2024-05-08 17:47:47
Chinese President Xi Jinping’s trip to Europe has rekindled the question of the European Commission‘s investigation into subsidies that could benefit electric car producers in China.
This is the trade issue at the heart of the Chinese president’s trip to Europe. Should the EU use its tools to protect its electric car industry from Beijing?
Xi Jinping’s stop in Hungary is not insignificant in this matter. Budapest is considered China’s gateway to the Union, and is where Beijing is investing heavily in electric vehicle factories.
“There is a large Chinese investment in automotive battery companies in Hungary. Hungary is in a good position to be a leading nation in Europe, for example, when it comes to the production of electric vehicles“, assures Victor Gao, vice president of China and Globalization.
Chinese electric cars accounted for 3.7% of the European market in 2022, up from 0.4% in 2019. This progress could lead to an unfair advantage. That is why the European Commission an investigation was launched last fall on possible subsidies that would benefit from it Chinese manufacturers. Vehicles from China would be 20% cheaper than European models. Allianz estimates that the potential annual loss in net profits of the EU car industry due to Chinese competition will be more than €7 billion by 2030.
But there are other issues behind this battle, explains Bruegel Institute researcher Niclas Poitiers. “If we do not send a strong signal that we are ready to implement free competition and open markets, there is a risk that this type of Chinese competition will affect many other sectors, unfair competition.“.
However, the launch of investigations does not mean the automatic implementation of additional customs duties. Since 2008, the Commission has launched 342 investigations into subsidies granted to imports from China, of which 101 resulted in no countervailing duties. The result of this research is expected in the coming weeks.
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