Chinese Commerce Minister Wang Wentao will hold talks with European Commission Executive Vice-President and Trade Commissioner Valdis Dombrovskis to discuss the European Union's countervailing subsidy case against China regarding electric vehicles on September 19.

According to an insider of the negotiation,

From past experience, it is certainly beneficial if both parties can resolve trade disputes amicably through thorough communication and friendly consultations, possibly by reaching a price commitment or similar agreement. However, if the other side demands too much, it is also normal for negotiations to fail to achieve the desired result. Regardless of the approach taken, whether the negotiations move in one direction or another, one thing will not change --China's determination to safeguard itscore interests remains firm. China would rather not reach an agreement than make any concessions on core interests.

Why is China so determined on this issue?

Recently, the European Union lowered additional tariffs imposed on Chinese auto companies on 20 August, and EU indicated through people familiar with the matter that they might lower them slightly again later.

Even if tariff rates are lowered, as long as Chinese companies are deemed to have received "subsidies”, Brussels will continue to suppress Chinese companies through other means.

Last year, the European Commission adopted the "Foreign Subsidies Regulation". This regulation claims that the Commission can initiate investigations into "distortions caused by foreign subsidies". Since its implementation, the Commission has conducted three in-depth investigations and one proactive investigation against Chinese companies, and has even carried out a surprise inspection.

Ding Ru, who has been researching trade rules for many years, explained:

Traditionally, ‘ subsidies ’ and ‘ countervailing ’ are directed at trade activities. The
Foreign Subsidies Regulation, on the other hand, targets investment activities, mainly
mergers and acquisitions, as well as participation in public procurement in EU member States. This was “pioneered ” by the European Union.

Behind this move, there is a recent trend in the European Commission—an increasingly broad application of anti-subsidy tools.
As long as the "subsidy" narrative is established, the European Commission can use various methods to target Chinese companies, and if necessary, even “create” new laws and regulations.

China will never accept such actions.

In recent days, the Spanish Prime Minister visited China, drawing attention from international media to the China-EU electric vehicle trade dispute. During his visit, the Prime Minister urged the European Union to reconsider its proposal to impose additional tariffs on Chinese-manufactured electric cars.

According to some foreign media analyses, such a move may undermine the EU's principal strategy to address the competitive challenges posed by the Chinese government-supported electric vehicle sector.

According to data obtained from experts, Chinese investment in Europe's electric vehicle sector has shown rapid growth. Chinese battery manufacturers have already announced investments worth $17.5 billion in Europe, and it is estimated that by 2030, their European factories'capacity will account for about 20% of Europe's total capacity.

If Europe wishes to continue maintaining a space for cooperative development, it needs to eliminate the anti-subsidy tariffs on Chinese car companies and make the correct decision as soon as possible.

Zhou Xiaoyan, VicePresident of China Council for International Investment Promotion, told YuYuanTanTian:

"Currently, the United States views China as a strategic competitor, and together with its allies, is pushing for 'decoupling and breaking chains’, building 'small yards with high fences’, and accelerating the process of'de-risking' and reducing dependence on China, with the clear intention of curbing China’s development. Under such circumstances, the difficulty of resolving major trade disputes between China, the U.S., and Europe through negotiations and consultations has greatly increased."

Zhou Xiaoyan, who has participated in the negotiations of the European Commission double reverse survey against China's PV, noted:

"Recently, some Brussels' officials have referred to the agreement reached in the China- EU photovoltaic trade negotiations as a 'shame.' They have learnt from that ‘lesson’, which objectively increases the difficulty of the ongoing China-EU electric vehicle negotiations."

However, whether trade frictions increase or negotiations become more challenging, these are issues that China must face in its development process.

Shi Yonghong, Vice President of the China Chamber of Commerce for lmport and Export of Machinery and Electronic Products, mentioned:

"For Chinese companies, they need to focus on their own work-- by accelerating innovation and research and development, they can turn the'crisis'of trade friction into an opportunity to further enhance their independent innovation capabilities and increase their international competitiveness."

As for the Chinese government, while it is always willing to seek consensus and resolve issues through communication in the face of friction, this does not mean that China will make concessions to ease the growing pressure from various trade disputes.

Regardless of whether negotiations move left or right, China will not make any concessions on the core interests.