German car parts supplier says China’s green campaign will slash US$45 billion from economy

A German car parts manufacturer has asked the Shanghai government to grant one of its suppliers that was forced to close under a sweeping environmental crackdown a three-month grace period or risk losing 300 billion yuan (US$45.6 billion) from China’s GDP.

Schaeffler Group, which supplies both locally owned and joint venture carmakers in China, including SAIC General Motors and SAIC Volkswagen, told authorities in Shanghai last week that it had only been told about the closure of its sole needle bearings supplier Shanghai Jielong on September 11 and had had no time to find a replacement. As a result, production in China of more than 200 car models for 49 brands would be affected, Xinhua reported on Thursday.

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Jielong’s metal wire drawing plant had earlier been forced to cease operations by the city’s environmental protection bureau, the report said.

In a letter signed by Greater China Chief Executive Zhang Yilin, the German company said it would take three months to find a replacement. In that time China’s car production would fall by about three million units, with an estimated value of 300 billion yuan, it said.

Phone calls and emails to Schaeffler’s China headquarters in Shanghai went unanswered on Thursday. The Shanghai Pudong New Area Environmental Protection Bureau was also unavailable for comment.

In an email to Xinhua on Wednesday, the bureau said it warned Jielong in December that it risked closure for failing to meet environmental requirements.

“Jielong and Shaeffler had nine months to communicate and adjust, so they should not feel that this has been sudden,” the bureau was quoted as saying.

“When choosing a supplier, the German company should consider whether it obeys China’s environmental rules,” it said.

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