Provisional European Union tariffs on Chinese electric vehicles (EVs) are meant to level the playing field and are not “punitive”, German Vice Chancellor Robert Habeck told Chinese officials in Beijing. “And I tried to explain to my Chinese partners all day long that these tariffs are not punitive tariffs,” Habeck said in Shanghai after leaving the Chinese capital. “There’s room for maneuver, there’s room for discussion. And I hope that this room for maneuver will be taken now and used,” he added. He also warned that economic ties between China and the EU had already been affected by China’s links with Russia, hinting there might be economic consequences. “I looked at the trade figures and Chinese trade with Russia increased more than 40% last year,” Habeck said. “But something like half of it is related to dual-use goods. These are technical goods that can be used on the battlefield, and this has to stop.”
Habeck, who is also Germany’s Minister of Economic Affairs and Climate Action, said the EU spent nine months examining whether Chinese EV makers had benefited unfairly from subsidies before concluding that countervailing measures were essential. “Common, equal standards for market access should be achieved,” he said at the Climate and Transformation Dialogue in Beijing. Habeck told Zheng Shanjie, Chairman of China’s National Development and Reform Commission, that the tariffs were meant to compensate for the advantages Chinese EV makers gained from Beijing’s subsidies. Habeck added that countries such as the United States, Brazil and Turkey had resorted to punitive tariffs, but not the EU. “Europe does things differently,” Reuters quoted him as saying.
From July 4, Chinese manufacturers including BYD and SAIC, will face levies of up to 38% – on top of the standard 10% – based on the amount of subsidies they receive and their ownership structure. The duties are meant to stem the influx of low-priced Chinese-made EVs, products the EU maintains are more competitive because of excessive subsidies from Beijing. The EU’s investigation will continue until November, when definitive duties, typically for five years, could be imposed. Brussels insists its tariffs are in keeping with World Trade Organization (WTO) rules and that it still intends to engage Beijing to find ways to resolve the matter.
But China's Ministry of Commerce (MOFCOM) warned that tensions over EVs could trigger a trade war. “The responsibility for a full-blown trade war lies entirely with the EU,” a Ministry Spokesman said. “The EU investigation improperly used anti-subsidy investigation tools to fabricate and exaggerate ‘subsidy’ projects. “Chinese companies were intimidated, coerced and pressured into providing overly broad information, which involved commercially sensitive information like business secrets and intellectual property.”
NDRC Chairman Zheng also told Habeck that accusations about “overcapacity” in China’s new energy industry ran counter to economic common sense. He said the tariffs would harm bilateral trade and bring no benefits to the EU. “The biggest factor underpinning the rise of China’s new energy industry is fair, fierce competition instead of subsidies. China will take all measures to safeguard the rights and interests of Chinese companies,” Zheng said. He added that Beijing hoped that Germany would “demonstrate leadership” within the EU on the issue and “do the correct thing”. But Habeck said he could not represent the entire EU and that he would leave much of the tariff issue to the bloc’s leaders.
Lance Gore, Senior Researcher with the National University of Singapore’s East Asian Institute, said China had to get used to “not being able to take advantage of developed countries as a developing country. We are now in a post-globalization era, there is no longer an objective standard to judge fairness. The WTO has been crippled. Most likely the exchanges between China and the EU over tariffs will be a game of tit-for-tat,” he added.
For the past eight years China has been Germany’s top trading partner but bilateral trade in the first quarter fell to USD64 billion, 14% less than a year earlier and below the USD67 billion Germany registered with the U.S. for the three months.
German Special Envoy for international climate action Jennifer Morgan called for collective efforts to reach climate goals and emphasized China’s critical role in achieving them. “China has a massive role to play in the green transition and dialogue with China is particularly important,” she said, adding that “we need everyone”. But Morgan also said China’s consumption of coal could hinder progress on those global goals. “China’s renewable energy sector has been doing very well, but its consumption of coal and building of new coal power plants are deeply concerning.” China generated 37% of the world’s wind and solar electricity last year – enough to power Japan, according to a report by London-based climate think tank Ember in May. But it still relied on fossil fuels for 65% of its electricity that year, making it the world’s biggest emitter. Its per capita power sector emissions were also more than twice the global average, the South China Morning Post reports.
Meanwhile, China and the European Union have agreed to start talks on the planned imposition of tariffs on Chinese-made electric vehicles being imported into the European market, according to Chinese Minister of Commerce Wang Wentao and Executive Vice President of the European Commission Valdis Dombrovskis.
Asked about a closed-door meeting between trade groups, four Chinese and six European carmakers at MOFCOM, where the relevant firms said that the EC demanded trade secrets about the Chinese EV industry, He Yadong, Spokesperson for MOFCOM, said that the EC requested a large amount of information on the production and operation, development plans, technical processes, and product formulas from Chinese EV and battery companies. “The type, scope and quantity of information collected by the EU side is unprecedented and far exceeds what is needed for countervailing investigations,” He said at a press conference, while also slamming the EC's punitive tariffs based on claims that Chinese firms did not cooperate. “Chinese companies were shocked and very disappointed,” he said. He reiterated that the EC's move lacks any factual and legal basis, violates WTO rules, disrupts fair competition, and undermines the global green transition and open cooperation. “China firmly opposes this and will take all necessary measures to resolutely defend the rights and interests of Chinese companies”.
A survey released by the China Chamber of Commerce to the EU (CCCEU), the main Chinese business group in the bloc, showed that 82% of surveyed companies said the EU's anti-subsidy probe has led to a decline in confidence in investing in Europe. More than 70% said that the EC's investigation negatively impacted sales in Europe. Bai Ming, Research Fellow at the Chinese Academy of International Trade and Economic Cooperation, said that if the EU joins the U.S. in its years-long trade disputes against China, it will have a profoundly negative impact on the EU's economy in the long term.
This overview is based on reports by the China Daily, Global Times and South China Morning Post.
