Opinion | Why US and China should work together environmentally: It makes auto industry better

By Augustus K. Yeung

Introduction

Is more volatility ahead for the world economy? How will geopolitical shifts impact Sino-US business? These questions should be in the minds of government leaders if they put their nations' business interests ahead of conflicts and confrontations, whose damages have been clearly shown in the Russia-Ukraine conflict in Eastern Europe, triggering ripple effects of worldwide food famine and gasoline rationing, etc.

How are Russia and Ukraine's economies working? The issue over the export of Ukrainian wheat to overseas countries has been a case in point. This has become a crisis. It is now being resolved with the help of Turkey, a third country. See the beauty of cooperation?!

Unfortunately, the Americans, be it the Biden administration or Trump administration, do not seem to be putting the interest of their business community in mind, and certainly there is no love for their Chinese counterparts. The case of CNOOC, which was kicked off the New York Stock Exchange (NYSE) is one glaring example of American hostility toward China.

Exiting NYSE, CNOOC Surged on Shanghai Trading Debut

China's Cnooc Ltd. surged on its Shanghai trading debut, after the country's largest offshore producer of crude oil and natural gas raised about $4.4 billion in one of this year's biggest share sales.

The listing comes months after Cnooc was kicked off the NYSE, and follows similar deals by two of China's largest telecommunications operators that were also ejected from the U.S. stock markets. In total, the three state-backed companies have raised about $20 billion from Chinese onshore investors, showing they still have access to abundant funding.

Cnooc shares closed nearly 28% higher Thursday, at 13.79 yuan apiece. The stock had earlier jumped by the maximum possible 44%, triggering a short trading halt, before paring gains.

The oil giant raised 28.1 billion yuan, equivalent to about $4.4 billion, from the offering. That is the world's third-largest equity capital markets deal so far this year. Dealogic data shows. The final total could be increased as much as 15% to a maximum of about $5 billion, if banks exercise a so-called green-shoe option.

The NYSE delisted Cnooc in October to comply with an investment ban introduced by former President Donald Trump. The ban blocks American investment in companies that the U.S. says aide China's military and security services. Cnoon unsuccessfully appealed the delisting, reported THE WALL STREET JOURNAL. (Friday, April 22, 2022)

Tesla, American Car Maker Given Freeland for its Foothold…

Tesla plans to set up a design center in Beijing to develop cars specifically for the Chinese market, stepping up plans to secure its foothold in the world's largest vehicle market. The US car marker's design and engineering bub will be one of the key projects in China's capital this year, according to a report by the Beijing municipal government.

Construction of the center will start this year, but other details such as investment and inauguration date were not provided.

"Testa has every reason to increase investment in China amid strong sales of its vehicles in the country," said David Zhang, a researcher for the vehicle industry at the North China University of Technology. "Building Chinese-style cars for Chinese people is a good idea and it obviously is stepping up a gear to implement its China strategy."

In January 2020, Tesla said that it would establish a design center in China to better serve customers in one of its biggest markets. The announcement came just a month after the Elon Must-led carmaker launched operations at the Gigafactory 3 in Shanghai, Tesla's first plant outside the United States.

The Shanghai factory, with an annual production capacity of 450,000 units, delivered 484,130 vehicles in 2021, or 51.7 per cent of its global total of 936,000 units.

Excluding exports of the Shanghai-made Model 3 and Model Y vehicles, Tesla sold 321,000 cars on the mainland last year, 117 percent higher than in 2020.

The plant, based in the Lingang free-trade zone, is the mainland's only fully foreign-owned vehicle assembly line.

Tesla is the front runner in China's premium electric vehicle segment, as the high-tech features of its cars, like the autopilot driver assistant system and high-performance batteries, easily click with young Chinese drivers.

Conclusion

America, starting with the Donald Trump administration, is getting more hostile to Chinese businesses, including the current Biden administration, which has been continuing the anti-China trade policy set by Joe Biden's predecessor.

By contrast, China's respect for and most favored trading practices toward American entrepreneurs is raising eyebrows, especially when Tesla is given free industrial land, provided by its municipal government.

And Tesla is not the first foreign carmaker to set up a design center in China, given favorable terms. General Motors founded its Pan Asia Technical Automotive Center in Shanghai in 1997 to design and develop cars specifically for the mainland market.

The Chevrolet Sail, a compact car launched in 2001, was the first vehicle fully designed and developed by the local engineers for the Chinese market, marking the beginning of cooperation between China and America.

China's car industry surpassed the US in 2009 as the world's largest vehicle market, and has kept the title ever since, thanks to its American counterparts.

Over the past two years, new-energy vehicles have become the new growth engine for the nation's auto industry, which has been buoyed by Beijing's ambition of becoming a global leader in the future of environmentally friendly mobility.

China reported sales of 2.99 million new energy vehicles in 2021, up 169 per cent from the previous year, contributing to the goal of a green global world, making climate change feasible for mankind. Sales of the vehicles are expected to exceed 5 million units this year, according to the China Passenger Car Association.

 

The author is a freelance writer; formerly Adjunct Lecturer, taught MBA Philosophy of Management, and International Strategy, and online columnist of 3-D Corner (HKU SPACE), University of Hong Kong.

The views do not necessarily reflect those of DotDotNews.

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