Inicio Financial Chinese city of Shenzhen rolls out plan to boost car exports

Chinese city of Shenzhen rolls out plan to boost car exports

Chinese city of Shenzhen rolls out plan to boost car exports
Attendees at the BYD stand on the opening day of the Geneva Motor Show in Geneva, Switzerland on February 26 2024.
Geneva Motor Show attendees at BYD’s stand on Monday. The carmaker has just started to increase global exports © Andrey Rudakov/Bloomberg

China’s southern technology hub Shenzhen has rolled out plans for a big expansion of car exports, a plan that is likely to fuel western fears about rising Chinese competition for domestic manufacturers.

The municipal government of Shenzhen, where the world’s largest electric vehicle maker BYD has its headquarters, unveiled 24 measures including support for factory construction, opening new sea routes and allowing another 20 companies to export second-hand cars, according to a statement released by the city’s commerce bureau late on Monday. 

The policy was crafted to “seize the opportunity from the development of car exports” and build an industrial cluster bridging car production, shipping and trade, the statement said, while aiming to turn Shenzhen into “a new generation world-class auto city”.

Local officials also said they would introduce services to support car exporters, including improving export insurance, speeding up tax refunds and encouraging Chinese banks to provide consumer financing for overseas car buyers. The plan also called for exporters to purchase more car-carrying ships to create a Chinese-owned fleet of roll-on, roll-off vessels.

BYD has just started to increase global exports. The EV maker commissioned its first 7,000-vehicle-carrying ship in January. On Monday, after a month-long journey from Shenzhen, Chinese-made cars began rolling off BYD’s Explorer No 1 into a German port for the first time. The company plans to expand its ship fleet to eight in the next two years.

Shenzhen’s plans come as concerns grow globally that China’s car industry has vastly overbuilt domestic capacity and that many of the cars rolling off domestic production lines will flood into western markets. 

Brussels in September launched an anti-subsidy investigation into Chinese electric vehicles “distorting” the EU market, and US officials this month warned Beijing that Washington and its allies would take action if China tried to ease its industrial overcapacity problem by dumping goods on international markets.

Last year, China overtook Japan as the world’s largest car exporter, sending 5mn vehicles overseas. The value of the country’s car exports jumped 74 per cent from a year earlier to $78bn, according to Chinese customs data.

Analysts at research group Bernstein have estimated that China has the capacity to make close to 40mn vehicles a year, but only has domestic demand for 20mn to 25mn cars. Moreover, the number of car plants in China continues to grow. 

While local governments such as Shenzhen are eager to increase exports to support the local economy, China’s central government has indicated the country should take a more cautious approach. The commerce ministry has called for the “healthy development” of the country’s overseas EV expansion, including co-operating more with foreign partners and utilising free trade deals.

Zhang Xiang, a car analyst with the World Digital Economy Forum, said that Shenzhen’s plans set an example for other local governments. “The guideline comes just in time as Chinese carmakers including BYD are attempting to transform themselves into global players from domestic companies,” he said.

Zhang added that government support for second-hand car exports could help find a home for the growing number of abandoned internal combustion engine vehicles in China as buyers switch to EVs. The EV penetration rate climbed to 35.7 per cent in 2023.

Shenzhen’s commerce bureau and BYD did not immediately respond to a request for comment.