From what I've read the car industry employs about 1.7M people directly and affects around 8M people when indirect suppliers are counted. No country can afford to lose that many jobs.
They may be inefficient but at least they now have some time to get their act together.
Also don't forget that even if China doesn't need to subsidise their manufacturers anymore, (maybe, maybe not), they have already spent many billions helping them get to where they are today and to have the advantage they have over the rest of the world. They are far more far sighted than the west, who don't seem to be able to see a tsunami coming until it's right on top of them.
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