Parts Dispute Final Trial Violation China's worst plan to lose

A few days ago, the World Trade Organization (WTO) Appellate Body issued a ruling on China, North America and the European Union’s auto parts disputes. The ruling upheld the conclusion that the dispute resolution agency believed that China's practices violated WTO rules. China lost the lawsuit in this trade dispute.

After this ruling, China must adjust its current policy within a certain period of time to reduce the threshold of foreign auto imports to China. It will have a certain impact on China's auto industry, but overall, the impact is limited.

Because, today's Chinese auto industry is no longer a "disadvantaged group" but has a real "martial arts."

When international competition becomes more and more fierce, it is the long-term way to learn to adapt to the rules of the game, from policy protection to policy assistance, and constantly increase the level of production to actively face international competition.

Influencing the test of a Chinese auto parts industry

This decision is undoubtedly a good news for component manufacturers in Europe and the United States. After all, exporting parts and components in the current economic environment is an important road for revitalizing the economy for European and American companies.

However, for China's domestic component manufacturers, the determination of this ruling will bring a certain degree of direct impact. Domestic and foreign wholly-owned auto parts are bound to form a stronger camp, which will deprive itself of relatively backward development opportunities in the Chinese auto parts industry.

However, the current overall technological level of China's parts and components has improved a lot in its development. From the perspective of cost, localization of production will be cheaper than imports. Considering the maximization of production efficiency and profits, foreign companies have not bypassed localization. Necessary for the road.

Therefore, although the WTO ruling will bring about some impact, it should not change the current domestic market structure of parts and components, and more is the adjustment of changes, if China's parts industry is struggling to do their own work, plus localization further Advancing is to be able to withstand pressure and go head-up.

Affected by more core technologies or will be controlled by foreign car companies

It can be speculated that car companies in Europe and the United States may use the threshold of import cost reduction and export more core components to China instead of joint venture production in China. This may make the CKD's production method more frightened by the 10% component import tax rate.

In the long run, due to the disappearance or weakness of the intermediate concept of “parts that constitute the characteristics of the vehicle,” developed countries will be more likely to make the core technology of the product enter China in a completely imported manner, and their degree of preservation of core technologies will be Further improvement will have more say in the Chinese market.

Influence the price of three luxury cars will reduce the benefits of high-end owners

In the automotive market, if the ruling is effective, the biggest impact will be on the luxury car market. For luxury car manufacturers, with the cancellation of the threshold for localization rates, all parts and components import methods will be reduced to 10% tariffs, which will help them reduce more costs and reduce vehicle prices. Because the current localization rates of some high-end models such as Mercedes-Benz and BMW are difficult to reach 40%, they were originally taxed according to the entire vehicle.

At the same time, as the ruling entered into force, the luxury car can let go a large number of original imported components, which also improves the purity of the luxury car brand in China, just to meet the deep-rooted "original import" car grade, which is for some high-end car owners. It is also good news.

However, as a result of the ruling, domestic luxury car companies are relatively calm and have stated that the WTO ruling on China will not affect their tendency to increase localization rates. The head of BMW Greater China stated that it will strengthen steadily. With the localization rate of BMW in China, "quickly reduced spare parts costs make domestic BMW more flexible pricing."

Impact IV Formulation of supplementary policies to eliminate "disguised smuggling"

Since the WTO ruling on China is about to take effect, the tax threshold originally set at the localization rate will disappear because of the disappearance of the tax difference between the vehicle and its parts. This will result in loopholes in the taxation, that is, a possible disguised appearance. "Smuggling" --- The original car was imported as a component and then simply assembled and sold in the country to avoid tax. This apparent "disguised tax evasion" smuggling phenomenon occurred in 2004. At the time, many smuggled cars were assembled into vehicles at a cheaper price. However, safety and quality were not guaranteed, and the country's tax revenue and automobile market were both high. Has brought bad effects.

Therefore, according to the results of the current ruling, it is necessary to formulate a series of policy guidelines to make up for the lack of tax exemption restrictions after the invalidation of the Measures and to strengthen supervision so as to minimize the adverse effects of the WTO ruling.

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