WionDrive News Desk 
As the European Union approaches a critical vote on imposing duties on Chinese-made electric vehicles (EVs), Beijing has deployed a sophisticated strategy combining diplomatic overtures and economic pressure to sway the 27-member bloc. This dual approach, featuring both threats of trade retaliation and offers of bilateral talks on investments and deals, appears to be gaining traction among key EU states.
The potential imposition of counter-tariffs by China would primarily affect EU members such as Spain, France, and Italy, which have been vocal supporters of the proposed EV duties. These countries face the prospect of seeing their exports of pork, dairy products, and brandy to the world’s second-largest economy jeopardised. Conversely, EU nations like Germany, Finland, and Sweden, which have not actively advocated for the tariffs, would likely experience less severe consequences due to their limited exposure to the targeted export categories.
China’s tactics seem to be yielding results. Spanish Prime Minister Pedro Sanchez’s recent visit to China culminated in a symbolic gesture of sitting in a Chinese EV, which he described as an “honour.” More significantly, Sanchez made an unexpected call for the EU to reconsider its stance on the tariffs. A Spanish government source revealed that the delegation left feeling that “Spain is more important now” and that an agreement on tariffs affecting Spanish pork products was within reach.
As part of its charm offensive, a Chinese company committed to constructing a USD 1 billion plant in Spain for manufacturing machinery used in hydrogen production, aligning with Spain’s green energy ambitions. This move underscores China’s strategic use of investments to influence policy decisions.
Beijing-based economist Mei Xinyu noted that by targeting pork and dairy products, China aims to maximise the “domestic political cost” for countries voting in favour of EV tariffs. The agricultural sector often plays a significant role in EU politics, and these products rely heavily on China as a key export market. In 2023, EU exports of pork, dairy, and brandy to China amounted to approximately USD 10 billion, although not all products within these categories would be subject to potential tariffs. For context, the EU’s total exports to China last year exceeded USD 280 billion.
The stakes are high for both sides. China, still grappling with the impact of U.S. tariffs imposed during the Trump administration, is keen to avoid a trade war with the EU. However, Beijing has made it clear that it will retaliate if Brussels imposes additional EV tariffs of up to 35.3%. The significance of this issue is underscored by the fact that China-made EVs exported to Europe increased by 38% in 2023, reaching 656,000 units, with Europe accounting for over 40% of China’s EV exports last year.
In a bid to further diplomatic efforts, Chinese Commerce Minister Wang Wentao is scheduled to visit Europe next week for talks with EU trade chief Valdis Dombrovskis. Wang will also visit Italy, which supports the EV tariffs while simultaneously seeking Chinese investment to bolster its EV production capacity.
For China to successfully block the proposed tariffs, it needs the support of at least 15 EU members representing 65% of the EU population in the upcoming October vote. However, positions within the EU remain diverse. Some smaller states are maintaining a low profile, while others are prioritising relationships closer to home. An Irish trade representative in China, speaking anonymously, stated that Ireland would prioritise its EU market and relationships over China, despite being among the top EU producers affected by China’s dairy and pork investigations.
In contrast to its nuanced approach with the EU, China has taken a more hardline stance with Canada. Following Ottawa’s introduction of a 100% tariff on Chinese EVs in August, citing unfair competition, Beijing swiftly launched a probe into Canadian rapeseed exports without prior public warning. This “shock and awe” tactic, as described by Even Pay, an analyst at Beijing-based Trivium China, stands in stark contrast to the negotiation-open approach taken with the EU.
As the October vote approaches, the international community watches closely to see how this high-stakes game of economic diplomacy unfolds. The outcome could have far-reaching implications for global trade relations, the future of the EV industry, and the delicate balance of power between China and the European Union.
