This week, the European Union (EU) announced that it would challenge the World Trade Organization (WTO) against China's decision to impose anti-dumping measures on imported brandy from the EU. This has sparked significant attention regarding the future direction of China-EU trade.
The crux of the matter is that the EU is now concerned about the situation escalating. Some think tanks have analyzed that if China were to target the EU's larger-scale agricultural exports, or luxury goods, cosmetics, or automobiles, the situation would become troublesome.
Particularly in the area of agricultural products, the EU is extremely concerned and this is the outcome they least desire to see at present. As for the possibility of luxury goods and the like, it is relatively small, and this is considered a peripheral area.
Recently, the chairman of the European Chamber of Commerce in China said, "If nothing changes, a full-scale trade war seems increasingly likely to break out."
He said that the EU is considering that in the first seven months of this year, China's exports to the EU have soared to a "historically high level," while imports from the EU have significantly decreased. Therefore, the EU may increase tariffs in the future.
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It is worth mentioning that neither side wants to escalate, but we are the ones taking the initiative, while the EU regards itself as the United States. For example, last month, we proposed a minimum price proposal for electric vehicles.
European media reported that the EU rejected China's proposal to set a minimum price of €30,000 ($32,950) for imported electric vehicles made in China.
According to data from the data company JATO Dynamics for 2023, the average cost of electric vehicles in China is less than half of that in Europe and the United States—In the first half of 2023, the average retail price of pure electric vehicles in China was about €32,000, while the average retail price of a pure electric vehicle in Europe was €66,000.The current stance of the European Union involves the simultaneous implementation of minimum prices and import quotas. For instance, the minimum price is set between 35,000 and 40,000 euros, and the minimum price is individually calculated for each car manufacturer based on the size and driving range of the automobile. It is also possible that the minimum price is tailored for each specific car model.
It is worth mentioning that in the automotive sector, we are also actively considering increasing tariffs on the import of large-displacement fuel vehicles. This move is causing the EU, particularly Germany, significant distress. As electric vehicles rapidly advance, the market share of German car manufacturers in Mainland China has plummeted, dropping from 25% in January of last year to 17% in August.
However, the situation in the high-end market is much better. Despite a more than one-third decrease in sales of Volkswagen brand cars compared to the first eight months of 2019, sales of Audi and BMW brands have increased by 3.9% and 1.9%, respectively, while Mercedes-Benz sales have only declined by 2.2%.
Therefore, in the long run, Germany will exert every effort to prevent significant changes in China-EU trade. They have previously abstained from voting and recently voted against such measures. If pushed too hard, there will definitely be an effect, as Germany remains the leader within the EU, albeit not as dominant as during the Merkel era.