By Joe Cash and Ryan Woo
BEIJING (Reuters) – Beijing wants the European Union to lift its preliminary tariffs on Chinese electric vehicles by July 4, China’s state-controlled Global Times reported, following an agreement by both sides to hold new trade talks.
Temporary EU tariffs of up to 38.1% on imported electric vehicles made in China will kick in by July 4 as the bloc investigates what the EU claims are excessive and unfair subsidies to Chinese EV makers.
China has repeatedly called on the EU to cancel its tariffs, expressing a willingness to negotiate. Beijing does not want to be embroiled in another tariff war, still hit by US tariffs on its goods imposed by the Trump administration, but says it will take all steps to protect Chinese firms if it happens.
The two sides agreed to resume tariff talks after a phone call 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 doors to discussion are “open “.
The best outcome of the talks is that the EU reverses its tariff decision before July 4, the Global Times reported late Sunday, citing observers.
The EU’s increasingly protectionist moves will trigger countermeasures from China and an escalation of trade frictions would only lead to “lose-lose” outcomes for both sides, the paper said.
The tariffs are set to be finalized on November 2 at the end 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 turned increasingly defensive over concerns that China’s manufacturing-focused 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 an overcapacity problem, saying the development of China’s electric vehicle industry has been the result of advantages in technology, the market and the industry’s supply chains.
“When European Commission President Von der Leyen announced that she would investigate China’s new energy vehicles… I had an intuitive feeling that it was not only an economic issue but also a geopolitical issue,” said Zhang Yansheng, lead researcher at the Center China for International Economic Exchanges.
“Personally, I think it is unfair to start a tariff war only considering the capacity utilization rate and insufficient demand,” he added.
Trade relations between the 27-member bloc and the world’s No. 2 economy took an unexpected turn for the worse when the European Parliament voted in May 2021 to freeze ratification of what would have been a landmark investment treaty because of sanctions. on allegations of human rights violations in China’s Xinjiang region.
Beijing and Brussels clashed again that year when China downgraded diplomatic relations with Lithuania and told multinationals to cut ties with the Baltic state after Vilnius invited democratically-ruled Taiwan, which China claims as part of its territory, to open a representative office in the capital. .
ARMED AND READY
Although Beijing is calling for talks, it has also indicated that it has retaliatory measures ready if the commission does not withdraw and that it holds Brussels fully responsible for the escalation of tensions.
The Global Times, which first reported that China was considering opening an anti-dumping investigation into European pork imports – which the commerce ministry announced last week it would undertake – has also pushed for an anti-subsidy probe into European dairies. freight and tariffs for large engine petrol cars.
Chinese authorities have hinted at possible retaliatory measures through state media comments and interviews with industry figures.
“It seems likely that Beijing will raise tariffs by up to 25% on European-made cars with engines of 2.5 liters or more,” said Jacob Gunter, chief analyst at MERICS, a Berlin-based China think tank.
“Pork and milk are already on the table for Beijing, and more agricultural products are likely to be threatened,” he added. “On the EU side, there are a number of ongoing investigations using the new toolkit that Brussels has put together, so we should expect some sort of measures targeting distortions in (Chinese) products ranging from medical equipment to scanners from airport security to steel pipes”.