Russia’s standing in the international community — from economic pariah to massive supplier of fossil fuels — seems perfectly suited to the predicament faced by traditional Chinese automakers. In fact, sanctions against Moscow are likely the single-largest driver of vehicle exports from its neighbor since the invasion of Ukraine began more than two years ago.
As China’s economy slows and buyers are increasingly choosing electric vehicles (EV), makers of old-school internal-combustion-engine (ICE) cars had become desperate to find new markets. The US is off the table amid an escalating trade war, and the EU’s appetite for foreign models is fading, leaving few good choices after Russia’s attack on Ukraine spurred overseas companies to ditch the country.
“Western sanctions on Russia have created a major market opportunity for China’s internal combustion engine auto sector, providing a lifeline to the industry and deepening Russia’s dependence on Chinese goods,” Gerard DiPippo and Alexander Isakov of Bloomberg Economics wrote last month.
They estimated 58 percent of the increase in the nation’s ICE exports since 2021 went to Russia last year. While most of that trade flows directly across the border, some also go via transshipment intermediaries, including Belarus, Kazakhstan, Kyrgyzstan, Tajikistan and Turkey.
Moscow and Beijing have a lot in common. They both feel under siege from the West, show a willingness to interrupt the international order, and face an existential need to wean themselves off foreign supply chains.
While local brand Lada, owned by AvtoVAZ PJSC, still topped the market and increased its share past 30 percent, the next six-largest players last year were all from China, displacing South Korea’s Kia Motors Corp and Hyundai Motor Co and Japan’s Toyota Motor Corp, data from Autostat.ru showed. Chery Automobile Co was the biggest winner. Its unit sales in Russia jumped threefold, taking 11 percent of the market. Haval, a brand under Great Wall Motor Co, saw a similar increase in scale with its Jolion crossover SUV the most-popular foreign model on the market. That growth in Russia is welcome news for Great Wall: The company last month shut down its European headquarters in Munich as it failed to gain traction on the continent.
Chinese automakers face a struggle. Some of their existing equipment can be switched to making electrified models, particularly chassis and interiors, but a lot cannot. Engines, and related components such as gearboxes and drive shafts, would face softening demand from an increasing uptake in EVs. Yet the capacity for these parts remains, hence the need to find foreign markets. Russia is particularly well suited because buyers there have shunned EVs.
Last year, gasoline-powered vehicles’ share of the auto market actually rose, to 93.7 percent from 91.6 percent, according to Autostat.ru, with diesel and hybrid models adding to the fossil-fuel mix. Pure EVs accounted for just 1.3 percent of the market.
That might not be good news for EV makers, or the planet, but these holdouts are exactly what China’s traditional automakers need at a time of excess capacity and a long-term shift toward new-energy models.
However, the dilemma for Beijing would be how to manage escalating demands from Moscow that suppliers move production to Russia if they want to keep selling into the market. China’s economic slowdown, weakening exports and overcapacity has policymakers searching for ways to prop up employment and keep factories humming. They would not be keen to see jobs and production head abroad.
Diplomacy might come into play. President Xi Jinping (習近平) has shown a willingness to side with his counterpart Vladimir Putin but that support is not endless nor absolute. If Moscow keeps pressuring foreign automakers to expand their local manufacturing footprint, Xi might need to push back. At the end of the day, Beijing is happy to have found a new market for its wares, but its leaders know it must put China’s economy first.
Tim Culpan is a Bloomberg Opinion columnist covering technology in Asia. Previously, he was a technology reporter for Bloomberg News. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Taiwan is a small, humble place. There is no Eiffel Tower, no pyramids — no singular attraction that draws the world’s attention. If it makes headlines, it is because China wants to invade. Yet, those who find their way here by some twist of fate often fall in love. If you ask them why, some cite numbers showing it is one of the freest and safest countries in the world. Others talk about something harder to name: The quiet order of queues, the shared umbrellas for anyone caught in the rain, the way people stand so elderly riders can sit, the
Taiwan’s fall would be “a disaster for American interests,” US President Donald Trump’s nominee for undersecretary of defense for policy Elbridge Colby said at his Senate confirmation hearing on Tuesday last week, as he warned of the “dramatic deterioration of military balance” in the western Pacific. The Republic of China (Taiwan) is indeed facing a unique and acute threat from the Chinese Communist Party’s rising military adventurism, which is why Taiwan has been bolstering its defenses. As US Senator Tom Cotton rightly pointed out in the same hearing, “[although] Taiwan’s defense spending is still inadequate ... [it] has been trending upwards
Small and medium enterprises make up the backbone of Taiwan’s economy, yet large corporations such as Taiwan Semiconductor Manufacturing Co (TSMC) play a crucial role in shaping its industrial structure, economic development and global standing. The company reported a record net profit of NT$374.68 billion (US$11.41 billion) for the fourth quarter last year, a 57 percent year-on-year increase, with revenue reaching NT$868.46 billion, a 39 percent increase. Taiwan’s GDP last year was about NT$24.62 trillion, according to the Directorate-General of Budget, Accounting and Statistics, meaning TSMC’s quarterly revenue alone accounted for about 3.5 percent of Taiwan’s GDP last year, with the company’s
There is nothing the Chinese Nationalist Party (KMT) could do to stop the tsunami-like mass recall campaign. KMT Chairman Eric Chu (朱立倫) reportedly said the party does not exclude the option of conditionally proposing a no-confidence vote against the premier, which the party later denied. Did an “actuary” like Chu finally come around to thinking it should get tough with the ruling party? The KMT says the Democratic Progressive Party (DPP) is leading a minority government with only a 40 percent share of the vote. It has said that the DPP is out of touch with the electorate, has proposed a bloated
RSS