Chinese President Xi Jinping arrived in Paris on Sunday as part of a six-day trip through Europe. It is his first visit to the continent since 2019. The trip includes long-awaited state visits to France, Serbia and Hungary and comes amid rising tensions over trade imbalances with the European Union and growing concerns over China’s economic support for Russia’s war effort .
It is expected that in Paris, during Xi Jinping’s first stopover, there will be lengthy discussions about the increasing trade tensions between the two trading blocs. European companies and governments have long complained about limited access to the Chinese market and about unfair competition from Chinese companies that threaten to flood the European market with dirt-cheap products subsidized by Beijing. Recent research from the Kiel Institute in Germany shows that Chinese subsidies to companies at home are three to nine times higher than those of other major economies.
Protect your own market
Now that the Chinese economy is sputtering and the United States is increasingly shielding its market from China for geopolitical reasons with high import taxes, French President Macron also wants to increase economic pressure on Beijing. If necessary, by imposing import tariffs on Chinese electric cars, solar panels and wind turbines to prevent European producers from being pushed out of their own market based on unfair competition. “We regulate too much, we don’t invest enough, we don’t protect enough,” Macron said in an interview this week The Economist.
China has so far dismissed European accusations of unbalanced trade, dangerous overcapacity and unfair competition as “hype”. But internally, Beijing is indeed concerned and Xi Jinping in Paris will mainly try to hold off the pressure by strategically responding to the internal divisions within the EU. And not only with later planned visits to Russia-loyal countries such as Hungary and Serbia, two European countries in which Beijing is heavily investing economically through the Belt and Roadinfrastructure project.
Divide and conquer
Through the classic divide-and-conquer strategy, China is also trying to respond to the great dependence of many large German export companies on the enormous Chinese sales market. An economic dependence to which German Chancellor Olaf Scholz seems to be particularly sensitive. Which in turn raises fears in Paris that Berlin will come to Xi Jinping’s aid in the sensitive EU issue of cheap Chinese electric cars. It is striking that the European Commission is following the harder French line for the time being. In recent months, it has been noticeable that Brussels is increasing pressure on Beijing in four major issues: electric cars, wind turbines, medical equipment and popular Chinese apps and online stores such as TikTok, Shein and AliExpress.
1 Chinese electric cars
In September last year, the European Commission announced an investigation into “unfair subsidies” for Chinese-made electric vehicles (EVs). Although the investigation will not be completed until June, Brussels announced at the beginning of March that it has “sufficient evidence” that there is “unfair competition” from Beijing.
That same month, the European Commission started customs registration of every electric vehicle imported into Europe from China. In this way, she wants to make it possible to levy additional import taxes on those cars retroactively at a later date.
2 Chinese windmills
The European Commission also launched an investigation into Chinese suppliers of wind turbines in April. Between 2009 and 2021, Chinese manufacturers received support from the Chinese national government, while currently they would still receive support from regional governments. As a result, Chinese-made wind turbines would quickly be 20 percent cheaper than European and American ones.
Brussels is afraid that European wind turbine manufacturers will be forced out of the market if the supply of cheap Chinese wind turbines continues to grow. This has already happened with solar panels from China. As a result, European solar panel manufacturers are now playing a supporting role. The research focuses specifically on the construction of wind farms in Bulgaria, France, Greece, Romania and Spain.
3 Medical equipment in China
The European Commission also launched an investigation in April into the access of European players in the field of medical equipment to the Chinese market. The investigation focuses on government contracts for medical equipment in China and the conditions attached to them. Brussels suspects that the Chinese government is encouraging hospitals in their own country to purchase Chinese-made medical equipment. Beijing would systematically favor Chinese manufacturers over foreign players.
4 Chinese apps
In April, Brussels also tightened European rules around several popular Chinese apps and online stores based on the new digital services law, the Digital Services Act. An important target is the popular app TikTok. Brussels suspects that the Chinese company violated the Digital Services Act with the launch of TikTok Lite. That new app may include “an addictive feature” that rewards kids for completing tasks, such as watching videos all the way through.
The Chinese online fashion store Shein was added by the Commission to the list of ‘very large online platforms’. Shein must therefore comply with stricter rules. A month earlier, Brussels also started an investigation into AliExpress. This super-cheap Chinese online store is suspected of distributing illegal content and the online sale of illegal products such as fake medicines and banned nutritional supplements.
