BEIJING, Sept 13 (Askume) – As the European Union approaches a vote on whether to impose tariffs on Chinese-made electric vehicles, Beijing has resorted to pressure and intimidation on the 27-member bloc, threatening trade retaliation in a bid to persuade key EU countries to do the same.
The potential impact of retaliatory tariffs on EU goods would mainly hit countries that have adopted EVs early, such as Spain, France and Italy. All have expressed support for the tariffs, which threaten exports of pork, dairy products and brandy to the world’s second-largest economy.
EU member countries that have not insisted on tariffs , such as Germany, Finland and Sweden, have less impact as they have little influence on the goods they export to China.
China’s strategy seems to be working.
Spanish Prime Minister Pedro Sánchez ended his visit to China this week in a Chinese electric car, calling it an “honour”. He then unexpectedly urged the EU to reconsider its position.
According to Spanish government sources, Sánchez’s delegation returned home with the feeling that “Spain is more important now” and that an agreement on tariffs on its pork products is imminent.
In apparent support of Spain’s green ambitions , a Chinese company has agreed to build a $1 billion factory in Spain to produce hydrogen machinery .
Mei Xinyu, a Beijing-based economist, said China maximized the “domestic political costs” of countries voting to impose electric vehicle duties on pork and dairy products, as the agricultural sector often plays a key role in EU politics.
“These products count China as one of their largest export markets,” he added.
EU exports of pork, dairy products and brandy to China will amount to around $10 billion in 2023, although not all products in these categories will be subject to tariffs. Last year, total EU exports to China exceeded US$280 billion.
Lack of time
Feeling the sting of US tariffs imposed during the Trump era, China does not want a trade war with the EU. But Beijing has made it clear it will fight back if Brussels imposes additional tariffs of up to 35.3% on electric vehicles.
The number of Chinese-made electric vehicles exported to Europe is expected to rise by 38% to 656,000 units by 2023, including exports to non-EU countries. Askume calculated based on data from the China Passenger Car Association that more than 40% of China’s electric vehicles exported last year came from Europe.
Chinese Commerce Minister Wang Wentao will visit Europe next week to hold talks with EU trade chief Valdis Dombrovskis.
Wang Yi will also visit Italy, where he is seeking EV support tariffs and Chinese investment to build EV production capacity.
China needs at least 15 EU member states, representing 65% of the bloc’s population, to vote against the tariffs in October.
But the situation within the EU remains diverse. Some smaller countries are keeping a low profile. Other countries prefer their closer ties.
“Ireland’s exports to China are only a small part of its exports, so Ireland prioritises the EU market and the relationship with China,” an Irish trade representative in China said on condition of anonymity.
“China is still important, but trade with China is difficult and not growing as expected.”
Ireland is the EU’s fifth most exposed producer in the Chinese dairy survey and the sixth most exposed producer in the pork survey.
‘shock and awe’
In contrast, China has no room for negotiation or concessions with Canada. After Ottawa imposed a 100% tariff on Chinese electric vehicles in August, China launched a retaliatory crackdown on Canadian canola exports on Monday .
Unlike Brussels, Beijing has not issued a public warning to Ottawa about how it might retaliate, although Chinese state media such as the Global Times have frequently hinted at it.
When asked about the difference in practices, Chinese Commerce Ministry spokesman He Yongqian said, “Relevant evidence shows that Canadian rapeseed exports have been dumped in China, causing great damage to the domestic industry.”
The Canadian Embassy in Beijing did not immediately respond to a request for comment.
In contrast, Beijing is apparently willing to negotiate with the EU, said Ivan Pei, agriculture analyst at Trivium China in Beijing.
“As far as Canada is concerned, they went straight into a state of shock and awe,” Pei said.
