June 2018 Newsletter

Dear friends of IFRTT,

China is at the center of world affairs. Firstly we have the looming trade war between the US and China (and now also Europe) and secondly we have the North Korea issue, where China has been playing an active, but low profile role to stabilize the situation on the Korean peninsula. We all now keep our fingers crossed that the meeting between president Trump and Kim Jung’un will be successful.

At the center of the trade war issue is a China that has been dragging its feet in opening up markets and reforming its economy. That together with unbalanced trade and investment flows with US and the EU has created tensions. Add to this a China with a political system that the West does not comprehend and an increasingly militarily assertive China and we have a very pungent cocktail.

But, maybe the real core issues are tectonic changes in the geo-economic and geo-political landscape? No other country has ever on so many levels been able to challenge the US. Russia was a military and political threat and Japan was an economic challenge, but China is so much more. How should the US and the rest of the world relate to a rising China? This is the real conversation.

This last half a year was a period of important political and high profile meetings that started with the 19th Chinese Communist Party Congress in November and followed by the National Peoples’ Congress and the China Peoples’ Political Consultative Conference in March. Finally at the Bao’ao forum (the China “Davos”) in April we started hearing long awaited concrete plans for how China intends to fulfill the reform and opening promises that it kept announcing since early 2017. Relevant to us in the IFRTT is that China has now finally laid down a time plan for the gradual opening of its automotive industry. From this year it will be possible to set up majority owned electric vehicle production companies and the same openings will apply to commercial vehicle and traditional passenger cars 2020 and 2022 respectively.

In view of an automotive market that potentially stands before important reshuffling due to advances in electrification, autonomous and connected services technologies, these ownership changes are very significant as they will allow for more freedom to tackle these challenges and opportunities.

China has been leading the development of electric vehicles though very active industrial policies and with with huge amounts of state support. China today has by far more electric vehicles deployed than any other country in the world. That has itself set the ball rolling for the global automotive industry to speed up development of electric vehicles. Furthermore, economies of scale are now being reached, which is reducing the cost of key components such as batteries, that are fast becoming both lighter and more energy dense.

As I have reported in my earlier monthly letters, China is pursuing regulation to allow for high capacity transport. At two recent seminars, representatives from the Ministry of Transports reconfirmed that after having successfully launched the new Chinese Modular System allowing for up to 22m vehicle combinations, the next step is to allow for 25,25 meter combinations. This is very good news and could happen within 4-5 years!

This opens up very interesting scenarios for sustainable road transport. During the next decade we will be seeing longer vehicle combinations and also a wider range of drivelines. As I was typing this sentence, the phone rang and a customer asked if Scania vehicles are adapted to run on blend-in biodiesel, to which I of course said yes. In the next ten years we will be seeing a combination of ICE engines using Euro6 equivalent diesel, biofuels and different forms of electrification ranging from battery vehicles to so called e-highways.

China is developing very fast and has huge ambitions to catch up in a number of technologies. New standards and new regulation will be designed in the years to come. China and the world will be better off if this work is done in a globally coordinated way.

That is why China’s involvement into the IFRTT community is so important in our field. I am therefore very happy to announce that the Chinese Ministry of Transport finally has approved the Research Institute of Highways (RIOH) to host the HVTT16 in China. A formal letter to the board of the IFRTT will be sent within short. At the HVTT15 there will be a special break-out session on China.

Let me end this newsletter with a few words about the weather. I have just returned from two weeks in Sweden with unusually warm and balmy May weather. Since Monday I am back a Beijing that is experiencing extremely hot weather for the season. Today the thermometer showed 41 degrees Celsius! I hope the HVTT16 can be arranged in September or October, which are the two months with the most pleasant weather in Beijing…under normal circumstances.

Greetings from Beijing!

Mats Harborn

IFRTT vice-president for Asia