinese EVs into Canada
The website of the Toronto International AutoShow, which opens next week, boasts a section called Electric City, but don’t look for any of China’s low-cost electric brands there. As the world seems to be heading for a global electric vehicle trade war, one wonders whether we will ever see cheaper made-in-China EVs on the roads of Canada. Maybe not, if the current Canadian and global EV policy regimes remain in place.
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The international auto market has never been a model of free trade perfection, but the current upheaval may turn out to be a major reversal in national and international trade policy and a threat to global stability. The main shift is the transformation of the auto industry into a major battleground for state economic intervention and control.
Is the EV part of a Marxist plot? I ask only partially in jest. Historically, the spectacular world-changing technologies of the past were developed and brought to market by bottom-up inventors and entrepreneurs — airplanes, printing presses, automobiles, telephones, electricity, semiconductors, computers, television, the internet, steam engines. As British writer Matt Ridley put it, ”Innovation is a bottom-up phenomenon.”
The EV industry is the opposite, a top-down phenomenon that attempts to overthrow that free market model. Today, the self-appointed modern masters of technological invention are politicians and climate powercrats who have decided to impose their version of a technological revolution on the world’s population.
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Instead of letting inventors, investors and ordinary consumers decide the future of electric vehicle technology (electricity failed to trump gasoline a century ago), governments everywhere are seizing control of vehicle electrification in the name of climate change. The rapidly emerging reality is grounded in massive state subsidies, regulations, mandates, increasing tariff barriers, and expanding trade controls, creating an unprecedented global economic structure and a foundation for economic turmoil and crises.
Importantly, the launch pad for an emerging EV global trade crisis is China, the world’s bastion of neo-Marxist dictatorship under Communist Party leader Xi Jinping. As far back as 2001, Chinese officials began to target electric vehicles as a perfect wedge market for auto exports. EVs would allow China to enter the otherwise impenetrable global market dominated by combustion-engine carmakers in Europe, Japan and North America.
Now, after massive subsidies and state support, China is threatening the Western auto industry. In January, Chinese automaker BYD launched its first EV freighter ship, one of more than 120 ordered by China to help flood the world with new, cheaper EVs. This transport capacity will lead to “a brutal predatory battle and price war in the automotive sector,” warns Joerg Wuttke, former president of the EU Chamber of Commerce in China (see Nota Bene below).
Price wars are just the beginning. Barring a major shift in events, coming soon are brutal trade and tariff wars as Europe, the U.S., Japan and Canada grapple with the fact that China has a lead of a hundred kilometres in the EV product market race.
Veteran Canadian trade lawyer Lawrence Herman, in a recent commentary, warned of “an epic battle” with the West as China begins to flood the world with cheaper EVs. Europe, where Chinese EVs are grabbing major market share, has already suggested trade action to counter China’s subsidies as “unfair trade practices.” The United States is also said to be on the brink of raising tariffs on Chinese EVs and other products. If the U.S. were to raise tariffs, writes Herman, “Canada will certainly have to follow.”
But hold on. Under what economic trade principle would the U.S. and Canada impose tariffs on China? Surely it cannot be because of government subsidies, given the Biden administration’s cash floodgate to the auto industry and the billions Ottawa and local governments are now showering on EV production, mineral development and battery plants. The U.S. has also brought in trade rules that interfere with Chinese trade.
The state subsidies and interventions are being driven by climate change theory. Canada and European nations have set planning targets to eliminate fossil-fuel vehicle sales by 2035. If such targets are as essential as claimed to prevent a global existential climate crisis, why not embrace China’s EV supply surge as a major benefit? Let cheap made-in-China EVs into Canada, save consumers money — and save the planet!
The West, however, seems caught playing an economic game created by China’s modern-day Communists, a regime described by former Australian prime minister Kevin Rudd as the “The Return of Red China.” Xi, as China’s leader, has brought back what Rudd calls Marxist-Nationalism, an ideological framework that “drives Beijing’s born-again statist approach to economic management.”
The same statist approaches to economic management of EV development are the norm in the West, with Canada deploying its own version of Marxist-Nationalism, deemed essential in the pursuit of a fossil-fuel-free world.
There is an alternative. End the West’s neo-Marxist EV plans and let China’s lower-cost EV products into Canada and the U.S. to help speed up the transition away from fossil fuels, if that’s the real plan. Let China test the market — including the lack of availability of charging stations, electricity production limits, range issues, and possibly limited consumer enthusiasm.
Instead of micro-managing the EV innovation process, leave it in the hands of investors and consumers. It’s been done before.
• Email: tcorcoran@postmedia.com
Financial Post
From an interview with Jorg Wuttke, former president of the EU Chamber of Commerce in China, published by the Swiss digital financial media The Market NZZ, November 2023.
Will we experience a car tsunami from China? …
This year China has ordered 60 car freighters, and another 60 are to be added in 2024. These are ships that can transport 4,500 to 8,000 cars. Starting in 2025, when these freighters are operational, we will see a car tsunami out of China. This will lead to a brutal predatory battle and price war in the automotive sector.
The U.S. market is already closed to Chinese car exports.
Yes, but this does not apply to buses. Chinese manufacturers such as BYD also supply large quantities of electrically powered buses to America and India. But it’s true, the U.S. market for Chinese cars is closing. This also applies to Japan and Korea. India will definitely never become a market for Chinese cars. This means that Europe is by far the largest market still open to China.
There is now also discussion in the EU about raising import barriers.
Brussels is addressing the question of the extent to which Chinese car manufacturers have benefited from subsidies. But we have a dilemma in Europe: Do we want to put up protective walls against green technologies even though we have practically decided to ban the internal combustion engine from 2035? Do we want to impose taxes of at least €10,000 on every Chinese electric car? In addition, it is not only Chinese cars that are exported from the People’s Republic. BMW and Renault-Dacia produce in China and export to the rest of the world, as does Tesla. China offers by far the best supply chains for electric cars. It therefore makes sense for European car companies to produce in China. It’s just that it’s no longer Made in Europe, with the jobs that go with it. The situation with electric cars is similar to that in the areas of solar or wind energy, where the Chinese are also dominant. Do we want to address climate change with Chinese products, or do we want to tax them?
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