China and the EU will start negotiations to eliminate prices on Chinese electric vehicles

In the middle of a commercial battle, the European Union agrees to negotiate the abolition of customs tariffs to Chinese electric vehicles. These low cost models, which are transported by massive subsidies, shake the European market. This conversion means a turning point because Europe, torn between industrial protectionism and ecological transition, opens up to a risk compromise. In the key sector, this convergence could retrieve cards between two competing powers, connected by competition, as well as interdependence.

The beginning of an unexpected business dialogue

It seems that Beijing and Brussels want to start a specific dialogue on the object so far marked with confrontation. For several months, the European Commission has accused China of massively subsidizing its automotive industry, which has failed to compete at the expense of European actors.

These discussions, which are only in diapers, take place in the climate of increasing diplomatic voltage. Last October, an investigation by EU on October on business practices of Chinese manufacturers, such as BYD or NIO, proposed tariffs escalation.

Beijing condemned the discriminatory initiative. However, the commencement of negotiations seems to indicate a shared desire to avoid trade war with potentially strong consequences for both economies. Among the key elements you will remember at this stage:

• The European Commission shall investigate subsidies considered unjustly provided to the Chinese electric vehicles;
• The target manufacturers include several giants such as Byd, Nio or Saic;
• Beijing strongly opposed these accusations and condemned an attack on the principle of free trade;
• The aim of the dialogue initiative is to dispose of a confrontation that is likely to destabilize European markets.

Step toward a new economic balance

The framework of these discussions is still vague, but their extent is already carefully explored by industrialists. Two economic powers have not yet been a calendar or accurate methods of future negotiations.

However, the signal sent is strong. The simple fact of considering prices suggests that the European Union could reconsider its approach to Chinese imports, in the industry as strategic as electrical mobility.

This change in posture could reflect awareness of the current balance of power. Chinese manufacturers consolidated their technological progress in batteries and large production.

By maintaining customs barriers, the EU can deprive a competitive offer when its climatic objectives require accelerated fleet electrification. On the contrary, a sharp withdrawal of protectionist measures could be weakened by European industrialists, still far from the economic balance of their face to their Asian competitors.

In the longer term, this opening could rebuch cards on the European market. If negotiations between the EU and China succeed, the massive arrival of Chinese low -cost models could force historical players to deeply review their production and marketing models. This could also redefine industrial alliance strategies with a possible convergence between European and Asian companies. Whether future negotiations, regardless of stores, promise to structure for the future of the automotive sector in Europe.

Luc Jose A.

A graduate of the Toulouse and the Blockchain Consultant Certification certification holder and I joined the adventure of Cointribuna in 2019. I convinced of the potential of blockchain to transform many economy sectors, committing to raising awareness and informing the general public about how the ecosysty developed. My goal is to allow everyone to better understand blockchain and take the opportunity they offer. I try to provide an objective analysis of messages every day, decrypt trends on the market, hand over the latest technological innovations and introduce the economic and social issues of this revolution.

Renunciation

The words and opinions expressed in this article are involved only by their author and should not be considered investment counseling. Do your own research before any investment decision.