China slaps German Economy Minister Habeck over tariffs on electric cars

During political talks in Beijing, Federal Economics Minister Robert Habeck (Greens) faced clear criticism of the EU. The chairman of the powerful National Reform and Development Commission (NDRC), Zheng Shanjie, called Brussels’ plans to impose tariffs on electric cars from China “unacceptable”. . There were already fears that the customs dispute would overshadow Habeck’s three-day trip to China.

Tariffs would harm European consumers and the development of the automotive industry, Zheng, who holds the rank of minister, criticized at the opening session of the German-Chinese dialogue on climate and transformation. The NDRC is responsible for China’s macroeconomic development and is more influential than, for example, the Ministry of Commerce.

Zheng pointed out that only 12.5% ​​of electric cars produced in China are exported. “In Germany this percentage is much higher,” she underlined. After all, Germany has destroyed its internal market and can only survive by exporting, one of the effects of austerity.

At noon local time, Habeck met the Commerce Minister Wang Wentao. He expressed himself equally bluntly. “This is essentially an attempt to suppress China’s industrial development.” Economic cooperation “should not be used as a weapon”.

Last week the European Commission announced special tariffs on electric cars from China. According to her, it is proven that producers from the People’s Republic have an unfair competitive advantage when exporting to the EU. The reason is the government support they receive in China. The Commission fears that low-cost electric cars “Made in China” will force European manufacturers out of the market.

The Chinese minister: “I hope that Germany can change the mind of the EU”

The EU’s temporary tariffs are expected to come into force on July 4. However, the EU wants to negotiate with China before it finally comes into force in November. So far it is said that there has been no progress. When it became known on Friday, shortly after Habeck’s arrival in Beijing, that the hoped-for meeting with Chinese Prime Minister Li Qiang would not take place, further speculation arose. However, the context is still unclear.

NDRC head Zheng called the EU’s accusation that China is distorting competition “absurd”. Protectionism is harmful to climate protection and green transformation. However, the president praised Germany for its commitment to avoiding tariffs: “I hope Germany can change the EU’s mind.”

There is some hope on the customs issue that on Saturday evening there will be a video conference between Chinese Trade Minister Wang and European Trade Commissioner Valdis Dombrovskis.

China is ready for negotiations, Wang said. But he also clarified who, from his point of view, should move: “If the European side insists on going its own way, we will take all necessary measures”, that is, they will respond with counter-sanctions on European products.

Germany is actually against tariffs. The major automotive industry is warning of the consequences. Chancellor Olaf Scholz (SPD) spoke out clearly against the introduction. His deputy did the same. But the German position is isolated.

Habeck responds to Chinese accusations

Habeck clearly countered Zheng’s statements to the NDRC. The problem is not the EU’s approach, but rather the Chinese side’s reluctance to compromise. Why should they accept compromises when they have a clear competitive advantage gained with large investments?

Habeck stressed that these are not blanket punitive tariffs. But rather on tariffs to compensate for unfair conditions of competition: “It is important that it is not a question of denying access to the market.”

In theory, there are a few options for a compromise between Beijing and Brussels. China may reduce subsidies in the future, but this is considered unlikely. Another option would be to raise auto tariffs and reduce import duties elsewhere to avoid an escalation. There is also the option of a quota system on the table: tariffs would only apply to a certain number of Chinese electric cars imported into Europe.

However, it seems impossible that tariffs can be completely avoided. The Chinese EV threat is seen as too great by France and Spain. Italy no longer has an automotive industry.

Germany is almost alone

The Chinese side must “say goodbye to wishful thinking that Germany can somehow convince the EU to change its decision, at least not its overall risk reduction policy towards China,” explained Zha Daojiong, professor of international political economy from the renowned Peking University. University, Handelsblatt. The only possibility is that the tariffs will be delayed to allow a compromise to be reached.

Habeck cooperated closely with the commission before his trip, but he faces a task that is almost impossible to solve. Brussels is determined to take tough action and many member states support it.

France strongly wants tariffs, supported by Spain and several other apes. Only Germany, Hungary (which is waiting for Chinese investments) and the Netherlands, which gain from the arrival of Chinese cars, are against it. For now, Beijing has targeted European pork to target Spain, but this product can find an outlet elsewhere.

Chinese political scientist Zha explained that ultimately the tariff issue itself does not necessarily have direct importance for the EU’s future relations with China: “What is most important is that each party in the negotiation process can convince the ‘other of one’s good will”. as it looks so far but not out yet.

A series of Habeck’s important meetings with Chinese political leaders were canceled or not confirmed at the last minute, confirming the Germans’ status as international economic upstarts. Berlin individually is only fragile towards China, and in the EU it does not have the weight it had in Merkel’s time, both because its industrial system is weaker and because the government does not enjoy popular support. Habeck’s trip was a resounding flop in which the minister received quite a few sound slaps.