On Friday, the EU and China issued a brief statement saying they had "reached a consensus on hybrid vehicle trade." "Business Daily" commented that if this consensus can temporarily alleviate the outbreak of the trade war, it will undoubtedly be good news. But the bad news is that we don’t know the specific content of this consensus. The commentary titled "The EU Just Got a Breathing Chance" reads:
"European Union Trade Commissioner Sefcovic said after the negotiations that in the next four years, China's imports of hybrid cars will be half of what they would have been without an agreement. At first glance, it sounds like China has made a major concession, but in fact this does not mean a halving of imports, but just some kind of restriction on Brussels's estimated import growth. The two sides did not provide further explanations on how many cars China will export to the EU in the future and what the ratio will be to the current import volume.
The specific content of the agreement is not made public, which is never a good sign. Not only does this make it harder to monitor Beijing's compliance with the agreement, but it also leaves room for Beijing to interpret the obligations as it sees fit. Looking back at past bilateral agreements between Europe and China, it is difficult to have high expectations. The EU accepted a similarly vaguely worded deal back in 2014, when it abandoned plans to impose retaliatory tariffs on Chinese telecom equipment suppliers Huawei and ZTE, while China pledged to give European suppliers Nokia and Ericsson 30% of the market. But Beijing has never fulfilled this promise. "
"Business Daily" commented that it would be too naive to believe that Beijing will keep its promises when China has not changed its industrial policies, has not reduced subsidies, and the problem of discrimination against foreign companies in China has not been improved.
"However, the European Commission actually has no choice but to accept this compromise to save face. After all, the EU is not ready to start a trade war with China. China only needs to stop exports of rare earths, and European industry will be paralyzed. In view of this, it is crucial for the EU to make full use of the time gained by this compromise. Germany's proposal for new trade deterrence tools should not be abandoned because of this compromise. Because it is only a matter of time before a trade conflict breaks out with China or the United States.
More importantly, the European industry should mass-produce electric vehicles at prices that are acceptable to the public to meet the needs of the European market, thereby reducing dependence on China. Politics cannot solve all problems, and Europe needs companies with long-term vision and planning. "
"The strategy of dialogue and deterrence has begun to work."
"Süddeutsche Zeitung" commented that China's commitment to proactively reduce hybrid vehicle exports to Europe means that Beijing has publicly acknowledged for the first time the imbalance in EU-China trade. This is the most unexpected result of the EU-China negotiations in Beijing, and it also brings a glimmer of hope to avoid a EU-China trade war:
"But Europeans cannot rest easy. Chinese goods are still flooding into Europe: the trade deficit between Europe and China has expanded to 30 billion euros per month. But unlike the first China shock 20 years ago, this time the influx is no longer mass consumer goods, but tunnel excavators, machinery and Chinese cars that are far more cost-effective than Mercedes-Benz.
China's success is not only due to the country's innovation, but also the result of strict implementation of a set plan, the ultimate goal of which is to make China an economic powerhouse. To this end, China does not hesitate to provide subsidies that distort market competition, artificially lower the RMB exchange rate, and create excess production capacity that completely violates market logic. On the one hand, Europeans must face up to the competition in innovation with China; on the other hand, they cannot continue to remain silent about Beijing's methods.
The EU's dual strategy has already produced its first fruits: while engaging in dialogue with China, it must also present powerful new deterrence tools, such as excluding China from the EU's internal market. This move really hits a sore spot, because China is no less dependent on the European market than European companies are on Chinese batteries. Germany has finally changed its consistent stance, paving the way for the formulation of a unified European policy towards China. Crucially, the EU cannot become careless just because China has made some concessions on the issue of hybrid vehicles. "
