The problem of cooperation and competition

The German Automotive Industry Association (VDA) has signaled its opposition to any European Union (EU) tariffs on electric vehicles imported from China, saying this would increase the risk of a trade war and threaten German jobs, Bloomberg reported on April 13.

With German Chancellor Olaf Scholz en route to Beijing for talks with the East Asian nation’s top leaders, including Chinese President Xi Jinping, the German auto industry’s “message” is a sign of the strained relationship between the two economic powerhouses.

“The current business with China guarantees a large number of jobs in Germany,” Hildegard Mueller, head of the VDA, told the German newspaper Welt am Sonntag. “The transition that our companies are currently financing with record amounts is also being financed with money from business in this key market.”

Any additional tariffs imposed by the EU on cars made in China could quickly have a negative impact if a trade conflict breaks out, putting the EU's goal of promoting electric vehicles and digital technology at risk, the VDA president said.

The EU has warned that manufacturers on the “old continent” could see a drop in sales and production levels if electric vehicle imports from China continue unchecked.

A lot has changed

German Chancellor Olaf Scholz left for China on April 13 for a three-day diplomatic visit, including meetings with Chinese leader Xi Jinping.

Accompanied by a high-level business delegation, the German government leader is expected to address grievances over the trade deficit between the EU single market and the world's second-largest economy.

German Chancellor Olaf Scholz meets Chinese President Xi Jinping in Beijing, November 2022. Photo: Getty Images

The German chancellor is scheduled to meet Xi and Chinese Premier Li Qiang in Beijing on April 16, the final day of the trip. This is Scholz's second trip to China as chancellor. His first visit to China is scheduled for November 2022.

Much has changed since Chancellor Scholz’s last visit. Last year, Berlin unveiled its first “China Strategy” aimed at reducing its dependence on the billion-people market in key sectors and moving Germany in the direction of “derisking” that the EU is pushing.

The fact that Mr Scholz is traveling with a group of industry executives signals Berlin's intention to maintain business ties with Beijing.

Zsuzsa Anna Ferenczy, a former political adviser to the European Parliament, said the change in Germany’s language on China “does not seem to translate into reality.” She described Scholz’s trip as part of Germany “figuring out how to deliver on its own commitments.”

Complaints

Philippe Le Corre, an expert on China-Europe relations at the Asia Society Policy Institute’s China Analysis Center, said there was a “disparity” in perceptions about how to continue doing business with China within the ruling coalition in Berlin and across different industries.

There are at least two groups, including “those who want to invest more in China” and “those who feel China is becoming too big a competitor,” Mr. Le Corre said.

Back to the EU electric car investigation. This is a matter between China and the wider union, of which Germany is a member. The investigation was announced last September. It could allow the European Commission to impose punitive tariffs on cheaper electric car imports from China to protect European manufacturers.

The parking lot of the Shanghai Automotive Industry Corporation-Volkswagen joint venture in Shanghai. Germany's leading carmaker Volkswagen has more than 40 factories in China. Photo: NY Times

China’s ambassador to the EU has described the investigation as “unfair”, and said Beijing was cooperating “because we want to avoid a situation where we have to resort to trade measures against each other”.

Mr. Le Corre told DW that Chancellor Scholz would have to comment on the issue during his trip, as Germany is China's largest trading partner in the EU.

And the German prime minister is likely to face complaints from Beijing, with Chinese leaders asking: “If you want to do business with us, why launch an investigation against Chinese electric cars?” .

Minh Duc (According to Bloomberg, DW)

Source: https://www.nguoiduatin.vn/thu-tuong-duc-tham-trung-quoc-bai-toan-hop-tac-va-canh-tranh-a658919.html