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Chinese Regulators Fine GM For Setting Up A Luxury Cars Monopoly

GM / 25 Comments

It could be retaliation for Trump's stance against China.

The largest automaker in the world's largest auto market is China's SAIC Motor Corp, which has a partnership with General Motors, the largest automaker in the second largest auto market. Fruitful as the relationship between two giants may sound, the American automaker may be facing fines for collaborating with SAIC to set up a price monopoly. Citing Chinese state television, Reuters reports that GM will be fined 201 million Yuan ($29 million) for setting minimum prices on Cadillac, Chevy, and Buck models.

While this could be problematic for GM, which relies on China for a sizable portion of its sales (especially for Buick sales given that US buyers aren't enthralled with the brand), it isn't a deal breaker. In an email statement, GM commented saying, "GM fully respects local laws and regulations wherever we operate. We will provide full support to our joint venture in China to ensure that all responsive and appropriate actions are taken with respect to this matter." The investigation by Shanghai's pricing regulators has reportedly been going on for some time but the timing of the charges is raising eyebrows with some thinking that the fine is a form of retaliation against President-elect Donald Trump's comments about China's "One China" policy.

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The policy, taken by the US and any other nations wanting diplomatic relations with the People's Republic of Chinas, has been to recognize mainland China as the official Chinese government and not the Republic of China, known as Taiwan to most. There isn't any evidence to certify that the fine is a form of retaliation, but the speculation adds to the growing rift between the two countries. The real beneficiaries of the dismantling of GM and SAIC's monopoly will be Chinese consumers, who already pay exorbitant prices for imported vehicles thanks to heavy taxes. In the past, this has spurred automakers to begin building cars in China, something that even Tesla is planning to do once the Model 3 sedan goes on sale.