In recent years, driven by the anxiety of developing the economy, local governments of the Chinese Communist Party (CCP) have engaged in fierce competition for investment, artificially creating almost frantic “zero-sum” investment attraction competition, which has emptied local finances and exacerbated unfair competition. Taking the example of the parent company of “Nezha Motors,” Zhuheng New Energy, the governments of Yichun and Nanning used taxpayers’ hard-earned money to engage in a losing gamble.
According to a report by CCTV News on April 21, a car manufacturing factory covering over 600 acres in Yichun Economic Development Zone in Jiangxi Province now stands deserted with dust-covered production lines.
Initially, the Yichun government invited the parent company of “Nezha Motors,” Zhuheng New Energy, to settle in order to ride the wave of new energy vehicles. This “smart factory,” which only started production in 2021, was touted as an important achievement in Yichun’s investment attraction efforts.
The contract signed between the Yichun Economic Development Zone Management Committee and Zhuheng New Energy shows that the total investment of the project is 5 billion yuan, with the first party (Yichun Economic Development Zone Management Committee) bearing the majority of the fundraising responsibilities – meaning that most of the money for the investment attraction came from Yichun.
According to statistics, Yichun’s state-owned enterprises and financial platforms alone spent nearly 2 billion yuan acquiring equity, in addition to 300 million yuan for constructing factory buildings underwritten by state-owned enterprises. Both land and buildings were acquired and built by companies established through local state-owned enterprises, costing nearly 300 million yuan for this item alone.
Yichun’s factory is just one of many bases of Zhuheng New Energy. Through local investment attraction, this company has replicated the same pattern in Tongxiang in Zhejiang and Nanning in Guangxi.
Under the cooperation agreement, this project plans to build an annual production base of 100,000 pure electric passenger vehicles in Nanning, with the majority of the investment being borne by the Nanning side. Land and factory buildings were also purchased and constructed by investments from Nanning – 2.4 billion yuan of investments from state-owned enterprises such as Nanning Production and Investment Group, with the government directly allocating 550 million yuan as “project subsidies” in December 2020.
Hu Zhaohui, Deputy Director of the Reform and Comprehensive Department of the National Development and Reform Commission of the CCP, stated that in order to achieve political achievements, some regions are rushing through project constructions, disregarding the fiscal capacity, resorting to borrowing for subsidies competitions, and engaging in policy loopholes. Some regions have turned industrial development funds into tools for investment attraction, providing implicit subsidies through secret agreements, leading investment attraction into a spiral of “zero-sum” competition.
The harmful effects brought about by the “zero-sum” competition in investment attraction are becoming apparent. In recent years, there has been a rush of new energy vehicle industry projects across the country, resulting in a series of redundant constructions, standardized constructions, and industry “zero-sum.” In this context, to capture the market, many new energy vehicle companies in China initiated a “price war” in 2023 and 2024.
Data shows that from 2021 to 2023, Zhuheng New Energy has accumulated net losses of up to 18.3 billion yuan, with an average loss of over 80,000 yuan per car sold. Starting from 2024, Nezha Motors halted production lines in three locations, and in the second half of 2025, Zhuheng New Energy was forced into “bankruptcy reorganization” by creditors.
The report mentioned that the “zero-sum” investment attraction has caused some regions’ investments to go down the drain. In recent years, the number of domestic new energy vehicle brands in China has exceeded 300, which is closely related to blind investments made by some regions.