European Union (EU) arise mainly out of friction over exports of cheap Chinese electric vehicles (EVs), and constrained access for European companies to markets in China.

WHY IS THIS SITUATION?

Chinese exports to European markets significantly outweigh European exports to mainland China. The EU has complained that unfair market access is a key reason for this situation. SUBSIDY V/S TARIFF China’s car shipments to foreign markets, and to the EU in particular, have surged in recent years. Last year, the EU opened an investigation into subsidies going into Chinese EVs, which Beijing denounced as an example of “naked protectionism”. Days ahead of Xi’s visit, the European Commission (EC) told three big Chinese EV makers that they had failed to supply “sufficient information” to the anti-subsidy investigators. Should the EC conclude that BYD, SAIC, and Geely had not provided all the facts, it could use “facts available” elsewhere to compute tariffs, which could potentially inflate duties on imports of these vehicles into the EU. CHINESE EVs IN EUROPE
  • China-made EVs are projected to make up more than a quarter of all EV sales in Europe in 2024, with the country’s share in the market increasing by more than 5 percentage points from a year earlier.
  • According to the Brussels-based European Federation for Transport and Environment (T&E), nearly 20% of battery-powered EVs sold in the EU last year were from China.
  • In France and Spain, close to a third of all EVs sold were shipped from China.
  • The share of Chinese-made vehicles in the EU is expected to rise to more than 25% in 2024, according to the T&E report, as brands such as BYD and SAIC step up their global expansion plans.
  • The majority of foreign EVs currently sold in the EU are from Western brands such as Tesla, which manufactures and ships from factories in China.