CHINA PASSENGER VEHICLE MARKET

Effective January 1, 2022, China’s National Development and Reform Commission and the Ministry of Commerce removed investment restrictions on foreign investment in passenger vehicle manufacturing.  This action eliminates the need for a Chinese joint venture partner, allowing foreign automakers to have 100 percent ownership of their production facilities in China.  From 1994 to 2018, the foreign ownership limit was 50 percent.  The limit was raised to 70 percent in 2018 for internal combustion engine facilities and 100 percent for new energy vehicles which led to the construction of at least one new 100 percent U.S.-owned electric vehicle factory in China.

From January to October 2020, U.S. passenger vehicle manufacturers produced and sold 1.45 million units of vehicles in China. During the same year, U.S.-based automakers exported 140,000 units of vehicles to China valued at $6 billion. In 2019, U.S. passenger vehicle manufacturers produced and sold about 1.9 million units of vehicles in China. During the same year, U.S.-based automakers exported 177,000 units of vehicles to China, generating $6.8 billion in revenue.   

The PRC’s elimination of restrictions on foreign investment in passenger vehicle manufacturing should enable U.S. and other international automakers to have the option to independently engage in design, R&D, global (including from the United States) sourcing of parts, and production in China.  The removal of this restriction provides a more level playing field for current U.S. companies doing business in the Chinese market, as well as new entrants.  The potential of U.S. exports, however, remains constrained by high Chinese tariffs on motor vehicles and automotive parts. 

For more information on the removal of this trade barrier and related opportunities, please contact Commercial Specialist Ms. Feng (Jessica) Tan at:  feng.tan@trade.gov.