BEIJING, September 24 (TMTPost)— China and European Union (EU)’s senior officials  will soon hold an in-person meeting that could reshape the future of a trillion-dollar industry.

Credit：Visual China

The 10the China-EU High-Level Economic and Trade Dialogue will be initiated on September 25 in Beijing, as the schedule released by the Ministry of Commerce of China last Thursday. The dialogue will be co-chaired by Chinese Vice Premier He Lifeng and the Executive Vice President of the European Commission Valdis Dombrovskis.

Multiple media outlets speculated the dialogue may result from an EU’s probe in electric vehicle (EV) sector, the state-run newspaper Shanghai Securities News noted. Rise of China’s EV will put pressure on European countries, especially Germany, which is EU’s largest economy that boasts automobile as pillar industry, but German automakers also have a considerable market share of traditional auto filed in China, the paper cited an expert on economic and trade research. The expert called for dealing with competition based on mutual benefit, rather than casual protectionist measures.  The dialogue will serve as a good opportunity for China and the EU to enhance communication and understanding, another state-backed newspaper the Global Times quoted Chinese observers. It said they expected the candid and constructive talks will help the EU to regain a sober mind on its policies toward Chinese firms and supply chains, paving the way for discussions on Europe's economic security during a meeting of European leaders in Spain on October 5.

Less than two weeks ago, European Commission President Ursula von der Leyen announced EU’s executive body is going to launch an anti-subsidy investigation into EVs from China. EV sector is a crucial industry for the clean economy, with a huge potential for Europe, but “global markets are now flooded with cheaper Chinese electric cars”, and their price is “kept artificially low by huge state subsidies”, which is distorting European market, von der Leyen said in her state of the union stress to the European parliament on September 13. Head of the executive arm said Europe is open for competition, not for a race to the bottom. While stressing EU would defend itself against unfair practices, she cautioned “it is vital to keep open lines of communication and dialogue with China”. The official reiterated de-risking, instead of decoupling, from China.

The European Commission will decide whether to impose tariffs more than the current 10% standard rate for cars in the coming 13 months. The possible tariff will affect not just Chinese automakers but also foreign brands that produce vehicles there such as Tesla, Renault and BMW. EU’s probe may have triggered a major battle. The move may result in tariffs close to the 27.5% level already imposed by the U.S. on Chinese EVs, Bloomberg cited people familiar with the matter.

The investigation that could lead to tariffs raised concern about retaliation from China, the world’s largest EV market. “The probe, in the name of fair competition, is a blatantly protectionist act that will seriously disrupt and distort the global automotive industry and supply chain, including the EU, and will have a negative impact on China-EU economic and trade relations,” a spokesperson of China's Ministry of Commerce said right after von der Leyen’s announcement. China and EU auto industries have huge room for cooperation and share extensive common interests, and China welcome European automobile companies to further investments in China, including those in EV sector, said the spokesperson, who urged dialogue between two parties to create a fair, non-discriminatory and predictable market environment for development of the EV industry in China and Europe. "China will keep a close eye on the EU's protectionist tendencies and follow-up actions, and firmly safeguard the legitimate rights and interests of Chinese companies," the spokesperson added.

“The EU has no intention to decouple from China,” Valdis Dombrovskis said ahead of the dialogue. EU has a very imbalanced trade relationship with China and needs to protect itself in stituaitons when its openness is abused, the EU’s chief trade negotiator said on Saturday. While EU wants to minimize strategic dependencies for a select number of strategic products, its economic strategy was focused on de-risking, not decoupling, he said.

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