Why electric vehicles are at the heart of trade frictions between China and Europe
- May 8, 2024
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Why electric vehicles are at the heart of trade frictions between China and Europe
Subject: Economy
Sec: External sector
Context:
- Chinese President Xi Jinping on Sunday arrived in France on a state visit hosted by Emmanuel Macron where the French leader will seek to push his counterpart on issues ranging from Ukraine to trade.
More on news:
- China’s trade issues with the European Union (EU) arise mainly out of friction over exports of cheap Chinese electric vehicles (EVs), and constrained access for European companies to markets in China.
The EVs question:
- Chinese exports to European markets significantly outweigh European exports to mainland China.
- The EU has complained that unfair market access is a key reason for this situation.
- China’s car shipments to foreign markets, and to the EU in particular, have surged in recent years.
- The EU opened an investigation into subsidies going into Chinese EVs, which Beijing denounced as an example of “naked protectionism”.
- Brussels has also opened separate investigations that could limit Chinese solar exports to the EU, and put restrictions on imports of wind turbines and medical devices.
- This is significant because the EC used the “facts available” in 10 previous anti-subsidy cases against China to fill in certain gaps, which allowed Brussels a free hand to impose higher duties.
Fear of Chinese flood:
- China-made EVs are projected to make up more than a quarter of all EV sales in Europe in 2024, with the country’s share in the market increasing by more than 5 percentage points from a year earlier.
- The share of Chinese-made vehicles in the EU is expected to rise to more than 25% in 2024, according to the T&E report, as brands such as BYD and SAIC step up their global expansion plans.
- The majority of foreign EVs currently sold in the EU are from Western brands such as Tesla, which manufactures and ships from factories in China.
About Trade Protectionism:
- Protectionism, sometimes referred to as trade protectionism, is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations.
About Naked Protectionism:
- When protectionist measures are described as “naked,” it implies that they are blatantly obvious and lack any attempt to conceal their intent.
- This might occur when a government openly imposes high tariffs on imported goods or implements strict quotas to limit foreign competition without providing any justification beyond protecting domestic industries.