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Europe gives China a taste of its own trade medicine: Europe is using the threat of tariffs to press Chinese electric car makers to set up in the EU and share know-how. (www.politico.eu)

submitted 3 months ago by [email protected] to c/[email protected]

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The EU is having a radical rethink of how to cope with the trade threat from Beijing — and its response has a very Chinese flavor to it.

Over the past years, EU trade policy has traditionally focused on building protective fortress walls, and last week's decision to impose punitive tariffs on Chinese electric cars initially looked like another example of the classic defensive playbook in Brussels.

In a remarkable turn of events, however, the EU is now considering a next step that invites China's electric vehicle (EV) makers inside the walls.

The big idea is to use the tariff threat to force Chinese carmakers to come to Europe to form joint ventures and share technology with their EU counterparts, according to conversations with four diplomats and two senior officials.

There are signs the formula is already attractive with EU carmakers. Franco-American-Italian carmaker Stellantis has formed a joint venture with China's Leapmotor to start Europe operations in September. Spain's EBRO-EV has teamed up with Chery — China’s fifth-largest automotive company — to develop EVs in Barcelona.

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[–] [email protected] 5 points 3 months ago (3 children)

So Europe went from suggesting decoupling from China to de-risking and now this?

[–] [email protected] 34 points 3 months ago (1 children)

This does not negate the tariffs or the decoupling from a building relationship with China, it halts a dependency on China without significant sacrifice from the EU.

It's the tactic that makes most sense right now.

[–] [email protected] 37 points 3 months ago (1 children)

And it sounds like literally what China did to Western companies wanting to set up shop in China. Seems like turnabout is fair play.

[–] [email protected] 2 points 3 months ago (2 children)

It would be the same if China has already caught up enough to have some know-how to transfer. Has it?

[–] [email protected] 5 points 3 months ago

I doubt Germany (or anywhere in Western Europe) needs knowledge transfer on technology but if China set up a factory in the EU, it’d probably be in an Eastern European country that could probably use a little.

[–] [email protected] 2 points 3 months ago

In certain areas it has practical know-how we don't. CATL is a good example. Not just their sodium-ion batteries, but their production processes in general. We might be able to readily reproduce their battery chemistries in a lab but that's not the same as having an industrial production process and the experience from ironing out all the kinks that feed back into basic research. With a joint venture, you can tap into that stuff.

If we had invested as heavily in the tech as they did we probably would be ahead right now but we didn't so we aren't. If they had invested as much into fusion as we did -- oh wait they did. They're behind, Max Planck is currently looking into the details of building a commercially viable reactor in the early 2030s, they're confident to have the plasma physics down now it's about stuff like "do we use a cheap material for the diverters and replace them often or do we develop/use something fancy", that is, about actual operational costs.

[–] [email protected] 4 points 3 months ago* (last edited 3 months ago)

You can’t decouple from 15% of the world’s population/one of the most powerful economies in the world. That was always chest pounding and frankly it was unproductive.

The “fortress” mentality described in the article does not work in the long run unless you are dealing with smaller (and frankly, poorer) countries. And even then they can prove resilient, especially if you can’t get enough other countries on board.