After a Chinese official warned the government could slap a penalty on an unnamed U.S. automaker for monopolistic behavior, shares of U.S. automakers General Motors Co and Ford Motor Co skidded on Wednesday.
It was only a few days ago that U.S. President-elect Donald Trump questioned the longstanding U.S. policy of acknowledging that Taiwan is part of "one China" as the warning from a senior Chinese state planning official was conveyed through the official China Daily newspaper on Wednesday.
U.S. corporations have been rattled by Trump's rhetorical challenges to long-established policy toward China. The companies have developed complex supply chains that feed Chinese-made parts to their U.S. operations and have ramped up sales in China relying on stable U.S.-China relations for more than 40 years.
During times of diplomatic discord, regulatory sanctions against U.S. corporations would be used, Chinese officials have demonstrated.
As the wider Dow Jones industrial average slipped, Ford was down 1.4 percent while GM shares slumped 3.2 percent.
Whether it was under investigation by Chinese authorities was not directly stated by GM in a statement on Wednesday. "GM fully respects local laws and regulations wherever we operate," the company said. "We do not comment on media speculation."
A spokesman for Ford's Asia-Pacific operations said the company was "unaware of the issue."
Investigators had found that a U.S. auto company had instructed distributors to fix prices starting in 2014, the China Daily quoted Zhang Handong, director of the National Development and Reform Commission's (NDRC) price supervision bureau, as saying.
The NDRC did not respond to requests for comment and the China Daily article did not give further details.
Including leveraging its holdings of $1.19 trillion of U.S. treasuries in September, there are many ways that China could retaliate against the United States.
Trump was urged to recognize the importance of close economic ties between China and the United States in an editorial in the China Daily.
"For the American economy to be great again ... the U.S. needs to cement its economic relations with China, rather than destroy them."
Crucial to GM’s sustenance is China, the world's largest vehicle market. in 2015, more than one-third of the 9.96 million vehicles GM sold were bought by Chinese consumers. Accounting for about 20 percent of GM's global net income of $9.7 billion in 2015 was profits from Chinese operations, including joint ventures.
About 16 percent of its global pre-tax profit of $9.4 billion in 2015 is represented by Ford's China joint ventures.
"This action is just a hint as to how much power China wields," said Michael Dunne, president of Dunne Automotive and a veteran of the Chinese auto industry. "A small fine of several million dollars is likely. The message is, 'If you want to play, we can play.'"
For several years Chinese officials have been cracking down on what they have called monopolistic behavior by foreign automakers and dealers for several years, people familiar with the situation said, even though Zhang's comments to the China Daily appeared just days after Trump's remarks.
The China Daily said that it would be the seventh issued to automakers since the commission began anti-monopoly investigations in 2011 and the second this month of the NDRC levies a new penalty.
(Source:www.reuters.com)
It was only a few days ago that U.S. President-elect Donald Trump questioned the longstanding U.S. policy of acknowledging that Taiwan is part of "one China" as the warning from a senior Chinese state planning official was conveyed through the official China Daily newspaper on Wednesday.
U.S. corporations have been rattled by Trump's rhetorical challenges to long-established policy toward China. The companies have developed complex supply chains that feed Chinese-made parts to their U.S. operations and have ramped up sales in China relying on stable U.S.-China relations for more than 40 years.
During times of diplomatic discord, regulatory sanctions against U.S. corporations would be used, Chinese officials have demonstrated.
As the wider Dow Jones industrial average slipped, Ford was down 1.4 percent while GM shares slumped 3.2 percent.
Whether it was under investigation by Chinese authorities was not directly stated by GM in a statement on Wednesday. "GM fully respects local laws and regulations wherever we operate," the company said. "We do not comment on media speculation."
A spokesman for Ford's Asia-Pacific operations said the company was "unaware of the issue."
Investigators had found that a U.S. auto company had instructed distributors to fix prices starting in 2014, the China Daily quoted Zhang Handong, director of the National Development and Reform Commission's (NDRC) price supervision bureau, as saying.
The NDRC did not respond to requests for comment and the China Daily article did not give further details.
Including leveraging its holdings of $1.19 trillion of U.S. treasuries in September, there are many ways that China could retaliate against the United States.
Trump was urged to recognize the importance of close economic ties between China and the United States in an editorial in the China Daily.
"For the American economy to be great again ... the U.S. needs to cement its economic relations with China, rather than destroy them."
Crucial to GM’s sustenance is China, the world's largest vehicle market. in 2015, more than one-third of the 9.96 million vehicles GM sold were bought by Chinese consumers. Accounting for about 20 percent of GM's global net income of $9.7 billion in 2015 was profits from Chinese operations, including joint ventures.
About 16 percent of its global pre-tax profit of $9.4 billion in 2015 is represented by Ford's China joint ventures.
"This action is just a hint as to how much power China wields," said Michael Dunne, president of Dunne Automotive and a veteran of the Chinese auto industry. "A small fine of several million dollars is likely. The message is, 'If you want to play, we can play.'"
For several years Chinese officials have been cracking down on what they have called monopolistic behavior by foreign automakers and dealers for several years, people familiar with the situation said, even though Zhang's comments to the China Daily appeared just days after Trump's remarks.
The China Daily said that it would be the seventh issued to automakers since the commission began anti-monopoly investigations in 2011 and the second this month of the NDRC levies a new penalty.
(Source:www.reuters.com)