China, EU close to EV tariff deal, state media says, dismisses ‘trade diversion’ fears
‘Final step’ in resolving EV tariff dispute hinges on EU political will, CCTV says, as Xinhua calls diversion fears ‘grossly overstated’
China and the European Union have largely finalised the “technical” part of negotiations towards resolving their electric vehicle (EV) tariff dispute, with the deal now hinging on “political will” from the European side, according to Chinese state-affiliated media.
Yuyuan Tantian, a social media account linked to state broadcaster CCTV, reported on Friday night that the “technical negotiations” were essentially complete, with only the “final step” remaining. “The key now depends on whether the EU can demonstrate the necessary political will to push for a resolution of the issue,” it said.
Meanwhile, state news agency Xinhua in a commentary on Saturday dismissed claims of a new “China shock”, describing fears that Chinese exports deflected by US tariffs were flooding Europe as “grossly overstated”.
In April, China and the EU agreed to negotiate a “price undertaking” mechanism that would allow Chinese EV makers to avoid tariffs by adhering to minimum export prices. The dispute centres on EU tariffs of up to 45.3 per cent imposed last October on Chinese EVs, to counteract what Brussels sees as an unfair edge enjoyed by Chinese manufacturers due to huge state subsidies and lower production costs.
The reported progress in the talks comes ahead of a critical EU-China summit that is expected to primarily focus on trade issues. EU leaders led by European Commission President Ursula von der Leyen are expected to visit Beijing later this month as the two sides mark 50 years of diplomatic ties.
Over the past two years, the EU has persisted in challenging Beijing on trade issues, including subsidies, alleged dumping and other practices that “distort the market”, with numerous investigations either ongoing or at the planning stage.
Beijing, which has retaliated with its own trade measures, accuses the EU of protectionism and insists that any deal must respect World Trade Organization rules.
In the latest reciprocal action, China’s Ministry of Commerce on Friday imposed anti-dumping tariffs of up to 34.9 per cent for five years on European brandy – mainly from France.
But the ministry also said that major players in the cognac industry would be exempt from the duties taking effect on Saturday, provided they sold at a minimum price, which it did not disclose.
The move coincides with Foreign Minister Wang Yi’s European tour aimed at easing trade disputes, which saw him tell his German counterpart in Berlin on Thursday that rare earth exports should not strain China-EU relations.
Tensions have escalated in recent months over China’s curbs on rare earth elements and magnets – crucial to making smartphones and EVs – which have forced some European companies to halt manufacturing operations.
Wang emphasised on Thursday that controlling dual-use goods was a sovereign right and an international responsibility. He also mentioned China’s “fast track” process for European firms and recent approval of several export licences.
China’s commerce ministry said last week that it had accelerated reviews of rare earth export licence applications and already approved a number of them.
Wang’s comments in Berlin came after the EU urged China to ease export controls on seven rare earth minerals that had disrupted supply chains, especially in the auto industry.
Meeting Chinese Commerce Minister Wang Wentao in Paris last month, EU trade commissioner Maros Sefcovic said the issue was a “priority”. They also made “significant progress” over issues of export controls, market access and tariffs on Chinese-made EVs, Chinese state media reported.
In its commentary published on Saturday, Xinhua said EU fears of Chinese “trade diversion” due to US tariffs were “rooted not in economic reality but in political anxiety”.
Such a narrative “risks undermining one of the world’s most vital economic relationships,” it added.
The article cited trade data and think tanks to assert that China’s exports to the EU remained stable and were not significantly redirected from the US, with minimal sector overlap.
“If China were truly weaponising exports to circumvent US tariffs, the data would paint a starkly different picture. In reality, the EU’s alarm over trade diversion is grossly overstated,” it said.
China’s focus on domestic demand and economic reforms reduced the need for export diversion, the article emphasised, while urging the EU to deepen industrial cooperation and develop a long-standing, mutually beneficial bilateral relationship.
“As China and the EU mark the 50th anniversary of the establishment of diplomatic relations this year, it is worth remembering that decades of cooperation have made the two sides vital trade partners,” it said.
“By upholding multilateralism, defending fairness and justice, and resisting unilateral bullying, China and Europe can together meet global challenges, anchor globalisation amid turbulent times, and foster a more equitable and inclusive world.”