TMTPost -- Chinese experts warn that the U.S. attempt to ban China-made connected vehicle parts will hurt the global auto industry supply chain,  including the American companies.

Credit：Xinhua News Agency

Chinese experts criticized a reported plan of the US to ban Chinese-made software and hardware in connected and autonomous vehicles in the US, saying the move lays bare Washington's reckless attempt to politicize trade issues, reported the Global Times, the Chinese state-backed newspaper. The US government has repeatedly disregarded pleas from the business community, laying bare the political motivation behind such actions, which will inflict huge damage for relevant industries, but fail to achieve the US' goal, the report cited experts.

In the long term, the proposed ban means Chinese companies will lose a major market if the US implements the ban; however, the ban will also cause loses for US businesses and consumers, Xiang Ligang, director-general of the Beijing-based Information Consumption Alliance, told the Global Times. Like the US' ban on Chinese telecommunications equipment and crackdown measures on other Chinese products, the proposed ban on Chinese auto software and hardware will also lead to higher costs for US businesses and consumers, Xiang said.

The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) announced Monday a proposal of rulemaking that would prohibit the sale or import of connected vehicles integrating specific pieces of hardware and software from China, claiming the rule is designed to protect national security and safety of U.S. drivers. BIS invites public comments, which are due 30 days after publication, before finalizing the rule by January 20, 2025.

The proposed rule focuses on hardware and software integrated into the Vehicle Connectivity System (VCS) and software integrated into the Automated Driving System (ADS). These are the critical systems that, through specific hardware and software, allow for external connectivity and autonomous driving capabilities in connected vehicles. The proposed rule would apply to all wheeled on-road vehicles such as cars, trucks, and buses, but would exclude vehicles not used on public roads like agricultural or mining vehicles.

The prohibitions on software would take effect for Model Year 2027 and the prohibitions on hardware would take effect for Model Year 2030, or January 1, 2029 for units without a model year, according to the proposal.  

The release of proposal confirmed recent reports at weekend. Reuters cited sources that the Biden administration is set to propose a ban on Chinese software and hardware in connected and autonomous vehicles on US roads due to national security concerns.

The latest proposal is the latest sign that the U.S. government is furthering curbs on Chinese auto industry. Earlier this month, The Office of the United States Trade Representative (USTR) unveiled its final modifications concerning the statutory review of the tariff actions in the Section 301 investigation of China, based on the proposal the Biden administration unveiled in May.

 The USTR said the proposed modifications announced in May were largely adopted, with several updates to strengthen the actions to protect American businesses and workers from China’s unfair trade practices following the review of more than 1,100 comments from the public. Under the USTR’s final modification, many of the tariffs would go into effect on September 27, including those on EVs, EV batteries, solar cells, steel, aluminum and key minerals. A 50% duty on Chinese semiconductors, that is due to start in 2025, now includes two new categories - silicon wafers and polysilicon used in solar panels.

The latest proposal, following the upcoming new EV tariff, further showed the U.S.' all-out effort to contain the development of China's auto industry; however, such effort runs counter to basic economic laws and will not stop the development of China's auto industry, Chinese experts noted.

"In essence, by announcing the additional tariffs and other crackdown measures, the U.S. also made it clear that it has fallen behind China in the new-energy vehicle sector," Lü Xiang, research fellow at the Chinese Academy of Social Sciences, told the Global Times. "It has lost in the competition so it resorts to protectionist measures."