The US response to China’s Seagull
The US response to China’s Seagull
The alternative economic model of cooperation among sovereign nations
The Seagull, a small all-electric hatchback produced by the Chinese automaker BYD, has U.S. auto executives and politicians worried, because of its potential capacity to take sales away from U.S. automakers in the U.S. market as well as internationally. So writes Michael Wayland in “Why a small China-made EV has global auto execs and politicians on edge,” published on CNBC on March 22, 2024. German and Japanese automakers and politicians are also concerned, Wayland reports.
According to U.S. auto analysts, the Seagull is a high-quality five-door hatchback that currently sells in the Chinese domestic market for less than 10,000 US dollars. In performance and appearance, it is comparable to the Chevrolet Bolt, Nissan Leaf and BMW i3; it has a range of approximately 190 miles on a single charge, with a top speed of 80 mph. Currently, ninety percent of Seagulls produced are sold in the Chinese domestic market.
BYD Auto makes battery electric vehicles and hybrid electric vehicles, producing its first battery electric vehicle in 2009. It is the automotive subsidiary of BYD, a publicly listed Chinese multinational manufacturing company. BYD Auto was founded in 2003, following the purchase by BYD owner Wang Chuanfu of Xi'an Qinchuan Automobile from a Chinese state-owned defense company, thus providing BYD with an auto manufacturing infrastructure.
BYD Auto sales have increased significantly since 2020, and it has become one of the two largest producers of all-electric vehicles, along with Tesla. It sold 3,024,417 vehicles throughout the world in 2023, a seven-fold increase from the 427,302 vehicles sold in 2020. The increase was primarily due to the increasing popularity of new energy vehicles in China. The Seagull, released in April 2023, is the smallest and cheapest of BYD’s electric vehicles, and it has enjoyed sales success in China.
BYD began exporting cars to Africa, South America, and the Middle East in 2009. With its productive expansion since 2020, it has rapidly expanded its global presence, with sales in Norway, Denmark, Sweden, the Netherlands, Germany, UK, Australia, Japan, Thailand, Malaysia, Indonesia, India, Uzbekistan, Colombia, and Brazil.
BYD opened North American headquarters in Los Angeles in 2011, and it established an electric bus manufacturing plant in Lancaster, California in 2014, supplying the Los Angeles Metro Bus system in 2015. Stella Li, Executive Vice President of BYD America, has stated that BYD is not planning to sell electric cars in the USA, because of political resistance to Chinese companies in the USA and the slowing rate of growth for electric cars in the U.S. market.
BYD can sell its products cheaply because of low production costs, due to its extensive vertical integration, in which the production of component parts and batteries is done within the BYD group. And also due to lower labor costs in China. BYD has benefitted from Chinese government subsidies to producers of new energy vehicles, but since 2017, the subsidies have been less than previously, as the new industry is finding its way on its own.
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How should the USA respond to the Chinese “threat”?
The people of the United States ought to understand, in the first place, that the advances in the Chinese auto industry are NOT violations of international law. Chinese competitive advantages in the auto industry are based in improvements in productivity over the previously most productive sectors of the world-economy, as well as in efficiency in production, lower wages, state subsidies (to orient the direction of national production), and the growing world prestige of China. None of these should be seen as contradicting a rule-based international order. Indeed, they are consistent with the pattern by which emerging economies have closed the gap with the leading core economies of the world-economy.
On the other hand, any interruption of China’s auto commerce through economic coercion or military intervention would be inconsistent with international law and would promote world instability and conflict. China has the right as a sovereign nation to produce and sell cars in the world-economy, and the core powers do not have a right to sanction countries and companies in third countries that are participating in the expanding Chinese automobile commerce, nor to invent pretexts for military interventions to break the Chinese advance.
During the last two decades, the USA has responded to the economic rise of China with the launching of a New Cold War, which has included a trade war and militarist threats, which make possible the beginning of a regional or global hot war. These actions are undergirded by a false narrative of Chinese authoritarianism, based in untruths with respect to supposed violations of human rights in certain autonomous zones in China as well as in a fundamental ignorance with respect to the structures of people’s democracy that China has developed since 1949.
Wayland reports that Caresoft, a U.S. auto consulting engineering firm, has torn down and rebuilt the Seagull, in order to understand how the Chinese automaker did it, and in order to advise U.S. automakers on improvements in efficiency and cost that they could implement in their own productive processes, in order to reduce their competitive disadvantage. Such observation and analysis is a sound idea, indicating the way that producers in one nation or region can learn from and benefit from the innovations and technological advances of others. Good ideas ought to be widely disseminated, so that they can advance all of humanity.
Perhaps the most serious negative consequence of Cold Wars is that they create entirely false distortions of “enemy” nations, thus interrupting the potential human process of mutual learning and progress, which could be more possible than ever in an age of advanced communication and transportation. In general terms, as a result of Cold Wars, the peoples and elites of the representative democracies of the West have completely false ideas of the people’s democracies that are under construction in China, Cuba, Vietnam, and the DPRK, which are characterized by local nomination of candidates, a combination of direct and indirect elections, concentration of power in legislative people’s assemblies, public media, and educational vanguard political parties. The peoples of the West, therefore, are prevented from knowing structures and processes that might provide useful ideas, although appropriating and transforming the ideas to adapt them to a different national context, in order to respond constructively to the current crisis of representative democracy.
It's not that we all need to become communists. It’s just that there are certain things we could learn about human potentialities if were to observe more carefully what the peoples of other lands are doing and building. We could arrive to appreciate the importance: of control of the political process by delegates of the people rather than representatives of the elite; of arriving to a national consensus with respect to national goals; of mobilizing all public and private resources in the attainment of consensual national goals; and of developing political parties and public media that participate responsibly in the education of the people.
With respect to economic issues and automaking, the West needs to go beyond carefully observing Chinese cars. It is good that Western auto specialists say, “Hey, that’s a pretty good car that China made. How did they do that? Let’s take it apart and examine it.” But the West should say more broadly, “China’s economic ascent during the last quarter century is impressive. How are they doing that?”
If Western analysts were to replace their Cold War dismissiveness with careful observation of China’s evolving political-economic system, they would see that China has forged a system of state direction of the economy in accordance with a formulated national plan and its defined goals, permitting space for private capital (because of private capital’s dynamic contribution to productivity), but regulating it and intervening in the economy in order to direct the economy toward the attainment of goals formulated in the development plan. It involves state direction of a mixed yet socialist-oriented economy. In this system, the state itself, it is important to note, is under the political control of the delegates of the people, and not an economic elite.
“Political Structures in Socialist China: A people’s alternative to Western representative democracy,” October 8, 2021
“China: Democracy That Works: A less conflictive, more consensual system of people’s democracy,” December 21, 2021
“China models a new type of socialism: The most advanced example of a new socioeconomic formation,” June 10, 2022
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Western analysists dedicated to empirical observation rather than Cold War dismissal would also see that China is benefitting from a foreign policy that formulates and seeks to implement the development of mutually beneficial trade among nations, rooted in the principles of respect for the sovereignty of all nations and non-interference in the internal affairs of states. Chinese President Xi Jinping has formulated these principles before the United Nations and regional and international associations. As a result, the nations of the world are eager to trade with China, whose large market and high levels of capital make her a beneficial partner.
“Xi Jinping proposes Global Development Initiative: The President of China seeks win-win cooperation,” October 19, 2021
“China’s Global Security Initiative: The security of each is rooted in the common security of all,” March 3, 2023
“China proposes Global Civilization Initiative: Diverse development paths and dialogue across civilizations,” March 21, 2023
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The United States of America, as a sovereign nation, has the right and the duty to protect and promote its principal industries. This is a universal human right that has been clearly put forth by the nations and peoples of the Third World and China during the past decades, seen as the foundation of all human rights. Indeed, one of the factors in the political emergence of Donald Trump was his correct accusation—apparently formed on the basis of direct experience in the USA rather than observation of other lands—that the U.S. political establishment has been negligent in its obligation to promote the continued development of American industry.
In previous eras, protection of national industry through tariffs was commonly adopted, and in some cases, it was a useful strategy among competing imperialisms and in the conflict of interests between imperialist powers and nations seeking autonomous economic development. But once the capitalist world-economy reached maturity, protection and tariffs turned out to be less useful. During the middle decades of the twentieth century, many Latin American governments tried protection of national industries, but it retarded the growth of national industry, rather than stimulating its development.
Nonetheless, some in the USA are proposing protection against the Chinese economic threat. Currently, Chinese-built electric vehicles are subject to a 27.5% tariff when imported to the USA, due to the general 2.5% tariff on imported cars plus the 25% tariff on Chinese-made vehicles enacted by the Trump Administration. Weyland reports that Republican Sen. Marco Rubio of Florida has proposed a tariff of $20,000 per vehicle on Chinese vehicle imports. And Trump has proposed a 100% tariff on cars made in Mexico by Chinese companies.
Although such tariffs possibly could function as temporary measures, tariffs on Chinese imports are only a partial solution. There is a fundamental problem with the American automobile industry, once the pride of American innovation and economic power, yet today, U.S. automakers produce only 40% of the vehicles sold in the U.S. national market.
How is it possible that an extraordinarily innovative and successful industry from the beginning of the twentieth century to the 1960s could decline in the last half of the century, demonstrating itself to be incapable of intelligently responding to its problems? How is it possible that an industry that once drove a spectacular U.S. economic ascent is now at the center of the U.S. decline?
We can expand these questions from a world perspective. How is it possible that the major automobile companies in the United States have insufficient customers for their products, yet many of the people on the planet do not have their fundamental transportation needs met? Does it occur to no one that the problem of the latter can be resolved through creative response to the problem of the former?
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Final considerations
The decline of the American auto industry is a symbol of the decline of America. For Americans of my age, it is a source of great sadness. For this reason, I propose to reflect further on the question in my next post. I will want to suggest that the problem is neither capitalism nor representative democracy per se, but the failure to develop a national transportation plan in defense of the needs of the nation and the people; and the incapacity of the U.S. elite to cooperate with the nations of the South in the search for practical solutions to common human problems. I also will want to try to unpack how mutually beneficial trade and cooperation with the nations of the South might have benefits for the U.S. auto industry, empowering its renewal.
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