Opel puts China entry on hold as trade tensions rise

German carmaker Opel said Friday it had stepped back from a planned entry into the Chinese market, as officials in Berlin take a harsher line with Beijing on trade.

The expansion, announced in July 2021, was stopped on a backdrop of “growing geopolitical tensions” between the Chinese leadership and the United States and Europe, according to German financial daily Handelsblatt, which first reported on the decision.

“The current challenges for the automotive industry” meant the carmaker had to focus on other priorities, Opel said in a statement.

The auto industry has been fighting persistent bottlenecks, particularly in the supply of semiconductors, which have led to production stops at manufacturers.

“With this in mind, and considering the volume required to make a real impact, Opel has put its entry into the Chinese market on hold for the time being,” said the carmaker, which is part of the Stellantis group.

China’s strict zero-Covid policy, which has led to rolling lockdowns, and the escalation of tensions over Taiwan had also made it “difficult” for Opel to enter into the major market, Handelsblatt reported.

Germany has likewise developed a stronger line against Beijing on trade issues, with the Economy Minister Robert Habeck saying earlier this week there would be no more “naivety” towards China.

Concern over human rights abuses is at the centre of the change in attitude amongst German officials.

“The period when we said trade no matter what, whatever the social or humanitarian standards are” was over, Habeck said.

In May, Germany refused investment guarantees in China to Volkswagen due to concerns over human rights abuses in Xinjiang, where the auto giant has a facility.

China’s Communist Party is accused of detaining over one million Uyghurs and other Muslim minorities in the far-western region — a claim which Beijing vehemently denies.

Volkswagen’s former CEO Herbert Diess said in June there was “no forced labour” at the Xinjiang factory, which it operates together with its Chinese partner SAIC. — Agence France-Presse