The European Union and China have reached an understanding that China will reduce the export volumes of its hybrid vehicles and implement minimum prices for electric cars.
However, this agreement is facing criticism from industry experts. Jürgen Matthes, an trade expert at the Institute of the German Economy (IW) Köln and an expert witness for the China Commission of the Bundestag, told Spiegel that a more targeted and effective approach would be to introduce corrective duties on Chinese imports that threaten European production.
Matthes notes that minimum prices for electric cars allow China to secure extremely high profit margins, driven by subsidies and an undervalued currency. He argues that this provides Chinese firms with disproportionately more capital than their European counterparts, making it easier for them to invest in innovation. Furthermore, the economist criticized the use of quantity and quota mechanisms for hybrid vehicles, stating that such measures have little to do with a functioning market economy. Targeted corrective tariffs, conversely, could neutralize China’s artificial price advantages.
In Matthes’ view, a significant portion of the industrial jobs lost since 2019 can be attributed to China. Therefore, he believes there must be a regulatory adjustment that preserves the fair aspect of the competition originating from China while neutralizing the unfair distortions. Matthes insisted that such corrective duties do not constitute protectionism; rather, they represent classic policy designed to establish a proper economic order.
The heads of state and government of the EU plan to discuss the outcome of the conversations between EU Trade Commissioner Maroš Šefčovič and Chinese Minister of Trade Wang Wentao, as well as potential next steps, during their summit in Brussels late next week.
