In the face of repeated anti-dumping investigations targeting Chinese products such as textiles, home appliances, and motorcycles in global markets, there's a growing temptation to believe that "facing anti-dumping" has become a common challenge for developing countries like China. However, this is not entirely accurate. Developed nations can also engage in dumping practices against developing countries, making it crucial for emerging economies to master WTO rules and strengthen their self-protection mechanisms.
Wang Qinhua, Director of the Bureau of Industrial Damage Investigation under the Ministry of Commerce, emphasizes that the automotive industry, especially its parts sector, requires particular attention. She highlights that the automotive supply chain is extensive, complex, and highly decentralized, making it vulnerable to external pressures. With foreign auto parts flooding the market, she warns that although no formal anti-dumping measures have been imposed on vehicles yet, upstream sectors like steel have already faced such challenges.
International competition is fierce, and preparation is key. During the "Eleventh Five-Year Plan" period, the concept of early warning and upgrading the auto parts industry was already introduced. As foreign anti-dumping investigations continue to target Chinese exports, domestic markets are quietly facing similar threats. Avoiding these issues is difficult, but proactive measures can reduce unnecessary losses.
This is not alarmism — the reality is evident. In industries like chemicals, direct confrontations have already begun. For instance, Japan, South Korea, the U.S., and France have dumped large quantities of hydrazine hydrate at low prices into China, causing severe damage to local producers. Sales prices, pre-tax profits, and investment returns have all suffered, leading to massive financial losses. In response, the Chinese government imposed anti-dumping duties ranging from 28% to 184% on imported hydrazine hydrates from these countries for five years.
Similarly, after the U.S. implemented steel safeguards, the EU and Canada followed suit, leading to an influx of steel into China that disrupted local companies. In response, the Iron and Steel Industry Association and major producers launched complaints and initiated import quotas with special tariffs on excess imports.
The situation in chemical and steel industries shows that the automotive sector is not immune. Since 1997, the Bureau of Industrial Damage Investigation has conducted over 40 anti-dumping inquiries and one safeguard investigation. At the 2005 China Automotive Industry Development International Forum, Wang Qinhua warned that the impact on auto parts from international giants is even more severe than on complete vehicles, with potential for dumping.
Currently, over 70% of the world’s top 100 auto parts suppliers operate in China, with nearly 1,200 foreign or joint-venture companies manufacturing auto parts. These entities hold more than 50% of the market share, while domestic manufacturers remain small, fragmented, and inefficient. Wang stresses the need for vigilance, though she notes that whether dumping has occurred or what actions should be taken is still under evaluation.
China, having joined the WTO, must learn to use international trade rules to protect itself. Anti-dumping, anti-subsidy, and safeguard measures are available tools to counter unfair trade practices. Safeguards, in particular, offer broader protection by allowing measures like tariff increases or import quotas without requiring proof of unfair practices.
During the "Eleventh Five-Year Plan," the Bureau aims to enhance protection for the auto industry. It has already established an early warning system, focusing on the entire auto and parts industry. The model uses analytical hierarchy processes and multi-order comparisons to predict potential damage. While most areas remain within safe limits, some components show signs of concern.
However, the current early warning mechanism lacks breadth and depth. To improve, it needs to cover more sectors, involve more companies, and enhance analysis. Specifically, the auto parts sector requires stronger early warning models and evaluation systems to better anticipate and respond to future challenges.
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