The European Union (EU) had shown its divisions in recent months, but finally stood firm and this represents a major setback for China. The vote by Member States on Friday, October 4, in favor of customs duties on electric cars made in China marks the failure of an intense Chinese diplomatic campaign – made up of so many promises to open factories on its soil and threats of reprisals – to encourage European capitals to oppose.
China expressed its anger on Friday night and warned that the decision “affect and hinder” the determination of their groups to invest in Europe. “China will take all measures to resolutely defend the interests of its companies”declared a spokesperson for the Chinese Ministry of Commerce, highlighting, however, the European commitment to continue negotiations.
There is no doubt that there will be consequences, considering China must sanction such an affront. The question is the magnitude of the response. The world’s leading exporter is already largely closing its doors to the North American market: the United States and Canada imposed 100% entry taxes on their electric vehicles, while Turkey set the bar at 40%.
It could be counterproductive for China to raise tensions too much with Europe, its largest export market, because excessive bidding would lead to a trade war in which Chinese factories would also have a lot to lose. A sign of the interest in Europe of Chinese brands seeking to internationalize, some are announcing factory projects there, such as BYD, which has opened one in Hungary.
The “sacrificed” cognac
Faced with China, the EU is demonstrating that it does not lack levers, even if it has acted dispersedly on previous issues. After the Biden administration mentioned on September 23 its intention to block Chinese software and components in connected vehicles, Commission Vice President Margrethe Vestager announced during a visit to the United States at the end of September, that the EU was also very attentive to the issue. At the same time, study the practices of very low-cost e-commerce sites, Shein, Temu and AliExpress.
The European sectors that are likely to be targeted by China are known. Already in January, Beijing launched an investigation into French cognac, while Paris has continually been in favor of the adoption of these new customs duties. Following the vote by member states on Friday, the National Interprofessional Cognac Office said it did not understand why the sector “it is thus sacrificed”. “The French authorities have abandoned us”he wrote in a press release.
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