Published: 14:46, June 14, 2024
Beijing slams EU’s electric vehicle tariffs
By Chen Weihua in Brussels and Wang Keju in Beijing

Commerce Ministry expresses concern over ‘wrongful’ move, urges dialogue

Workers operate at a production line of SAIC-GM-Wuling in Liuzhou, Guangxi Zhuang autonomous region, in May 2024. (PHOTO / XINHUA)

China has expressed grave concern and strong dissatisfaction following the European Commission’s decision on electric vehicle tariffs.

The EC announced on June 12 that Chinese-made battery EVs will soon be subjected to punitive countervailing tariffs following an anti-subsidy investigation launched last October.

It said it “has provisionally concluded that the BEVs (battery electric vehicles) value chain in China benefits from unfair subsidization, which is causing a threat of economic injury to EU BEV producers”.

The commission said the countervailing duties will vary depending on the brand — including 38.1 percent tariffs on SAIC, 20 percent on Geely, and 17.4 percent on BYD — and the new tariffs will come on top of the existing 10 percent import tariffs.

Following the move, China’s Commerce Ministry called on the European Union to immediately rectify its wrongful actions and seek dialogue and negotiations to address the trade friction between the two sides.

The decision, which disregards factual evidence and World Trade Organization rules, has been made despite China’s repeated strong objections, and it ignores the appeals and warnings from several EU member states’ governments and industry sectors, a ministry spokesperson said in a statement.

The ruling also fails to recognize that China’s competitive advantage in the electric car industry is a result of fair and open competition, and the decision is a violation of WTO rules and a failure to acknowledge the comprehensive cooperation of Chinese companies during the investigation, the spokesperson added.

Furthermore, it is a blatant act of protectionism that will escalate trade friction and undermine fair competition, the spokesperson said, adding that the EU’s move will not only jeopardize the legitimate rights and interests of China’s electric car industry but also disrupt the global automotive supply chain.

The actions taken by the European Commission harm the interests of European consumers and also jeopardize the EU’s own goals of green transition and collaboration in addressing climate change on a global scale, said the spokesperson.

China will keep abreast of the developments on the EU side and is prepared to take necessary measures to firmly protect the rights of the Chinese companies involved, the spokesperson added.

Also on June 12, the Foreign Ministry urged the EU to honor its commitment to support free trade and reject protectionism.

Lin Jian, a ministry spokesman, said at a daily news briefing that the anti-subsidy investigation is a typical act of protectionism.

The tariffs will damage China-EU economic and trade cooperation as well as the stability of global automotive supply chains, ultimately harming Europe’s own interests, he said.

“Protectionism is not the way forward, while openness and cooperation are the right path,” Lin said.

He urged the EU to work with China to uphold the overall China-EU economic and trade cooperation. China will take all necessary measures to firmly defend its legitimate rights and interests, he added.

The EC said it has reached out to Chinese authorities to discuss the findings and explore possible ways to resolve the issues in a WTO-compatible manner.

“Should discussions with Chinese authorities not lead to an effective solution, these provisional countervailing duties would be introduced from July 4,” the commission said.

In a statement on June 12, the Chinese Chamber of Commerce to the EU expressed “its shock, grave disappointment and deep dissatisfaction with the protectionist trade measure” by the EC.

The chamber believes this measure “will seriously impair the legitimate rights and interests of BEV companies and exert negative impacts on China-EU trade and cooperation in the automotive sector”, it said.

According to a recent survey by the chamber, within the Chinese BEV industry, the imposition of a 10 percent additional levy would already carry significant implications for most Chinese car manufacturers, resulting in a substantial negative impact on their exports to Europe.

The rates ranging from 17.4 percent to 38.1 percent will pose a serious market barrier, the chamber said.

Despite China’s strength in the global BEV production and sales market, exports of BEVs to the EU accounted for only about 5 percent of China’s BEV production in 2023. The market share of China’s BEV brands in the European market has consistently remained lower than that of local European companies, according to the chamber.

It also said the EU’s investigation into China’s BEVs was politically motivated, driven by protectionism, and lacked substantive complaints from its own industry.

“In contrast, numerous European industry representatives have voiced concerns regarding the investigation, citing potential negative impacts on Chinese and European BEV supply chains, innovation, and market cooperation,” the chamber said, adding that the chamber and the Chinese car industry also share these concerns.

Carl Bildt, co-chair of the European Council on Foreign Relations and a former Swedish prime minister, said on social media on June 12 that he is “not too worried by what is said to be Chinese EV subsidies — if they want to subsidize the EU green transition, which really needs to speed up, then it’s OK with me”.

David Henig, director of the United Kingdom Trade Policy Project at the Brussels-based European Centre for International Political Economy, wrote on social media: “In essence, the real purpose of EU tariffs is giving the domestic industry a few years to become closer to competitive as the Chinese industry or to receive investment from them. Yes, there are subsidies, but so there are everywhere.”

Minister of Commerce Wang Wentao, on a recent trip to Europe, dismissed accusations of “unfair competition” made by the EU and the United States, calling them groundless.

He said that some countries are implementing high tariffs, discriminatory subsidies, investment restrictions, and unilateral sanctions that contravene WTO rules, aiming to exclude Chinese companies from their markets.

“This is not fair competition at all,” Wang said.

Zhao Jia in Beijing contributed to this story.

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