A new trade dispute appears to be emerging between the United States and China, this time in the area of ​​green technologies and electric cars. As the AP news agency reported, China has significantly increased its production of electric cars, solar panels and low-cost batteries, while the Biden administration has pushed laws to support these industries in the United States.

China's cheap electric cars pose a global threat

The increase in production in China is generating concern not only in the United States, but also in Europe and Mexico. There are fears that China could prop up its own struggling economy with a flood of exports that could undercut foreign factories. A report by US trade association Alliance for American Manufacturing noted that major Chinese automaker BYD recently introduced an electric SUV at the “surprisingly low” price of $14,000. This poses an “existential threat” to American automakers, according to the report.

The main problem appears to be China's high production capacity in many industries. “The concern is that the Chinese are building a lot of capacity in many industries, including these new technology areas, and if domestic demand doesn't recover, they will look for markets outside the country,” said Eswar Prasad, an economist at Cornell University. AP said out loud.

China's subsidies exceed those of the United States and threaten competition

While the United States also subsidizes these industries, a 2022 report from the Center for Strategic and International Studies found that China's industrial subsidies in 2019 were proportionally double those of the United States. That's why there is concern that Chinese exports could flood markets and make it difficult for American companies to compete.

For now, the two sides have mostly agreed to hold talks on the issue. However, the Chinese government has recognized that excess manufacturing capacity and weak consumer spending are challenges it must address to achieve sustainable growth in its own economy.