Indeed. It's a smart strategy by the CCP, a brand battle royale until only the strongest survive. Given the way things have happened in the past though, I suspect what we'll see is Geely and Chery buying out the ones that fail until there's just those two giants and a few niche players who'll likely be domestic market only.
It makes sense if they let them fail, but note the system is not that the ccp broadly backs them. Each state backs their own set, and if they fail that state loses the jobs/favtories/etc. so there is a lot of friction for letting them fail.
Ah interesting, thanks for the extra context.