China’s auto sales drop again on trade war, eco­nomic gloom

The Gulf Today - Business - - INTERNATIONAL -

BEI­JING: China’s au­to­mo­bile sales fell for the sec­ond straight month in Au­gust as a weak macro econ­omy and trade fric­tions with the United States made con­sumers cau­tious about spend­ing, an in­dus­try as­so­ci­a­tion said.

Chi­nese auto sales dropped 3.8 per cent in the month from a year ear­lier to 2.1 mil­lion ve­hi­cles, af­ter a 4.0 per cent fall in sales in July and an in­crease of 4.8 per cent in June, the China As­so­ci­a­tion of Au­to­mo­bile Man­u­fac­tur­ers (CAAM) said.

China is the world’s largest auto mar­ket and a crit­i­cal re­gion for global car­mak­ers, though reg­u­la­tors in the coun­try have spooked some firms with a clamp-down on over­ca­pac­ity in the sec­tor and an ag­gres­sive push to­wards elec­tric ve­hi­cles.

Wor­ries about China’s over­all eco­nomic sit­u­a­tion led peo­ple to tighten their purse strings dur­ing July and Au­gust, CAAM as­sis­tant sec­re­tary gen­eral Xu Haidong said. The on-go­ing trade spat with the United States was an­other fac­tor.

“The trade fric­tions brought un­cer­tain­ties, im­pacted sen­ti­ment and made Chi­nese cus­tomers more cau­tious,” Xu told re­porters at a brief­ing in Bei­jing.

The re­cent sales dips have re­versed a win­ning streak since Fe­bru­ary when sales vol­ume fell 11.1 per cent. Over­all sales for the first eight months of the year to­talled 18.1 mil­lion ve­hi­cles, up 3.5 per cent from the same pe­riod a year ear­lier.

CAAM at­trib­uted weak sales of Amer­i­can brands to prod­uct and mar­ket­ing is­sues, and Xu noted that there was no boy­cott of US auto brands.

Cit­ing Ford Mo­tor Co as an ex­am­ple, Xu said Ford is not rolling out new or re­designed prod­ucts fast enough and has al­lowed Chi­nese con­sumers to turn to other brands. Ford’s China sales dropped by over a third in Au­gust.

CAAM has fore­cast over­all mar­ket growth of 3 per cent this year, in line with the pre­vi­ous year but sig­nif­i­cantly be­low the 13.7 per cent gain in 2016.

Yale Zhang, head of Shang­haibased con­sul­tancy Au­to­mo­tive Fore­sight, said a weak stock mar­ket and higher gaso­line prices had hit de­mand for pop­u­lar sports util­ity ve­hi­cles (SUVS), which have been be­hind much of the mar­ket’s re­cent growth.

NEW-EN­ERGY CARS

Sales of new-en­ergy ve­hi­cles, a cat­e­gory com­pris­ing elec­tric bat­tery cars and plug-in elec­tric hy­brid ve­hi­cles, rose 49.5 per cent in Au­gust from a year ear­lier to 101,000 ve­hi­cles.

That took new-en­ergy ve­hi­cle sales in the first eight months of this year to 601,000 ve­hi­cles, up 88 per cent from the same pe­riod a year ear­lier. China will ask the World Trade Or­gan­i­sa­tion (WTO) next week for per­mis­sion to im­pose sanc­tions on the United States, for Wash­ing­ton’s non-com­pli­ance with a rul­ing in a dis­pute over US dump­ing du­ties, a meet­ing agenda showed on Tues­day.

The re­quest is likely to lead to years of le­gal wran­gling over the case for sanc­tions and the amount.

China ini­ti­ated the dis­pute in 2013, com­plain­ing about US dump­ing du­ties on sev­eral in­dus­tries in­clud­ing ma­chin­ery and elec­tron­ics, light in­dus­try, met­als and min­er­als, with an annual ex­port value of up to $8.4 bil­lion.

It won a WTO rul­ing in 2016, which was con­firmed by an ap­peal last year. The case con­cerned the US Com­merce De­part­ment’s way of cal­cu­lat­ing the amount of “dump­ing” — Chi­nese ex­ports that are priced to un­der­cut Amer­i­can-made goods on the US mar­ket.

The US cal­cu­la­tion method, known as “ze­ro­ing”, tended to in­crease the level of US anti-dump­ing du­ties on for­eign pro­duc­ers and was re­peat­edly ruled to be il­le­gal in a se­ries of trade dis­putes brought to the WTO.

The string of US de­feats fu­elled US Pres­i­dent Don­ald Trump’s cam­paign to re­form the WTO. Trump said last month the United States could with­draw from the WTO if “they don’t shape up”.

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