Chinese officials urge EU to avoid protectionist actions
Published: Jun 03, 2024 10:42 PM
Workers complete assembling an electric vehicle (EV) at China's EV start-up Leapmotor in Jinhua, East China's Zhejiang Province on April 1, 2024. The smart EV factory delivered 14,567 new vehicles in March, a yearly increase of 136 percent. Photo: VCG

Workers complete assembling an electric vehicle (EV) at China's EV start-up Leapmotor in Jinhua, East China's Zhejiang Province on April 1, 2024. The smart EV factory delivered 14,567 new vehicles in March, a yearly increase of 136 percent. Photo: VCG

Chinese officials have repeatedly urged Brussels to avoid taking protectionist actions against Chinese electric vehicles (EVs), warning such actions could lead trade frictions to spiral out of control and stressing China's rights and capabilities to take countermeasures if the EU takes any action that harms Chinese interests. 

The latest warnings from senior Chinese trade officials, who were in Europe for various activities, further demonstrated China's resolve to take concrete measures to safeguard the legitimate rights and interests of Chinese firms, as the EU moves closer to decide whether to impose tariffs against Chinese EVs, Chinese experts said on Monday. 

Chinese officials and experts also highlighted the deeper repercussions from any EU protectionist actions, given the massive amount of trade between China and the EU in the auto industry. While there is competition, mutual interests are much greater, they stressed, calling on the EU to return to the right path of cooperation. 

On Saturday, Chinese Commerce Minister Wang Wentao chaired a roundtable meeting of Chinese-funded enterprises in Spain in Barcelona. While commending Spain's rationality, pragmatism and friendliness toward China, Wang also criticized the EU's recent move of citing various false claims such as "overcapacity" and discriminatorily using various tools such as trade remedies to launch probes into a slew of Chinese products, including EVs, locomotives and solar panels. 

"This has led to the continuous rise in the risk of China-EU economic and trade frictions," Wang said, according to a statement from the Ministry of Commerce (MOFCOM) on Sunday. "We hope to properly handle economic and trade frictions through dialogue and consultation, accommodate the legitimate concerns of both sides, and avoid an out-of-control escalation of trade frictions."

The Chinese side has noticed that French, German and European Union officials have repeatedly stated their intention to avoid a "trade war" and support a multilateral trading system based on rules and a fair competitive environment, Wang said. 

Wang further warned that if the EU's actions fail to match its leaders' words and if EU continues to suppress Chinese companies, China will take all necessary measures to firmly safeguard the legitimate interests of Chinese companies.

On Sunday, Wang visited a factory of the joint venture between Chinese manufacturer Chery Automobile and Spain's Ebro-EV Motors, where he stressed that while there is competition between China and the EU in the EV sector, cooperation is even greater. "We hope that the EU will abandon protectionism and return to the right path of dialogue and cooperation." 

Also on Sunday, Ling Ji, a vice minister of MOFCOM, chaired a symposium on Chinese-funded enterprises in the Greek capital Athens. Ling urged Chinese firms to fully recognize the damage of the EU's protectionist actions and said that China will not allow the EU to undermine China-Greece cooperation. 

"We hope that the EU side will match its words and deeds and will not do anything that may cause trade frictions to escalate out of control. If the EU side insists on going its own way and continues to suppress Chinese companies, China has the right and sufficient ability to take measures to defend the legitimate interests of Chinese companies," Ling said.

As the EU is reportedly mulling potential actions against Chinese EVs, including tariff measures, the clear warnings from the Chinese officials are imperative for letting Brussels know the profound repercussions of its protectionist moves, Chinese experts said. 

"It appears that the result of the investigation is coming out soon. At this moment, it is very necessary for Chinese officials in this field to make these remarks and clarifications," Gao Lingyun, an expert at the Chinese Academy of Social Sciences, told the Global Times on Monday. 

Resolute countermeasure

While it remains to be seen what actions the EU will announce and when, Chinese experts said that given some EU politicians' growing protectionism and hostility toward China, as well as pressure from the US, Brussels could take some sort of protectionist actions against Chinese EVs, including possible provision tariffs. And given the massive interests at stake, China will resolutely take countermeasures to protect its own interests, they noted. 

China must be prepared in advance. If the EU takes protectionist actions, China will definitely take countermeasures, Gao said. 

Experts also emphasized that the EU's move would have much greater repercussions than the US' previously announced tariff hikes on Chinese EVs, as China exports a much larger quantity of EVs to the EU, compared to the very small number of exports to the US. 

If the EU imposes a 20-percent tariff on Chinese EVs, it could cost China nearly $4 billion in trade with the bloc, with the number of Chinese EVs imported to the EU expected to drop by a quarter, or some 125,000 cars, Bloomberg reported on Friday, citing an analysis from Germany's Kiel Institute for the World Economy.

The Chinese and EU auto industries are closely intertwined, with many EU automakers also investing heavily in the Chinese market, and any potential Chinese countermeasures could also have a great impact on the EU, experts noted. 

In an exclusive interview with the Global Times published on May 21, a prominent Chinese auto industry policy advisor has suggested that China consider raising the temporary tariff rate on imported cars with engines larger than 2.5 liters, in order to reduce imports as part of the country's broader efforts to cut emissions and promote the green development of the auto industry. 

Such a move would have a major impact on car imports from the EU, experts said.