Mikołaj Woźniak, Konrad Falkowski
EU imposes tariffs on Chinese electric vehicles
As announced, so it was done. Less than a month has passed since the European Commission announced its intention to impose temporary countervailing duties on electric cars of Chinese origin. The previous “Review” discussed this topic extensively (we encourage you to read it). July 5 was the day when the announcements finally came into force. However, there were some changes.
In a press release, the European Commission reiterated that the “provisional countervailing duties on imports of battery electric vehicles (BEVs) from China.” The reason for this turn of events is the result of a nine-month investigation, according to which Chinese companies benefit from “unfair subsidisation,” which in turn poses “a threat of economic injury to EU BEV producers.” The press release further states that the European Union held extensive consultations with the Chinese side. This can be seen as one of the reasons why the value of the duties was slightly reduced, especially since the press release itself states that: “Compared to the rates pre-disclosed on 12 June 2024, provisional duties were adjusted slightly downwards based on comments on the accuracy of the calculations submitted by interested parties.” However, it should be clearly noted here that “slightly” must be interpreted literally, as this reduction oscillates between 0.1% and 0.5%.
So, as far as the Chinese companies listed by name are concerned, there have been no changes here. Exactly as stated in the announcement of June 12, individual duties are falling on three Chinese producers: BYD, Geely and SAIC. In turn, the value of these duties is as follows: BYD – 17.4% (here there was no change), Geely – 19.9% (down 0.1%) and SAIC – 37.6% (down 0.5%). In addition, other Chinese producers who have cooperated in the EU investigation are only burdened with a weighted average duty rate of 20.8% (down 0.2%). Companies that have not accepted the offer of cooperation are in a worse situation. The rate of countervailing duties on them is the same as in the case of SAIC – 37.6% (here a similar decrease of 0.5%).
The press release was issued on July 4, but as mentioned above, provisional countervailing duties are in force from the following day, July 5. They are set to last for a maximum of four months. This period is set for EU countries to decide on definitive duties. Such duties will in turn be in force for five years.
The government in Beijing reacted briefly to the whole situation, which is understandable, because a month earlier China clearly expressed its position. Asked about the matter during her regular press conference, Chinese Foreign Ministry spokeswoman Mao Ning responded as follows: “China has expressed strong opposition more than once to the EU’s anti-subsidy investigation on China’s electric vehicles. We believe that specific trade issues should be resolved properly through dialogue and consultation.” She also implied, without saying so, that Brussels should expect retaliation from Beijing: “China will also take necessary measures to firmly safeguard its legitimate rights and interests”.
As you can see, the collision course is still going strong when it comes to EU-PRC relations. The EU is increasingly trying to become independent from the Chinese economy, which is why all actions of the European Commission should be read through the prism of politics. The re-election of Ursula von der Leyen only confirms that this course will be maintained and even deepened, which is also confirmed by analysts from the Polish Institute of International Affairs Marcin Przychodniak and Piotr Dzierżanowski: ” The re-election of Ursula von der Leyen as EC president should mean a continuation of the strong policy towards China, above all in the industrial sector.”
Viktor Orbán’s “peace mission” – visit to China and criticism in Europe.
Hungarian Prime Minister Viktor Orbán’s visit to Beijing on July 8 was – according to Chinese media reports – the third stage of the “peace mission” he initiated. The aim of this initiative, according to the Hungarian side, was to create a diplomatic platform that could lead to a resolution of the crisis caused by the Russian-Ukrainian war. Orbán’s conversation with Xi Jinping took place the day before the NATO summit in Washington, where US President Joe Biden hosted the alliance leaders to discuss key issues and gather further support for the defense of Ukraine.
Orbán praised China for its key role “in creating conditions for achieving peace in the Russia-Ukraine war,” which he said was the reason for his meeting with Xi, coming just two months after the Chinese leader’s visit to Budapest, which can be read more about in the May issue of the “Review”. During the meeting, Orbán countered growing concerns in Europe about threats from Beijing and moved to elevate Hungary-China relations. In response, Xi praised the development of Hungarian-China relations and expressed his hope that Hungary would play an active role in promoting the “healthy and stable” development of China-EU relations during its presidency of the EU Council.
Orbán’s initiative coincided with Hungary taking over the six-month presidency of the EU Council. Before his visit to China, after only five days as president, Orbán visited Ukrainian President Volodymyr Zelensky, whom he asked to consider a ceasefire in order to speed up peace talks. Zelensky rejected the offer.
The next stage of Orbán’s initiative was a trip to Moscow, where he met with Russian President Vladimir Putin. This was the first meeting between an EU leader and Putin in Moscow since April 2022, just two months after the invasion of Ukraine began. Putin considered the talks with Orbán useful, but accused Ukraine of not wanting to end the ongoing war. The President of the Russian Federation reiterated his proposals to end the conflict, which had previously been rejected by the Ukrainian side. According to Kyiv, these conditions, including abandoning aspirations to join NATO and giving up four provinces, are unacceptable. Ukraine points to its 10-point peace plan as the only realistic path to ending the war.
The intentions and form of the initiative have raised concerns among EU leaders. Orbán took an action despite the lack of support from the European Commission and Ukraine. His previous opposition to Western military aid to Kyiv and his close relationship with Putin have been met with criticism, both in Hungary and across the EU. The Hungarian government has long advocated an immediate ceasefire and peace negotiations in the conflict in Ukraine, but has been vague about what such action would mean for Ukraine’s territorial integrity and future security. Orbán, who maintained close ties with Moscow even after the full-scale invasion in February 2022, has faced accusations, including from the leaders of Lithuania and Estonia, of undermining Hungary’s EU presidency and promoting Budapest’s interests at the expense of European unity. European Commission President Ursula von der Leyen has accused Orbán of trying to placate the Russian leader. Zelensky, however, stated that Orbán cannot play the role of a mediator because – in his opinion – only world powers can do so.
China is accused of close ties to Russia. The U.S. administration says China is helping Russia build up its defense industry to the point where Moscow is embarking on its most ambitious expansion of military production since the Soviet era. Chinese support includes significant amounts of machine tools, drone and turbojet engines, cruise missile technology, microelectronics, and nitrocellulose, which Russia uses to make weapons fuel. In addition, China is promoting a Russian-backed six-point peace plan unveiled in Brazil in May. The plan calls for an international peace conference “at the appropriate time” and calls for equal participation by Ukraine and Russia.
China announces investigation into EU tariffs
Expectations for a more forceful response from Beijing did not last long. On July 10, the Ministry of Commerce of the People’s Republic of China issued a statement from which it can be learnt that from that very day it will conduct “investigations on barriers to trade and investment in relation to relevant practices adopted in the investigation into the EU Regulation on Foreign Subsidies”.
According to the statement, the Chinese investigation was initiated based on a formal request submitted by the Chinese Chamber of Commerce, concerning the import and export of machinery and electronic products. The ministry further specified that the main products in question were railway locomotives, photovoltaic cells, wind turbines and safety equipment. In order to carry out this investigation, the Chinese Ministry of Commerce will use appropriate questionnaires, interviews, inspections and other methods that are useful in obtaining information. A day later, ministry spokeswoman He Yongqian added at a press conference on the matter that all investigation methods will be carried out “in accordance with the law” and the ministry will ” widely solicit opinions to ensure that the investigation is fair, impartial, open and transparent.”
The Chinese expect the duration of this investigation to last until January 10, 2025, reserving the right to extend this time “under special circumstances” by another four months, i.e. until April 10, 2025.
It can be expected that the exchange of blows will occur more and more often in the near future, because there is no indication that either side intends to give up in this confrontation, especially the European Union, which, in accordance with the concept of “de-risking”, will strive to become increasingly independent from China and its economy. A good example of implementing this approach in a non-confrontational way is the EU’s desire to deepen economic relations in the field of critical raw materials supplies with ASEAN countries.
Ursula von der Leyen hits Beijing’s soft spot
July 18 was the day Ursula von der Leyen took over as President of the European Commission for the second time. The European Parliament elected her by 401 votes to 284, with 22 blank or invalid votes. Von der Leyen’s victory is not surprising in itself. And her approach to China during the next five years will be just as predictable. This situation can be described as “continuing on a collision course”.
In her 30-page manifesto entitled “Europe’s Choice”, the President of the European Commission addresses flagship issues for the European Union, such as security in connection with the war in Ukraine and green economic transformation, but due to the tense relations between Brussels and Beijing, the issue of China has not been omitted.
Von der Leyen, writing about China, raised two issues. The first was reducing Europe’s dependence on the Chinese economy – the famous “de-risking” policy: ” We have seen first-hand the dangers of dependencies or fraying supply chains – from medical products in the pandemic to Putin’s energy blackmail or China’s monopoly on raw materials essential for batteries or chips.” However, this can be considered a foretaste, because the second issue is a much more sensitive point for the Chinese. Von der Leyen mentions the Indo-Pacific as one of the regions with which the EU should cooperate and deepen relations. The blow to China was meant to be a statement that the EU, together with regional allies such as Japan, Australia and New Zealand, should work hard to counter challenges posed by the PRC, and most importantly, the EU and allies should prevent China from taking over Taiwan: “Similarly, we will work with Japan, Korea, New Zealand and Australia with whom we face common challenges in cyber, space and in the secure supply of critical minerals and technologies. This includes our collective efforts to deploy the full range of our combined statecraft to deter China from unilaterally changing the status quo by military means, particularly over Taiwan.” Von der Leyen also lists the deepening alliance between Russia and China in the form of a “no-limits friendship” as a matter of concern, and the related increases in military spending by both countries, which are many times higher than that of the EU: To put this into perspective, combined EU spending on defence from 1999 to 2021 increased by 20%. In that time, Russia’s defence spending increased by almost 300% and China’s by almost 600%.” The final sentence adds a comment to this issue that clearly suggests the direction in which Von der Leyen wants to lead the EU over the next five years: “We must change this.”
The references to China and Taiwan have not gone unnoticed. Both the People’s Republic of China and the Republic of China (Taiwan) have expressed their views on the matter. Wang Lutong, Director General of European Affairs at the Ministry of Foreign Affairs of the People’s Republic of China, has expressed criticism of the political guidelines presented by Von der Leyen for the European Commission. He stated that they constituted “interference into China’s internal affair.” He further used the phrase that “playing with fire on Taiwan is highly dangerous”, which could be taken as a threat or a very strong suggestion. At the very end of his post, he shared the advice that “meddling and even trying to join forces is by no means a right choice for Europe.” In more measured words, Cui Hongjian (Beijing Foreign Studies University) spoke in the Global Times. He stated that Von der Leyen’s position has not changed and remains “tough” on China. He also noted that “we can see that she still places more emphasis on competition and confrontation with China instead of cooperation.” In addition, according to Zhao Junjie (Chinese Academy of Social Sciences), the dynamics of Sino-European relations are influenced (implicitly negatively) by the United States. In his post on X, President of the Republic of China Lai Ching-te congratulated Von der Leyen on her re-election, appreciated her desire to maintain peace in the Taiwan Strait, and expressed his hopes for strengthening Taiwan-EU relations, which are “built on our shared commitment to human rights and democracy.”
The collision course has been maintained, and there is no sign of change on the horizon. Electric vehicle tariffs, the raising of the Taiwan issue, the Sino-Russian alliance – the situation can be expected to continue to escalate, as it is doubtful that either side will compromise its own arguments.
Meloni in China
Italian Prime Minister Giorgia Meloni’s long-awaited visit to China has finally moved beyond the announcement zone. Meloni visited Beijing from July 28 to 31. The trip to the People’s Republic of China is the culmination of the process of resetting Italian-Chinese relations since the country’s exit from China’s Belt and Road Initiative in 2023. There has been talk of a reset for a long time – confirmation of this is, for example, the April Italian-Chinese economic event, which we wrote about a few months ago in the “Review”. The Italian leader herself, speaking about her visit to the Middle Kingdom, stated that it was “a demonstration of the will to begin a new phase, to relaunch our bilateral cooperation.”
At the very beginning, as an aperitivo before the main course, which was to be a meeting with President Xi Jinping, the Chinese served Meloni a conversation with the Premier of the People’s Republic of China, Li Qiang. During the exchange of views, many words were said about the fruitful cooperation between the two countries, especially from the perspective of the 20th anniversary of the conclusion of the agreement on a comprehensive strategic partnership. Additionally, the fact of the 700th anniversary of the death of Marco Polo – the medieval traveler and liaison between Italy and China – was highlighted. Both sides confirmed that this event is a good opportunity to deepen bilateral relations in various fields. The topic of Marco Polo was also raised on July 29 during the speech of the Italian Prime Minister, which she gave as part of the inauguration of the exhibition entitled ” A journey of knowledge. The Travels of Marco Polo and its legacy between East and West” at the World Art Museum in Beijing. Moreover, together with her Chinese counterpart, Meloni participated in the Italian-Chinese Business Forum, which took place in Beijing. There, she also spoke at the beginning of the event, which was attended by over 100 Italian and Chinese companies and trade associations. The result of the talks with Chinese premier is the signed “Action Plan to Strengthen the China-Italy Comprehensive Strategic Partnership (2024-2027)”. As Meloni herself admitted, this is to be “experiment new forms of cooperation.”
On July 29, talks between Meloni and Xi took place. According to an official Italian government statement, the development of cooperation was once again raised “in the context of the 20th anniversary of the global strategic partnership” – the importance of “balanced, mutually beneficial cooperation based on mutual trust” was emphasized here. Similar accents were highlighted in the announcement issued by the Chinese government. Xi emphasized the importance of the ancient Silk Road, which once connected China with Europe, and thus with Italy. “China and Italy should uphold and promote the Silk Road spirit” – these words could be seen as China’s encouragement to return Italy to the bosom of the New Silk Road. Nevertheless, the most important topics of the talks should be considered global problems such as the war in Ukraine, the escalation of tensions in the Middle East, and also in the Indo-Pacific – the Italian statement described this as the interlocutors moving to discussing “the priorities of the international agenda”. In addressing these issues, the Italian head of government described the People’s Republic of China as a “very important interlocutor” in solving global problems: “There is growing insecurity at an international level and I think that China is inevitably a very important interlocutor to address all these dynamics.” This is a nod to Xi, primarily concerning the resolution of the war in Ukraine. European leaders have repeatedly tried to convince the Chinese leader that his country’s role in this matter is significant – first of all, the possibility of putting pressure on Vladimir Putin to end military operations in Ukraine.
For his part, the Chinese leader stressed that mutual benefits from common relations can only be achieved by ” upholding openness and cooperation in global industrial and supply chains”. He stressed that development based on peace is the most important thing for China and that his country “never seeks hegemony”. In doing so, he also expressed his hope that Italy ” understands and supports China’s development philosophy”, thanks to which Italy could play a positive role in stabilizing relations between the European Union and China. The Chinese statement also stated (which was not included in the Italian one) that Meloni confirms her country’s adherence to the “one China” policy and that Italy opposes “decoupling”, i.e. the economic separation of Europe from China. In addition, it does not support protectionism and expresses its readiness to improve relations between Brussels and Beijing.
There are many inaccuracies in these words, for example in the matter of rejecting protectionism, while Italy supports imposing sanctions on Chinese electric vehicles. The Italians have identified themselves as those who will support the European Commission’s proposal to impose these tariffs. On the other hand, Meloni knows that it is impossible to go to all-out war with China, which is why she is trying to find opportunities for cooperation or a “new start”. This start would be beneficial primarily for Italian companies in China, and would also attract Chinese investors to Italy: “Today, Italian investment in China is about three times as much as Chinese investment in Italy. […] We clearly want to work to remove obstacles for our products to access the Chinese market.” Individual EU countries will strive to reduce the restrictive approach of the Union through their own actions, while at the same time expressing more or less clear support for this approach – this, one could say, “European duality” will characterize EU-China relations for the foreseeable future.
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