The trade dispute between Brussels and Beijing is likely to continue for the foreseeable future, as officials on both sides of the dispute plan their next moves.
Following the EU’s imposition of fresh tariffs on Chinese electric vehicles (EVs) last week, China has publicly considered imposing tariffs and launching investigations into EU food products.
This comes as reports suggest Brussels might be changing its tactical approach towards handling China’s manufacturing overcapacity, a point of ongoing concern for developed countries.
China action
After the EU imposed tariffs of up to 38% on Chinese EVs, there’s been increasing calls for Beijing to impose retaliatory measures.
Currently, China’s import tariff on cars stands at 15% but an automotive research centre affiliated with the Chinese government has called for large petrol-powered European cars to receive a 25% duty, according to a Reuters report.
However, prominent carmakers like BYD, BMW and Volkswagen have advocated against the new tariffs at a meeting on Tuesday (18 June).
Since Brussel’s announcement, industry figures on both sides of the trade spat have pushed for sustained trade liberalisation and a reduction in tariffs.
Food fight
While contemplating the best approach to EU car imports, China has moved swiftly on other industries with the FT reporting an anti-dumping investigation into pork imports launched this week (17 June).
The investigation is set to hit major European economies such as Germany, the Netherlands and Denmark, according to China’s ministry of commerce.
Spain will also take a significant hit, as the second-largest exporter of pig products to China, supplying China with almost a quarter of its pork in 2022, worth just over US$1bn.
In its investigation application, the China Animal Agriculture Association said:
“In recent years, the EU has been dumping large quantities of low-priced pork and pig by-products into China, impacting … China’s pork and pig by-products industry, as well as the related farming sector and farmers.”
Officials in Brussels have been quick to dismiss the probe as retaliatory and politically motivated. The European Centre for International Political Economy director, Fredrik Erixon, highlighted that France is one of the countries likely to be affected at an “politically sensitive time”, in reference to its upcoming election.
EU response
The EU may be pivoting towards a more cooperative approach on EV manufacturing, Politico reports, with Brussels poised to use the threat of further tariffs to incentivise Chinese carmakers to engage in joint ventures on European soil.
A senior diplomat told the publication:
“Joint ventures make sense, as a way to make sure that the Chinese don’t only set up final assembly plants in Europe, but also more substantial parts of the supply chain.
“Of course, it can also be a way to ask the Chinese to share some technology.”
Technology is the primary motivator, with a number of commentators remarking on the “arrogance” of the EU for assuming it would retain a technological advantage over China, and the irony of European carmakers once refusing similar proposals over fears for their intellectual property.
Advancing technological capabilities combined with a competitive pricing model has hit domestic European producers hard, with a Guardian report noting that top Chinese carmaker BYD offers advanced European features as part of their basic models for significantly less.
China could be onboard with a ministry of commerce missive sent to domestic manufacturers requesting firms to build supply chains that are “jointly built and shared by all parties”.
