The European Union ( EU) remains an attractive market for China’s automakers even after the bloc imposed 17-38 % tariffs on Chinese electric vehicles ( EVs ) earlier this month, said a Hong Kong-based prominent academic.
” The Chinese EV market is very competitive as local manufacturers are lowering costs,” Fan Di, an associate professor at the Hong Kong Polytechnic University, told Asia Times in an interview. Chinese EV producers need to travel abroad to find locations where they can develop and use their production capacity.
Chinese EV companies can still live in the Union because the new levies are significantly lower than the US’s new 100 % tax in May, according to Fan. Either way, they can recoup their investment in the region by absorbing the new tariffs or starting new factories there.  ,
Beijing has launched an anti-dumping research into the EU’s meat products and has stepped up its ongoing research of German brandy since the EU began imposing temporary taxes on Chinese electric vehicles on July 4.
Additionally, it has begun an investigation to determine whether the EU’s anti-subsidy investigations into Taiwanese manufacturers of railways, solar panels, wind energy products, and protection equipment legitimately constitute trade barriers.  ,
Chinese government officials and automakers have indicated that they will work with their Union rivals to come to an agreement on the subject. If the two factors fail to reach a compromise, the temporary taxes will be continuous in November.
During the European Commission’s non-binding voting on Monday about the imposition of tariffs on Chinese EVs, the German Ministry of Economy did not make a decision, according to Reuters. Spain, France and Italy are apparently backing the proposed jobs.
Because the bloc’s residents earn more money than those in developing nations, Chinese EV companies wo n’t abandon the European market, according to Fan. ” But after all, taxes are a kind of business hurdle. They will have a negative impact on how the Chinese supply chain and the German market communicate and interact.
He claimed that Taiwanese electric vehicle companies will have to increase their selling prices at a certain point if they are subject to more tariffs, despite having a price advantage and being able to withstand the EU’s recently imposed tariffs. He claimed that these rate increases will stifle the EU’s effort to achieve climate neutrality by 2050.  ,
New EV flowers in Europe
On July 9, BYD, China’s largest Vehicle maker, announced that it would fixed up a shop in Turkey for US$ 1 billion. The new center, scheduled to begin generation by the end of 2026, will include a peak production capability of 150, 000 vehicles per year. The flower will make about 5, 000 work.  ,
China’s SAIC Motor Corp, which owns the United Kingdom’s MG Motor, is officially negotiating with Spain’s Ministry of Industry about building its first EV grow in Europe. The business is even thinking about starting a mill in Hungary or the Czech Republic for lower labor costs, with a final decision expected by September 30.  ,
Another Chinese EV companies, such as Chery and NIO, plan to open their second companies outside of China in Spain and Hungary, both. At present, China’s Contemporary Amperex Technology Co Limited ( CATL), the world’s largest EV battery maker, has been running a factory in Hungary.  ,  ,
Fan claimed that setting up fresh flowers in Europe will lower production costs for Chinese EV companies in the near future, but the decisions will also have long-term advantages.  ,  ,
” Probably, many Western governments will want to see it because they want to repair their car manufacturing industry,” Fan said.  ,
He claimed that developing EVs in Europe can shorten Chinese car companies ‘ delivery times, gain more objective market feedback, and tailor their production to meet the needs of local businesses.  ,
Chinese car companies will have a” some information overflow” to the new markets, he continued, but that does not imply that they will lose their competitive advantage. They may apply the knowledge they have gained from Europe to creating new products.
He cited Nanjing Automobile Group’s 2005 acquisition of MG Motor as a good illustration of how Taiwanese manufacturers gained knowledge abroad.
A 20 % decoupling
In April 2024, Fan and three academics from China, Australia, and Singapore collaborated on the writing of a research article titled” Locking in international customers amid geopolitical problems.”
According to an analysis of the data of US-listed companies and their overseas suppliers, transactions between sampled US buyers and Chinese suppliers decreased by 18.42 % after the Trump administration imposed tariffs on Chinese goods worth over$ 250 billion in 2018.  ,
” Think if the average transaction price between a sampled US consumer and a Chinese provider was US$ 100 prior to the business war. However, the average transaction price decreased to$ 80 after the trade conflict, according to Fan.
He claimed that this” 20 % decoupling” was brought on by the decision of US customers to leave China and the transfer of some Chinese manufacturing services to some ASEAN nations, including Vietnam.
He noted that some US businesses had trouble relocating from China because they were unable to locate an appropriate alternative supplier from elsewhere who would be able to provide them with the required technologies, delivery services, and corporate social responsibility ( CSR ) programs they needed.  ,
” We witnessed instances where some Taiwanese garment makers relocated from Vietnam to China. They had hoped to reduce costs by moving to Vietnam, but they were unable to find any particular fabrics to make efficiency textiles it, he said.
Last year, China’s total exports fell 4.6 % year-on-year to$ 3.38 trillion due to weak demand in the West amid US rate hikes, according to Chinese Customs data. The country’s exports to the EU dropped 10.2 % to$ 501 billion while those to the US declined 13.1 % to$ 500 billion. Exports to ASEAN also contracted 5 % to$ 524 billion.  ,
In the first half of this year, China’s total exports rebounded 3.6 % to$ 1.71 trillion from the same period last year. The country’s exports to the EU eased 2.6 % to$ 250 billion. Exports to the US rose 1.5 % to$ 241 billion while those to ASEAN gained 10.7 % to$ 285 billion.  ,
Some analysts claimed that as a result of the US presidential election, where both applicants promise tougher trade measures against China, they were concerned about possible US price increases later this year.  ,
Donald Trump, the Republican nominee for president, declared in February that he would impose a 60 % tax on Chinese goods if he wins the November election after recovering from an assassination attempt at a campaign rally on July 13.  ,  ,
The proposed 60 % price, if implemented, will decrease China’s economic progress by 2.5 percentage points in the year that follows, UBS said in a research report on July 15. China has announced a 5 % GDP growth target this year, compared with a 5.2 % rise last year.  ,
Origins of products ,
Washington has increased its work to track the causes of imported goods recently to stop China from avoiding US taxes by using third nations.  ,
President Joe Biden announced on July 10 that the US would implement additional tariffs on imported steel and aluminum from China via Mexico. The move aims to close a hole that has allowed Chinese material providers to avoid US taxes since 2018.
Indonesian authorities said the South Asian country may impose a 100-200 % tariff on China’s labor-intensive products to protect its local companies. If their exports involve several levels of suppliers, according to Fan, it will be challenging for US buyers to investigate the origins of products.  ,
” Supply chain transparency is often a pain for the customers, who may have info about their first-tier providers but not the second-tier kinds”, he said.
Some US customers just had to stop their payments in China to avoid potential threats, he said in cases involving the restrictions on the use of Xinjiang fabric in American fabric.  ,
Read: US slaps’ metaphorical’ tariffs on China metal, metal
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