The Electric Surge: China's E-Car Export Boom to EU
Trade Tensions Loom as China's E-Cars Roll into the EU
This week we prepared a complementary issue of the newsletter entirely focused on the surge of China’s e-cars exports to the EU. Let us know if you liked it and if there is any topic that you would like us to explore in future complementary issues.
On March 5, the EU issued a regulation making imports of new battery electric vehicles designed for the transport of persons originating in the People’s Republic of China subject to registration.
The grounds for such regulation is to take the appropriate steps to register imports, so that measures may subsequently be applied against those imports from the date of such registration.
The European Commission claims it has sufficient evidence showing that imports of e-cars from China are being subsidised. The alleged subsidies consist, inter alia, of direct transfer of funds and potential direct transfers of funds or liabilities, government revenue forgone or not collected, and government provision of goods or services for less than adequate remuneration.
China vehemently refutes these claims, dismissing them as veiled trade protectionism. Electric cars, alongside lithium-ion batteries and photovoltaic panels, represent what China terms as the 'new trio,' emblematic of new productive forces emphasized by China's political leadership in recent statements.
Such a new trio combined represented $139 billion in exports for China in 2023, with each product ranking in the top 10. Among them, lithium-ion batteries occupy the 3rd spot with $65 billion, while photovoltaic panels and e-cars hold the 7th and 8th spots respectively, with $40 billion and $34 billion each.
As for e-cars, China Customs declares exports to the EU of about $13 billion FOB for 2023, while EUROSTAT reports EU imports with a CIF value of $10 billion. It's noteworthy that exports to the EU account for nearly one-third of China's total exports in this category.
The graph above is somewhat unusual. Beginning from May 22, the declared FOB price in China is significantly higher than the registered CIF price in the EU. See below.
Additionally, while almost 100% of EU imports in this category (HS code 8703 8010) are considered general trade, China presents a quite different breakdown. It considers that general trade accounts for only 46%, while processing trade and entrepot trade make up the remaining 54%.
The disparities in such figures and the substantial amounts involved undoubtedly necessitate a reconciliation.
In its opening argument in support of its decision, the European Commission refers to the number of 'pieces' traded. It compares two periods: October 2022 to January 2023 and October 2023 to January 2024. While our calculations do not exactly match the figures argued by the Commission, they are similar.
The reason for discrepancies may be that we utilize an open-source database: EUROSTAT, while the European Commission uses its proprietary database known as the Surveillance database. Access to the Surveillance database is restricted, with only a limited number of staff in the Member States and the Commission having access.
Anyhow, for your information, we compare the number of pieces traded for the category of electric cars (HS 8703 8010) over a period of four years.
If you've made it this far through this lengthy post, you deserve a scoop!
In Jan 2024, EU27 imports of electric cars from China were down 15% by value compared with Jan 2023
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