Despite frequent pressure from the Chinese Communist Party (CCP) towards various countries in the European Union, the EU has still passed a decision to increase tariffs on Chinese electric vehicles. The EU also rejected the conditions put forward by the CCP to exempt the tariffs, showing the EU’s steadfast stance in defending its domestic manufacturing industry. This contrasts greatly with the EU’s weak posture a decade ago when a large influx of Chinese solar panels flooded into Europe. Experts say that the CCP can no longer expect European compliance.
At the Paris Motor Show, which ended on Sunday (20th), nine Chinese electric vehicle manufacturers such as BYD, NIO, and Xiaopeng Motors showcased their advanced technologies. At the BYD booth, a large screen displayed iconic landmarks from around the world, from the Christ the Redeemer statue in Rio de Janeiro to the Arc de Triomphe in Paris. All these indicate the company’s ambition to dominate the global market.
This seems like a challenge to the EU. Just over ten days ago, the EU decided to impose anti-subsidy tariffs on Chinese electric vehicles.
On October 4th, EU countries voted on Chinese electric vehicles, with the EU imposing a 45% tariff on Chinese electric vehicles. According to Politico, 10 countries voted in favor, 12 countries abstained, and 5 countries voted against, including Germany.
The European Commission stated last month that it had received proposals from Chinese electric vehicle manufacturers for the EU’s minimum import price as a way to avoid tariffs, but the EU rejected all proposals. Reuters cited sources saying that the CCP proposed a minimum import price of 30,000 euros ($32,946).
To prevent the EU’s tariff action, the CCP also pressured individual member countries.
Last month, Spanish Prime Minister Pedro Sánchez visited China, only to be met with a show of strength. Upon arrival, he learned that CCP officials were canceling a series of agreed investments in Spain. The blackmail worked. After a long meeting with Xi Jinping in Beijing, Sánchez relented and called on the European Commission to reconsider the case regarding Chinese electric vehicles.
A few days later, Chinese Minister of Commerce Wang Wentao traveled to Europe, seeking to capitalize on the momentum. He tried to get Italian Prime Minister Giorgia Meloni’s government to switch sides like Sánchez, and hoped that Germany, Italy, and Spain would act as its advocates in Brussels, leaving the European Commission with no choice but to compromise and accept an unsatisfactory agreement.
However, Italy stood its ground. Italian Foreign Minister Antonio Taliani, in an interview before meeting Wang Wentao in Rome, expressed Italy’s support for the European Commission’s proposal to impose tariffs on Chinese electric vehicles for the protection of their companies’ competitiveness.
The only voice speaking on behalf of the CCP in Brussels is Germany. This is because German auto manufacturers such as BMW, Mercedes-Benz, and Volkswagen have large-scale production facilities in China. They fear severe repercussions from retaliatory tariffs imposed by the CCP.
German Chancellor Scholz pressured von der Leyen, threatening to withdraw support for her second term as President of the European Commission, but it ultimately proved futile. When these tactics failed, Scholz turned his attention to other member countries, attempting to persuade them to pressure the European Commission.
Michael Barone, Senior Honorary Researcher at the American Enterprise Institute, told Epoch Times that the EU does not want its production of electric vehicles mandated by green laws to face competition from outsiders. Moreover, he noted that currently, there is an oversupply of electric vehicles in Europe, with no one willing to purchase them. Gasoline-powered vehicles, on the other hand, are in high demand, with a waiting period of six to eight months.
Europe has an ambitious goal to fully transition to electric vehicles by 2035, with the continent’s largest car manufacturers – including Renault, Stellantis, BMW, and Volkswagen – unveiling new models aimed at attracting European consumers.
Kenneth Rogoff, Professor at Harvard University and former Chief Economist at the International Monetary Fund, told Epoch Times that although Europe and the US are willing to spend trillions of dollars and implement stringent regulations to tackle climate change, they refuse to let consumers have access to low-cost Chinese electric vehicles. This is due to some important national security considerations and motivations to protect employment.
This time, the EU’s attitude towards the influx of Chinese products is in stark contrast to a decade ago. Back then, Chinese solar panels also flooded into Europe like a tide, but the EU’s stance was weak.
The EU has learned from its experience a decade ago, hoping to take more decisive action in this conflict with much higher stakes, and must do whatever it takes to prevent the failure of the crucial green transformation battle for the automotive industry.
Former EU Trade Commissioner Karel De Gucht told Politico that in 2012 and 2013, when he pushed for anti-dumping and anti-subsidy measures against China for dumping solar panels, Beijing disrupted EU actions by using a divide and conquer strategy, pressuring member countries who feared retaliation. Up to 18 EU countries advised De Gucht not to impose tariffs on China. Eventually, the EU first imposed lower tariffs and gradually increased them months later.
The EU’s weakness led to the collapse of the European solar cell industry. In March of this year, European solar manufacturers warned that they were facing a survival crisis due to China almost entirely dominating the global supply chain, causing an extremely cheap oversupply of solar panels within the EU, leaving them unable to compete. Companies started laying off approximately 4,000 technical workers.
In February of this year, 12 companies that account for three-quarters of the EU’s solar module capacity sent a final request to the European Commission, demanding subsidies amounting to 880 million euros over the next two years. This included acquiring shares and helping with their operational expenses. “If there’s no significant change in the market or urgent support decisions, we will be forced to make a difficult decision in March and shut down these photovoltaic manufacturing facilities completely.”
The wave of closures began in March. A spokesperson for Meyer Burger, Germany’s largest solar manufacturer, told Politico that on March 12, the company produced its final module due to lack of public support from Brussels and Berlin. The spokesperson stated that the company would begin laying off 500 employees “in the coming days.”
Secretary-General of the European Solar Manufacturers Committee John Lindahl stated that by late March, businesses would close production lines equivalent to one-fifth of the EU’s total solar module capacity. “It’s truly terrifying,” he said. If closures proceed as expected, “Beijing may likely control Europe’s energy transition.”
Faced with the massive influx of Chinese electric vehicles, Europe is no longer passive.
Noah Barkin, Senior Visiting Researcher at the Marshall Fund of the United States and Senior Advisor at Rhodium Group, wrote that officials from several European countries find Germany’s pressure on the EU regarding tariffs on Chinese electric vehicles “difficult to understand,” “frustrating,” and “sad.”
In some of the largest member countries, it is perceived that Germany is sacrificing Europe’s influence on China, the relationship between Germany and France, and Berlin’s position in the G7 in order to allow German automakers a temporary breathing space in China. However, this market seems to no longer need them.
Barkin predicted three days before the EU vote that Germany’s opposition to EU tariffs was “doomed to fail.” He said that if member countries voted for tariffs on Chinese electric vehicles, one of the most important messages would be that Germany’s influence on the EU’s policy towards China had significantly diminished.
In May of this year, Chinese party leader Xi Jinping visited Paris, but failed to receive trade concessions from French President Macron and von der Leyen. After the trilateral meeting, von der Leyen stated, “We will defend our companies; we will defend our economy. If necessary, we will not hesitate to do so.”
Barkin said that the EU’s biggest gain from imposing tariffs on Chinese electric vehicles is that, faced with immense pressure, Europe has refused to fall back into the old habit of self-harm. The CCP cannot expect Europe to surrender anymore.