PREAMBLE
"Although a trade war is not a fundamental way of resolving this issue, it would ... prompt the EU to be more cautious and reduce its willingness to provoke a potential larger-scale trade war."
Thomas des Garets Geddes
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China's response to EU tariffs
Conflicts in EU-CHINA relations
INTRODUCTION
This contribution from Jian Junbo in the Chinese debate on Europe illustrates the mismatch in the European and Chinese perceptions of economic competition and the transformation of China-Europe trade relations.
The author is clear-eyed about the European challenge to reconcile competitiveness with the green transition in an era of strategic competition. He presents the economic competition between China and Europe as inevitable as they compete on industries, products and manufacturing capabilities while at the same time recognizing the importance of the European market for Chinese companies. In his view, tariffs as a European tool to level the playing field with China are not an adequate response and are driven by geopolitical motives to preserve the Western liberal order and are neither fact-based nor justified by the WTO.
Jian Junbo pictures a Europe that is turning protectionist and fundamentally divided at both the European and national levels. While discussing the role of the European Council, the Commission, Member states and business leaders, he demonstrates a lack of clarity regarding the drivers and shapers behind the European decision to take countervailing measures.
The articulation of recommendations by Jian Junbo revolve around three ideas and some contradictions. First, Jian argues that China has agency through its negotiations with Europe, and Beijing needs to seize this opportunity to change the European decision. At the same time, he is convinced that the decision will not change given the EU’s motivations to impose tariffs and the underlying geopolitical tensions. Second, he discusses whether to retaliate against countries that voted in favor of the tariffs like France, and argues that the trust deficit between Europe and China will lead to rethinking trade relations. At the same time, Jian proposes that Europe and China work together to reshape trade rules in order to avoid further trade conflicts. Third, his main recommendation is to alleviate the costs for Chinese companies by boosting their internationalization, especially increasing exports to third markets, reducing their export prices to expand their share in the European market, circumventing tariffs by boosting investments in Europe and assembling Chinese EVs in the Union. In a nutshell, he argues that the European tariffs will boost the competitiveness of Chinese companies helping them to prepare for a more protectionist environment and a less open European market.
by Abigaël Vasselier
Director for Policy and European Affairs and Head of China's Foreign Relations Programme at the Mercator Institute for China Studies (MERICS). Abigaël was previously the Deputy Head of Division for China, Hong Kong, Macao, Taiwan and Mongolia at the European External Action Service (EEAS). She is also the co-author with François Godement of "China at the gates: A new power audit of EU-China relations".
Key Points to Jian Junbo (简军波) paper:
EU tariffs on Chinese EVs are a protectionist and politically motivated measure that contravenes WTO principles.
They are a sign of Brussels’ increasingly competitive and hostile stance towards Beijing.
They also reflect the West’s determination to maintain the liberal, rules-based international order it has for so long dominated.
If confirmed, these levies could mark a turning point in EU-China relations, injecting “significant instability” into this important relationship.
The danger is that they “create a powerful template” for future protectionist measures against Chinese goods.
Chinese EV producers may face short-term setbacks, but their competitive advantages are such that China’s EV industry will continue to thrive.
EV firms should continue seeking ways to circumvent such duties, increasing their investments in Europe and beyond.
Should negotiations with Brussels break down before 4 November and tariffs be maintained, Beijing will have to retaliate.
China should target both pro- and anti-tariff countries. The deterrent effect of Chinese countermeasures will only endure if Beijing follows through on its threats.
A limited trade conflict may be the best way to deter the EU from engaging in a larger-scale trade war with China. “This is the inevitable way of ‘stopping war with war’ [以战止战].”
The Author
Name: Jian Junbo (简军波)
Position: Deputy director of the Centre for China-Europe Relations, Fudan University
Research focus: Politics of the European Union; EU-China relations; Chinese diplomacy
Education: BA Nankai University; MA-PhD Fudan University (2000-2006)
Experience abroad: Visiting scholar in the United Kingdom, Belgium and Denmark
First published by The Paper (澎湃新闻) on 5 October 2024 as