EU urged to reach appropriate solution with China in EV tariff talks

EU car companies should take advantage of the significant opportunities in the Chinese market, as the nation vows to advance high-level opening-up and further relax market access, Chinese officials and experts said, following the conclusion of China's third plenary session this week, which unveiled a number of reforms and opening-up measures.

These remarks were made amid bilateral talks on the EU imposing additional tariffs on China-made electric vehicles (EVs). The high tariffs have raised concerns among EU member countries and leading industry players about the possibility of a "trade war" between the two major trading partners.

In a meeting between China's Minister of Commerce (MOFCOM) Wang Wentao and Oliver Blume, chairman of the Board of Management of Volkswagen AG, in Beijing on Friday, both sides exchanged views on the development of the German car company's business in China.

Wang stated that the recently concluded third plenary session emphasized that openness is a distinctive feature of Chinese modernization and that adhering to the fundamental national policy of opening-up is essential. "This will create a favorable business environment in China for enterprises from all countries, including Volkswagen," the minister said.

European automotive companies such as Volkswagen advocate for fair competition and strongly oppose the EU's imposition of tariffs on Chinese electric vehicles, a stance that China appreciated, Wang said.

The commerce minister expressed the hope that Volkswagen and other European automotive companies will continue to play an active role, encouraging the European Commission and the governments of Germany and other member states to work with China. On the basis of respecting facts and rules, he urged them to speed up the consultation process and reach an appropriate solution as soon as possible to prevent the escalation of trade frictions.

Despite trade tensions, China remains welcoming of more European companies coming to China to win new business. China's door of opening-up will only open wider and it is believed that the EU car companies will vote with their feet in terms of where they want to invest, Yang Chengyu, an associate research fellow from the Institute of European Studies of the Chinese Academy of Social Sciences, told the Global Times on Friday.

It is hoped that both parties can reach a satisfactory result from negotiations on EV talks as soon as possible for the benefits of both sides, Yang said.

The high tariffs targeting Chinese EVs have been met with serious concern among the international business community, including the key industry players within the bloc, for its foreseeable impact on the normal trade activity.

On Thursday, Volvo cut its full-year retail sales forecast, blaming European tariffs on EVs made in China that will hit one of the Swedish automaker's key electric models until it shifts production to Belgium, Reuters reported.

While reporting better than expected second-quarter results that sent its shares up 6 percent in morning trade, Volvo lowered its forecast for sales growth this year to 12-15 percent from 15 percent, the report said.

Experts said that this is a clear example of how additional tariffs may backfire.

Previously, Hungary voiced its opposition against the EU's decision to impose extra tariffs on China-made EVs, as European officials and businesspeople continued to express their dissatisfaction of the EU actions.

Major German carmakers including BMW, Mercedes-Benz and Volkswagen also criticized the planned tariffs and voiced their support for fair competition and free world trade.

China's achievements in the EV sector are mainly fueled by technological innovation, a robust supply chain, and a highly competitive domestic market, rather than by subsidies, experts said, calling the EU to listen to the voices of their own industry insiders and reflect their stance as an open region for cooperation.

Nearly one-third of the EVs exported from China to the EU are actually brands owned by European companies, such as Volvo, BMW, and Volkswagen, Wang Yiwei, a professor from the School of International Relations at Renmin University of China, told the Global Times, noting that this is also why leading car companies like those from Germany are opposed to the EU's actions, and why Germany abstained from voting on this issue.

The current approach of imposing heightened tariffs on Chinese-produced EVs is driven by populism and violates principles of free and fair competition, the expert said.

Trade and investment are deeply intertwined and cannot be resolved simply through tariffs, Wang said, urging the EU to listen more carefully to their own voices within the bloc before making any decisions.

In contrast with the EU's protectionist move, China has always taken an open stance in welcoming cooperation and competitions of world players.

In addition to meet with China's commerce minister, Blume also met with China's Minister of Industry and Information Technology Jin Zhuanglong, who said during their meeting that the Chinese government attaches great importance to the development of the automotive industry and continues to promote the high-level opening-up of the automotive sector.

China's industrial system is complete and the automobile market has huge potential, Jin said. He welcomed Volkswagen AG to continue to delve into the Chinese market and provide consumers with more high-quality products to choose from.