SwedCham China Insights for the Week of June 11 - June 14 , 2024

Top news of the week:

Beijing sees robust tourism during the Dragon Boat Festival

11 June 2024

The three-day Dragon Boat Festival has seen robust tourism in Beijing, as it received a total of 7.79 million visitors during the holiday between Saturday and Monday.

China's CPI up 0.3% in May

12 June 2024

Official data showed Wednesday that China's consumer price index (CPI), a main gauge of inflation, was up 0.3 percent year over year in May.

EU hits Chinese EVs with tariffs, drawing rebuke from Beijing

13 June 2024

The European Commission said it would impose extra duties of up to 38.1% on imported Chinese electric cars from July, risking retaliation from Beijing, which said on Wednesday that it would take measures to safeguard its interests.

The second China-U.S. Track 1.5 Dialogue calls for stable relations through cooperation

14 June 2024

The Second China-U.S. Track 1.5 Dialogue was held in Beijing on Thursday under the theme of ‘sharing perspectives and finding solutions on key and urgent issues’. Some 30 representatives from both China and the United States, including John Thornton, co-chair of the Board of Trustees of the Asia Society, attended the dialogue and had candid, in-depth and constructive exchanges.

Insight of the week:

The European Commission has announced it will impose additional duties of up to 38.1% on imported Chinese electric vehicles (EVs) starting in July. This move risks retaliation from Beijing, which stated on Wednesday that it would take measures to protect its interests. The decision comes shortly after Washington's plan to increase duties on Chinese EVs to 100%.

Brussels aims to counteract excessive subsidies by adding tariffs ranging from 17.4% for BYD to 38.1% for SAIC, supplementing the existing 10% car duty. This announcement concludes the initial phase of an investigation that has heightened concerns of a potential EU-China trade war. The anticipated countervailing duty is higher than the typical EU duty, which averages 19%.

The result is a significant increase in the cost of Chinese-made EVs in Europe. Interestingly, the lower rates for BYD and Geely mean these brands might become even more competitive compared to European counterparts manufacturing in China. The European Commission estimates that the market share of Chinese EVs in the EU has surged to 8% from below 1% in 2019, with projections suggesting it could reach 15% by 2025. These vehicles are typically priced 20% lower than their EU-made rivals.

European policymakers are wary of a repeat of the solar panel industry scenario a decade ago, where limited action against Chinese imports led to the collapse of many European manufacturers. The EU's anti-subsidy investigation into Chinese EVs, launched in October 2023, underscores this concern.

China's Ministry of Commerce has expressed strong dissatisfaction with the EU's plan, calling it blatant protectionism that disregards facts and World Trade Organization rules. A spokesperson from the ministry warned that such actions would create and escalate trade tensions, harming both China's EV industry and the global automotive supply chains, including those in the EU.

Within the EU, member states with significant automotive sectors are expected to challenge the Commission's imposition of permanent duties in November. Germany, home to major brands like Volkswagen, BMW, and Mercedes-Benz, has been vocal in its opposition and is likely to lead the resistance. Sweden, which hosts Volvo and Polestar, now owned by China's Geely, is another anticipated opponent.