Habeck says EU tariffs on Chinese cars not a 'punishment'

The European Union is not punishing China by imposing tariffs on Chinese-made electric vehicles (EVs), Germany's Economy Minister Robert Habeck said in Beijing on Saturday.

His comments follow EU plans to levy tariffs on imports of Chinese EVs to counteract overcapacity in the auto sector, which Brussels says is caused by Chinese carmakers dumping cheap cars on European markets.

What did Robert Habeck say?

Speaking during a visit to China, Habeck, who is also vice chancellor, called on Beijing to take the findings of the European Commission, the EU's executive arm, seriously.

"It is important to understand that these are not punitive tariffs," Habeck said.

He added that the Commission had spent nine months probing whether Chinese car manufacturers benefited unfairly from large government subsidies.

Any duties imposed following the EU review, said Habeck, should not be seen as "punishment" but rather as compensation for the advantage Chinese carmakers gain from government subsidies.

Habeck told Chinese officials that it was vital for Brussels to try to maintain a level playing field for the auto industry in Europe.

"Common, equal standards for market access should be achieved," Habeck said.

Later, Habeck flew to Shanghai where he again spoke of the issue of tariffs: "What I suggested to my Chinese partners today is that the doors are open for discussions and I hope that this message was heard."

China warned of blowback over Russia stance

Habeck earlier restated his warning that China would face economic consequences for its support for Russia in the war on Ukraine, referring to how EU states were cutting their reliance on Chinese imports.

"We would proceed differently and certainly not quite as hard when analyzing where we have dependencies on raw materials and technical goods if this war, or China's support for Russia in this war, did not exist," Habeck emphasized. 

He said German and European security interests are directly affected by the conflict, which has been raging for two-and-a-half years.

Habeck was speaking at a plenary session of a climate and transformation dialogue in Beijing.

What has the EU accused China of doing?

In October, the European Commission said it would carry out an anti-subsidy investigation of Chinese EVs imported into Europe.

Commission President Ursula von der Leyen warned the "global market is flooded with cheaper electric vehicles."

She said the price of the vehicles is "kept artificially low" owing to "huge state subsidies," from Beijing.

Last week, Brussels announced plans to levy tariffs on imports that will vary by Chinese automaker, depending on their adherence to EU trade rules.

Provisional duties of up to 38% are set to take effect on July 4.

The EU's investigation is set to continue until November when definitive duties could be imposed for up to five years.

Habeck told his Chinese counterparts there was time for a dialogue between the two powers before then.

"This opens a phase where negotiations are possible, discussions are important and dialogue is needed," Habeck said. 

During its meteoric economic rise, China has repeatedly been accused of unfair trade practices, including dumping cheap goods — from shoes to solar panels — on the global market and violating the intellectual property rights of Western brands.

Washington, meanwhile, has imposed 100% tariffs on Chinese electric vehicles, a move that has effectively shut them out of the US market.

How has Beijing responded?

Ahead of Habeck's visit, China warned that escalating frictions with the EU over EVs could trigger a trade war.

On Saturday, Zheng Shanjie, chairman of China's National Development and Reform Commission, denied accusations of unfair subsidies, telling the same session that Beijing would do "everything to protect Chinese companies."

Auto industry growth "is the result of competition, rather than subsidies, let alone unfair competition," Zheng said.

He added that the proposed tariffs could hurt both sides and he hoped Germany would demonstrate leadership within the EU and "do the right thing."

Later on Saturday, German and Chinese officials confirmed that talks between Beijing and Brussels would begin soon to try to avoid tariffs.

Habeck said he had been surprised to be informed of the move by EU Commissioner Valdis Dombrovski who agreed to start talks during a conversation with Chinese Commerce Secretary Wang Wentao.

Habeck: China support vital over climate goals

On Sunday, Habeck traveled to the southern Chinese city of Hangzhou where he told officials that the global climate goals would not be met without China's backing and that Beijing had to find a safe alternative to coal.

Noting how Chinese officials had told they were expanding coal production for security reasons, the vice chancellor said:

"You don't have to teach them that CO2 emissions are bad for the climate. They've got that."

But he added that an alternative should allow them to achieve the same level of security with fewer coal-fired power plants.

mm/rm (dpa, Reuters)