In EV trade row with EU, China calls on Spain to help ease 'anxiety'

China has condemned Brussels' investigation into its electric vehicles as trade protectionism and expects that Spain will be proactive in encouraging the European Union to engage in dialogue, while the Spanish side is also seeking opportunities for cooperation in vehicles and renewable energy between the two nations, according to its commerce ministry.

The European Union's investigation of Chinese EVs in the name of "excessive production capacity" is typical trade protectionism, Minister of Commerce Wang Wentao was reported as saying by the official Xinhua news agency on Tuesday.

"It's not [a matter of] excess capacity but [rather] anxiety," he said. "We hope that the EU and China can address each other's concerns through dialogue and communication."

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The minister said China wants to see Spain encourage the European bloc to maintain an open stance on green new energy.

In October, the EU launched an anti-subsidy probe into China's EVs, alleging that China is flooding the European market with cheap government-subsidised electric cars, at the detriment to local manufacturers.

Last week, the EU said it would postpone a decision on whether to impose punitive tariffs on China's electric cars until after parliamentary elections on June 9.

Wang's remarks on Monday were made with Carlos Cuerpo, the Spanish minister for economy and industry, in Madrid during the 29th meeting of the China-Spain Joint Economic and Industrial Cooperation Committee.

China hopes to increase trade and two-way investment with Spain, communication between small and medium-sized enterprises (SMEs) and their cooperation in third markets, Wang added.

Spain is willing to promote business between the two countries to explore further cooperation opportunities in areas such as automobiles, renewable energy, industrial machine tools and medical equipment, Cuerpo said.

Xinhua said they also discussed ways to facilitate the flow of people between the two countries, government procurements, and market access for agricultural and food products.

Electric cars, along with lithium batteries and solar panels, are becoming the new growth engine for the world's second-largest economy, with 2023's exports up nearly 30 per cent, year on year, gaining international market share.

Yet, the West's assessments of China's overcapacity problems and government subsidies for its new-energy sector have put manufacturers under more pressure.

Washington last month proposed increasing tariffs on Chinese EVs from 25 per cent to 100 per cent.

"It is always better to communicate than not. However, it depends on whether there are genuine exchanges and actions taken by China to mitigate the concern," said Gary Ng, senior economist at Natixis Corporate and Investment Bank.

"China will need to find ways to invest in the EU and create jobs without only exporting from its domestic production, as well as providing a competitively neutral environment for foreign firms to lower geopolitical tensions," he said.

Ng said that Chinese EV makers would inevitably face more obstacles globally as the concern comes not only from the EU but also from emerging markets, and that the country will continue to incentivise domestic purchases and invest further in improving export competitiveness and lowering prices to solve its overcapacity issues in the future.

"It is also possible for China to see further trade barriers in traditional sectors such as steel and building materials in the future," Ng added.

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