Otis Singleton
Chinese investment in the US economy is soaring, with Chinese companies buying iconic American businesses. For example, in 2017, Qingdao Haier bought General Electric's appliance division for $5.4 billion, and China's Anbang Insurance Group purchased the Waldorf-Astoria hotel in New York City for $1.95 billion. Chinese companies like BYD and NIO have also explored entering the US auto market, one of the largest in the world. However, these attempts have been hindered by economic calculations, political pressures, and rising tariffs.
| Characteristics | Values |
|---|---|
| Number of all-electric cargo ships commissioned by China | 2 |
| Company building the ships | Jiangxi Jiangxin Shipbuilding Co |
| Company that commissioned the ships | China’s COSCO Shipping Corporation Limited |
| Energy capacity of the ships | 19,000 kilowatt-hours (kWh) |
| Energy capacity compared to Tesla Model 3 Standard Range PLUS vehicles | Equivalent to 352 vehicles (54 kWh per car) |
| Number of cargo holds | 7 |
| Capacity of cargo holds | 740 TEUs |
| Yara's cargo hold capacity | 120 TEUs |
| Design of the vessel's bow | Reduces wind resistance, noise, and vibration |
| Propulsion system | Dual-engine, dual-prop |
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What You'll Learn
Chinese-branded vehicles sold in Mexico, but not in the US
In 2023, 135,000 Chinese-branded vehicles were sold in Mexico, accounting for 10% of total car sales. In contrast, the US has no Chinese auto brands on sale, although it does sell a small number of electric or hybrid cars made in China by Polestar, Volvo, and Ford.
Chinese carmakers are effectively barred from the US market by tariffs that double the price of vehicles imported from China. However, there are two major ways that Chinese car companies could sell vehicles in the US. Firstly, they could set up factories in Mexico and sell vehicles through the North American Free Trade Agreement. Secondly, they could establish a dealer network in the US, although this would be challenging as there are currently no Chinese automakers with a distribution channel in the country.
Despite these obstacles, some Chinese cars have made their way onto American roads. For example, John Karlin, a registered nurse and quality process analyst from Oklahoma City, purchased a Wuling Hongguang Mini EV from China for $5,000. He was able to register the vehicle in Oklahoma by agreeing to a speed cap of 35 miles per hour, which prevented him from driving on the highway.
As Mexico becomes a key market for Chinese electric vehicles, officials in Washington fear that it could be used as a "back door" to access the US market. Under the US-Mexico-Canada Agreement, if a foreign automotive company can demonstrate that its vehicles are manufactured in Mexico using locally sourced materials, they can be exported to the US duty-free. This has raised concerns among American politicians and industrial leaders, who worry that Mexico may be an unreliable partner.
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Temporary imports of Chinese vehicles to the US
The process of importing a vehicle from China to the US involves several steps and considerations. The eligibility of the vehicle for import is determined by various factors, including whether it is a temporary or permanent import, the purpose of importation, and the importer's residency status.
For temporary imports of Chinese vehicles into the US, there are specific conditions and requirements that must be met. Here is an overview of the process and relevant regulations:
Temporary Import Purposes
Temporary imports of vehicles from China to the US are generally permitted for specific purposes, such as testing, demonstration, racing, or competition. These vehicles must not be licensed for use on public roads or highways, except when such operation is integral to the testing process.
Residency Status
The residency status of the importer plays a crucial role in the eligibility and requirements for temporary vehicle imports. The following scenarios are outlined by the US Customs and Border Protection (CBP):
- Nonresidents: Nonresidents can import vehicles for personal use for a period not exceeding one year. The vehicle must be exported out of the US at the end of that year, with no exceptions or extensions.
- Foreign Armed Forces and Diplomatic Personnel: Members of foreign armed forces, foreign diplomatic personnel, or individuals authorized by the Department of State under international law may be eligible for duty-free importation.
- Racing and Competition: Nonresidents importing vehicles for racing or other specific purposes may be eligible for duty-free treatment. Prior written approval from the Environmental Protection Agency (EPA) is required, and such approval is granted only to racing vehicles deemed incapable of safe or practical use on streets and highways.
Vehicle Requirements and Documentation
All temporarily imported vehicles must comply with specific requirements and documentation:
- Standards and Modifications: Imported vehicles must meet US safety, bumper, and emission standards. Nonconforming vehicles may need modifications to meet applicable Federal Motor Vehicle Safety Standards (FMVSS) and EPA emissions standards.
- Age of Vehicle: Vehicles more than 21 years old with their original engines may qualify for an EPA exemption, while those over 25 years old may qualify for a Department of Transportation (DOT) exemption.
- Documentation and Approvals: Parties importing vehicles for testing, demonstration, or racing must submit forms EPA 3520-1 and DOT HS-7 to CBP upon entry. Written approvals from the EPA and DOT must be obtained in advance and presented along with the required forms.
Costs and Timeframe
Importing a vehicle from China to the US typically starts at a cost of $2,749 USD, with an estimated turnaround time of 20–40 days. The timeframe depends on factors such as the make and model of the vehicle, the departure port in China, and the destination on the US east or west coast.
Trade Relations and Tariffs
It is important to note that the trade relations between the US and China have an impact on importing Chinese vehicles to the US. There have been discussions and concerns about the potential ban on the import of Chinese vehicles into the US due to national security, protection of domestic industries, and economic considerations. President Joe Biden announced a 100% tariff on Chinese-built electric vehicles (EVs), which may influence automakers' plans to sell their EVs in the US market.
In summary, the temporary import of Chinese vehicles to the US is subject to specific regulations, eligibility criteria, and documentation requirements. Importers must carefully consider the purpose of importation, residency status, vehicle modifications, and associated costs and timeframe. The dynamic trade relations and tariffs between the two countries also play a significant role in the process of importing Chinese vehicles to the US.
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Chinese investment in the US economy
China has been investing heavily in the US economy, with Chinese financial interests acquiring more than $120 billion of assets in the US economy since 2002. This includes diverse sectors in at least 40 states, with more than 50 acquisitions of American assets worth at least $50 million each in 2016.
China is the world's largest investor in other countries, providing funding for infrastructure projects such as roads, railways, and energy supplies. Chinese-funded projects have been criticized for not creating enough local jobs or sharing knowledge of infrastructure development with the recipient countries. In addition, China's telecommunication projects have raised concerns due to their use of technical standards that are incompatible with those of the US and other countries, potentially allowing China to gather intelligence or exert influence.
The US has taken steps to protect its economic and security interests. For example, in 2020, the US energy secretary prohibited electric utilities supplying critical defense facilities from importing certain power system items from China to safeguard against cyber and other attacks.
Despite these concerns, Chinese companies have dominated the supply chain for electric vehicles, with companies like Xiaomi and Huawei making significant strides in this industry.
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Chinese companies buying American companies
Chinese companies have been investing in and buying American companies across various sectors, including hotels, entertainment, and food. In 2017, CNBC reported that Chinese investment in the U.S. economy was soaring, with high-profile deals such as the Anbang Insurance Group's purchase of the Waldorf-Astoria hotel in New York City for $1.95 billion. The same group also bought U.S. insurer Fidelity & Guaranty Life and 16 luxury hotels from Blackstone Group for $3.93 billion, including Ritz-Carlton locations and the Four Seasons Resort in Jackson Hole, Wyoming.
Chinese companies have also shown interest in the American film industry. In 2012, the Dalian Wanda Group, owned by Chinese businessman Wang Jianlin, bought the nation's largest movie theater chain for $2.6 billion. Jianlin also attempted to buy a controlling stake in Paramount Pictures, but the offer was rejected by Viacom. Additionally, in 2011, Tencent, a Chinese holding company, bought a majority stake in Riot Games, the creator of the popular "League of Legends" video game, for $400 million.
In the electronics industry, Qingdao Haier, a Chinese company, acquired General Electric's appliance division in a $5.4 billion deal, making it China's largest acquisition of an overseas electronics business. General Electric's stoves, refrigerators, washers, and dryers are well-known in the American market, and the company has been around for over a century.
Beyond these sectors, there is also concern about Chinese companies buying up American farmland and enterprises. In 2013, a Chinese company purchased Smithfield Farms for $4.7 billion. Florida Governor Ron DeSantis has expressed concern about Chinese property purchases in his state, with some purchasers allegedly tied to the Chinese Communist Party.
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Workarounds to get Chinese electric vehicles into the US
Chinese electric vehicles (EVs) are rarely sold officially in the US. However, there are some methods and loopholes that people can use to get them into the country, even if only temporarily.
One workaround is to import a Chinese EV that is over 25 years old. Vehicles of this age are exempt from the usual approval process and can usually be registered without any obstacles. However, as China's EV boom mostly took place in the last decade, this exception is not especially helpful for those wanting to import a Chinese EV.
Another option is for non-US citizens to bring their foreign vehicle into the country temporarily. This route is possible for those shipping their Chinese cars to the US for test drives or short-term stays. However, this option is not suitable for everyday use, as the car must leave the country within 12 months and cannot be sold during this time.
A third workaround is to import a Chinese EV through a lengthy and costly process of proving that the vehicle meets US safety and emission standards. This process is challenging, and no US state will allow the registration of a Chinese EV without this approval.
Despite these challenges, some individuals, like John Karlin, have successfully imported Chinese EVs into the US. Karlin studied the requirements, placed an order with a Chinese auto exporter, and navigated the customs process to become the first American to import the Wuling Macaron model into the country.
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Frequently asked questions
Almost no Chinese electric vehicles are legally sold in the US. However, some workarounds allow people to get them onto American roads.
Non-American citizens can bring their foreign vehicles to the US temporarily without getting an American license plate. The vehicle must leave the country within 12 months and cannot be sold during that time.
Yes, in Mexico, there were 135,000 Chinese-branded vehicles sold in 2023, accounting for 10% of total car sales.
Some examples of American companies owned by Chinese investors include General Electric, Motorola Mobility, and Ingram Micro.
China has commissioned a pair of all-electric container ships, which are the largest of their kind globally. This is a step towards cleaner maritime transport and achieving the International Maritime Organization's goal of halving shipping emissions by 2050.
