Beijing and Brussels take ‘first step’ toward resolving months-long trade dispute over Chinese electric cars with new negotiations, after European Union imposed additional tariffs of up to 38.1% which will come into effect on July 4.
The EU and China will begin negotiations on electric vehicle tariffs, following a video conference meeting between Chinese Commerce Minister Wang Wentao and European Trade Commissioner Valdis Dombrovskis on Saturday, according to A declaration of the Ministry of Commerce. The statement did not reveal further details on when discussions would begin.
The announcement was made during German Vice Chancellor Robert Habeck’s three-day visit to China, the first by a senior European leader since the tariffs were unveiled earlier this month. In his comments Saturday, Habeck called the planned talks a “first step,” and many more steps are needed to bring the two sides together.
Wang met with Habeck on Saturday and expressed Beijing’s displeasure to the German minister, according to a Chinese statement. statement from the Ministry of Commerce.
Chinese state media is already celebrating the announcement of the talks, with state media World Time calling it proof of Beijing’s “utmost sincerity” in its attempt to resolve trade disputes through negotiation.
These talks could be a welcome sign that both sides are open to discussions. “Both sides are taking an open stance, which likely indicates that Chinese OEMs may be charged a lower rate than previously reported,” said Vincent Sun, equity analyst at Morningstar. Sun also notes that the tariffs also affect cars made in China by European companies, such as BMW.
Last October, Brussels launched a anti-subsidy investigation in Chinese-made electric vehicles to determine whether they unfairly benefit from Chinese state support.
Beijing, on the other hand, slammed the probe as “protectionist behavior” and ignores China’s extremely competitive electric vehicle sector.
Germany criticized the EU’s decision to increase customs duties following the anti-subsidy investigation (mainly supported by France). German Chancellor Olaf Scholz has pushed to minimize the scale of the tariffs, according to the Financial Times And Policy. German Transport Minister Volker Wissing also warned of an increase in fares. could risk a “trade war” with China.
The German Automobile Industry Association has also warned that the potential harms from tariffs could outweigh the benefits.
Germany, the EU’s largest economy, has extensive trade relations with China. The Asian economy accounted for last year, almost a third of the German automobile industry’s sales. It was also Germany’s largest trading partner for a decade, until the United States overtook it this year.
A potential trade war between China and the EU
China and the EU have stepped up their trade threats in recent months, since the October anti-subsidy investigation.
China launched anti-dumping investigation into European brandy for the first time in Januarythen an investigation into European pork last week.
Chinese automakers are also would have ask Beijing to impose retaliatory tariffs on European gasoline cars entering China.
For its part, the EU is currently investigating the Chinese government’s support for sectors such as wind turbines and medical devices.
The prices for electric vehicles announced in Europe are already threatening to change the behavior of Chinese electric vehicle manufacturers. More than 80% of Chinese enterprises in the automotive sector and industrial chains are less confident about investing in Europe in the near future, according to a recent survey by the China Chamber of Commerce to the EU and from the China Economic Information Service.
