China’s auto stocks rise unfazed by U.S. proposal to ban Chinese car parts

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China’s auto stocks rise unfazed by U.S. proposal to ban ******** car parts

Rows of new energy vehicles are parked at Changan Automobile’s vehicle distribution center in Chongqing, China, on January 14, 2024. 

Costfoto | Nurphoto | Getty Images

Shares of ******** automakers climbed Tuesday, shrugging off a U.S. government proposal to ban certain types of vehicles equipped with car parts from China and Russia, amid a broad rally after Beijing announced policy easing.  

Hong Kong listed Li Auto rose over 8%, while Nio surged 9%. Shares of BYD climbed 2.7%, while Geely added 3.3%. Leapmotor jumped 4.35%. 

The proposed rule aims to ban the import and ***** of cars with specific vehicle communication systems or automated driving systems with hardware or software linked to China or Russia. These systems enable external communication, such as Bluetooth, cellular, and Wi-Fi modules. 

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has cited national security risks for its latest measure aimed at curbing ******** auto industry’s influence and reach in the U.S.

“Cars today have cameras, microphones, GPS tracking, and other technologies connected to the internet. It doesn’t take much imagination to understand how a foreign adversary with access to this information could pose a serious risk to both our national security and the privacy of U.S. citizens,” said Commerce Secretary Gina Raimondo.

The restrictions on software will be implemented for model year 2027, while those on hardware will start for model year 2030, or January 2029, for units without a model year.

The rally in the auto sector today was mainly driven by the overall market condition in Hong Kong, which was related to the support given by the PBOC, said Ivan Wu, equity research analyst at Guotai Junan International.

People’s Bank of China Gov. Pan Gongsheng said in a press conference on Tuesday that the amount of cash banks need to have on hand, known as the reserve requirement ratio, or RRR, will be cut by 50 basis points. He also announced that the PBOC would cut the 7-day repo rate by 0.2 percentage points, among other measures.

U.S. proposal to ban ******** auto parts may not have a direct negative impact on the ******** auto industry as the sales volume of ******** auto exports to the U.S. markets are “very small” and limited, Wu said. Additionally, ******** parts companies have already set up factories in South America, which can be exported directly to U.S. markets under the U.S.-Mexico Tariff Agreement, he added.

According to the

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, the country’s car dealers faced a total loss of 138 billion yuan ($19.55 billion) in the first eight months of the year as they were forced to sell new cars at significant discounts. 

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