China’s use of state power to invest in and develop green technologies should have informed European policymakers’ own strategy towards decarbonising the bloc’s economy, two former EU environment ministers said on Wednesday (19 June).

“We must commend China for its leadership in decarbonising industry,” former French Minister of Environment Brice Lalonde said at an event organised by Chinese businesses and state media in Brussels.

“it’s a path that we in Europe must follow,” he added.

Lalonde’s remarks were echoed by former Irish Minister for the Environment Dick Roche, who emphasised the benefits of China’s state-led development of cutting-edge green technologies, including solar panels, wind turbines, and electric vehicles (EVs).

“Favourable government policies set the stage for China’s rise to leadership,” Roche said. “Other governments could have followed the same policies, should have followed the same policies, didn’t follow the same policies.”

“So there is no point in other governments moaning about China’s dominance in this market now. We could have, should have, and didn’t do it. And that’s a reality.”

Lalonde and Roche said the European Commission’s tariff decision would ultimately impede the bloc’s ability to achieve its goal of fully decarbonising by 2050.

“Making electric vehicles more expensive will reinforce doubts about the long-term prospects of EVs. It will depress demand. It will frustrate the fulfilment of one of the most challenging targets in Europe’s Green Deal,” Roche said, referring to Commission President Ursula von der Leyen’s flagship initiative.

“What the Commission hopes to achieve by these various actions being taken at the moment is very hard for me to fathom,” he added.

The two former politicians’ remarks, however, are in stark contrast with other stakeholders since the Commission’s announcement last week.

The EU executive said it would impose provisional tariffs of up to 38.1% on exports from Chinese EV producers – on top of the 10% levy currently in place – after finding the hefty state subsidies received by these companies resulted in substantial market distortions in Europe.

China currently produces about 80% of the world’s solar panels and two-thirds of the world’s EVs and wind turbines at prices that European producers cannot match.

Analysts from Brussels-based think tank Bruegel and the Centre for European Reforms told Euractiv last week that imposing duties on Chinese exports would merely align with measures enacted in other jurisdictions, and that the announced tariffs would still be too low to significantly affect Chinese exporters.

Warning against an escalation

The former officials’ comments come amid rising trade tensions between Beijing and Brussels, with EU policymakers alleging that Chinese cheap green tech exports are unfairly subsidised and pose a threat to Europe’s faltering industrial base.

China responded on Monday by announcing an anti-dumping investigation into European pork exports, which would affect the bloc’s main exporters: Spain, the Netherlands, Denmark and France.

Lalonde, who also previously served as Assistant Secretary-General of the United Nations, warned about the dangers of a trade war and urged Brussels and Beijing to resolve their dispute through negotiations.

“The last thing we need is a trade war with escalating tariffs,” he said. “So, in my view, engaging in bilateral discussions to address the complexity of issues is much preferable.”

Lalonde also suggested that Chinese car manufacturers should try to avoid the new duties by moving production to Europe.

“If I had advice to give, it would be that they ally with local manufacturers to invest in Europe and enjoy the same rights as the European manufacturers,” he said.

Chinese carmakers localising in Europe

A survey of 30 EV companies and institutions published on Wednesday by the China Economic Information Service and the China Chamber of Commerce to the EU (CCCEU) – which co-hosted the Brussels event – showed that, since the EV probe was announced by the European Commission in September 2023, 73% reported falling sales, while 82% reported a drop in investor confidence.

“Chinese investors face more uncertainties and are becoming more cautious with their investments,” the CCCEU report noted.

While the EU’s actions seem to have “dampened enthusiasm for such efforts,” the report said “increasing localisation in Europe remains a long-term strategic goal for these companies.

Overall, in fact, Chinese car manufacturers are establishing a greater foothold in Europe.

In December 2023, BYD announced that it would open a factory in the southern Hungarian city of Szeged, thereby becoming the first Chinese car manufacturer to set up production in Europe.

Chery, another major Chinese carmaker, similarly announced in April this year that it would set up a factory in Spain.

The day after the Commission’s tariff decision, Chery’s executive vice president Charlie Zhang noted that localising production in Europe “should help us mitigate some of the impact” of the new tariffs.

[Edited by Anna Brunetti/Chris Powers]

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