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After China’s tires are about to end the US’s three-year punitive tariff, it may be possible to usher in a new wave of export blows.
According to foreign media reports recently, the United States plans to submit a complaint against China to the World Trade Organization (WTO) again, accusing China of unreasonable export subsidies in the automobile and parts trade.
This is the second time since the Obama administration officially launched the reelection campaign. The U.S. government has filed a lawsuit with the WTO on China’s auto trade. On July 6 this year, the U.S. government submitted an accusation to the WTO, saying that the Chinese government has violated trade regulations and imposed more than 3 billion U.S. dollars in additional duties on cars imported from the United States.
US officials did not specifically point out what subsidies China gave to auto parts manufacturers, but they said that the Chinese government encourages provinces to set up export zones for component manufacturers. There are at least 12 “export bases†in China for components and parts. Manufacturers provide tax breaks and other subsidies.
For the anti-subsidy complaint that Obama is about to submit to the WTO, Gesang.com general manager Chen Wenkai believes that, in the current situation, the complaint is difficult to establish. “Because auto companies did not take money from the government. Local governments mainly subsidize export bases. Export bases, as a platform company, will use the money to do services like exhibitions. In practice, Only a very small number of companies can get a small amount of subsidies. The government has not directly subsidized the production companies."
For the subsidy process, Chen Wenkai said that the local government subsidizes part of the base money first, and then according to the effect, the central government will give part of the local money.
If Obama's enforcement case is passed at the WTO, it will undoubtedly have a negative impact on China's auto parts export industry.
A sales director of a company that produces brake pads in China told the reporter that the state will give subsidies for export tax rebates for export of parts and components. If the relevant US authorities file a case, it will reduce the price competitiveness of domestic parts and components companies’ export products.
As of 2011, the United States is already the largest exporter of auto parts in China. According to the Analysis of Imports and Exports of Auto Parts 2011 released by the China Automotive Technology and Research Center, the export value of auto parts in China last year was USD 53.262 billion. Among them, the total amount of parts and components sold to the United States was 12.07 billion U.S. dollars, accounting for 24.35% of the total amount of such products exported nationwide, a year-on-year growth rate of 26.44%.
Hou Zhizhi, a partner of Management Consulting, said that if the U.S. appeal is successful, the most affected companies will be export-oriented auto parts companies, especially those based on the OEM (original support) market, such as Jiangsu and Zhejiang. The export of auto parts companies, many companies accounted for more than 90% of their sales.
The 2012 semi-annual report released by Wanxiang Qianchao Automotive Systems Co., Ltd. shows that in the first half of this year, its overseas sales revenue was 27.76 million yuan, a year-on-year increase of 61.86%, accounting for 7.2% of total sales revenue; Fuyao Glass’s data for the first half of the year shows that In the first half of this year, the company realized overseas sales revenue of 1.674 billion yuan, accounting for 34.36% of total revenue, of which revenue in North America was 779 million yuan, accounting for 15.97% of total revenue.