‘They are sending a signal’: China halts production of 500 car models
WA Today, 3 January 2018
China is suspending the production of more than 500 car models that do not meet its fuel economy standards, several automakers confirmed Tuesday, the latest move by Beijing to reduce emissions in the world’s largest auto market and take the lead in battling climate change.
The official Chinese news agency Xinhua said in a report Sunday that the suspension, effective Monday, would affect both domestic carmakers and foreign joint ventures like FAW-Volkswagen and Beijing Benz. No end date was given.
The move was expected to affect a small share of car manufacturing in China, where 28 million vehicles were produced in 2016. China has dozens of small-scale automakers some producing just a few hundred cars a year and the central government has tried to consolidate its auto industry, a factor that most likely also played a role in the suspension.
Still, the measure pointed to a mounting willingness by China to test forceful antipollution policies and assume a leading role in the fight against climate change, experts said. The country, which for years prioritised economic growth over environmental protection and now produces more than a quarter of the world’s human-caused greenhouse gases, has emerged as an unlikely bastion of climate action after President Donald Trump’s rejection of the Paris climate agreement.
Chinese leaders are under intense pressure to rein in dangerous air pollution, a hot-button issue in China, where thick smog has at times forced schools and businesses to temporarily shut down. Late last month, China said it was going ahead with plans to create the world’s largest carbon market, giving Chinese power companies a financial incentive to operate more cleanly.
“They’re sending a signal to everybody that this is for real,” said Michael Dunne, president of Dunne Automotive, a Hong Kong-based consultancy on China’s clean car market. “This shows their emissions standards have teeth.”
The Chinese government has already become the world’s biggest supporter of electric cars, offering automakers numerous incentives for producing so-called new energy vehicles. Those incentives are set to decrease by 2020, to be replaced by quotas for the number of clean cars automakers must sell. That has spurred global automakers to pick up the pace in their shift toward battery-powered cars.
By contrast, the United States is considering relaxing tailpipe emissions standards and nearly killed off a tax credit for electric vehicles during its latest tax overhaul.
The fact that Chinese automakers like the state-run giant Dongfeng Motor Corp. did not appear to be spared “shows that the government is not playing favourites in trying to meet their goals,” said Bruce M. Belzowski, managing director of the Automotive Futures group at the University of Michigan Transportation Research Institute.
The Chinese government had long held back from aggressive emissions standards to allow its own automakers to catch up with the latest clean car technology. But that is changing, with the government setting increasingly stringent tailpipe rules.
The latest development “is a testimony to how quickly their own automakers have evolved,” Dunne said. “They’re saying: We’re ready to play this game.”
Foreign automakers were still tallying the effect of the suspension on Tuesday. Volkswagen, General Motors, Honda and other foreign automakers in China referred queries on specific numbers to their Asia offices. Rebecca Kiehne of BMW, which runs the BMW Brilliance joint venture in China, said the company was not yet prepared to comment.
Han Tjan, a spokesman for Daimler, said production would not be affected at its Beijing Benz joint venture with the Chinese car manufacturer BAIC Motor Corp. The only car covered by the suspension was a high-end E-Class model the venture has not manufactured since 2016, he said.
Whatever the consequences, global automakers will have no choice but to meet the increasingly stringent government policies in China, said Michelle Krebs, an analyst at the AutoTrader Group.
“The simple fact that China is the biggest market means automakers will be accommodating,” she said.