GM shares fall on re­ports of Chinese an­titrust fine

Threat of penalty seen as re­sponse to Trump

The Washington Times Daily - - WORLD - BY TOM KRISHER AND PAUL WISE­MAN Paul Wise­man re­ported from Wash­ing­ton.

DETROIT | China will levy penal­ties on an uniden­ti­fied U.S. au­tomaker soon for al­leged anti-com­pet­i­tive be­hav­ior, the first sign of pos­si­ble eco­nomic re­tal­i­a­tion in the wake of crit­i­cal com­ments from Pres­i­dent-elect Don­ald Trump, a lead­ing state-run news­pa­per re­ported Wed­nes­day.

With signs point­ing to Gen­eral Mo­tors as the likely tar­get, shares of the Detroit com­pany fell nearly 2 per­cent at one point in the day’s trad­ing.

The China Daily quoted the gov­ern­ment’s top price reg­u­la­tor as say­ing an au­tomaker would be fined for “im­ped­ing com­pe­ti­tion.”

Some trade an­a­lysts pre­dicted that China might sin­gle out GM, the U.S. au­tomaker with the largest sales in China, as re­tal­i­a­tion af­ter Mr. Trump sug­gested this month that he might for­mally rec­og­nize Tai­wan as an in­de­pen­dent na­tion and im­pose tar­iffs on Chinese goods if he did not get more co­op­er­a­tion from Bei­jing on trade deficits, North Korea and other is­sues. A gov­ern­ment of­fi­cial warned Wed­nes­day that recog­ni­tion of Tai­wan could un­der­mine re­la­tions be­tween Bei­jing and Wash­ing­ton.

The threat of a fine was is­sued as au­thor­i­ties stepped up an­titrust over­sight and ex­panded the in­dus­tries they scru­ti­nize in or­der to pro­mote “fair mar­ket” com­pe­ti­tion, Zhang Han­dong, di­rec­tor of the Na­tional De­vel­op­ment and Re­form Com­mis­sion’s price su­per­vi­sion bureau, said in an in­ter­view with the China Daily. Amer­i­can au­tomak­ers such as GM and Ford have been among the mar­ket lead­ers among for­eign auto com­pa­nies in tap­ping the huge and fast-grow­ing ap­petite for cars in China.

A GM joint ven­ture was tar­geted in a 2014 in­ves­ti­ga­tion into over­charges for re­place­ment parts. No penalty was an­nounced, but au­thor­i­ties gave no in­di­ca­tion that the probe had ended. GM said in a state­ment that it “fully re­spects lo­cal laws and reg­u­la­tions wher­ever we op­er­ate,” and it wouldn’t com­ment on “me­dia spec­u­la­tion.”

It’s un­likely that Ford, the only other U.S.-based au­tomaker with a large pres­ence in China, would be tar­geted. The com­pany said it wasn’t aware of any in­quiries in China.

Shares of GM fell 2 per­cent to $36.61 in af­ter­noon trad­ing Wed­nes­day af­ter a post­elec­tion run drove them to a 52-week high of $37.66 on Fri­day.

Amanda DeBusk, chair­woman of the in­ter­na­tional trade depart­ment at the law firm of Hughes Hub­bard & Reed LLP in Wash­ing­ton, said the tim­ing of the anti-mo­nop­oly penalty makes it likely that the Chinese are punch­ing back against Mr. Trump.

“They had a list of things they could pull the trig­ger on. They de­cided to pull the trig­ger,” she said.

Al­though such a penalty could be a warn­ing to Mr. Trump, it also is con­sis­tent with China’s stance on other au­tomak­ers and may have roots in a slow­ing econ­omy, said Linda Lim, a pro­fes­sor at the Univer­sity of Michi­gan Ross School of Busi­ness.

The gov­ern­ment may be us­ing the fines to fur­ther force down auto prices to stim­u­late the econ­omy, even though car prices al­ready are fall­ing, she said. But the is­sue of rec­og­niz­ing Tai­wan is a “red line” for the Chinese, and Mr. Trump’s prece­dent-shat­ter­ing di­rect phone call with Tai­wan’s pres­i­dent also could be a mo­ti­va­tor, she said. “They’ve picked on U.S. com­pa­nies pre­vi­ously,” she said. “The tim­ing could just be serendip­i­tous.”

Chinese reg­u­la­tors launched a sweep­ing probe of the auto in­dus­try in 2014 af­ter com­plaints that global au­tomak­ers were abus­ing con­trol of sup­plies to over­charge for re­place­ment parts.

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