Beijing “strongly opposes” the European Union’s decision to impose surcharges on electric vehicles from China for five years, its Ministry of Commerce announced on Tuesday, August 20.
Retaliatory measures considered
China “hopes that the European side (…) will seek appropriate solutions and take concrete measures to prevent an escalation of trade frictions,” the ministry said in a statement.
The European Commission has just published on Tuesday its final version of the additional customs duties that will apply to electric vehicles produced in China and imported into Europe.
The Chinese Chamber of Commerce in the EU has warned of “negative” consequences for relations between Beijing and Brussels, criticising “covert protectionism” following the European announcement.
In mid-June, China launched an anti-dumping investigation into European pork imports, following one in January into EU wine spirits, including cognac. Wine, dairy products and high-engine cars are also in Beijing’s sights, according to Chinese media.
This latest skirmish comes amid growing trade tensions between the West and China, which is also accused of destroying competition in other sectors, such as wind turbines, solar panels and even batteries.
European countries divided on the strategy to follow
While France and Spain actively pushed for proportionate measures, Germany, which is heavily involved in China, fought, on the other hand, with Sweden and Hungary, to avoid sanctions, for fear of retaliation from Beijing.
Berlin is particularly reticent because of the weight of its car industry in China. Carmakers Audi, BMW, Mercedes and Volkswagen generate almost 40% of their global sales in China. “The negative effects of this decision outweigh the possible benefits,” Volkswagen lamented in July when the provisional taxes were imposed.
The new taxes will be adopted definitively unless a qualified majority of Member States (15 countries representing 65% of the European population) oppose them at the end of October.
Ecological transition and employment
In this way, Europe hopes to protect an automobile industry that employs 14.6 million workers in the EU and at the same time avoid a deadly conflict with its second largest economic partner after the United States, which announced in mid-May customs duties of 100%, up from 25% previously.
In its communication today, Brussels also declared itself “open” to any other solution coming from Beijing, which respects the rules of the World Trade Organisation (WTO), which China also appropriated in July.
“We think it is really up to China to find an alternative” to the surcharges, a European official told AFP. The idea is therefore to encourage Chinese manufacturers to produce in Europe, rather than import from China: BYD plans to set up a factory in Hungary and MG (SAIC group) is considering Spain.
The European car industry, a champion of petrol and diesel engines, fears that its factories will disappear if it fails to curb the announced rise of Chinese electric models. Beijing has long been a leader in investing in batteries.
In the EU, the market is booming ahead of a ban on sales of new combustion engine vehicles in 2035, but Chinese electric vehicles account for 22% of the European market, up from 3% three years ago, according to industry estimates. Chinese brands account for 8% of the market.
Source: BFM TV
