On October 4th, 2024, the European Union, in line with US tariffs on Chinese EVs, voted to place tariffs on the same. This is a growing trend courtesy of the perceived threat of Chinese EVs disrupting Western markets and creating stiff competition with Western manufacturers who lack the production capacity of domestic Chinese car manufacturers.
However, these tariffs are par on course with growing western anxiety towards the behemoth that is Chinese manufacturing which has proven an unshakable force against growing Western tariffs. Outside markets like the EU and North America, Chinese EVs have popularity in larger economies in South America including nations like Brazil, Chile and Argentina, as well as a loyal middle-class customer clientele in South East Asia and mainland China itself.
In Europe as well, the voting pattern of EU members shows that not everyone agrees with imposed tariffs, Nations like Luxembourg, Sweden, Portugal and Spain abstained from the vote to impose tariffs while Germany and Hungary voted outright against imposing tariffs on Chinese EVs. It should be noted that Germany has a strong relationship with China in the automotive sector, especially due to its reliance on Chinese materials and Volkswagen, a leading German car manufacturer having a huge shareholding from China. Equally, BYD ( a Chinese EV carmaker) is establishing a plant in Hungary, which would provide plenty of jobs to the Central European nation that is seeking to limit emigration to the West by its younger populace.
Western consumers are equally receptive to Chinese EVs due to their relatively cheaper prices. Norway, a non-EU member but a member of the EEA is a particularly friendly market for Chinese EVs as the Norwegian government seeks to transition towards green mobility which includes electric and hybrid vehicles.
Generally, Western attitudes over the past decade have been towards the transition to cleaner and smarter energy which has less toll on the environment. This has spurred on a whole industry of smart technologies and vehicles in particular in an effort to combat climate change. Majority of Western car manufacturers have taken on this task with the creation of hybrid vehicle options. However, as aforementioned, industrial capacity in the West pales in comparison to Chinese industrial might which has near quadrupled Western European Industrial Capacity.
The above-mentioned tariffs can thus be perceived as a creature of American trade conflicts with an emerging power in the East. China presents as a power which can spearhead the energy transition which has the potential to leave majority of the West behind in its wake. This is a product of both Chinese output as mentioned and a coherent Chinese government policy to promote Chinese industry to both its neighborhood in South East Asia and other industrialised high income states ranging from Australasia to the Americas.
American influenced sanctions therefore can be perceived as a means to stall the Chinese wave while building internal capacity to match Chinese output.
However, this does not seem to scupper Chinese innovation, which is growing stronger and finding ways to circumvent American and EU pressure. With BYD building plants in Mexico and Brazil, there is an effort to work around tariffs placed by Western actors. Equally, China filed a complaint with the WTO questioning the parameters by which the EU determined tariffs on Chinese EVs and questioning whether any transparency existed in setting said tariffs. Equally, in a circular circulated to EU members and Turkey, China seeks to query whether said subsidies are not discriminatory towards Chinese products which, according to vehicle reviewers, are produced to the same standards as Western vehicles. The Financial Times on 2nd March 2024 reported that Chinese EVs have been found to be more reliable than US and European EVs. Their charging times are often faster and display more durability. As evidenced by market preferences.
In such an environment, it is clear that Chinese manufacturers and the Chinese government are keeping themselves adaptable in the face of the West’s anxiety concerning Chinese innovation and industrial might. Western consumers are equally receptive to Chinese EVs, which underlines the futility of Western governments’ resistance to Chinese vehicles entering their markets.
In conclusion, it seems more than likely that this chapter of Chinese-Western industrial relations is not closed, as there are more than likely plenty of sub-plots unfolding on both sides of the aisle. China equally seems unfazed in the face of impediments from the West, choosing to push on with her objectives despite hurdles presented by Western governments. The next half of this decade will determine whether the above measures will yield much or, if the West is delaying the inevitable.
The writer is a Research Fellow at the Development Watch Center.
