Tensions are rising between Brussels and Beijing after the announcement of the European investigation into market distortions. The European Union’s assertive shift is changing the pace of trade and political relations with China. As the two powers try to balance risk with openness, Ford is freezing the construction of a Maxi battery factory with Chinese technology.
Over the past couple of weeks, the electric vehicle (EV) has become the perfect way to monitor how the dynamics between the EU, the US and China are changing. The first two are trying to balance maintaining the very important trading relationship with the Chinese partner (which exports products needed for the ecological and digital transformation, including electric vehicles) and the need to move forward. Eliminate risksThat is, reducing exposure to China in strategic sectors (including, specifically, those associated with the transition). Beijing, for its part, also seeks to maintain economic relations, but does not hesitate to show its strength through them to achieve its national goals. The battle over the electric car is one of the battles in which the relations between these forces are being redefined.
European turning point…
This topic became very central in mid-September, when the President of the European Commission spoke Ursula von der Leyen It announced the launch of an investigation into the possibility of China manipulating the European market. He said the EU is “flooded” with cheap Chinese electric vehicles because Beijing keeps prices “artificially low” thanks to “huge government subsidies,” suggesting Brussels is willing to intervene more decisively to protect the market and European producers — including at the cost of Chinese electric vehicles. . Angering China by imposing tariffs on electric vehicles imported from the Celestial Empire.
The European Union always exported much more cars to China than it imported, until December 2022, when the trade surplus turned negative for the first time. Meanwhile, Western production of electric vehicles and batteries is increasingly dependent on Beijing, whose industries outpace those of the geopolitical West in both areas. This proves it option From Western brands (including Tesla and Volkswagen) to increase the production capacity of electric vehicles within China, to take advantage of the low cost of materials and labor, and then export part of the electric vehicles produced from there to Europe.
Naturally, this issue was the focus of attention during the visit to China Valdis Dombrovskis. The Vice-President of the European Commission wanted to convey in no uncertain terms the European change in pace in the relationship with Beijing. “We are at a crossroads,” he said in a speech at Tsinghua University.Alma mater From the president Xi Jinping), explaining that the EU and China can “choose the path to mutually beneficial relations” – based on open and fair trade and investment – or “the path that slowly divides us.”
…and the Chinese response
In the second case, Dombrovskis warned that “headwinds” such as Chinese ambiguity regarding Russia’s aggressive war or unfair trade practices will lead the two countries’ economies to face “diminishing opportunities.” Words that He is livingThe Deputy Prime Minister and head of the Chinese President’s economic team responded by highlighting “grave concern and dissatisfaction” with the launch of the investigation into Chinese electric cars, criticizing market protectionist measures and calling on Brussels to limit their use “to maintain stable development prospects for EU-China trade.”
The threat is also targeted indirectly Car maker Europeans, who could see their access to the Chinese market and production fabric reduced. According to the experts I interviewed MIT Technology Review About half of the electric vehicles exported from China are already produced by foreign companies or Join the adventures With Chinese facts. Given its track record of economic coercion, Beijing will almost certainly respond to European tariffs on Chinese-made EVs with countermeasures that would hurt European brands that have a deeper relationship with the Chinese market.
Both Chinese and European officials wanted to put their cards on the table (on the EV side and beyond) in an exchange that was a far cry from the soft tones the EU and China typically use. Having forcefully made their positions clear, the interlocutors also agreed to work on a number of areas – including some measures aimed at easing current and future economic frictions – by establishing a mechanism to discuss export controls.
American reaction
This new mechanism is very similar to the one established in August between China and the United States, which began with the speeches Disengage (Separation) from the past has become closer to the European concept of Eliminate risks. But even on American soil, commercial relations in the field of electric vehicles are being re-evaluated. It must be said that the American market has never opened up to Chinese electric cars like the European market (today there are no Chinese brands available in the United States, unlike the Old Continent). But batteries, due to China’s near-monopoly on raw materials and production of leading products, come mainly from China.
Washington has already moved to begin recalibrating its game plan. Indeed, Chinese electric cars (and their components) are not covered by subsidies from the Inflation Control Act — the $370 billion cap plan signed by the president. Joe Biden To speed up the transition process. On the other hand, these exemptions already apply to electric vehicles produced in the United States, Canada, Mexico and Japan. In the future they should also cover European imports – with a view Support friends Supply chains – provided that agreements on vital materials are concluded between Brussels and Washington.
Ford Cattle Saga
On the Chinese side, a very strong signal arrived from the United States on Tuesday: Ford Announce Construction of a $3.5 billion electric vehicle battery plant in Michigan is on hold. The company said the decision was due to “a number of considerations,” without specifying which ones. But its partner in the project is almost certainly involved, the Chinese giant and absolute leader in batteries Catel, which has granted Ford the license to produce its batteries and which, for its part, He insists That cooperation is still ongoing.
The agreement between Ford and CATL raised concerns about the United States’ increasing dependence on the battery sector. In fact, the US House of Representatives Committee on the Chinese Communist Party, which has launched an investigation into the partnership, welcomed the news with great joy. “We are encouraged that Ford has taken a decisive first step to reevaluate its agreement with the electric vehicle battery company allied with the Chinese Communist Party.” He announced Chairman of the Committee Mike Gallagher. “Now Ford will permanently cancel this agreement.”
“Prone to fits of apathy. Introvert. Award-winning internet evangelist. Extreme beer expert.”
