China has always leveraged its potential to extract concessions from major automakers. Its initial strategy was to force the global majors to partner with Chinese firms and encourage technology transfers in the hopes that domestic players would grow to rival the established players. Decades in, however, it’s clear that Chinese automakers have not become globally competitive powerhouses: Even in their home market, they continue to lose out to their foreign partners and rivals. Unable to encourage a dynamic domestic industry, China’s government has found new ways to score populist points off the overall strength of its car market.
Last year’s antitrust investigations into the luxury car market showed that President Xi Jinping’s emphasis on consumer protections was a convenient veil for pursuing an agenda for the auto industry as well as a substitute for meaningful political liberalization. But it’s become increasingly apparent that Xi’s anti-corruption campaign is also aimed at the allies of former President Jiang Zemin, whose close ties with China’s largest automakers put the industry at the center of a massive power struggle within the Communist Party.