Ahead of the EU's Ruling, China Increases Hybrid Car Shipments Fivefold in July-August, Unaffected by Tariffs
Issue 165, Monday 30th September 2024
Cars and Tariffs
As the EU prepares to vote on new tariffs for electric car imports this week, China is celebrating its National Day holiday. Meanwhile, China has ramped up hybrid car shipments to the EU by fivefold, taking advantage of the fact that hybrids—plug-in or not—are still exempt from the pending tariffs, at least for now
By the end of July, EU data revealed that hybrid car imports were already growing rapidly by value, with a 47% increase in the first seven months of the year.
After reviewing China’s August shipments to the EU, which have yet to clear customs, we need to reassess our forecast for hybrid car imports. European car dealers report that cautious consumers are temporarily favoring hybrids over pure electric vehicles.
Putting tariffs aside, it seems China overestimated EU demand for pure e-cars, shipping far too many without securing final buyers.
The growing uncertainty surrounding imports of pork from the EU
We believe the anti-dumping probe China is conducting on pork imports from the EU is a red herring. No doubt, the results of the probe will be linked to the final EU ruling on China’s electric car tariffs.
In the meantime, imports from the EU dropped by 23% in the first eight months of 2024, falling to 731 thousand tons from 948 thousand a year earlier. While it may be risky to read too much into these figures, it appears that importers are hurrying to import pork from the EU preemptively, ahead of potential tariffs
China's Economy
With the quarter over, we're not rushing to estimate China’s GDP growth this time. As we noted in July, since the Third Plenum the market has taken a backseat—it’s now all about politics.
Just days ahead of the National Day marking the 75th anniversary of the People’s Republic of China, Xi convened an economic conference that signaled a deep sense of urgency and concern about the economy.
At the conference, Xi brought up the 'three exempts'—a concept already present in the Third Plenum official document—to clarify the circumstances under which cadres won’t face punishment for mistakes. Rather than encouraging new ideas and initiatives, we believe this will further paralyze the government machinery. One can easily imagine anxious Party cadres now questioning who will judge whether their initiatives were in good faith, experimental, or efforts to tackle something new and complex. Given the current state of affairs in China, advancing a GDP estimate is as random as the autumn weather just beginning.
From a trade perspective, one might conclude that it’s not trade wars or tariffs harming China. Rather, it’s its stubborn support for Russia amid Russia's outrageous invasion of Ukraine that is self-inflicting damage on its own economy.
Happy reading!
EU Imports from China: Value Down 11%, Volume Unchanged
Percentage of Car Types Exported from China to the EU by Trade Mode
It is worth noting that the only cars exported to the EU under the entrepôt trade mode are electric cars.
The EU's Growing Need for Heterocyclic Compounds: About One-Third Supplied by China
Shein, TEMU, and Similar Merchants on the EU's Radar
As mentioned in previous issues, the European Commission explores measures to control the rapid growth of Chinese online merchants.
Finbarr Bermingham explains it much better
China’s online retailers – including fast-growing internet merchants Shein and Temu – are in the cross hairs of EU authorities amid concerns about the volume and quality of their products flooding the European market.
Officials are studying a range of actions including the possibility of introducing customs duties on items that fall below the €150 (US$167) value threshold at which import taxes are applied.
EU Challenges China’s Dairy Probe at WTO; China Vows Compliance
On September 23rd, the EU Commission launched a consultation request at the World Trade Organization (WTO), challenging China's initiation of an anti-subsidy investigation into imports of certain dairy products from the EU.
The next day, China responded that it regrets the EU’s decision to challenge the case through the WTO dispute settlement mechanism, but the country will address the challenge in accordance with WTO rules.
China’s Christmas Exports Shift Gears: Online Sales Cannibalize Traditional Trade Channels
U.S Commerce Seeks Input on Ban of China and Russia-Linked Vehicle Connectivity Systems
BIS solicits comment on a proposed rule to prohibit transactions involving Vehicle Connectivity System (VCS) hardware and covered software designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of the People’s Republic of China, including the Hong Kong Special Administrative Region (PRC), or the Russian Federation (Russia).
China-Costa Rica: A Free Trade Agreement With Strings Attached
When China and Costa Rica implemented their Free Trade Agreement in the summer of 2011, it didn’t take long for China to do what it does best. Take a look at how Costa Rica’s trade balance with China has evolved.
The Central American country's deficit increased nearly threefold.
The China-Costa Rica Integrated Circuits Conundrum
One of those oddities that often pops up in China Customs data is that China reports significant integrated circuit imports from Costa Rica.
However, Costa Rica, by contrast, reports nearly no exports of integrated circuits to China.
China-Switzerland: When a Free Trade Agreement Falls Flat
On September 23, China and Switzerland began negotiations to upgrade the Sino-Swiss Free Trade Agreement (FTA). Chinese media, along with China’s Minister of Commerce and his Swiss counterpart, highlight the benefits of the deal. However, as we reported in August, let’s take another look at how Swiss exports to China have actually performed over the past decade under the FTA—excluding gold exports. Draw your own conclusions
Chinese Exporters’ Dream of Using Mexico as a Gateway to the U.S. Fades
In our August 26 issue—following the visit of Mexico's envoy to China—we noted that there was too much wishful thinking in believing that Chinese manufacturers could bypass U.S. tariffs by producing in Mexico.
The latest actions and announced plans from the U.S. Commerce Department make it extremely difficult, if not outright impossible
China’s Wine Imports: Fall Back to the Values Seen a Decade Ago
Despite the increase in 2024, the reality is that imports this year will be similar to those from over a decade ago.
Currently, Chilean wines, which make up 37% of the imported volume, represent only 13% of the imported value. This means the CIF price per liter is well below $2—imagine that! But that’s where the demand lies. The drop is largely tied to consumers' dim mood.
So-Called 'New Productive Exports' Lose Steam in August, Except for Low-Cost Goods
World Maritime Day
A trade-focused newsletter can't overlook the celebration of World Maritime Day on September 26. This year's theme is crucial: reducing greenhouse gas emissions from ships.
To our knowledge, specific rankings of maritime carriers by their actual greenhouse gas (GHG) emissions are not publicly disclosed as standardized data. However, industry reports often track overall emissions by ship type and global estimates, though they rarely break this information down by individual companies.
In 2022, Maersk reported approximately 34 million metric tons of CO2-equivalent emissions, while COSCO reported around 15.2 million metric tons. However, these figures are not directly comparable without considering several factors such as the number and types of ships, their sizes, the length of routes they cover, operational practices and others.