Joe Cash and Ryan Wu
BEIJING (Reuters) – Beijing wants the European Union to lift preliminary tariffs on Chinese electric vehicles by July 4, state-controlled Chinese newspaper Global Times reported, following an agreement by both sides to hold new trade talks.
The EU’s provisional tariffs of up to 38.1% on imports of Chinese-made electric vehicles will take effect on July 4 while the bloc investigates what the EU says are excessive and unfair subsidies to Chinese electric vehicle makers.
China has repeatedly called on the EU to lift the tariffs, expressing its willingness to negotiate. Beijing does not want to be drawn into another tariff war, still stung by US tariffs on its goods imposed by the Trump administration, but says it will take all steps to protect Chinese firms if one occurs.
Both sides agreed to resume tariff talks after a conversation between EU Commissioner Valdis Dombrovskis and Chinese Trade Minister Wang Wentao on Saturday during a visit to China by the German economy minister, who said the door to discussions was “open”.
The best outcome of the talks is that the EU will reverse its decision on tariffs by July 4, the Global Times reported late Sunday, citing observers.
Increasingly protectionist moves by the EU will provoke retaliatory measures from China, and escalating trade tensions will only lead to “losing” results for both sides, the newspaper writes.
The tariffs will be finalized on November 2 following the conclusion of the EU’s anti-subsidy investigation.
China’s Commerce Ministry did not immediately respond to a Reuters request for comment.
TRADE WAR?
EU trade policy has become increasingly defensive over concerns that China’s manufacturing-led development model could see it flooded with cheap goods as Chinese firms seek to boost exports amid weak domestic demand.
China has rejected accusations of unfair subsidies or that it has an overcapacity problem, saying the development of China’s electric vehicle industry has resulted from advantages in technology, markets and industry supply chains.
“When European Commission President von der Leyen announced that she would explore China’s new energy vehicles… I had a gut feeling that this was not only an economic problem, but also a geopolitical problem,” said Zhang Yansheng, chief researcher at the China Research and Development Center. research. International economic exchanges.
“Personally, I think it’s unfair to start a tariff war based only on capacity utilization and insufficient demand,” he added.
Trade relations between the 27-nation bloc and the world’s second-largest economy deteriorated sharply when the European Parliament voted in May 2021 to freeze ratification of what could have been a landmark investment treaty due to reciprocal sanctions. over allegations of human rights violations in China’s Xinjiang region.
That same year, Beijing and Brussels came to blows again when China downgraded diplomatic relations with Lithuania and ordered multinationals to sever ties with the Baltic state after Vilnius invited democratically governed Taiwan, which China considers part of its territory, to open a representative office in the capital . .
ARMED AND READY
While Beijing has called for talks, it has also signaled it is prepared to retaliate if the commission does not back down and that it believes Brussels bears full responsibility for the escalating tensions.
The Global Times, which first reported that China was considering launching a mutual anti-dumping investigation into European pork imports announced by the Commerce Ministry last week, has also launched an anti-subsidy investigation into European dairy products. products and tariffs for large engine gasoline vehicles.
Chinese authorities have hinted at possible retaliatory measures in comments to state media and interviews with industry representatives.
“It seems likely that Beijing will raise tariffs to 25% on European-made cars with engines of 2.5 liters and above,” said Jacob Guenther, lead analyst at MERICS, a Berlin-based institute for Chinese studies.
“Pork and dairy products are already on Beijing’s agenda, and more agricultural products are likely to be at risk,” he added. “There are a lot of EU investigations using the new tools assembled by Brussels, so we should expect some measures aimed at misrepresenting (Chinese) products, ranging from medical devices to airport security scanners and steel pipes.”