Chinese automaker Guangzhou Automobile Group Co., Ltd. (GAC) announced on Monday that it plans to acquire a 50-percent stake in FAW Toyota Motor Co., Ltd., a major step forward in the strategic cooperation between GAC and China FAW Corporation.
According to the statement, GAC, a state-owned automaker headquartered in Guangzhou, the provincial capital of south China's Guangdong, plans to purchase a 50-percent stake in the joint venture FAW Toyota, held by China FAW Corporation Limited based in Changchun City, Jilin Province in the northeast, through a share issuance, while simultaneously raising supporting funds through a separate share offering.
The number of shares to be issued will not exceed 30 percent of GAC's total share capital prior to the supporting fund-raising share issuance. The move marks significant progress in the two companies' strategic cooperation.
Experts noted that the GAC-FAW cooperation represents a new model in which a centrally-administered state-owned enterprise and a local state-owned enterprise explore lightweight equity ties and deep coordination.
From the perspective of national industrial strategy, the cooperation offers a new example of addressing industry bottlenecks and tackling core technologies.
"State-owned automakers have long faced problems such as scattered layouts, mismatched production capacity, fragmented research and development, and homogeneous competition. Each company invests independently in new energy, intelligent driving and automotive-grade chips, making it difficult to share technological achievements and leading to low efficiency in tackling core technologies. From the perspective of state-owned enterprise reform and the coordination between the central government and local enterprises, GAC and FAW have built a new example for strategic cooperation," said Li Shaohua, deputy secretary-general of the China Association of Automobile Manufacturers.
According to industry insiders, the GAC-FAW cooperation will pool resources in diverse areas such as solid-state batteries, intelligent driving, in-vehicle operating systems and automotive-grade chips.
State-owned automaker GAC to acquire 50 pct stake in FAW Toyota for strategic cooperation
As the U.S.-Canada tension over trade and tariff escalates, Canada is aiming to diversify its export structure while seeking to negotiate with its southern neighbor, Wang Yaojing, associate professor of economics at Peking University noted.
As part of the responsive measure by the Trump administration to Canada's tariff retaliation on a range of U.S. goods earlier this month following a breakdown in trade talks, the United States banned several Canadian imports of alcohol, dairy, and motorcycles, which has taken effect on Tuesday.
While the new trade ban is considered part of the U.S. move to manipulate its partners with trade policy, the strategy is a double-edged sword for the country, said the professor.
"I think Washington is trying to use access to the U.S. market as leverage to force Canada to make concessions on issues such as dairy, alcohol, autos, and even the broader market access. Moving from tariffs to outright importer restrictions itself is sending a much stronger message. And there is also a wider strategic point here. The U.S. is increasingly treating trade policy as part of the national power even towards close allies. But I also want to mention that is that the leverage on the U.S. is not cost-free. The Canada has already retaliated I think against roughly 20 billion worth of American goods. it can hurt Canada, U.S. exporters, raise cost of retailers and consumers for both countries and also create uncertainty across the highly integrated North America supply chain," she said in an interview with China Global Television Network (CGTN).
As the cross-border rivalry escalates, the EU has proposed to make Canada its first associate member. While the unexpected move provides Canada with a new choice to diversify its overly reliant export structure, Europe cannot completely replace the United States to support Canadian economy, according to Wang.
"The current trade tension with Washington have reminded Canada just how dependent it is still on the U.S. market. And roughly two thirds of Canada exports still go south of the border. And that is why the EU proposal is very interesting, even though this idea of Canada becoming an associate member is still quite vague. But the political signal is very clear. Both sides want a closer relationship not only in trade, but also in defense technology, critical minerals, and Arctic security. But at the same time, Europe cannot simply replace the U.S. So, I would describe this relationship as becoming more triangular," she said.
The U.S. attempt to pressure its neighbor has triggered public resentment. A recent poll from CTV News, Canada's major broadcast TV network, showed that over 80 percent of Canadians support the country's tit-for-tat tariffs on U.S. imports, laying solid political foundation for Canada to hold its position, Wang noted.
"For many Canadians, the dispute is no longer viewed simply as a technical disagreement over tariffs. It has increasingly become a question of economic sovereignty and whether Canada should push back against the pressure from its much larger neighbor. And that matters politically because it gives the Canadian government more room to maintain a relatively firm negotiation position. But at the same time, public support does not automatically remove the economic constraints. And if this escalation prolongs, it could hurt jobs, investment, and supply chains. So, the Canadian government has an incentive to appear firm domestically while continuing to look for and negotiate a settlement and, as we just talked about, to increasingly diversify trade toward Europe and other markets," she said.
Trade tension with US prompts Canada to diversify trade structure: expert
