Trade fragmentation has intensified

Trade fragmentation has intensified

It is noteworthy that although our country has become the second automobile exporting country in the world. But in terms of export value, China ranks fourth, behind Germany, Japan and the US. Sun Xiaohong believes that although automobile export develops rapidly, but the export situation is not stable enough, the foundation is not solid enough.

There are also objective factors behind the explosion of Chinese auto exports in 2022. For example, in the aspect of ocean shipping, due to the insufficient production capacity of Japanese and South Korean car manufacturers during the epidemic period, they could not fully meet the demand of Japanese and South Korean freight companies to ship goods to Europe. Coupled with China's strong export capacity demand, Chinese car companies used a large number of whole packages of Japanese and South Korean freighters to sweep goods, which enabled China's auto industry to have both supply capacity and transport capacity.

It should be noted that the high cost of shipping capacity and freight remains a major challenge for China's automobile export. Meng Qingwen, general manager of the international Division of Long-term Logistics, said that in the face of the rapid growth of market demand, global ro-ro capacity reserves are in short supply. At present, there are 750 RO-RO ships in the world (600 of which have more than 4,000 parking Spaces), some of which are nearing the end of their service life and need to be supplemented by new capacity. Due to the long ship manufacturing cycle and the delay effect of supply and demand matching, the ro-ro shipment market is expected to remain in short supply in the next 3 to 5 years. Freight rates have risen nearly eightfold from a two-year low, and will continue to rise as demand outstrips supply.

According to Clarkson research data, in February 2023, the one-year rental of 6,500-car class ro-ro ship will be $110,000 / day, while in February 2021 it will be $17,500 / day.

Some Chinese auto makers transit their products through the Middle East and then export them to European markets. "Electric cars produced in China are first licensed in the Chinese market, then the new cars become used cars and exported as used cars to the Middle East and then to the European market. The idea is to avoid fees for things like certification, maximize profits, and be more efficient." In addition to shipping, China's auto exports also face challenges in export certification, exchange rate and other aspects, an overseas business management official of an autonomous auto company told reporters. In addition, subsidies for electric vehicles in many European countries have fallen this year, and growth in the new-energy vehicle market is likely to slow.

According to data provided by Zhang Xiaochen, senior product manager of China CITIC Bank International Department, according to financial data of listed companies, in the past three years (2020 ~ 2022), listed companies in the automobile industry suffered a total foreign exchange loss of 3.67 billion yuan due to exchange rate fluctuations. In the process of RMB internationalization, the factors affecting RMB fluctuation are complex and changeable, so it is difficult to accurately predict the exchange rate fluctuation. Gao Yang, deputy director of the Foreign Trade Driver Electrical Export Department of the Ministry of Commerce, believes that the current trade risks are increasing, emerging economies and developing countries are facing debt default, economic downturn and other challenges, which will have an adverse impact on auto exports.

"China's automobile exports surge, the cost advantage is prominent, the cost advantage of the new energy industry chain is hard to shake, the foreign investment of new energy vehicles rise, and the cooperation with Russia is repositioned. In 2023, vehicle exports will maintain the general tone of stability while seeking progress. It is expected that the annual growth rate of vehicle exports will reach 20%, and the contribution rate of pure electric passenger vehicles to vehicle exports growth is expected to exceed 50%. However, we should pay attention to the black Swan event (Japan's hexavalent chromium and Turkey's electric vehicle tax increase of 40%)." Ms Sun said the trend of "fragmentation" of trade was severe and trade tensions among countries had been rising amid a surge in trade restrictions around the world. At the same time, the epidemic and the Russia-Ukraine conflict and other emergencies also make countries in reasonable economic and national security considerations, began to pay attention to the defense of the supply chain.