China
China's double threat to Europe
Wolfgang Hansson
This is a commenting text. Analysis and positions are the writer's.
Published 2024-09-23 21.16
Quick version
- China threatens Europe's auto industry by flooding the market with state-subsidized, cheap electric cars. It could lead to factory closures and lost jobs in Europe.
- China has been good at the green transition, which has benefited the world in many ways but at the same time made it heavily dependent on China.
- The prevailing world order is also threatened by China's strong support for Russia's war in Ukraine.
Without China's help, Putin would not be able to continue his war of aggression against Ukraine.
But China is also on the way to knocking the legs of the European car industry aside.
When we think of the threat from China, it is normally mostly in military terms. Like an invasion of Taiwan or attacks in the South China Sea to mark China's territorial claims.
But there is a double threat that we easily forget.
Recently, the German car manufacturer Volkswagen, VW, announced that for the first time in the company's 87-year history, it plans to close one or two of its factories in Germany due to low demand. Up to 30,000 jobs could disappear.
The reason is that China is flooding the European market with electric cars that are far cheaper than what VW and other European manufacturers are able to produce.
The reason for the significantly lower prices is above all heavy subsidies from the Chinese state. When China decides on something, they go "all in".
The United States and Canada have responded with 100 percent tariffs on Chinese electric cars, while the EU has been considerably more cautious in the hope that China will speak up. In July, tariffs of between 17 and 38 percent were introduced, depending on the manufacturer.
The United States has also introduced government subsidies for the transition to electric cars. So while both China and the US support their industries, Ursula van der Leyen continues to sing the praises of free trade. Only that neither China nor the US is listening. For European companies, it will be more profitable to make their green investments in the US instead.
Knocked out
If nothing is done, Europe's car industry risks being partially wiped out. An industry that means a great deal to the prosperity of the continent. It's not just about the big car manufacturers, but also about all the subcontractors who make different parts.The automotive industry accounts for seven percent of the EU's total GDP.
But it is about more than that. Who takes control of the new green technology? Whoever does so also gets an economic and geopolitical edge.
China has been extremely good at the green transition. Which in many ways benefited the world but at the same time made it heavily dependent on China. They largely control the production of the rare earth metals required to change the fossil society.
China is the world leader in the production of solar panels. Recently, the West has started its own production, but it is still China that dominates.
In a free world where all countries are good friends and decently democratic there would be no problem.
In today's highly polarized world where democracies are pitted against dictatorships, our strong dependence on China in a number of areas is a major concern. Should Europe lose its car industry and become dependent on China in that area as well, it would be a difficult strategic setback. It simply cannot happen.
Northvolt's battery factory in Skellefteå and planned factories in Germany, among other places, also play a role here. Northvolt will supply batteries for, among other things, VW's electric cars. Who will do it if Northvolt goes bankrupt?
But the prevailing world order is also threatened by China's strong support for Russia's war in Ukraine.
If you follow the news reporting, you can easily get the impression that China, even if you have not condemned Russia's invasion, is sitting on the sidelines as a more or less neutral observer. Nothing could be more wrong.
More than 90 percent of the technology and electronics that Russia imports to use in the war came last year from China, according to a report by the Carnegie Endowment for International Peace think tank. It is not about pure weapons, but about products with dual uses, military and civilian. Not least microchips.
Without these Chinese imports, Putin would have a very difficult time continuing the war at the level he is now doing. China is helping to prolong the war and prevent Ukrainian gains.
But not only that.
By keeping the war going, China is ensuring that NATO is fully occupied with Ukraine instead of focusing on Taiwan and the Pacific region where China is becoming increasingly militarily aggressive. President Xi Jinping has vowed to invade Taiwan if the self-ruled democracy does not agree to voluntarily "reunify."
Despite China's strong support for Russia's warfare, the EU has only targeted a few Chinese companies with sanctions.
In general, Europe has a more benevolent attitude towards China than the US. China is an important market for European companies and the EU does not want to pull the rug out from under them. But as the strategic struggle intensifies, it becomes necessary for the EU to toughen itself up.
Extends the war
Strategically, it is important that battery production is in Europe, even if Northvolt is partly dependent on imports from China and Chinese companies that have established themselves in Eskilstuna and Timrå, among others.But the prevailing world order is also threatened by China's strong support for Russia's war in Ukraine.
If you follow the news reporting, you can easily get the impression that China, even if you have not condemned Russia's invasion, is sitting on the sidelines as a more or less neutral observer. Nothing could be more wrong.
More than 90 percent of the technology and electronics that Russia imports to use in the war came last year from China, according to a report by the Carnegie Endowment for International Peace think tank. It is not about pure weapons, but about products with dual uses, military and civilian. Not least microchips.
Without these Chinese imports, Putin would have a very difficult time continuing the war at the level he is now doing. China is helping to prolong the war and prevent Ukrainian gains.
But not only that.
By keeping the war going, China is ensuring that NATO is fully occupied with Ukraine instead of focusing on Taiwan and the Pacific region where China is becoming increasingly militarily aggressive. President Xi Jinping has vowed to invade Taiwan if the self-ruled democracy does not agree to voluntarily "reunify."
Despite China's strong support for Russia's warfare, the EU has only targeted a few Chinese companies with sanctions.
In general, Europe has a more benevolent attitude towards China than the US. China is an important market for European companies and the EU does not want to pull the rug out from under them. But as the strategic struggle intensifies, it becomes necessary for the EU to toughen itself up.
China's electric car exports to Europe are increasing sharply
TT-Bloomberg
Published 2024-09-23 09.06
China's global exports of electric cars rose 9.4 percent year-on-year to 114,639 vehicles in August, according to recent figures from the Chinese Customs Administration.
This means an increase in exports so far this year - if you combine exports during the period January-August - by 16 percent to 1.12 million electric cars.
Exports from China to Europe in August increased by 32 percent to 44,226 electric cars. A large share of these exports goes to Belgium, which received 17,339 Chinese EVs in August – a 379 percent jump over August 2023.
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