Japan’s carmakers follow German lead to expand in China
Toyota and Nissan are set to increase production capacity in China substantially, as the world deepens integration with America's chief tariff target
The Donald Trump administration’s top economic adviser, Larry Kudlow, has suggested that the US can join forces with allies across the globe to challenge China on trade in what he has referred to as a “trade coalition of the willing.”
So much for that.
After similar news about fellow Japanese carmaker Toyota, not to mention Germany’s Mercedes-Benz and BMW, Nissan has announced it will boost production in China by 30%.
Nikkei Asian Review reported on Monday that the company would spend US$904 million to build a new assembly plant in China and expand production lines at two existing plants there.
Meanwhile, Toyota is gearing up to increase production in the country by 24%, Reuters reported last week.
As was noted here in July, Germany’s top manufacturers have recently announced billions of dollars’ worth of new investments in China.
“BMW will expand its joint venture with Brilliance Auto to produce 519,000 vehicles a year,” Asia Times columnist David Goldman wrote. “It also set up a joint venture to produce an electric version of the Mini together with Great Wall Auto. And it agreed to buy US$4.7 billion worth of batteries from Chinese producer CATL, which just announced a new plant in southern Germany.
“Volkswagen earlier this year announced that it would invest US$18 billion in China by 2022 and construct six plants to build electric vehicles.”
While Toyota and Nissan are smaller than the German automakers (especially VW) in China, they are doing the same thing. They are responding to a US threat of trade war by embedding themselves more securely in the Chinese market. And for good reason: China is expected to be the world’s biggest auto market for the next generation.
As for Kudlow’s “coalition of the willing,” so long as the US continues pursuing protectionist policies, there’s a zero percent chance of that coming to fruition.
“The world isn’t lining up with us. It’s lining up against us,” as Goldman pointed out.