The Chinese auto industry could be headed for calamity after at least six cities across the country suspended trade-in subsidies for car purchasers, partly due to government funding running out.
This action could slow new car sales and hinder a vital industry for the second-largest economy in the world, according to Reuters.
Governments in Zhengzhou and Luoyang reportedly blamed the issue on funding cuts from Beijing, while the cities of Shenyang and Chongqing said it was done to “improve capital efficiency.”
State-run media in China claimed that new cars were being disguised as used ones and then sold to clear inventory. Businesses were also pretending that new automobiles were used to trade them in for the subsidies.
China’s economy relies heavily on subsidies for various major items. These include cars, electronics, and everyday appliances. This news comes at a time when the Chinese are struggling with wages, employment figures, and property values dipping.
Their economic woes will likely be exacerbated by recent trade talks with the United States, after President Donald Trump took a firm stance on issuing tariffs to restore global fairness.
A trade deal was agreed upon in principle earlier this month, according to the Wall Street Journal, that would result in a 55 percent tariff on Chinese goods and a 10 percent tariff for the U.S.
“We’re going to start to implement that framework upon the approval of President Trump, and the Chinese will get their President Xi’s approval, and that’s the process,” Commerce Secretary Howard Lutnick said.
“I feel really good about where we got to,” he continued, also suggesting that China will increase exports of rare earth minerals and magnets to be used in complex technologies.
Will the Chinese auto industry continue to decline?
Now is the time for the U.S. to turn up the heat and restore as much domestic manufacturing as possible. China is wobbling. They’re far from out, but they’re trending downward.
After bending to Trump’s demands, this new trade framework could be the cornerstone of the president’s promise to usher in a new golden age for America.
No more importing cars, cellphones, and other items from a country that’s committed a litany of sins against us.
They constantly seek to steal our intellectual property, attempt to buy our farmland, spy on our political apparatus, team up with countries like Iran to sell them missile components, and use slave labor without regard for human dignity.
The United States should continue to lean on China at all costs, and to remind large companies seeking to save a buck overseas of a major reality: You will pay an even bigger price for not opening your companies to U.S. markets and American workers.
In the short term, prices may rise, and everyday norms could change.
Yet in the long run, we will have taken a major step forward in this quasi-cold war that’s been brewing between China and the United States for the past two decades.
It should not only boost our economy, but by hobbling China, it could force their leaders to begin changing their own economic practices for the better.
The United States must remain vigilant, no matter what, and rein in our top adversary before they achieve a long-term economic upswing.
Otherwise, they could rise back up stronger than ever and sabotage any work the Trump administration may leave behind, sending America back to square one.
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