Will Chinese Electric Vehicles Drive on U.S. Roads?

If you are a Chinese automaker, you will be looking at what is the next presidency going to look like. Does this

hold in Congress, right? How much

support for this is there beyond the person of the president, right? Who I

think certainly has some interest in this. But I think there is, you know,

this. But I think there is, you know, actually a lot of skepticism about some kind of deal that would involve maybe Chinese investment or Chinese technology beyond that. So I think you know there's

beyond that. So I think you know there's there's a lot of uh volatility still in the political environment and yeah between the US and China ahead of the planned sheet Trump summit

in April. Both Washington and Beijing

in April. Both Washington and Beijing are scrambling to put real substance on the table. Since the meeting in Busousan

the table. Since the meeting in Busousan last autumn we've seen a fragile truce.

Few escalations but no real reset. One

question that's suddenly back in play is whether the US might allow some form of Chinese auto or vin investment on American soil. Something that President

American soil. Something that President Trump himself has publicly floated multiple times. On this digital program

multiple times. On this digital program of the National Committee on US China relations, we're unpacking whether that's realistic, what it would mean for US industry, and what the real

roadblocks are from national security reviews to Chinese export controls. To

do that, I'm joined by two experts, Earia Matsoko and James Roland. Both are

joining us from Washington, DC. Aria is

a deputy director and senior fellow with the trusty chair in Chinese business and economics at the Center for Strategic and International Studies, CSIS.

Aria has written extensively about China's EV industry, including for her PhD dissertation, which investigated how Chinese local governments use industrial policy efforts to promote the

technology. James is the founder and CEO

technology. James is the founder and CEO of Clear Arrow Policy Advisers, a firm specializing in complex international government affairs for global corporations. He previously worked for

corporations. He previously worked for 15 years at Ford Motors, including in Shanghai. And my name is Gregor

Shanghai. And my name is Gregor Williams. I'm an associate director at Rodium Group, a China focused independent research provider where I focus on China's auto industry. Elaria,

President Trump has said he would be happy to let Chinese OEMs build here. At

the same time, Chinese firms like Gile have publicly signaled interest in expanding their US presence at the CES a couple of weeks ago. Can you start

explaining why allowing Chinese auto investment is even a question in the US from Europe? I'm based in Berlin where

from Europe? I'm based in Berlin where I'm sitting. Chinese EV investment is

I'm sitting. Chinese EV investment is controversial but largely legal. What's

structurally different in the US system and what actually prevents Chinese automakers from investing in the US today? Uh well, first of all, Gregor,

today? Uh well, first of all, Gregor, it's a pleasure to talk to you as always and to be joined by James as well. I'm

really looking forward to this conversation. Um and I'm sure James

conversation. Um and I'm sure James actually will have thoughts on this very question as well. So, I mean, I think there's a couple of different things, right? First of all, there are actually

right? First of all, there are actually some Chinese automakers that have in some ways a presence in the United States. Uh right. So actually Gile is

States. Uh right. So actually Gile is the owner of Volvo and a Volvo of course actually has a factory in the United States right and certainly you can see Volvos down the street or Polestar which

is um another EV maker that is owned by Gile. So you know this is it's not

Gile. So you know this is it's not entirely true that there is sort of zero presence of Chinese um technology and in fact you also see some partnerships for

example in the battery sector right Ford has a licensing deal with CL which now seems to be shifting towards uh stationary storage rather than batteries

for electric vehicles due to a shift in sort of Ford's own strategy. Uh but you know again this is it's not that you know you have zero presence of of of

Chinese manufacturers and yet it is true that you're certainly not seeing BYD for example or or J open a factory under the J name in the United States and that's

because there there's you know a couple of different obstacles there. Uh one and I think the the main one here really is the complexity around the um connected

vehicle rule that was introduced under the Biden administration. So there are actual sort of restrictions on certain hard types of hardware and software that

are in cars very connected vehicles right which is a lot of modern cars these days that have connectivity capabilities. Um so there's actual

capabilities. Um so there's actual restrictions in the for these components that are made uh by Chinese manufacturers or in China. So actually

this is created some uh difficulties even for western manufacturers that may be reliant on Chinese components. Right.

So that's certainly an obstacle there.

Um there's other obstacles in uh accessing potential tax credits where those tax credits are still present, right? And a lot of those are actually

right? And a lot of those are actually been rolled back since the Biden, you know, the inflation reduction act has, you know, a lot of those provisions have have really been rolled back over the past year. But you know, again, there's

past year. But you know, again, there's there's restrictions there through what is known as the foreign entity of concern clause, which which of course a lot of Chinese uh manufacturers have trouble complying with. So I think

there's, you know, a couple of different things there and those are sort of actual legal obstacles. There's also

just political obstacles, right? It's

not clear that Chinese factories would be welcome either by politicians in DC or by local communities, right? So a

good example of that again in the battery sector where we have seen a little more you know over the time there's been a little more interest on the part of Chinese manufacturers is Gon

which is a battery manufacturer tried to open two factories in the US one in Illinois which has had you know relatively smooth progress uh but one in Michigan which has been incredibly

controversial the local community uh push back there's been you know lawsuit a lot of criticism on the part of policy makers right it got really policized very quickly. And I think that's sort of

very quickly. And I think that's sort of a lesson for Chinese uh manufacturers that this is not a um easy sort of environment for them to invest in even

though the the payoffs may be really big because this is of course a huge automotive market, right? And so at a time in which Chinese EV makers and car makers in general are sort of in a in a

difficult position because of overcompetition in China and are trying to go anywhere really around the world where there there might be consumers.

The United States would be really sort of the big market for them to break into. But it it's certainly I think one

into. But it it's certainly I think one of the more challenging markets for them to enter uh both as you know exporters but also as investors. Um, so yes, I

don't expect there to be sort of uh I don't expect that tomorrow we'll see any sort of uh announcements uh on the part of Chinese uh manufacturers just because President Trump has indicated that

perhaps he might be interested or open to some sort of arrangement.

>> Okay. So you're saying we have a whole host of kind of legal I guess also commercial reasons um and and then the whole political question especially about on the on the state level, right?

or even even more local level on whether Chinese investments would be welcome. Um

James >> and sorry let me just add I didn't even talk about tariffs right so even there like your entire value chain is based in China and so just bringing in all those components and of course that's been a challenge for some other automakers as

well but yeah just >> of course right and a lot of the the cost advantage for a lot of these companies would probably also lie or rest within them having access to at least a large chunk of their their their

sort of supply chains in China. James,

your your former employer Ford is reportedly although there's there's denial on both sides now in talks with Xiaomi um about a potential partnership uh including in the US based on what

Laria just described. I mean is this kind of given industry you know um I guess I guess hopes that actually even if uh the president says you know we want to welcome them that

investment might not be forthcoming because US industry's main reaction would be sort of concern and defensiveness and they would actually look quite uh positively above uh um at

all these kind of restrictions in place or do you think some firms are potentially actually interested in some form of collaboration given that you know the the world is slowly shifting towards EVs and I guess a lot of the big

US car makers actually slashed some of their development budgets recently and there might be a way actually to to you know have some quiet cooperation here that might allow them to to regain their

competitiveness.

>> Uh thanks first of all I just want to say it's great to be on a panel with you and two people I followed and thank you for the national committee that it's been a longtime friend of the national committee and all the work they do. So

this is an important conversation and it's extra relevant than that your involvement Gregor and Yaria. I think

Yaria makes a point that I wanted to start off with which is I think Chinese investment is really a bit of a test case in the USChina relationship. Can we

coexist? Can we find ways to work together? And uh outlined a number of

together? And uh outlined a number of areas where it's kind of a no-go.

There's issues. There's real policy hurdles. And the goan example is a good

hurdles. And the goan example is a good case. And then of course you you people

case. And then of course you you people have mentioned about Ford had worked with CL rather than a CL investment in the United States. It was a a licensing deal that Ford undertook and that seemed

to be more palatable. So I think there are policy frameworks that allow the Chinese to invest in the United States without exposing themselves to the brunt force of opposition talked about. You

know for example would a Chinese car plant be welcome in a community? I think

that's a real case. Even with the CHL investment, there was a considerable amount of backlash and questioning, but the fact that they were working with Ford made it different than on their

own. For me, I think uh uh I did see the

own. For me, I think uh uh I did see the article in the Financial Times and I saw that Ford quickly um disavowed the veracity of the story. However, it does

point to the fact that these are live conversations and um I think to frame it a little bit from my years at an auto company at Ford, there's a concern now

of the prowess of Chinese manufacturing, there's a I think a quiet realization and some executives are not so quiet.

They acknowledge the superior EV architecture, the tech stack, that piece of it that's accelerated beyond where some Western manufacturers are. But I

think there's some there's some red lines if you will. Uh one is the imports don't make sense. They would be a direct threat to domestic business models. And

so just as by the way China maintained high tariff walls for a number of years, there's probably a lot of support for that going forward. And I think one of

the frameworks that would make Chinese investment in the United States is potentially with a joint venture partner as Western car companies both Gregor

from your world and the United States had to enter into joint venture relationships to enter the China market.

It may be time for people to think about if there is going to be Chinese investment in the United States. What

are some of the precursors? And I think one is an opportunity for western companies operating in the United States to be a joint venture partner in that.

Uh there's lots of other things ICTS and techs but I think uh just to frame it I would start with there.

>> Fascinating. And I mean definitely I can I can see that same sentiment as well in in Europe now actually. It's

interesting. I think five six years ago um I think industry observers they probably would have thought oh you know some of those stateown enterprises in China they don't innovate. they're not

commercially viable without subsidies.

But now, I mean, the Italian government, I think last year, was actually vying for some investments from Dongfang, right? One of the kind of three uh

right? One of the kind of three uh centrally owned stateowned enterprise. I

think something that before 2020, nobody would have guessed either in policy maker circles or or industry circles, right? So, it's really a reversal of

right? So, it's really a reversal of roles here. But James um do you think I

roles here. But James um do you think I mean is is there is there interest um on the sort of I would say like let's call it direct competitor tie-ups as well

right I mean the Ford CL one I mean this is I guess more an upstream partnership for Ford right they want to secure and lock in supply in an area where frankly most of the OEMs maybe apart from Tesla

are not really going right I mean most of them see batteries as something that they need to procure it makes sense to have some knowledge inhouse. But now

looking at some of those other potential partnerships, right? When we talk about

partnerships, right? When we talk about the BYDs, the the Xiai's of this world, is there is there also a risk basically that you allowing the the wolf into the

pen so to say and kind of bring your competitors into the US market?

Yeah, I would say there is that concern and I think the dominant reaction in Detroit at least my contacts that when I was at Ford and now and maintain my

contacts now is this dominant theme of concern but where are we going to go from here? Uh we can't be an island

from here? Uh we can't be an island forever. I think there there this

forever. I think there there this actually the China question presents a stronger case for USMCA and what I mean by that is um maintaining uh uh and I

know there's some folks at CSAS that talk about this but the fortress uh USMCA the fortress North America so that we maintain our competitive supply chains to compete with China and then of

course and your direct question Gregor is what about Chinese investment in the United States I don't I think we need to treat This is a live issue. I think the president's visit, as you framed it, in

April, it's it's reasonable that these types of questions are probably in the backgrounds of the Trump administration.

Now, the reality is it could lead to uh billions of investment jobs that they'll have to solve for they'll likely in this move would have to bifurcate their tech

wiring. So, their tech stacks would wire

wiring. So, their tech stacks would wire differently for a western, US, Canadian, Mexico vehicle as opposed to how they're wired now. We can talk about more of

wired now. We can talk about more of that later, but I think people have to be seriously considering given the uh growth of China's auto sector, where and how does the United States play? And I

think uh at the end of the day, if they're going to be here, I think the Western car companies broaden it. There

could be other Western car companies, German, Japanese in the United States, maybe partner, have a JV with Chinese car companies. Um how do we go about

car companies. Um how do we go about this? And I think we should invest the

this? And I think we should invest the time as we're doing today to talk about that because I think if things move quickly as they did in China when China opened up, it'll be a race for a joint venture partner as opposed to if you

want to do that. So, uh, I'll leave it there.

>> No, fascinating. I mean, you you you just opened the question as well on the kind of USMCA renegotiation which is also happening this year, right? Maybe

to both of you. I mean, how does that play into the equation? Right. We

obviously have um the Treasury Secretary Bessent uh US Gria kind of warning uh Mexico and Canada against becoming back doors for for for Chinese car companies.

Right. We had um the Treasury very much pushing uh Mexico to not open to door to to certain Chinese investments. There

were a lot of rumors back and forth whether BYD was going to invest in Mexico. Now, just last month, a few

Mexico. Now, just last month, a few weeks ago, we had Canadian Prime Minister Carney visiting Beijing and um signing this this this big deal, right?

I mean, allowing uh nearly 50,000 Chinese EVs coming in under the uh 6% MFN tariff rate rather than the 106% uh

tariff and also opening the door um to to Chinese investment. I mean, how how do these two components go together? On

the one hand, parts of the administration seem to be warning against um Chinese investment and then we have the president himself saying, you know, if they want to invest in the

in the US, then that's fine. Um unpack

that for us a little bit. I mean, all do you want to go first?

>> Um well, I do think there are some uh there's a lot of different pieces and it's not always entirely clear if they are all going to fit together in one sort of neat uh image. And I think

that's been um uh you know I think the result of this is I think James is right that there's like very conflicting views on this and I think very even within companies and certainly within

government I think there's um there's uh differing opinions on how what would be the best strategy moving forward and I think that's true even in the other you know in Canada and Mexico um and of

course one thing that is worth noting and I think you know this is what James was getting at with the US becoming more and more of an land is that the rest of the world is moving towards to a certain

extent more integration with these Chinese value chains, right? You have

more Chinese exports, you have more Chinese investment, you have European OEMs, and Gregor, you're more of an expert on this than any of us, but you know, European OBMs that are certainly very open to having some of these

technological deals with some of these Chinese companies, right? Elite Motor

and Stalantis, Oxong and and Volkswagen, right? And so I think you know in a

right? And so I think you know in a world devoid of of of of sort of geopolitical tension or economic security you maybe would see uh a lot more you know you would see a Xiaomi and

Ford deal probably right I think it would it would in some ways they would make sense but there are these big concerns about you know this isn't coming into the context of uh you know as we said like a lot of other sort of

geopolitical tensions also this very rapid expansion of Chinese automakers globally right there's this fear of this takeover over um this shift in technologies uh right so there's just

like it's a nexus of different things happening all at the same time and I think in the context of the USMCA what's happening is yes you're having this automotive piece but it's also coming in the context of you know Trump

administration really rewriting the rules of the international the global international order and um the trading system and what the partnership with

allies looks like right so I think there's just a lot of different moving pieces and so I think we'll be forgiven for not always seeing whether or not there is actually like a grand strategy behind all of this. So yes absolutely I

think there would be a lot of conflict if the US is uh preventing invest Chinese investment in Canada and Mexico on the basis of national security and then were to welcome that uh investment

in the United States. Right? But that

would actually move, you know, in a in a way that would actually be fairly consistent with sort of this America first view where, you know, it really the goal is uh also to just, you know,

reshore manufacturing to increase the foreign direct investment in the United States. Uh right and a lot of the deals

States. Uh right and a lot of the deals that we've seen between the United States and many of its trading partners have involved this big uh foreign direct investment package. So I think again I

investment package. So I think again I don't I think if it were a world where the United States and China did not have these big national security um and economic security sort of conflicts you

probably would see a deal that involved a lot of foreign direct investment. But

you're also seeing a lot of tension resistance to that because of the sort of national security concerns. So I I think you know I don't think we have a sort of neat solution to that yet. Uh I

also I will be very surprised if in April what comes out of the meeting is that you know BYD gets to open a factory in the United States, right? That would

that would be I think a big shock. Uh so

I don't know if James has a different view but I you know I don't think that that's probably not what we're going to see. Uh but again you know President

see. Uh but again you know President Trump is uh certainly uh you know unpredictable in many ways. So you never know.

>> I think Gregory has pointed to a couple important themes. One is the America

important themes. One is the America first and uh I would argue that if there is going to be Chinese car manufacturing in this hemisphere, I think the president would want to have it in the

United States. He does not want to see a

United States. He does not want to see a massive facility on the southern and the the southern part of the US in Mexico, but we all heard some of the public statements about the Canadian deal with

China, uh which the prime minister has said is not formally a deal. He doesn't

want to get in trouble with a full FTA with China. But um I think the president

with China. But um I think the president if there is going to be manufacturing for this hemisphere I think the president would like to take credit for that and I agree with I don't think it'll be a branded BYD facility. It

could be uh and what I think people need to be focused on okay what are the criteria if it is a joint venture type of situation where there's benefits to

local OEMs getting to the USMCA point I don't think there has ever been a more important policy framework for the auto industry in the United States than this

uh review of USMCA. I really think it is the preeminent policy question that could set the the the foundation for the auto industry in the United States and

North America going forward. I think uh Ari also mentioned there's a lot of thing you know that in itself uh is a massive policy question and then you layer onto that after the companies have

done major write downs on their EV investments well do we also want the Chinese here? So I think there's a lot

Chinese here? So I think there's a lot but sequencing is important and I would say that the most important piece of the conversation in the next few months will be this review this all the discussions

leading up to the end of June or July negotiation of USMCA if the United States I think takes what I think is an opportunity to tighten the cordon around

North America and kind of own these this regional supply chain and uh run with it. And by the way, I suspect there will

it. And by the way, I suspect there will be content levels caps on Chinese content. That would be a no-brainer. You

content. That would be a no-brainer. You

can't simply allow more and more content to be shipped or transipped or assembled south of the border, what have you.

There has to be limits on that. And I

think there'll be potentially more content required of the United States and higher penalties for non USMCA compliance. But I think the point about

compliance. But I think the point about would the Chinese welcome an opportunity? Absolutely. Have they

opportunity? Absolutely. Have they

lobbyed for it? Yes. Did they lobby for entry into Canada? Absolutely. So,

there's a lot going on. Totally agree

with Laura. I don't think you'll see a branded potentially a BYD or XH plant.

However, a massive investment partnered with a a company I think has to be considered unless you get a full full court push back from the OEMs. And what

I'm hearing is certainly a full by the way a JV that would produce United States and maybe maintain the import prohibition. So you'd be producing as

prohibition. So you'd be producing as the president said if you want to sell here you build here and I suspect uh the folks at USCR if you want to build here then you would ship to Canada and ship

to to Mexico potentially for the hemisphere. So as a start. So a couple

hemisphere. So as a start. So a couple thoughts on that question.

Yeah. Know I mean that that's that's fascinating. I mean James on on the sort

fascinating. I mean James on on the sort of point uh that you made as well about you know the the Xiaomi and the potential models that we could see right

joint ventures uh licensing deals right for CL. I mean I guess also again to

for CL. I mean I guess also again to both of you what do you think does the situation look like from the Chinese perspective right maybe let's start with the company perspective. Um the way

Allaria described it to me there's a tons of risks here right um taking this sort of gamble right you have a um you have a price war at home right so a lot

of the Chinese car makers are nearing perhaps some of them are nearing profitability a lot of them are losing uh uh some of the profits they've actually gained right looking at BYD the sales numbers weren't great in January

so is there actually additional capital that they might want to invest in some of those partnerships in the US or are they just saying you know the US is is such a hot band of political push back against our

companies. We're just going to focus on

companies. We're just going to focus on the rest of the world and let the US deal with themselves. And you know, maybe after this administration is is is out of the office, then we can see

perhaps with a more long-term view of what the situation is. Maybe you guys want to unpack that a little bit more.

And again, also like diving a little bit deeper, what what potential models could we see? Is there like a um a model that

we see? Is there like a um a model that would actually be very capital light, right? Where we basically just have like

right? Where we basically just have like a uh a software licensing uh or an architecture licensing. But again,

architecture licensing. But again, right, especially if you look at software, I do a lot I see a lot of risks, right? Especially on the ICTS

risks, right? Especially on the ICTS side. Um so yeah, just just putting that

side. Um so yeah, just just putting that out there for for the both of you.

>> I'll just I'll just throw in a couple of thoughts. Um I'm actually watching the

thoughts. Um I'm actually watching the Tik Tok deal um closely because I think that will be sort of interesting to see, you know, that's seems to be t taking

the the shape of a joint venture that's majority Americanowned. Uh obviously

majority Americanowned. Uh obviously lots of ICT concerns there. Um so that's going to be and it's certainly been very politically controversial. Uh, of

politically controversial. Uh, of course, uh, Tik Tok, I think, has, you know, an incredible base of supporters in the United States, which I think has made it, um, challenging to to, you

know, ban outright. Uh, but I think that would be sort of a one interesting model, obviously different in the case of cars because you actually have to build them. Uh, but I think that's uh

build them. Uh, but I think that's uh that's potentially one one pathway. I

think the other one, you know, James has been pointing at it, right? you know,

something that US automakers think is in their best interest. Um, that can allow them to access some technology they don't have right now, uh, through some kind of, you know, either joint venture

or licensing deal, which on the other hand actually could help the Chinese manufacturers, right? They don't they

manufacturers, right? They don't they they have less risk. Um, they would have to, you know, put up less capital. Uh,

right? They can sort of benefit a little more. I think you know the the thing

more. I think you know the the thing about um the US market is that they could potentially access you know much more much higher margins you know it's

it's an upper it's a higherend market uh these are companies that in many cases are desperate to find new markets right the you the Chinese market isn't growing

uh it's very much sort of like you know a lot of companies competing for the same same pie right it's the share of the pie but the pie isn't growing uh and a lot of the other markets they're going to are small markets right so then

they're fragmenting and that creates a lot of new costs and challenges uh which you know they're doing you and I Gregor have been following this closely they're internationally very they're internationalizing very rapidly but you know if they could access the US market

that would make their life a lot easier um so I think they're still interested but I think they're probably they should be well aware of all the challenges and the risks associated with uh going and

going solo in the the US market >> and I'll pick up exactly where left off which is I think the Chinese will also have go into this with their eyes wide

open. Uh there it might be an

open. Uh there it might be an opportunity with the white house blessing to break into the United States because I think they do want to get into all the regions talked about margins and

size and so forth even with a joint venture partner. However,

venture partner. However, uh will they be received well? Will

those vehicles be uh uh the consumer acceptance be there? um will what will be the regulatory uh framework in the United States in a few years from now?

These vehicles might not even be online until uh 28 maybe 2 years from now reasonably. So would they have uh

reasonably. So would they have uh certainty after working on this market and if there's an import uh prohibition that continues for a number of years to

get the domestic you know build where you sell that the president mentioned um the Chinese car companies they've got a lot of other uh business challenges to solve and

markets to develop. So there's no shortage of opportunities that they're chasing and I think the United States would be a large opportunity but a large challenge and whether they would want to

take that on remains to be seen.

>> One one question I want to pose to to you. Um so far perhaps that's that's me

you. Um so far perhaps that's that's me but maybe uh the more common grounding has been you know that Beijing and um Beijing's leadership are are broadly supportive right I mean there's been the

kind of uh China Global Inc. sort of you know Chinese companies going out it's been a very um supportive policy environment for the last two decades I would say right but um now looking at

this and we have a similar policy context in in the US but also in Europe right we're talking about outbound investment uh screening in in certain sectors China certainly thinks that the

V industry is is one of its technological assets right and we've seen how I guess the prowess as well of of China's auto industry has turned a massive trade deficit into a surplus in

in in a record number of years. How do

you think Chinese policy makers are looking at this? I I I think on the one hand, we can clearly say yes, they're interested in, you know, cementing um a broader deal, kind of delaying further

US measures, especially on trade, and if that includes an investment deal, they they might be up for it. But at the same time, we have these um export controls on certain battery inputs. We have

concerns about unemployment in China as well, right? I mean, James, you you were

well, right? I mean, James, you you were saying that a no-go for the Detroit car makers or US car makers would be um imports from China, right? So, that is already off the cards. You also

mentioned that as part of the USMCA renegotiation, you're expecting a cap on Chinese content, right? So, where does kind of the Chinese economy fit into all of these questions? Maybe Laria, we're

starting with you, right? You've kind of studied um the Chinese policy ecosystem for a number of years. where where do you see the the direction going?

>> Well, I think we've actually already been seeing a bit of this this tension, right, where as you said, right, you have a lot of factories in China.

There's certainly been, you know, this challenge of involution, uh, you know, with falling margins, uh, over competition, a lot of supply, uh, which has been pushing a lot of automakers to

export more. And yet internationally and

export more. And yet internationally and not even you know leaving the US alone the pressure uh from other governments has been you know if you want to access my market you got to make it here right so you're now seeing a lot of these

Chinese companies and again you know if you want to just look at BYD by has committed and started building a lot of factories outside of China it's not exactly clear how that's going to all

sort of uh work out in a in a sort of coherent fashion because you you can envision that this is going to sort of uh again creating a lot of

redundancy um across the spectrum. So I

think that is something that already is somewhat present and I think already you're seeing um how a lot of you know Europe this is a very live debate is like how can you pressure these com

Chinese companies or you know pressure incentivize these Chinese companies to transfer more of their knowhow and uh

more of the value added part of the the production process outside of China.

Right? So how can you ca c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c c capture more of that value added if you're the recipient country of you know the country that's receiving the the foreign direct investment and there's a lot you know I

think a lot of experimentation and thinking around this I think different countries are different interested in different pieces of this as well uh but I think you know that is certainly something that's not going to come

naturally out of the goodness of the OEM or the Chinese government's heart uh that's going to be a negotiated outcome and I think to be honest that's always been the case right I mean if you look

at the automotive sector in previous years. Certainly when it came to the

years. Certainly when it came to the types of investments that uh you know foreign auto western automakers made in China but even you know when Japanese automakers uh started investing in the United States these were usually

political deals that led to these sort of um uh you know ultimately whether market not market but business decisions let's put it that way. um it's it's not necessarily just sort of a natural

process and I expect that's what we'll be seeing here in a lot of countries and I think if the US wants this type of investment that is also going to be something that and and right we're

talking about President Trump's visit in conjunction to maybe a potential uh deal of some kind right this is going to be political it's not going to be something

that's purely decided between businesses >> and then maybe maybe as a last question um how do you see this kind of fit into the broader state of US China relations.

I mean the way you just framed it, right? I mean also looking at this um

right? I mean also looking at this um against the backdrop of the 80s and Japanese investment in the US, right? I

mean do you think okay this could actually become a template right for some of the broader tensions that we're seeing between China and the US at least on the economic side right I'm thinking

about China's massive trade surplus um you know if you shift all of that into investment right that might alleviate some concerns at the same time are those sort of cyber security and national

security issues ever going to go away so I mean maybe if you can just you know in a minute each um sum up how you how you think that might how how that might fit into this broader uh state where we are

now in in early 2026.

>> I I think you framed it correctly. Now,

Laria, your last comment, it's going to come down to a political decision and what are the pieces that are being negotiated uh by the Chinese and by the

the Americans and uh auto has to figure into that somehow. uh whether it's a direct opportunity for Chinese companies which I think would be they'd have to have their eyes open as well to see

whether they want that and whether US companies are really fully ready to embrace. I think the president would be

embrace. I think the president would be wise to check in with the auto companies who have had these big writedowns.

Having said that, unlike the Trump's first term, my sense is the Chinese are very wellprepared and doing their scenario analysis of what they want out of a deal and what they're prepared to

give. And we'll have to see what comes

give. And we'll have to see what comes out of it. And my final point of how this fits together. The for me the the preeminent policy conversation that we

need to land successfully is USMCA.

Otherwise, we actually impose costs on our domestic champions instead of leveraging a regionally a stronger regional framework that could actually uh be a foundation for competing with

China on some some level. So, that'd be my few points to close there, but I'll be interested to hear what has to say.

Yeah, I think it's uh you know how this fits into broader USChina relations is is obviously you know I think as James said right this is the auto industry is obviously like a really important

industry uh on you know both sides.

What's interesting is that in some ways the auto industry because of all these tariffs and rules and you know the the the restrictions are in place right now is in some ways less of a hot spot right

there's less of an ongoing you know immediate crisis. Everybody knows that

immediate crisis. Everybody knows that this is a big challenge moving forward, but it's not necessarily the crisis right now, right? I think you know right now the big priorities have to do with

export controls on both sides.

>> Um and uh you know when it comes to exports for example the United States is very focused on agricultural exports, energy exports uh and and and this is on

the on the Chinese side right although exports is I think certainly a desire uh or some kind of maybe uh investment. So

again, I think you know it's it's part of this broader debate over trade uh and trade imbalances. I mean I think what's

trade imbalances. I mean I think what's interesting is that the Trump administration has moved away from sort of a more traditional approach to debate discussing economics with China which

had to do more of sort of systemwide uh reforms and structural issues and much more on the sectoral level of you know how much are you exporting of this how much are you buying of this and how

does it add up with our trade deficits and trade surpluses. So within that context I think all those could play a really big role but you know does this mean that the USChina relations are

resolved right that we have a prolonged period of stability I I doubt that right I think all the structural challenges are still there um and I think although

it's much more of a symptom of the changing sort of balance between and technology and and the the ch the competition that's going to continue to be there for I think a very long time um

so I think you know we would all probably welcome come some sort of um uh strategy that would help the US auto industry in one way or another make progress. But I think you know the the

progress. But I think you know the the the US the train the competition with China is still going to be there for a very long time to come.

>> And I would just add Lar agreed to everything you said and the level of trust is razor thin. So a lot of these longer term decisions based on a strong

relationship and I'm not clear that we're there yet. uh it's a very tenuous uh relationship to sort of holding on to >> absolutely and I think you know James the point that you made earlier is very

valid right that even if you are a Chinese automaker you will be looking at what is the next presidency going to look like does this hold in Congress right how much support for this is there

beyond you know the person of the president right who I think certainly has some interest in this but I think there is you know actually a lot of skepticism about some kind of deal that

would involve maybe Chinese investment or Chinese technology beyond that. So I

think you know there's there's a lot of uh volatility still in the political environment and yeah between the US and China.

>> James this has been a fantastic discussion. The the one thing I wanted

discussion. The the one thing I wanted to add um just just coming back to your comments you made just now. There is

also the the the broader global dimension I think especially when we look at the ICTS rules right other countries are watching this very closely and especially how this administration is handling the issue right because I

think under the Biden administration there was also a broader effort right to bring other countries on board right Canada was was signaling we might be following the US right the EU um just

released its proposal for a cyber security act which I would say actually copies some of the ICTS elements um in in in in the last two weeks, right? So,

I think looking at this could also become a broader template um for other countries on how they are handling Chinese investment, right? Both in the auto sector but also beyond. Um leaving

it there. I would like to thank the both of you and also the national committee um especially national committee staff who you know behind the scenes made this possible. Um thank you very much. We

possible. Um thank you very much. We

hope you enjoyed the program and we also hope that you will join us for future national committee events. Thank you.