The tone is rising between Brussels and Beijing. China reiterates its “strong dissatisfaction” after the announcement of a European investigation into its automobile subsidies.
The irritation went up a notch. After the Minister of Commerce two weeks ago, this time it is the Deputy Prime Minister who is angry with Europe. The Chinese authorities denounce “an openly protectionist measure” which will not go without retaliation. Beijing and Brussels may have announced on Monday September 25 the resumption of their exchanges on macro-economic issues, the atmosphere remains frosty.
An investigation into abusive subsidies
Economists, lawyers and experts commissioned by the European Commission will try to prove that the Chinese state subsidizes its manufacturers in an abusive manner.
By offering them loans at reduced rates, preferential rates on electricity or raw materials. All of which could explain why Chinese electric cars arriving in Europe are around 20% cheaper than those from Stellantis, Renault or Volkswagen.
This investigation must begin in October and last more than a year, but if Brussels quickly finds dumping practices or distortions of competition, the Commission will not refrain from immediately increasing its customs duties on Chinese electric vehicles. .
These duties currently amount to 10%. In the United States it’s almost 28%. That leaves some room. But Beijing sees red.
Unfair competition ?
European manufacturers are concerned about 2035, the year when they will only have to produce 100% electric models. A radical transformation of the market for which Chinese manufacturers are eagerly preparing, who already have a good head start, particularly in terms of electric batteries.
In 2021 brands like Byd (pronounced in English, “be why d”) or MG certainly only represented 4% of market share in Europe, this year they are already at 8%.
Europe leaves divided in its war against Beijing
Germany especially does not want to go into conflict because its economic model is largely based on automobile exports. Volkswagen and Mercedes make around 40% of their turnover in China.
France, on the contrary, is pushing for a showdown. Moreover, the ecological bonus which will be detailed in mid-December will not apply to cars made in China, it will not help to appease the mood in Beijing.
Last May, defining the new European strategy against China, the Union’s High Official for Foreign Affairs explained that it was necessary to adopt an approach “lucid” but “non-confrontational “. His document specifies that “systemic rivalry can manifest itself in almost any area of engagement. But this should not prevent the EU from maintaining open communication channels and seeking constructive cooperation with China.”Needless to say, things got off to a bad start.