Eurasia Group | Chinese autonomous vehicle industry faces geopolitical headwinds

Chinese autonomous vehicle industry faces geopolitical headwinds

12 March 2021
Chinese autonomous vehicle industry faces geopolitical headwinds
China is betting heavily on autonomous vehicles (AVs), which Beijing considers a sector to showcase its strength in the deployment of emerging technologies ranging from 5G networks to artificial intelligence. The country's AV ecosystem will benefit from state investment in digital infrastructure over the next year as part of the coronavirus stimulus spending under the so-called New Infrastructure Initiative (NII). The NII, which was unveiled last May, includes approximately USD 1.4 trillion of government funding over five years.

This Eurasia Group report explains China's efforts to accelerate AV development. It describes how escalating US-China technology competition — including US actions launched in 2019 against the Chinese 5G networking equipment producer Huawei—threaten to disrupt China's ambitions in this important emerging technology field. Indeed, 2021 will be an inflection point in AV development and deployment in China, as the complexity of AV supply chains becomes more apparent. AV companies and their suppliers will face mounting geopolitical challenges from US-China tensions and continuing shortages, especially for auto-related semiconductors, caused by the pandemic.