The European Commission initiated a countervailing investigation into Chinese-made electric vehicles on October 4, 2023, with plans to announce temporary tariffs on Chinese electric vehicles on June 5, 2024, signaling a substantial increase from the initial tariff level. This move could significantly raise the cost of Chinese electric vehicles in the European market. In response, China’s Ministry of Commerce criticized the investigation, arguing that it was based on subjective assumptions regarding subsidies and lacked sufficient evidence in adherence to WTO rules.

Recent reports suggest that the European Commission has postponed the announcement of tariffs on China, possibly due to the European Parliament elections scheduled from June 6 to 9. Chinese Foreign Ministry spokesperson Mao Ning reiterated on June 4, 2024, that China views the essence of China-EU economic and trade relations as mutually beneficial, emphasizing the rejection of protectionism in favor of openness and cooperation. China hopes the EU will uphold its commitment to free trade, resist protectionist measures, and collaborate with China to preserve China-EU economic and trade cooperation.

In reality, the “trade protection” measures by the EU are not receiving appreciation from European car companies. In May, BMW Group Chairman Philip Zipzer described the EU’s actions as potentially “shooting itself in the foot.” Hildegard Müller, president of the German Association of the Automotive Industry, also cautioned that so-called countervailing measures, such as additional tariffs, would not resolve the challenges faced by the European and German automotive industries. Instead, they would quickly yield negative impacts. Additionally, Kang Linsong, chairman of the board of directors of Mercedes-Benz Group AG in Germany, urged the EU to reduce tariffs on electric vehicles in China. Ferrari CEO Benedetto Viña similarly characterized the entry of Chinese car companies into the European market as “healthy competition” for local car companies.

And beyond that, many of the new energy vehicles exported from China to Europe were initially manufactured in China by European car companies and subsequently exported to Europe. For Europe’s largest automakers, China remains their largest single market, with Germany serving as a prime example. Furthermore, Chinese new energy vehicle companies have established factories in Germany and introduced new technical collaborations such as intelligent battery swapping, intelligent transportation, and autonomous driving technologies to the region.The imposition of tariffs on China stands to undermine the shared interests of both China and the EU.

The economic and trade relations between China and the EU are intricately linked to their future development as well as the global development landscape. Tariffs on electric vehicles in China could indeed impact the EU’s green transition strategy, potentially creating unnecessary obstacles. Indeed, the disapproval of trade protectionism and related measures has been echoed by leaders of many EU countries. This sentiment reflects a broader recognition of the value of open and mutually beneficial trade relations.

Trade between China and the EU is not detrimental to the interests of both sides; rather, it fosters healthy competition and technological advancement. Trade cooperation contributes to enhancing people’s living standards while expanding product diversity. Fostering trade liberalization and leveraging existing competition and cooperation relations between China and the EU can pave the way for mutually beneficial outcomes. By capitalizing on their shared interests and complementary strengths, both parties can enhance economic prosperity and promote global trade stability.

Between China and the EU, there exists not only competition but also cooperation. In expanding cooperation within a framework of healthy competition and achieving mutual benefit, this is the correct way to coexist.

By Le Tianyu