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TRADE WAR?
EU trade policy has turned increasingly protective over concerns that China’s production-focused development model could see it flooded with cheap goods as Chinese firms look to step up exports amid weak domestic demand.
China has rejected accusations of unfair subsidies or that it has an overcapacity problem, saying the development of China’s EV industry has been the result of advantages in technology, market and industry supply chains.
“When European Commission President Von der Leyen announced she would investigate China’s new energy vehicles … I had an intuitive feeling it was not only an economic issue but also a geopolitical issue,” said Zhang Yansheng, chief research fellow at the China Center for International Economic Exchanges.
“Personally, I think it is unfair to start a tariff war by only taking into consideration the capacity utilisation rate and insufficient demand,” he added.
Trade relations between the 27-strong bloc and the world’s No 2 economy took an abrupt turn for the worse when the European Parliament voted in May 2021 to freeze ratification of what would have been a landmark investment treaty because of tit-for-tat sanctions over allegations of human rights abuses in China’s Xinjiang region.
Beijing and Brussels came to blows again that year when China downgraded diplomatic ties with Lithuania and told multinationals to sever relations with the Baltic state after Vilnius invited democratically governed Taiwan, which China claims as part of its territory, to open a representative office in the capital.
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