Chinese experts have strongly criticized US efforts to rope in G7 members to form a coalition of protectionism targeting Chinese emerging industries, particularly in the electric vehicle (EV) sector, at a G7 finance meeting in Italy later this week.
The experts argue that the US is unlikely to achieve its intended goals as it is not in the interests of some G7 member states with stronger trade ties with the Chinese EV sector and global green transformation processes.
US Treasury Secretary Janet Yellen on Thursday said that she wants market-driven countries to present a “wall of opposition” to China’s industrial policies, a key issue she is pushing at a G7 finance ministers and central bank governors meeting in Italy on Friday and Saturday, Reuters reported.
She said she was not asking countries to mirror US tariffs or closely coordinate their trade policy responses. “But we need to stand together and send a unified message to China,” Yellen reportedly said.
The remarks came amid the latest push by the US on its allies to unite against China’s “overcapacity.”
During a visit to Frankfurt, Germany on Tuesday, Yellen emphasized the need for the US and Europe to work together to address this issue in a “strategic and united way” to keep manufacturers viable on both sides of the Atlantic, Reuters reported.
Chinese experts said that Yellen is not likely to achieve her goal, as suppressing China’s new-energy sector is not in the best interests of other G7 members and would slow down global efforts to combat climate change.
Gao Lingyun, an expert at the Chinese Academy of Social Sciences, told the Global Times on Friday that while China exports few electric vehicles to the US, it has a stronger presence in the European market through joint ventures. The US’ tactic may have a limited impact on itself but a larger one on Europe.
Europe’s focus on climate and environmental issues is among the highest globally, and its entire new-energy industrial chain is closely intertwined with China. It is expected that other G7 member states will prioritize their own interests and strengthen cooperation with China, rather than align with the US’ agenda, Gao said.
Joining the US in suppressing China’s EVs would harm the interests of consumers of some G7 members such as Germany and France, where there is close cooperation with China on EV components, batteries, and charging stations, Zhang Xiang, Director of the Digital Automotive International Cooperation Research Center of the World Digital Economy Forum, told the Global Times on Friday.
This could lead to an increase in the prices of EVs in their domestic markets, potentially causing consumers to switch back to traditional gasoline vehicles and hindering the progress of emission cutting efforts, Zhang said.
Data showed that in 2023, China exported some 1.2 million new-energy vehicles, with Europe accounting for 38 percent of the total export volume, demonstrating the unique market position of Chinese EVs in Europe. The domestic electric vehicle market in the US is mainly dominated by local brands, with few Chinese exports.
Refuting ‘overcapacity’ narrative
Yellen’s call for G7 unity comes at a time when the US is intensifying its crackdown on China’s new-energy industry and imposing additional tariffs on a variety of Chinese products, with some going into effect on August 1.
The tariff hike has been criticized by a number of business representatives and is expected to have a significant impact on the global green industry.
Tesla founder Elon Musk told tech investors in Paris on Thursday he opposed US tariffs on Chinese electric vehicles (EVs), Reuters reported.
“Neither Tesla nor I asked for these tariffs, in fact I was surprised when they were announced. Things that inhibit freedom of exchange or distort the market are not good,” Musk said.
“Tesla competes quite well in the market in China with no tariffs and no deferential support. I’m in favor of no tariffs,” he added.
In a latest development, Tesla’s Shanghai Megapack energy storage plant broke ground on Thursday, another major investment from Tesla in China following the inauguration of its Shanghai Gigafactory in 2019, offering a vivid example of China-US win-win cooperation that rebuts Washington’s “overcapacity” hype.
Musk’s comments represent the voice of the industry and send a clear signal that tariffs are detri-mental to both sides, Gao said.
In addition to Tesla, European automakers have briskly increased their investment in the Chinese market for greater opportunities, blasting Washington’s false “overcapacity” narrative.
German automaker BMW Group announced in April that it plans to invest an additional 20 billion yuan ($3.12 billion) into its production base in Shenyang, Northeast China’s Liaoning Province.
Volkswagen also announced in April it would invest 2.5 billion euros in its innovation hub in Hefei, East China’s Anhui Province, as the company is further increasing its pace of innovation in China, its key market.
There is no “China overcapacity,” and the real purpose of the US is to hold back China’s high-quality development, Gao said, adding that the US’ strategy of seeking allies to suppress China only shows its inefficiency in the field of new energy development, which will ultimately hinder global efforts to address climate change.
China’s Foreign Ministry spokesperson on Tuesday slammed the US push to use “overcapacity” as a pretext to “coerce G7 members into creating fences and restrictions for Chinese new-energy products.”
“This could mean building a coalition for protectionism that is completely against the trend of the times, which calls for openness and mutual benefit. It will not only hurt the consumers in those countries but also impede the global green transition,” Wang said.
Wang reiterated that China stands ready to work with all countries to deepen cooperation on new energy industrial and supply chains, and promote tech innovation and industrial development. We hope that countries will embrace open cooperation, reject protectionism, strive for win-win and prevent lose-lose, he said.
