US carmaker Tesla and chip giant Intel unveiled their new business plans in China over the weekend, serving as fresh examples of US companies’ confidence in the nation, as the world’s second-largest economy is ramping up its efforts to further attract foreign investment.
One important reason behind these moves is the mature supply chain that China has cultivated for years, Chinese experts said, and the so-called decoupling from China boosted by some US politicians turn out to go against the fact, as the US tech giants are choosing to invest in China.
US carmaker Tesla announced on Sunday that it will build a Megafactory in Shanghai. The new plant, which will manufacture the company’s energy storage product Megapack, is scheduled to break ground in the third quarter of the year and to start production in the second quarter of 2024, said the announcement the company sent to the Global Times on Sunday.
The company said the new factory will initially produce 10,000 Megapacks every year, equal to around 40 gigawatt hours of energy storage, and those products will be sold worldwide.
The news came as Bloomberg reported that Tesla CEO Elon Musk would be in China from Saturday and is expected to meet with local officials, among other events. Musk’s tour comes just days after his 74-year-old mother visited China, saying that “Everyone Is Very Friendly.”
“Tesla is keen in investing in China, for China’s production and consumption of new-energy vehicles lead the world,” Wang Jingzhong, deputy director general of the China Battery Industry Association, told the Global Times on Sunday.
“China has the most complete and mature supply chain when it comes to lithium batteries, ranging from the supplies of raw materials to spare parts, which will help Tesla to gain more of an edge in the international market,” he said.
Intel Photo: VCG
On Saturday, US chip giant Intel held an opening ceremony of setting up an office for its integrated circuit business in Sanya, South China’s Hainan Province. It will provide services for distribution and settlement of cross-border software and hardware products, system integration, and talent training for the Chinese market.
Moves by Intel, Tesla and other US companies that have planned to expand their investment in China once again proved that the US-launched “decoupling” move is a false proposition, Gao Lingyun, an expert with the Chinese Academy of Social Sciences in Beijing, told the Global Times on Sunday.
“The current trends, in both investment and trade, are counterproductive to the strategic efforts of some US politicians aiming to ‘decouple’ from China and contain China’s development,” Gao said.
The swarm of investment showed that US companies are clearly eager to expand where there are large profits and benefits from the world’s most vibrant markets, Gao noted.
At present, the scale of Intel’s investment in China is about $13 billion, with more than 12,000 employees. In 2022, Intel China’s revenue accounted for 27 percent of Intel’s global revenue. China has become the regional market where Intel has the largest investment and the most comprehensive organization outside the US, said the official WeChat account of the commerce department of Hainan Province.
After the US, China is Tesla’s largest market, accounting for 22.3 percent of revenue in 2022. The company increased shipments from its Shanghai plant in March, according to Bloomberg.
China’s opening attitude to foreign investment is in stark contrast to the anti-globalization and protectionist trend in the US, Chinese experts said, explaining that China’s large market, complete industrial support, high-quality labor force and strong innovation ability make the country lucrative for overseas investment, including by US companies.
Senior officials from the US Department of Commerce are reportedly scheduled to travel to Beijing and Shanghai this week as part of an effort to lay the groundwork for a potential trip by Commerce Secretary Gina Raimondo later this year, according to people familiar with the plan, CNBC reported.
Regarding the possible visit, Gao said it has been a long time since senior US officials said they planned to visit China. China has always been open to the visit, “but we hope that they will show sincerity in solving concrete problems instead of making a show for the US public.”
Bilateral trade reached 703 billion yuan ($101.2 billion) in the first two months of this year, down 10.6 percent year-on-year, Chinese official data showed. This amount accounted for 11.4 percent of China’s total foreign trade, compared with 12.7 percent a year earlier.
Source : Global Times