TMTPost --  The Biden administration seems to step up curbs on Chinese electric vehicle (EV) industry, posing new threat to China-Mexico trade relations.

AI Generated Image

The Mexican government is refusing to offer incentives like low-cost public land or tax cuts to Chinese automaker for investment in EV production due to U.S. government pressure, specifically from the Office of the United States Trade Representative (USTR), Reuters reported, citing Mexican officials with knowledge of the matter. During the last meeting with the Chinese auto company in January, the top Mexican officials told executives of BYD Co., Ltd. that they would not give incentives like previous granted to automakers, and they would put on pause any future meetings with Chinese automakers, according to the sources.

Neither Mexco’s federal  government nor BYD commented on the report. A White House spokesperson said U.S. President Joe Biden will not let Chinese automakers flood the market with vehicles that become a national security threat. While not addressing the reported pressure,  a USTR official responded to Reuters that the United States-Mexico-Canada Agreement (USMCA) was not meant to "provide a back door to China and others who may be seeking to access our market without paying ... tariffs." The official added the USTR is focused on that issue as it relates to autos, steel and aluminum.

China has issued warning on attempts of economic coercion on China-Mexico relationships last December. The Financial Times reported that month the U.S. has raised concerns with Mexico over a wave of Chinese investment into the country, with three of China's biggest electric vehicle manufacturers looking to establish plants there.

Normal cooperation between China and Mexico should not be meddled by any third country, commented Shu Jueting, the spokesperson of Ministry of Commerce of China (MOFCOM) , at a regular press conference  following the report. Many Chinese companies in the new energy sector and the electric car industry have entered the Mexican market to engage in trade and investment cooperation, and help boost local green economy, Shu noted. Such cooperation is conducted between two sovereign countries, with companies from the two sides undergoing normal commercial activity based on international norms and market principles, Shu said. "Any third country has no rights to intervene and we urge relevant countries to stop act of economic coercion."

In the beginning of March, the White House announced that the U.S. Commerce Department is launching an investigation into whether Chinese vehicle imports pose security risks and could impose curbs due to concerns about connected vehicle technology. The White House said such investigation is required because vehicles "collect large amounts of sensitive data on their drivers and passengers (and) regularly use their cameras and sensors to record detailed information on U.S. infrastructure." In his address on national risks to the U.S. auto industry, President Joe Biden said China is determined to dominate the future of the auto market, “including by using unfair practices”. “China’s policies could flood our market with its vehicles, posing risks to our national security. I’m not going to let that happen on my watch,” Biden said.  

China has been opening its door to global auto companies, including those from the United States, while the U.S. has engaged in trade protectionism and set up obstacles including discriminatory subsidy policies to obstruct access to the US market by Chinese-made cars, and “such acts of politicizing economic and trade issues will only hinder the development of the US auto industry itself”,  Mao Ning, the spokesperson of China’s Foreign Ministry, commented on the report about the U.S. government’s planned probe into Chinese-made EVs. Mao claimed vehicles made in China are popular globally not by using so-called “unfair practices”, but by emerging from the fierce market competition with technological innovation and superb quality. China urged the U.S. to respect the laws of market economy and the principles of fair competition, stop overstretching the concept of national security, stop its discriminatory suppression against Chinese companies, and uphold an open, fair and non-discriminatory business environment, Mao said.