GM shares fall on reports of Chinese antitrust fine
Threat of penalty seen as response to Trump
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.