U.S. to Launch Probe Against Chinese-Made Cars

The Lede: On Thursday, the Biden administration announced that it is opening an investigation into whether Chinese vehicle imports threaten the American auto industry or U.S. national security due to concerns about connected smart car technology, which could lead to trade restrictions on Chinese vehicles . This move echoes a similar probe launched in the European Union several months ago and comes as the U.S. continues to lead the charge in a larger effort to deny Chinese domination across various industries in the global markets.

What We Know:

• U.S. President Joe Biden prompted the Commerce Department to scrutinize the potential for the Chinese auto industry to dominate the world market by using unfair practices. U.S. officials have cited China’s industrial overcapacity as a top concern for potentially flooding the global car market. National security concerns regarding Chinese vehicles center on the connectivity of modern cars, which would make them susceptible to the collection of sensitive data about U.S. citizens and the country’s infrastructure as well as remote access of vehicles by Chinese entities. 
• U.S. officials also cited China’s restrictions that prevent connected vehicles from operating domestically unless they use only Chinese software and send data gathered to Chinese groups exclusively. 
• Chinese officials have called the investigation another instance of Washington’s discriminatory approach to trade. The Chinese embassy in Washington pointed out that the value of cars exported by the U.S. to China amounts to three times the volume of Chinese exports to the U.S.

The Background: In September last year, the European Commission announced a probe into Chinese state subsidies for electric vehicles, which they argue have unfairly undercut their domestic car brands.China’s largest export market for vehicles is Southeast Asia, the Middle East and Europe. BYD, the world’s largest EV maker by sales, has reiterated that the company has no plans to target the U.S. market. In China, Tesla owners have faced security-related restrictions. 

Likely Outcomes:

• This move does not come as much of a surprise as the EU has launched a similar investigation on Chinese auto imports. It fits in a longer line of U.S. trade policies that aim to blunt the influence of China in the global markets in general and to protect Western markets in particular. U.S. and Western policies have also played up the need to cautiously tread the dynamics of trade relations with China in the area of sensitive technologies such as semiconductors, AI, and quantum computing. Cars made in China do not currently factor prominently in the U.S. market and will likely remain unpopular. 
• The Biden administration may also be launching this investigation in the run up to the upcoming presidential election against former president Donald Trump, who has focused on trade issues with China in much of his political career. The two candidates may mutually escalate China-related positions to increasingly precarious heights as tensions between Washington and Beijing continue to steadily ratchet up. 

Quotables: 

“China is determined to dominate the future of the auto market, including by using unfair practices. China’s policies could flood our market with its vehicles, posing risks to our national security. I’m not going to let that happen on my watch.” - Joe Biden, U.S. President

“We’ll certainly continue to look at a range of policies to make sure that our carmakers and our autoworkers continue to be the most competitive in the world.” - Lael Brainard, director of the National Economic Council

“China urges the US to respect the laws of market economy and the principles of fair competition, stop overstretching the concept of national security, stop its discriminatory suppression against Chinese companies, and uphold an open, fair and non-discriminatory business environment.” - Mao Ning, spokesperson of the Chinese foreign ministry

“Imagine if there were thousands or hundreds of thousands of Chinese-connected vehicles on American roads that could be immediately and simultaneously disabled by somebody in Beijing. So it’s scary to contemplate the cyber risks, espionage risks that these pose.'' - Gina Raimondo, U.S. Secretary of Commerce

Good Reads:

Biden orders US investigation of national security risks posed by Chinese-made 'smart cars' (ABC News)

Biden Calls Chinese Electric Vehicles a Security Threat (NYT)

Joe Biden says Chinese smart cars could pose US security threat (FT)

US to probe if Chinese cars pose national data security risks (Reuters)