In a recent address at the World Economic Forum in Dalian, China, Premier Li Qiang defended his country’s electric vehicle and lithium-ion battery industries against allegations of overcapacity and unfair subsidies from the West.
What Happened: Li’s comments come amid escalating trade tensions between China and the U.S. and EU, reported Reuters on Tuesday. The U.S. recently imposed significant tariff hikes on various Chinese imports, including EV batteries, while the EU is considering imposing tariffs on Chinese-made EVs.
“The rapid rise of China’s new industries is rooted in our own unique comparative advantages,” Li said. “The continuous emergence of economies of scale can effectively dilute enterprises’ innovation costs… which is the real source of the strong competitiveness of China’s new industries.”
Li refuted the allegations, stating that China’s production of advanced EVs, lithium-ion batteries, and photovoltaic products not only meets domestic demand but also enriches the global supply. He attributed the rapid growth of China’s new industries to the country’s unique comparative advantages.
He also criticized the trade policies of the U.S. and EU, warning that their protectionist measures could escalate the ongoing trade war with China. Li emphasized that China’s early investment in green technologies is the key to its strong competitiveness in the global market.
“China’s really made headway into producing these cars at low cost… so it is a lesson for us to try to get our act together and be better at it,” said Benoit Boulet, professor of electrical and computer engineering at McGill University.
Why It Matters: China’s willingness to engage in discussions with the EU over EV tariffs marks a significant development. During a visit to Beijing by Germany's Vice-Chancellor Robert Habeck, China agreed to talks, which Habeck described as “a first step” but emphasized that “many more will be necessary.”
China has invested over $230 billion in the past decade to develop its EV industry, accounting for nearly 19% of total electric car sales from 2009 to 2023. This financial backing has significantly declined from over 40% in the years leading up to 2017 to just above 11% in 2023.
Chinese automakers have reportedly urged Beijing to retaliate against EU tariffs by increasing tariffs on European gasoline-powered cars. This move is seen as a countermeasure to the EU’s restrictions on Chinese-made electric vehicles.
Meanwhile, the U.S. is also reportedly pressuring Japan and the Netherlands to tighten their export policies on chipmaking equipment to China.
Image Via Shutterstock
This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
