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Trade cooperation between China and the EU has always been close, but in the key area of electric vehicles, the EU has suddenly imposed tariffs on China.
The decision appears to be aimed at protecting Europe's domestic car industry, but the motivations behind it are far more complex than they seem.
Germany was the first to stand up against it, what is the real goal of the tax increase?
What are the consequences of a split within the EU? What will China do in response?
The EU-China game behind the EU's tax hikes
The trade friction between the EU and China will escalate again in 2024, with the focus on electric vehicles, a new energy industry.
A few days ago, EU member states passed a final ruling on the imposition of countervailing duties on Chinese electric vehicles.
The EU's decision marks a new phase of confrontation between the two sides on trade issues.
As one of the world's largest producers of electric vehicles, China has rapidly expanded its share of the global market.
Especially in the European market, its high-quality and low-cost products have had an impact on the local automotive industry.
Faced with this situation, the EU has chosen to protect its own auto industry, especially electric vehicle manufacturers, by imposing tariffs.
But it's not that simple.
In fact, the EU knows very well that its pace in the field of new energy has been a little unable to keep up, especially in the field of electric vehicles.
China's development speed has made the EU a little panicked, especially France, seeing China's electric vehicles increasingly occupy the European market, it is certainly not very comfortable.
Therefore, the move of raising taxes seems to be to block the Chinese car, but it is actually trying to put pressure on China.
The question, though, will this tax hike really stop China?
It's hard to estimate.
China's electric vehicles have made a global reputation for their cost-effectiveness.
Even if tariffs are added, the price is still advantageous, so the EU's trick may not work.
Moreover, the real intention of the EU's tax hike is to take the opportunity to force China to make concessions in terms of technology and market.
To put it bluntly, the tax increase is their bargaining chip, and they want to take the initiative at the negotiating table in this way.
Another point is that the EU feels that it still has "confidence" in its hands, because it has the support of United States behind it.
United States has always wanted to contain China, especially in the field of technology and new energy, so when the EU wants to raise taxes on Chinese electric vehicles, United States does not hesitate to support it.
This has also given the EU some courage to take this opportunity to regain some advantages in the global new energy competition.
But the EU may have overlooked the fact that a tax hike doesn't mean you win.
China's electric vehicle industry already has considerable strength, and it is really not so easy for the EU to restrict China through tariffs.
And there is a risk that China will not sit idly by.
If China decides to retaliate, a trade war between the two sides would hurt not only China, but also the EU itself.
In particular, the EU's calculation of trying to force China to make concessions with tariffs may not be successful.
At the end of the day, the idea behind the EU's tax hike is complex, both to protect its own industry and to use economic pressure to gain the upper hand in the game with China.
But whether this strategy will work or not, it's really hard to say now.
Germany's shift in stance: concerns about the risk of a trade war
And Germany's attitude in this tariff storm can be said to be both cautious and realistic.
After all, Germany and China have very close trade relations, especially in the automotive industry.
Germany's luxury car brands have a huge market in China, and if the tariff war begins, these brands may face a significant reduction in sales.
Not to mention, the German automotive industry is also highly dependent on China's parts supply, and a trade war for them is simply "hurting a thousand enemies and losing eight hundred".
Therefore, when the EU decided to raise taxes on Chinese electric vehicles, Germany was strongly opposed.
Germany Chancellor Olaf Scholz and Finance Minister Lindner are well aware that the tax hike will not only affect trade between China and Europe, but could also lead to greater economic trouble.
If China decides to retaliate, Germany's export industry will bear the brunt.
Scholz directly warned the EU not to easily fight a trade war with China, because there is no winner in this "tooth for tooth" game.
Germany wants to avoid a complete deterioration in relations with China, and raising taxes is clearly not a smart move.
Germany's attitude is not only motivated by economic considerations, but also by deeper political calculations.
As a core member of the European Union, Germany understands that if the trade friction between China and the EU escalates, the whole of Europe will be affected.
Germany does not want to be the leader of this storm.
After all, it is not only the engine of the European Union, but also an important partner of China.
Germany's leaders do not want to see Europe plunged into long-term economic instability as a result of tax hikes, especially when the European economy is already under pressure from high inflation and the energy crisis.
More importantly, Germany is well aware that things are not yet irreparable.
Although the EU's tax hike policy was passed, negotiations between the two sides continued.
If a solution can be found before it is formally implemented, it may be possible to avoid a trade war.
The Germany Foreign Minister is preparing to visit China precisely for this purpose.
Germany clearly wants to negotiate some kind of compromise through diplomatic channels that would protect the EU's interests as a whole and avoid bore the brunt of the conflict.
epilogue
In the face of this wave of tax hikes by the European Union, China has not sat idly by.
The Chinese government expressed strong dissatisfaction with the EU's decision, and quickly stated that we will not let others manipulate it, and if necessary, China will have the means to fight back.
After all, this is not the first time China has faced such a situation.
From the previous trade war between China and the United States, China has accumulated a wealth of experience in dealing with it.
The EU's provocation has clearly not pushed China into a corner, but may trigger a tougher response from China.
China's position is clear: tax hikes will not solve the problem, but will only undermine the long-standing foundation of cooperation between China and the EU.
The electric vehicle industry is already a very important export project for China, and the EU market is also part of the global layout of Chinese companies.
If the EU wants to suppress China and force Chinese companies to make concessions by raising taxes, it will be basically useless.
Next, China is likely to take a series of countermeasures.
The volume of trade between China and the EU is very large, and any tough move by either side will bring about great consequences, and everyone will suffer if they don't do it.
Instead of fighting through tax hikes, it is better to sit down and talk and look for more opportunities for cooperation.
The EU should indeed think hard now to avoid things going out of control.
Resources:
The EU passed the China-related tariff case, "Germany took the lead in strongly opposing it"! - The Paper