China offered benefits to German cars to avoid tariffs on their electric cars

China offered benefits to German cars to avoid tariffs on their electric cars

Beijing has suggested that German luxury car makers could benefit if Berlin convinces the European Union to reduce tariffs on Chinese exports of electric vehicles.according to Bloomberg reports.

China proposed lowering the tariffs it applies to large-displacement cars in exchange for the elimination of planned taxes about imports of electric vehicles from the Asian nation, according to these people, who spoke on condition of anonymity to discuss private conversations. Beijing currently imposes a 15% tax on passenger vehicles coming from the bloc.

Chinese Commerce Minister Wang Wentao hinted at the possibility of the benefits to his German counterpart, Robert Habeck, during a meeting in Beijing on Saturday, one of the people said. His three-day visit to the world’s second-largest economy came weeks after the EU proposed raising rates on electric cars to 48% later this year.

The exchange reflects a mismatch between the way the EU and China approach the conflict. The European Commission says it sets the tariffs based on the legal conclusions of an in-depth study of Beijing’s large state subsidies. The levies are intended to level the playing field by offsetting Chinese aid with something of equal value.

But that legal practice has always been vulnerable to political pressure, and President Xi Jinping’s government has been offering both carrots and sticks to persuade Berlin to help it trade horses. Beijing had already signaled that it could impose a 25% tax on large European cars, a measure that would affect German luxury car makers such as Mercedes-Benz Group and BMW..

The danger for the Commission is that Berlin, which already opposes the tariffs, will be persuaded by its huge car industry to break ranks and put pressure on the bloc’s executive arm and other member states, using its weight as the EU’s largest economy. .

The European Commission and the Chinese Ministry of Commerce did not respond to requests for comment. The German Economy Ministry declined to confirm Wang’s comments.

According to Deborah Elms, head of trade policy at the Hinrich Foundation, Beijing officials still have room to negotiate: “The EU can always choose to postpone the imposition of tariffs, pending the outcome of the negotiations,” she added. “As long as the two sides make enough progress toward an answer, it is possible to stop the clock.”

The exchange in Beijing took place while EU Trade Chief Valdis Dombrovskis held a “candid and constructive” video call with his Chinese counterpart over the weekend. Senior officials from both sides have barely spoken to each other during the probe.

Olof Gill, spokesperson for the European Commission, stated: “The two sides agreed to compromise on the basis of facts and in full respect of WTO rules”. “The EU side stressed that any negotiated outcome of its investigation must be effective in addressing harmful subsidy.”

For China, the suspension of tariffs could send an important signal to other major economies. Canada is also studying possible taxes on Chinese electric vehicles to align with measures taken by the EU and the US, where President Joe Biden has announced a 100% tax on these products.