Foreign Carmakers Keep Losing Ground in China as Beijing Exports Its Industrial Surplus

International luxury car brands continued to lose sales in China last month, as wealthy buyers kept moving away from expensive petrol-powered vehicles toward domestic electric models. The South China Morning Post reported that brands including Mercedes-Benz and Land Rover saw sales erode even in the premium segment that once insulated them from Chinese competition.

The decline is part of a larger structural shift. The Financial Times argued that China's high degree of self-sufficiency reduces its vulnerability to economic coercion, a central asset in what it called a contest among neo-mercantilist states that use industrial policy for strategic advantage. That policy is visible in freight as well as passenger cars. Beijing is pushing to make electric vehicles at least 40% of new heavy-goods truck sales by 2030, which would require about 1.6 million electric trucks on its roads.

The combination of weak domestic demand and vast productive capacity leaves China dependent on exporting its manufacturing surplus. That dependence sustains trade friction with the United States and Europe and exports price deflation to its trading partners. Foreign incumbents that once relied on Chinese demand for profit now face both a shrinking share inside China and rising Chinese competition in their own markets.