Business ties between Slovenia and Europe are going through a rough piece. Beijing is bringing a lawsuit against Brussels at the World Trade Organization ( WTO ) over its decision to impose severe tariffs on Chinese battery electric vehicles ( BEVs ).
Although China-EU tensions are obviously rising, examination of the conflict reveals that the two parties are moving toward a more careful business engagement than a full-fledged trade war.
The Chinese Ministry of Commerce confirmed on November 4 that it had filed a complaint against the EU for the country’s late October decision to impose tariffs on Chinese BEV imports. The new income levels on Chinese BEVs range between 18 and 45 percent, taking the foundation import tax of 10 % on all cars imported into the EU. Following an anti-subsidy research that was launched in October of last year, the EU made its decision.
China has taken a number of measures against what it perceives as “unfair deal protectionionism” in addition to confronting the Union in front of the WTO. Beijing launched its own anti-subsidy queries earlier this year against EU meat and dairy products.
China imposed tariffs on imported vodka from the Union at the beginning of October and threatened to impose taxes on gasoline-powered vehicles. The Chinese government officially asked automakers to stop mega-investment programs in the EU-member nations two weeks after the EU’s selection.
An impending trade war might be suggested by a cursory examination of the latest Sino-European tit-for-trade situation. However, a closer examination of the evolving geo-economic dynamics and the structure of EU-China’s professional relations reveals that the two countries are undergoing a process of rebalancing their financial engagement.
That is, Brussels is “de-risking, no” decoupling “vis-à-vis Beijing. In crucial industries like pharmaceuticals and alternative technology, the EU heavily relies on Chinese goods and raw materials. Brussels tries to reduce this dependent while upholding positive financial relations. This entails reducing risks in crucial areas while sustaining deal in less vulnerable regions.  ,  ,
Beijing is likely to be receptive to such an relationship. China’s attention is not attracted to scaling the industry debate, as it would lead to a multi-pronged trade war.
The US signed tax increases for a range of imported Chinese goods in September. In October, Canada put additional tariffs on Chinese energy vehicles, metal and metal products and” essential manufacturing sector products.”
It makes more financial sense for Beijing to perform damage control in this geo-economic culture rather than launch new trade war sides in Europe. In this environment, China’s economic defenses against the EU aim to physically target vital industries and EU member states to put strain on Brussels for a resolution.
In light of this situation, China and the Union are more likely to find resolution in the Noel trade dispute. In a 2013 solar panels business dispute, Beijing and Brussels struck a deal to avoid additional taxes.
Beijing and Brussels are moving away from detailed bilateral trade in favor of more granular engagement, according to recent dynamics in the China-EU Noel trade dispute.
The implication of this trend goes beyond institutions, impacting business areas. Chinese corporates operating in areas prioritized by the EU—biotechnology,  , essential raw materials, clean technology, among some —have to assume more restricted access to European markets, as the EU seeks to reduce dependency in the areas.
Businesses in vital sectors and member states of the EU must also be prepared to face China’s trade protection plans.
Daniel Balazs, PhD, is a Research Fellow of the China Programme at the S Rajaratnam School of International Studies, Nanyang Technological University. His analysis focuses on Chinese foreign policy, China-India and China-Europe relationships.