China EVs still seek safe EU markets

The European Union (EU) is a great market for China’s automakers, even closer to the bloc imposing 17-38% price list on Chinese electric cars (EVs) this time, a leading Hong Kong-based analyst said. he said.

“Competition in the Chinese EV market is quite fierce because local automakers are cutting prices,” Fan Di, a labor school teacher at Hong Kong Polytechnic College, told Asia Times in an interview. “Chinese EV manufacturers need to go abroad to find places where they can utilize and expand their production capacity.”

Since the EU’s unused rate lists are significantly lower than the 100% tariffs imposed by the US in May, Chinese EV companies may still survive to tell the tale within the EU by absorbing unused price lists or opening unused plants in pockets. Can. , the fan said.

Since the EU began imposing provisional price lists on Chinese EVs on July 4, Beijing has launched an anti-dumping investigation into EU beef products and intensified an ongoing investigation into EU brandy.

It has also launched an investigation to see whether EU anti-subsidy investigations into Chinese manufacturers of trains, sun panels, wind energy products and safety equipment legally represent industry limitations.

Chinese officials and auto companies said they would fight to resolve the issue through talks with other EU members. If the two sides fail to reach an agreement, the provisional price list will become permanent in November.

Germany’s economy ministry took no decision on imposing a price list on Chinese EVs during a non-binding EU Commission vote on Monday, Reuters reported. Spain, France and Italy are reportedly supporting the proposed actions.

“Chinese EV companies will not abandon the European market because people in this group make more money than those in developing countries,” Fan said. “But at the end of the day, tariffs are a type of trade barrier. They will negatively impact communications and interactions between the Chinese supply chain and the European market.

He said that despite the fact that Chinese EV companies have price eligibility and can adopt the newly imposed price lists of the EU, they will have to increase their promotional costs to positive points in case they face additional price lists. He said these price increases would slow the EU’s pace towards becoming climate-neutral by 2050.

Untapped EV crops in Europe

On July 9, China’s largest EV maker, BYD, announced it would set up a manufacturing unit in Turkey for US$1 billion. The unused facility, which is planned to start manufacturing by the end of 2026, will have a maximum manufacturing capacity of 150,000 cars per year. The plant will create approximately 5,000 jobs.

China’s SAIC Motor Corp, which owns UK’s MG Motor, is reportedly in talks with Spain’s trade ministry to develop its first EV plant in Europe. The company is considering setting up a factory in Hungary or the Czech Republic for its lower investment costs, with a decision expected to be taken by September 30.

Other Chinese EV companies, such as Chery and Nio, are planning to locate their first factories outside China in Spain and Hungary, respectively. Currently, China’s Fresh Amperex Era Co. Ltd. (CATL), the world’s largest EV battery maker, is running a manufacturing unit in Hungary.

Fan said setting up unused plants in Europe will gradually increase manufacturing costs for Chinese EV companies, but the moves will also have long-term benefits.

“This is probably something that many European governments would like to see as they hope to rebuild their auto manufacturing industry,” Fan said.

Making EVs in Europe could help Chinese auto companies shorten their supply lives, get market feedback more easily and adapt their production to the needs of local markets, he said.

“There will be some spillover of knowledge from Chinese auto companies into new markets, but that doesn’t mean they will lose their profits,” he said. “They can use the knowledge learned from Europe and combine it with their current knowledge to develop new products.”

He said the 2005 acquisition of MG Motor by Nanjing Automobile Group, which merged with SAIC Motor in 2007, was a good example of how Chinese automakers gained advantage overseas.

20% decoupling

In April 2024, Fan and three lecturers from China, Australia and Singapore wrote a research article titled “Locking out foreign investors amid geopolitical conflicts”.

Through investigating the knowledge of US-listed companies and their foreign providers, they found that the transactions between the sample US custodians and Chinese language providers increased by 18.42% after the US-China industry conflict was triggered by the imposition of price lists by the Trump administration. There was a decline of %. The value of Chinese products exceeded $250 billion in 2018.

“Imagine that the average transaction price between a sample US buyer and a Chinese supplier before the trade war was US$100. But after the trade war, the average transaction price dropped to $80,” Fan said.

He said this type of “20% decoupling” was caused not only by the decision of US patrons to move away from China, but also by the relocation of some Chinese production facilities to some ASEAN countries, including Vietnam.

He pointed out that some US companies faced difficulties in moving away from China because they could not find an acceptable additional provider from alternative parks that could lend them the necessary technologies, supply products and services and with corporate social responsibility (CSR) systems. Could. They want.

“We saw cases where some Chinese apparel manufacturers moved back to China from Vietnam. They originally wanted to go to Vietnam to cut costs but they could not find some specific fabrics to produce performance garments there,” he said.

Last year, China’s total exports fell 4.6% year-on-year to $3.38 trillion due to weak demand in the West amid US price rises, according to Chinese customs data. The country’s exports to the EU fell 10.2% to $501 billion while exports to the US fell 13.1% to $500 billion. Exports to ASEAN also declined 5% to $524 billion.

In the first half of this year, China’s total exports peaked at $1.71 trillion, up 3.6% from the same period last year. Pastoral exports to the EU declined 2.6% to $250 billion. Exports to the US increased by 1.5% to $241 billion while exports to ASEAN increased by 10.7% to $285 billion.

Some analysts said U.S. buyers bought more from China in the first tranche as they were fearful of potential U.S. tariff hikes amid the U.S. presidential election this year, where both candidates are promising tough industry crackdowns on China.

Republican presidential candidate Donald Trump, who survived an assassination attempt at a campaign rally on July 13, said in February that he would impose 60% tariffs on imports of Chinese goods if he wins the election in November.

UBS said in a research report on July 15 that the proposed 60% tariffs, if implemented, would reduce China’s economic growth by 2.5 percentage points in the coming year. By comparison, China has announced a 5% GDP growth target this year. With an increase of 5.2% in the peak 12 months.

origin of goods

In recent months, Washington has stepped up its efforts to track the origin of imported products to prevent China from using third-country tariffs to avoid U.S. price lists.

On July 10, President Joe Biden said the US would impose additional tariffs on metal and aluminum products coming from China to Mexico. The development is aimed at closing a loophole that has allowed Chinese steel providers to avoid US price lists since 2018.

Indonesian officials said the Southeast Asian country would impose 100-200% tariffs on China’s labor-intensive goods to protect its local producers. Fan said it would be difficult for US protectors to identify the origin of goods if their imports involve multiple levels of services.

“Supply chain transparency is always a headache for buyers, who may have information about their first-tier suppliers, but not second-tier suppliers,” he said.

He said that in situations like the protests over the usefulness of the Xinjiang story in American textiles, some American buyers have had to restrict their purchases in China to avoid potential threats.

Know: America imposes ‘symbolic’ price list on Chinese metal, aluminum

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