JUST days after the European Commission imposed anti-subsidy tariffs of up to 35.3% on Chinese EVs, China’s Ministry of Commerce lodged a formal complaint with the World Trade Organization (WTO). China criticized the EU’s stance as not only “unacceptable” but also a fundamental breach of WTO rules, underlining Beijing’s view that such actions serve to stifle fair competition under the guise of protectionism. While the EU immediately dispatched a technical team to Beijing in an attempt to find middle ground on pricing commitments, China sees the recent move by the EU as an unjustified assault on its electric vehicle (EV) sector.
The presence of Italian President Sergio Mattarella and recent diplomatic efforts by French Minister Delegate Sophie Primas suggest that European nations, while wary of China’s competitive edge, are eager to avoid a full-scale trade conflict. For Beijing, the stakes are not merely economic but symbolic, representing its right to fair competition in a global market increasingly shaped by Western protective policies. China’s electric vehicle industry, seen as symbol of its innovation and environmental progress, is being challenged by barriers that echo past protectionist measures. In defending its EV sector on the global stage, China is signaling that it will not retreat under pressure, instead championing a global trading system that respects its place as a legitimate competitor.
For now, these interactions reveal the potential for a cooperative resolution. China’s trade relationship with the European Union is at a critical juncture. With the EU’s investigation into over 30 Chinese products – including electric vehicles (EVs) – a more volatile era of bilateral trade seems likely. Yet, China’s approach has been measured. While Chinese Ministry of Commerce has responded to EU tariffs with carefully chosen countermeasures, it’s clear that a broader confrontation can still be avoided. In recent months, China has initiated its own investigations into key European imports, including brandy, dairy and pork. A preliminary ruling found evidence of dumping in the brandy sector, but China refrained from imposing duties. Instead, cash deposits have been introduced, signaling a restrained response even as the EU moved forward with tariffs last month. Chinese measured actions signal a hope for reciprocity from Brussels, which has sometimes used trade as a shield for protectionist interests while towing Washington’s line.
As trade tensions simmer between China and the European Union, there are still pathways to avoid further escalation. During her recent visit to Beijing, France’s Minister Delegate Sophie Primas — representing a country both invested in brandy exports to China and eyed by Chinese automakers as a production base – emphasized France’s hope for resolution through dialogue, not dispute. Apparently, China, meanwhile, remains committed to Europe as a critical market for its electric vehicles (EVs) and broader manufacturing partnerships. Chinese firms are not only seeking to export; they’re pursuing local production opportunities with European partners, especially in Eastern European countries with historically favourable ties. This collaborative approach, grounded in mutual benefit, could soften the impact of EU’s restrictive tariffs. Recent forecasts from S&P Global Mobility suggest that while these tariffs may initially dampen Chinese EV imports, the overall trend remains upward. With Europe’s appetite for diverse EV models growing, Chinese-made vehicle registrations are projected to climb from 508,700 in 2023 to a striking 977,600 by 2027.
Currently, Europe absorbs over 40% of China’s Battery Electric Vehicle exports, with Tesla alone accounting for 28%. China’s EV industry is evidently here to stay and Chinese future in Europe hinges on cooperation, not conflict. China’s electric vehicle (EV) sector is adapting strategically, broadening its reach well beyond Europe and tapping into promising markets in Latin America and Southeast Asia. On the same day the European Union announced new tariffs on Chinese EV imports, CNGR Advanced Material, a Chinese firm, committed $10 billion to build a battery materials facility in Indonesia — a clear signal of China’s flexibility and expansion plans in the global supply chain. Chinese companies have been increasingly active in expanding regional partnerships, not only in response to European and American trade barriers but as part of a larger global strategy. The shift towards Southeast Asia began in tandem with the rise in exports to Europe, underscoring the competitive pricing that has made Chinese EVs attractive worldwide. The International Energy Agency reports that China now supplies 60% of global EV demand, surpassing 800,000 vehicles annually.
Despite Europe’s tariffs, studies from the Rhodium Group suggest that Chinese EV manufacturers can still maintain healthy profit margins, thanks to their substantial cost advantages. By diversifying geographically and investing in local production, China’s EV industry is demonstrating its adaptability and its sustained competitiveness in the face of shifting trade dynamics. As Europe has positioned itself alongside the U.S. in forming a unified front on China policy, this stance is likely to face fresh tests with Donald Trump’s return to the White House. Trump’s “America First” approach, an agenda driven by economic nationalism, would likely weaken trans-Atlantic alignment, with the U.S. shifting toward a more insular foreign policy. As such, Europe may find itself driven to emphasize “strategic autonomy,” focusing on its own supply chain resilience, industrial strength and less reliance on American influence.
This trend is already emerging. The EU’s Critical Raw Materials Act and the European Green Deal illustrate its increasing commitment to homegrown initiatives. European leaders are also eyeing policies that prioritize regional manufacturing capabilities — particularly in response to growing public weariness with green initiatives that seem to leave domestic industries at a disadvantage. For the EV sector, this signals a clear shift toward localized production, with calls for re-industrialization of European manufacturing facilities growing louder. Europe’s demand for EVs remains robust, but its path forward appears centred on building a self-sustaining industrial ecosystem, independent of US policies and increasingly reliant on its own market-driven policies. China is watching closely, as this could reshape its long-term trade relations with the EU.
—The writer is political analyst, based in Karachi.
