The European Union announced on Wednesday (June 12) that it will impose a maximum anti-subsidy tariff of 38.1% on Chinese electric cars, triggering concerns from the international community.
The Wall Street Journal reported on Thursday with the headline “Can China’s Export Machine Continue to Operate without Western Markets?” The EU’s new round of tariffs on Chinese electric cars is reshaping global trade. The key question for China is whether shifting its exports to developing countries will be enough to sustain its export machine.
Following the United States imposing a 100% tariff on Chinese electric cars and a 25% tariff on Chinese electric car batteries and components, the EU Commission announced on June 12 that it will impose anti-subsidy tariffs ranging from 17.4% to 38.1% on Chinese electric cars. The reason cited is the presence of unfair subsidies throughout the entire value chain of Chinese electric cars, which poses “foreseeable and imminent” harm to EU industries.
In response to trade restrictions from the US and EU, China is seeking new markets, with countries such as Russia, Brazil, Southeast Asia, and other low-income countries becoming its new targets.
Over the past two years, China’s exports to Russia have surged by 70% amid sanctions from Western countries against Russia. With China’s domestic car market rapidly transitioning to electric vehicles and facing an oversupply of traditional fuel vehicles, China has been exporting a large number of fuel vehicles to Russia.
According to reports, China is exporting different types of products than before. Data from Morgan Stanley shows that in 2023, new types of products including electric vehicles, batteries, solar panels, and mature process chips accounted for 8.5% of China’s total exports, up from 4.5% in 2018.
Affordable Chinese goods may be welcomed by many lower-income countries. Statistics show that in 2023, the sales of electric and hybrid cars in Brazil nearly doubled, with Chinese automaker BYD’s electric cars accounting for over half of Brazil’s total electric car sales that year. Chinese car manufacturers also lead in the sales of hybrid cars in Brazil.
Southeast Asia is a larger target for China’s exports. As of 2024, Southeast Asia and Latin America combined accounted for nearly a quarter of China’s exports, but still lower than the total of 29% to the US and EU.
The report mentioned that while many developing countries are generally relatively friendly towards China, they are still susceptible to domestic political pressures and may impose barriers on imports from China.