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Germany assures China that doors still open to discuss EU surcharges

Shanghai, China — The German vice-chancellor assured China on Saturday that the “doors” remained “open” to discuss EU surcharges on Chinese electric vehicles, without reassuring Beijing which promised to “firmly defend” its manufacturers.

Also, the Minister of Economy and Climate, Robert Habeck is making a visit that seems like a last chance to avoid a trade war between the Old Continent and the second world power, an important economic partner of Germany.

A task further complicated by the political context, the German leader reproached China on Saturday for its economic support for Russia against a backdrop of the invasion of Ukraine, stressing it was “harming” relations between Beijing and Brussels.

China regularly denounces these upcoming surcharges on electric vehicles as being “purely protectionist.”

“These are not punitive customs duties,” Habeck assured Zheng Shanjie, director of the Chinese Economic Planning Agency (NDRC) Saturday, according to a recording sent to AFP by the Chinese Embassy in Germany.

“This is not a punishment,” he insisted.

Up to 28% increase

Without compromise by July 4, the European Commission will impose up to 28% increase in customs duties on imports of Chinese electric vehicles, accusing Beijing of having, according to it, distorted competition by massively subsidizing this sector.

These surcharges would become definitive from November.

“For Europe, I can say that the doors are open and the invitation or offer for discussion has been made several times. Now it must be accepted,” Habeck said at a news conference in Shanghai.

From Brussels, Olof Gill, the EU spokesperson, assured that European Trade Commissioner Valdis Dombrovskis and Chinese Trade Minister Wang Wentao “had a frank and constructive call on Saturday regarding the anti-subsidy investigation of the EU on electric cars produced in China.”

“Both sides will continue to engage at all levels in the coming weeks,” he added.

China vows to defend ‘rights’

Earlier Saturday, the tone had been firm on the Chinese side.

“If the EU shows sincerity, China wants to start negotiations as soon as possible” on the surcharges, Trade Minister Wang told him, according to the English-speaking state television CGTN.

“But if the EU persists in this course, we will take all necessary measures to defend our interests. This will include lodging a complaint with the dispute settlement mechanism of the World Trade Organization (WTO). We will firmly defend the legitimate rights and interests of Chinese enterprises.”

Beijing had already announced Monday that it had launched an anti-dumping investigation into imports of pork and pork products from the European Union.

German and European manufacturers are strongly affected by cheaper Chinese competition. Imports of Chinese electric vehicles into Germany increased tenfold between 2020 and 2023.

China argues that the success of its electricity sector is due to innovation and efficient supply chains, not subsidies.

“(EU) protectionism will not protect (its manufacturers’) competitiveness and will only slow down the global fight against climate change and the promotion of a green transition,” Zheng told Habeck.

“We expect Germany to show leadership within the EU and take the right measures,” implying the cancellation of surcharges, he insisted, according to the New China agency.

Habeck blames Beijing

Such an epilogue seems improbable, with Habeck again blaming Beijing on Saturday for the surge in its trade with Moscow.

“The Russian war of aggression and Chinese support for the Russian government are already harming trade and economic relations between Europe and China,” he said he told his Chinese interlocutors.

China has pledged not to supply weapons to Russia and calls for respect for the territorial integrity of all countries — including Ukraine. But China has never condemned Moscow for its invasion.

Habeck assured Saturday that many “dual-use” goods (both civil and military) were used by Russia after passing through “third countries” — implying China.

“We therefore cannot accept” that the Russian invasion is supported with these products, insisted the German vice-chancellor, calling on Beijing to ban their export to its Russian neighbor.

German car manufacturers still fear a major trade conflict with Beijing, which would undermine their activity in this crucial market. For Mercedes, Volkswagen or BMW, China represents up to 36% of sales volumes.

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