When it comes to fair trade practices, China often plays dirty. They don’t have the same protections for workers that we have in the U.S. or in the European Union, for that matter. China also heavily subsidizes their quasi-private sector to give companies an edge in international markets. We need to fight for our workers by implementing policies that will create a more equal playing field.
In one particularly important area, Congress needs to recognize that domestic investment in American auto manufacturing is critical to countering China’s attempts to dominate the U.S. market. Nearly one in 20 U.S. jobs is supported by the auto industry. Automakers account for 3% of U.S. GDP and collectively are the largest creators of manufacturing jobs, accounting for a total of 9.6 million directly, indirectly and induced.
But these American jobs are under threat because China uses cheap labor and massive subsidies to give its automakers a huge edge – which is critical as they eye the U.S. market, particularly in the emerging age of electric vehicles. For example, Chinese EV maker Nio nearly ran out of cash in 2020 before Chinese government agencies provided $1 billion for a 24% stake in the company. The threat to U.S. EV producers is significant because China has pushed all their chips in to make sure that they dominate that strategically vital market.
China's strategy to dominate the global auto market is making progress, with predictions that the country will overtake Japan as the world's No. 1 car exporter in 2023 – representing a turning point that ends decades of dominance by American, Japanese, South Korean and European automakers.
Concern over this significant global takeover recently received attention from the U.S. House Select Committee on the Chinese Communist Party (CCP). Chair Mike Gallagher and Ranking Member Raja Krishnamoorthi sent a letter to U.S. Trade Representative Ambassador Katherine Tai warning the Administration about the threat China's auto strategy poses to American companies and workers. In the letter, the members ask the Administration what actions will be taken to counter this growing Chinese auto dominance.
The answer is clear: The U.S. must prioritize greater investment in domestic auto manufacturing, particularly EVs, and their component parts, to ensure our automakers and workers remain competitive in the 21st Century global economy and so that America controls its own supply chain as China races to run the table.
China currently controls more than 75% of global battery cell production capacity, meaning that Chinese automakers today have a real competitive advantage in their ability to build and sell EVs at lower prices. If we want our U.S. auto companies to continue developing and making affordable vehicles that Americans value, such as large SUVs, it's critical that we quickly bring this manufacturing and technological expertise home to our shores. While the CCP committee is right to focus on China's anti-competitive practices, they should also recognize and support American companies that are committed to advancing manufacturing leadership here at home.
Some American auto companies, such as Ford, are making bold investments to scale up advanced manufacturing, strengthen the resilience of our supply chain, secure our energy independence, and improve our competitiveness in the years to come – all while creating thousands of good-paying American jobs. Tesla is making similar plans. By manufacturing lithium iron phosphate, or LFP, EV batteries in the U.S., Ford will put the company and its workers at the center of helping to secure our supply chain and economic future and lower the costs of electric vehicles for American customers.
Without domestic investment, the U.S. will be forced to rely almost entirely on our adversary, China, for critical minerals and battery technologies, irrefutably placing American companies, and in turn American workers and consumers, at significant disadvantage. U.S. companies will need to choose between building in America or buying from companies China. We should be making it easier for them to choose wisely.
Congress needs to step up like they did for semiconductor makers and other domestic industries to help automakers keep their jobs making cars, some electric, while China attempts to corner that market.
Christian Josi is a veteran political strategist and media advisor.
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