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, arguing that 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 top leaders of the East Asian nation, including Chinese President Xi Jinping, the message from the German automotive industry signals the growing pressures in the relationship between the two economic powerhouses.

“The current business with China ensures 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 now funding with record amounts is also being financed by money from business in this key market.”

The VDA chairman stated that any additional tariffs imposed by the EU on vehicles manufactured in China could quickly have a negative impact if a trade conflict were to occur, jeopardizing the EU's goals of promoting electric vehicles and digital technologies.

The EU has warned that manufacturers in the "old continent" itself could see a drop in sales and production if imports of electric vehicles from China continue unchecked.

Many things have changed.

German Chancellor Olaf Scholz departed for China on April 13th for a three-day diplomatic visit, which includes meetings with Chinese leader Xi Jinping.

Accompanied by a high-level business delegation, the head of the German government 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 with Chinese President Xi Jinping in Beijing, November 2022. Photo: Getty Images

German Chancellor Scholz is expected to meet with Xi Jinping and Chinese Premier Li Qiang in Beijing on April 16th, the final day of his trip. This is Scholz's second trip to China as Chancellor. His first visit to China took place in November 2022.

Much has changed since Chancellor Scholz's last visit. Last year, Berlin unveiled its first-ever “China Strategy” aimed at reducing dependence on the billion-person market in key sectors and moving Germany toward the “derisking” approach that the EU is promoting.

The fact that 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 advisor at the European Parliament, said that a shift in Germany's language toward China "does not seem to materialize in practice." The expert described Scholz's trip as part of Germany "finding a way to fulfill its own commitments."

Complaints

Philippe Le Corre, an expert on China-Europe relations at the Center for China Analysis of the Asia Society Policy Institute, said there is a "gap" in perception regarding how to continue doing business with China, both 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 much of a competitor,” Le Corre said.

Returning to the EU's electric vehicle investigation, this is an issue between China and the broader 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 vehicle imports from China to protect European manufacturers.

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

The Chinese ambassador to the EU described the investigation as "unfair," and said Beijing was cooperating "because we want to avoid a situation where both sides will have to resort to anti-trade measures."

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 head of the German government may face complaints from Beijing, with Chinese leaders questioning: "If you want to do business with us, why are you conducting an investigation against Chinese electric vehicles? "

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