[Column] China Shock 2.0 (JoongAng Ilbo Japanese Edition)

Western automakers are increasingly wary of China's offensive in low-priced exports. China's domestic sales of new-energy vehicles totaled approximately 7.44 million units in the first half, up 7.3% year on year. Domestic demand, however, fell approximately 13% to around 5.09 million units, highlighting a move to redirect overseas the vehicles that cannot be sold domestically. Exports surged approximately 120% year on year to 2.355 million units.

Tensions are particularly high in Europe, where Chinese companies are expanding into the European market amid delays in recovering their position in the US market. Exports of China-made hybrid vehicles to the EU rose from 100,000 units in 2024 to 300,000 last year and are estimated at approximately 800,000 this year. The industry estimates that approximately 35% are destined for Europe. As a result, the European market has become an important competitive arena.

The phenomenon known as China Shock 2.0 is said to differ from the shock of the early 2000s in that competition in higher-value-added products is the main driver. Fields including electric vehicles have become central, while the EU has introduced safeguards, although their effectiveness remains uncertain. South Korea is also facing pressure in the European market, with Chinese companies seeking to take market share in areas including components and electric vehicles.

South Korea benefited during the era when China was the "world's factory," but in the 2.0 era it is facing pressure in markets for products such as automobiles and batteries, areas in which Japanese companies excel, and is confronting difficulties similar to those in Europe. As concern over the moves of Chinese companies grows, attention is also focusing on emerging companies following BYD, as well as Xpeng and Xiaomi.