China’s “Used” Car Exports to Central Asia Raise Questions Over Trade Practices
China has recently surpassed Japan to become the world’s largest automobile exporter. Yet behind this headline lies a controversial trade tactic: the mass export of brand-new vehicles categorized as “used.” Since 2019, this strategy has become a key component of China’s vehicle trade with regions including Central Asia, Russia, and the Middle East. A Reuters investigation has revealed that these so-called “zero-mileage used cars” are new vehicles that are briefly registered in China to obtain domestic license plates, then exported abroad without being driven. This approach allows automakers to classify the cars as “sold,” enabling local governments to boost export figures and manufacturers to reduce unsold inventory from an increasingly saturated domestic market. “This is the outcome of an almost four-year price war that has made companies desperate to book any sales possible,” said Tu Le, founder of the Michigan-based consultancy Sino Auto Insights. Local Governments Fuel the Export Boom At least 20 provincial and municipal governments in China, including major industrial hubs like Guangdong and Sichuan, actively support this model. Local incentives include issuing additional export licenses, offering tax breaks, investing in export-related infrastructure, and providing free warehouse space near border zones These measures align with national macroeconomic objectives and offer local officials a tool to demonstrate economic performance through export statistics. Central Asia: A Strategic Destination Central Asia has emerged as one of the primary destinations for these vehicles. Many of the exported models are gasoline-powered, as China pivots to electric vehicles (EVs) domestically. Nonetheless, EVs, often heavily subsidized at the production stage, are also part of the export mix. William Ng, international director at Chongqing-based Huanyu Auto, reported strong profits in 2022-2023. “We were able to earn 10,000 yuan ($1,400) in profit on an electric sedan purchased for 40,000 yuan by selling it in Central Asia,” he told Reuters. However, Ng warned that the market is becoming oversaturated. “Small dealers and even livestreamers are getting involved. They used to sell wine or vases, now they’re selling cars. This is chaos.” Industry Pushback and Regulatory Scrutiny Despite short-term export gains, several Chinese automotive leaders have expressed unease. Zhu Huarong, chairman of Chang'an Auto, warned that the practice could tarnish the global image of Chinese carmakers. Xing Lei, founder of AutoXing, echoed this sentiment. “How many [sales] are real or inflated? No one knows,” he said, pointing to a growing distrust of industry data. Importing nations are starting to react. Russia has banned zero-mileage used cars from brands that already have authorized dealerships in the country. Jordan and several Middle Eastern countries have tightened regulations, redefining what qualifies as a “used” vehicle to close loopholes. These moves reflect mounting concern over what some consider a “dumping” strategy, flooding foreign markets with low-cost or subsidized vehicles that disrupt local competition and undercut domestic dealers. Why the Practice Continues China’s centrally managed economy allows for considerable leeway in how provinces achieve growth targets. Export volume, employment figures, and retail sales data are often tied to the promotion prospects of local officials....
