* GM, Ford shares fall after China Daily report
* Trump spokesman says transition team aware of report
* China has been investigating auto industry since 2011
* Penalty comes at a sensitive time in U.S.-Sino relations
(Adds comment from Trump spokesman, updates share prices)
By John Ruwitch and Jake Spring
SHANGHAI/BEIJING, Dec 14 Shares of U.S.
automakers General Motors Co and Ford Motor Co skidded on
Wednesday after a Chinese official warned the government could
slap a penalty on an unnamed U.S. automaker for monopolistic
The warning from a senior Chinese state planning official,
conveyed through the official China Daily newspaper on
Wednesday, came days after U.S. President-elect Donald Trump
questioned the longstanding U.S. policy of acknowledging that
Taiwan is part of "one China."
Chinese officials had been investigating the pricing
practices of automakers prior to Trump's comments, sources said.
Trump's rhetorical challenges to long-established policy
toward China have rattled U.S. corporations. Relying on stable
U.S.-China relations for more than 40 years, the companies have
ramped up sales in China and developed complex supply chains
that feed Chinese-made parts to their U.S. operations.
Jason Miller, a spokesman for the transition team, said on
Wednesday that members of the team were aware of the China Daily
report but that it would be premature to comment. He said he
expected Trump to discuss the matter with billionaire investor
Wilbur Ross, who has been tapped to be commerce secretary, when
the two meet on Wednesday.
"The president-elect has made very clear that he's going to
get out there and fight for American companies and American
jobs, and that's something he has not been shy about doing so
far and it's not something that we're going to be shy about
going forward," Miller said.
While Chinese officials did not directly link the warning
about a possible penalty of a U.S. automaker to Trump's
comments, the Chinese government has used regulatory sanctions
against foreign corporations during previous episodes of
GM shares slumped 2.2 percent, while Ford was
down nearly 1 percent as the wider Dow Jones industrial average
In a statement on Wednesday, GM did not say directly
whether it was under investigation by Chinese authorities. "GM
fully respects local laws and regulations wherever we operate,"
the company said. "We do not comment on media speculation."
A spokesman for Ford's Asia-Pacific operations said the
company was "unaware of the issue."
The China Daily quoted Zhang Handong, director of the
National Development and Reform Commission's (NDRC) price
supervision bureau, as saying investigators had found that a
U.S. auto company had instructed distributors to fix prices
starting in 2014.
The China Daily article did not give further details and the
NDRC did not respond to requests for comment.
There are many ways that China could retaliate against the
United States, including leveraging its holdings of $1.19
trillion of U.S. treasuries in September.
In an editorial, the China Daily urged Trump to recognize
the importance of close economic ties between China and the
"For the American economy to be great again ... the U.S.
needs to cement its economic relations with China, rather than
China, the world's largest vehicle market, is crucial to GM.
Chinese consumers bought more than one-third of the 9.96 million
vehicles GM sold globally in 2015. Profits from Chinese
operations, including joint ventures, accounted for about 20
percent of GM's global net income of $9.7 billion in 2015.
Ford's China joint ventures represented about 16 percent of
its global pretax profit of $9.4 billion in 2015.
"This action is just a hint as to how much power China
wields," said Michael Dunne, president of Dunne Automotive and a
veteran of the Chinese auto industry. "A small fine of several
million dollars is likely. The message is, 'If you want to play,
we can play.'"
While Zhang's comments to the China Daily appeared just days
after Trump's remarks, people familiar with the situation said
Chinese officials have been cracking down on what they have
called monopolistic behavior by foreign automakers and dealers
for several years.
If the NDRC levies a new penalty it would be the second this
month and the seventh issued to automakers since the commission
began anti-monopoly investigations in 2011, the China Daily
Targeted firms have included Audi AG, Daimler AG's
Mercedes-Benz and Toyota Motor Corp, and one
of Nissan Motor Co Ltd's joint ventures.
"I don't think the NDRC had only made a decision two weeks
ago or a week ago. This is a long-term plan for them," a source
at a government-affiliated industry association said.
Analysts said on Wednesday that a separate Chinese action
would undercut confidence in the Chinese auto market outlook.
Separately, China will extend a tax cut on small-engine
vehicles to 2017, two sources told Reuters, a move that could
prevent a predicted steep drop-off in sales.
(Additional reporting by Norihiko Shirouzu in Beijing, Bernie
Woodall in Detroit and Emily Stephenson in Washington; Editing
by Joseph White and Jeffrey Benkoe)