EU-China: A Trade Conflict in the Making
Issue 147, Monday 27th May 2024
China Deploys Its Own Lobbyists in Brussels to Announce Tariff Hikes
The presser shared by the China Chamber of Commerce to the EU (CCCEU) states that
the Chamber was informed that in response to EU´s successive subsidies related investigations targeting Chinese enterprises China has sufficient countermeasures at its disposal
Agriculture and the auto industry are in the crosshairs, the CCCEU says. A majority of CCCEU members are state-owned Chinese companies.
EU Exports to China Drop 7% in Q1
Disturbing Figures of China's Imports from the European Union
China's Year-on-Year % Imports from Top Suppliers
China Importing Semiconductor Machinery Like There's No Tomorrow
This is what China Customs reports, believe it or not
China's E-car Exports to EU Decline 18% in First Four Months of 2024
Of its total e-car exports, 36% by value goes to the European Union
China's E-car Exports by Trade Mode
Data is for the first four months of 2024.
A Discrepancy That Persists
China's PV Industry in Price Competition Spiral. Exports of Photovoltaic Panels Drop 30% by Value
However, exports increased some 20% by volume. Chinese industry reports that silicon prices for rods and wafers are down the hill. For most companies, the more they sell, the more they lose.
The China Photovoltaic Industry Association (CPIA) called this week for action to reduce the downward spiral of prices and overcapacity, aiming to stop what they label as vicious competition.
At Odds Regarding Overcapacity
China calls on its media, think tanks, and academics to counter accusations of overcapacity. In the heated exchange of arguments, it's inevitable that some arguments are specious in nature.
Ding Weishun, a researcher at the Ministry of Commerce, suggests that we should consider supply and demand issues globally. While we mostly agree with him, it's important to note that he overlooks the appropriate context:
Out of China's total exports, a significant 30% is directed towards the EU and the U.S. combined. The remainder is shared among approximately 170 other countries. However, imports from the EU and the U.S. represent only 17% of China's total imports.
EU Agrifood at Risk
The EU is aiming to increase its agrifood exports beyond the temporary boost in meat exports caused by the ASF outbreak in China. For example, in Q1 of this year, overall agrifood exports to China increased by 30%, while meat exports remained flat. In the category of wines, much cherished by the EU, exports to China also increased by 14% in Q1, both in value and volume.
However, current tensions between the EU and China might disrupt the EU's plans for agrifood as a whole. Meat, dairy, wines, cereals, and other products could become victims of the trade crossfire.
More on this in the May issue of MERICS Europe China 360°. Check it out.
China's Trade-in-Services Deficit Amounts to $60 Billion in Q1
The deficit in Q1 increased by 34% compared to a year earlier, driven by a rise in imports of travel services. Value-wise, outbound travelers' expenditures outpaced those of inbound travelers by 8 to 1.
While Chinese citizens resumed their travel abroad to pre-COVID levels, the return of inbound travelers to China has not yet occurred.
However, the World Tourism Organization reports that international tourist arrivals surged to 97% of pre-pandemic levels in the first quarter of 2024. Not the case of China.
Chinese Appetite for Gold Reaches All-time High
The demand is equivalent to every single Chinese citizen storing $100 in gold per year.
Freight Index Based on Settled Rates Shanghai to Europe Surges 22% in One Week
Covid Shipper Capitulation
That's the expression used by a cargo director according to The Loadstar. Mountain container shortages are creating havoc.
It is reported that there is a lack of empty 20' containers across ports in China.
In Shanghai, almost all carriers are lacking empties. Vessel waiting time at the port is now three to 14 days. Across almost all carriers, we are seeing schedule delays
Bonus: What Are the Chances?
It's clear that Milei's refusal to join BRICS upset China, especially since Xi Jinping himself announced the expansion of BRICS with Argentina at a meeting in South Africa last August. It was a miscalculation on Xi's part.
Unsurprisingly, China's imports from Argentina abruptly dropped by 34.7% since Milei confirmed it would not join the bloc. What's more curious is that China's exports to Argentina also decreased by exactly the same percentage, 34.7%. What are the chances?
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