China asks its car manufacturers to stop investments in Europe

A fairly ambiguous relationship has developed over the years between China and Europe. Because for some time now, many Chinese manufacturers have been try their luck on the Old Continentas we notably saw during the last edition of the Paris World Cup. And yet, this does not please Brussels at all.

The situation becomes more tense

The European Commission is stepping up measures to put obstacles in the way of brands from the Middle Kingdom, going so far as to open an investigation accusing them of unfair competition.

According to her, the latter benefit from subsidies granted by the Chinese government, which allow them todisplay lower prices, to the detriment of traditional manufacturers Europeans. A situation which led Brussels to introduce higher customs duties on electric cars produced in China.

And now, yesterday, the European Union confirmed once and for all this increase, which will have the effect of driving up the prices of Chinese vehicles sold here. Except that manufacturers have a solution: produce elsewhere than in their native country. This has already started with factories in Russia and Brazil, while some are also banking on Europe. This is the case of BYD which will set up in Hungary or even MG which also wants to produce on the Old Continent. Good news, which will logically benefit the European economy.

Yes, but everything is not as rosy as that. Because Beijing was stung by Brussels' decision regarding import taxes. And the government does not intend to let this happen. The latter has already taken the floor and indicated having contacted the World Trade Organization (WTO) in order to bring “ action under the WTO dispute settlement mechanism “. A few months earlier, China had already denounced this measure, contrary to international trade rules.

But the Middle Kingdom wants to go even further, as indicated in an article from the British press agency Reuters. And he doesn't do things by halves, since he simply asked his manufacturers to reduce, or even increase stop their investments in Europe. But that's not all, because China has also requested an interruption of all discussions about new projects and now only wants new agreements are signed with Brussels.

And the least we can say is that the Chinese manufacturers did not wait long before reacting. Indeed, those who depend directly on the government, such as Dongfeng ou Changan quickly took the necessary measures. The first has just announced that it has abandoned its factory project in Italywhile the country supported Europe's decision regarding the increase in customs duties. The second for its part canceled the event planned in Milan for the launch of its young brand Deepal, founded with CATL and Huawei.

For several months, more and more Chinese manufacturers have been arriving on the Old Continent, such as BYD or more recently Xpeng, whose G6 we tested. Not to mention cars from European brands which are produced in China, such as the Volvo EX30, which will be assembled in Belgium, or the Dacia Spring. Moreover, according to Reuters, the European market represented more than 40% of electric vehicles shipped from China in 2023. A figure which is expected to rise further in 2024.

For the moment, Geely, SAIC or even BYD have not commented on the subject, nor has the Chinese Ministry of Commerce. But one thing is certain, this decision could harm the European automobile industrysince Chinese companies could reduce their investments in manufacturers established on the Old Continent. However, the latter are already in a difficult situation, due to the fall in sales of electric cars in Europe. From now on, brands from the Middle Kingdom could choose to'invest in other countriess, like in South Africa or Mexico, for example.

To go further
How Europe shot itself in the foot with Chinese taxes on electric cars