Habeck on tariff dispute with China
“Then we’ll hit each other on the hat, that would be bad”
By Sebastian Huld, Seoul
21.06.2024, 05:07
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Before his flight from Seoul to Beijing, German Economics Minister Robert Habeck dampened expectations of a solution to the customs dispute between the EU and China. He did not want to let the conflict escalate. However, a quick settlement was not to be expected.
In the customs dispute between the EU and China, Federal Minister of Economics Robert Habeck has dampened expectations of his government talks in Beijing. “It is out of the question that the conflict will be resolved in China while I am there,” said Habeck before his departure from South Korea. “I cannot negotiate for the EU,” Habeck continued. He wanted to “make a contribution” to the opening of negotiations. “The signs are now rather challenging, however.”
Habeck wants to explore ways to solve specific problems and also examine formats for discussions. The aim is to “encourage the Chinese to talk to each other, not to just let things run their course, to let things escalate.” He has resolved “not to simply say, now things are going downhill and then we’ll fight each other, that would be bad.”
Accusation of massive subsidies
The EU Commission has decided to impose countervailing duties on the import of Chinese electric cars, which are to come into force in November. Until then, the Chinese side has the opportunity to dispel the accusation of massive state subsidies for its own car manufacturers, or at least to put an end to them. Chinese electric cars are offered in Europe at significantly lower prices than those from domestic suppliers.
In a specially initiated investigation, the EU Commission came to the conclusion that China is directly subsidizing production at various levels. In addition, manufacturers such as BYD have built up massive overcapacities, which they are now pushing into the European market. The countervailing duties are not without controversy in Europe either. Europe wants to electrify its car fleet as quickly as possible in order to reduce the massive CO2 emissions in the transport sector. However, European manufacturers have so far hardly had any affordable models and only a few electric small cars in their range.
In an initial reaction, China sharply rejected the accusations from Brussels and shortly afterwards announced higher tariffs on European pork. In view of an already struggling economy, many sectors of the German economy are concerned about a trade war in which a spiral of mutual punitive tariffs will make trade more difficult. China, along with the USA, is Germany’s most important trading partner outside the EU, with the USA achieving a comparable trade volume mainly due to its energy exports.
Habeck meets three government representatives
“The relationship between China and the EU has become increasingly complex in recent years – and that is the polite way of putting it,” said Habeck. “As the largest country and the largest car-producing country in Europe, Germany is certainly in a special position.” He had discussed the matter with EU Trade Commissioner Vladis Dombrovskis before his departure, said the Green politician.
Habeck will be received in Beijing on Friday afternoon (local time) by Trade Minister Wang Wentao and Industry Minister Jin Zhuanglong. He will also be met by the Chairman of the National Development and Reform Commission (NDRC), Zheng Shanjie. The NDRC is a central planning commission that sets priorities and goals for the development of the Chinese economy.
Habeck is accompanied by several representatives from German medium-sized companies. The heads of the large corporations flew to China in April together with Chancellor Olaf Scholz. The federal government is looking for a middle way to promote fair and legally secure trade with China, while at the same time minimizing Germany’s dependence on China as a sales market, production location and source of raw materials.