Editor's note: Greetings! What an "information-packed" week! Chinese Commerce Minister Wang Wentao's visit to Europe focused on the EU's anti-subsidy probe into Chinese EVs. After his meeting with European Commission Vice-President Valdis Dombrovskis on Thursday, both sides called the talks "constructive" and "frank," agreeing to advance negotiations on price undertakings. Meanwhile, European Commission President Ursula von der Leyen introduced her new team, with Stéphane Séjourné replacing the dramatically resigned Thierry Breton. In addition, Europe's auto market also faced a blow, with EV deliveries down 69% in August. Dive into this edition of the CCCEU Weekly Update for the latest insights on China-EU dynamics. Enjoy reading and have a fantastic weekend!

Focus

This week, Chinese Minister of Commerce Wang Wentao's visit to Europe garnered significant attention as he engaged in discussions surrounding the EU's anti-subsidy investigation into Chinese electric vehicles. Minister Wang visited Italy, Germany, and Belgium, where he held talks with Antonio Tajani, Italy's Deputy Prime Minister and Minister of Foreign Affairs, as well as Wolfgang Schmidt, Chief of Staff of the German Chancellery. On Wednesday, Minister Wang hosted the "China-EU Electric Vehicle Supply Chain Roundtable" in Brussels, where he emphasized that China had entered the discussions in good faith and would remain committed to the negotiations until the very end. He also noted that should the talks fail, the responsibility would not lie with China.

On Thursday, Minister Wang met with Valdis Dombrovskis, Executive Vice-President of the European Commission and Commissioner for Trade. The two engaged in comprehensive and in-depth discussions on the EU's anti-subsidy investigation into Chinese electric vehicles. The two sides reached a consensus on advancing negotiations concerning price undertakings and reaffirmed their commitment to achieving a mutually acceptable resolution through constructive dialogue.

EU Officials Urge Avoidance of "Trade War" as Electric Vehicle Tariff Vote Is Delayed

European commentators remain cautious about whether Thursday's talk will lead to a breakthrough. Some have even suggested that "if China successfully blocks the tariffs, the future of the EU will face significant challenges." This week, Teresa Ribera, the newly appointed European Commission Executive Vice-President in charge of competitiveness, commented on electric vehicle tariffs in an interview with the Financial Times. She emphasized, "The main message is that it is important to avoid a clash, a trade war. We need to identify the best tools for how we can develop the car industry in Europe but also effectively avoid this trade war," adding that the European Commission's relevant departments are already assessing the issue.

According to a report by Politico, three European Commission officials revealed that a vote scheduled for September 25 on imposing tariffs on Chinese electric vehicles has been removed from the agenda. The report noted that if Thursday's talks between China and the EU failed to reach an agreement, China would seek to oppose the five-year tariffs through the EU's Trade Defence Instruments (TDI) Committee. In TDI matters, EU policy is rarely overturned. Earlier in the week, European media cited Commission insiders who stated that "there are currently enough votes to pass the anti-subsidy tariffs, but the situation is highly fluid."

Tariffs and New Emission Rules: Europe's Auto Industry Faces Dual Pressure

The additional tariffs on electric vehicles and increasingly stringent emission regulations have not only shaken consumer confidence but also exacerbated manufacturers' concerns about the future market. According to data released on Thursday by the European Automobile Manufacturers' Association (ACEA), new electric vehicle registrations in the EU in August fell by 44% year-on-year, with the market share dropping from 21% to 14%.

Faced with this weak demand, European automakers have been applying pressure on Brussels. On Thursday, ACEA, which represents major manufacturers such as Renault and Toyota, called for "urgent relief measures" of the 2025 emission standards and the 2035 ban on the production of new internal combustion engine vehicles. Manufacturers, while supportive of the shift to electric vehicles, argue that the current market remains too weak to meet the stringent targets. If this trend continues, automakers may be "forced to cut gasoline-powered vehicle production" to avoid multibillion-euro fines, further complicating an already challenging economic environment.

According to Financial Times, Italian Prime Minister Giorgia Meloni recently described the EU's 2035 internal combustion engine ban as "self-destructive," warning that it could destroy entire industrial sectors and cost thousands of jobs.

Amid the global green transition, China is negotiating pragmatically and in good faith to protect its businesses' rights. We hope that China and the EU will work together to reach a price undertaking agreement, fostering cooperation in trade and green capacity, and promoting the sustainable development of industries on both sides.

News

Von der Leyen reveals the new team of European commissioners

According to Xinhua, the President of the European Commission, Ursula von der Leyen on Tuesday revealed the proposed structure of the new European Commission, which is expected to be confirmed by the European Parliament for a five-year term in the coming months.

The vice-presidents include Teresa Ribera of Spain, Henna Virkkunen of Finland, Raffaele Fitto of Italy, Roxana Minzatu of Romania, Stephane Sojourne of France, and Kaja Kallas of Estonia.

Europe's Plunging EV Sales Prompt Carmakers to Seek EU Relief

According to ACEA, EV deliveries in the region's biggest car market fell 69% during August, leading to a 36% drop across the region, the European Automobile Manufacturers' Association said Thursday. The group urged the European Commission to take urgent relief measures ahead of 2025 fleet-emissions targets that could result in billions of euros in fines for carmakers that fail to meet them.

Spain's Industry Minister: China Key to Europe's Electric Mobility Industry

According to Bloomberg, at a Chinese-Spanish business event in Madrid on Thursday, Spanish Industry Minister Jordi Hereu emphasized the importance of China's role in developing Europe's electric mobility sector. "China is a fundamental partner to develop the electric mobility industry in Europe," Hereu stated, stressing that it would be "absurd" not to strengthen this relationship. He also noted that Spain will "always avoid extreme protectionism,"

Global transportation expo features innovative Chinese brands

Xinhua reported that Chinese vehicle manufacturers are showcasing their latest electric and hydrogen-powered technologies, attracting global industry leaders' attention, at the ongoing International Motor Show (IAA) Transportation 2024, in Hannover, Germany, with a focus on advancing climate-neutral logistics and transportation through innovative systems.

European Parliament Announces China Delegation, Chair to Be Elected in October

According to Table Briefings, the European Parliament has announced the composition of its China delegation on Thursday. It consists of 38 MEPs. The delegation chair will be elected in early October. The German European politician Engin Eroglu (FW), who was also a member of the delegation in the last parliamentary term, has the best prospects for the post.

Federal Reserve signals end to inflation fight with a sizable half-point rate cut

The Federal Reserve slashed its benchmark interest rate by half a percentage point, the first and the biggest cut since March 2020, when COVID-19 was hammering the economy. The cut amounts to a declaration of victory over inflation, which has come down from a peak of 9.1% in June 2022 to 2.5% last month. The Fed signaled that it will cut the rate by another half a percentage point this year and expects four more cuts in 2025 and two in 2026.

What are the experts talking about

The Dual Pathways of EU ESG Regulation and Its Impact on China — Sustainable Finance and Corporate Governance

Source: Institute of European Studies of  Chinese Academy of Social Sciences
Author: Jiang Feng'an

Environmental, Social, and Governance (ESG) represents a value system that balances economic, environmental, social, and governance benefits, promoting sustainable development. Since it was first introduced by the United Nations Global Compact in 2004, ESG has gradually gained international recognition. The European Union has the most stringent ESG regulatory framework, evolving from voluntary corporate participation to mandatory legal requirements, and has adopted a dual-pathway approach.

Under the sustainable finance strategy, the goal of ESG regulation is to build a sustainable financial value chain by enforcing mandatory disclosure of information and promoting the flow of ESG data across the financial value chain. In contrast, the ESG regulatory pathway under the sustainable corporate governance strategy shifts from focusing on the value chain to the more flexible concept of the "operational chain." This approach not only expands the scope of mandatory disclosures but also requires companies to conduct ESG risk assessments and remediation for specific business relationships within their supply chains. By aligning with core provisions of international human rights and environmental protection treaties, it clarifies corporate liability for damages.

Draghi's message: sharing economic sovereignty is hard but possible

Source: Bruegel

Author: Marco Buti & Marcello Messori

The significance of the report on the future of European competitiveness, drawn up by former Italian prime minister and European Central Bank governor Mario Draghi (Draghi, 2024), is that it offers a thorough diagnosis of the weaknesses and opportunities of the economic and institutional setting of the European Union. The report, published 9 September, rightly points out that, given the negative long-term demographic trends facing the EU and the lack of a common integrated policy on migration, the only driver of sustainable European growth is labour productivity, and mainly its elusive but crucial component represented by total factor productivity.

Draghi is also correct in stating that three conditions must be met to boost EU productivity: (i) the European economy must catch up technologically with the United States and China by implementing streams of innovation to feed both the digital and green transitions; (ii) the EU needs more start-ups, which will eventually scale-up and be able to attract the highly-qualified people who today are leaving Europe; (iii) meeting these objectives should be combined with the construction of a unified security and defence framework, which is not only a necessary response to the geopolitical conflicts at the EU borders but is also needed to protect value chains and guarantee the availability of technological inputs.

Please note: the English version of this issue is slightly different from our Chinese one. The views and opinions expressed in this article do not necessarily reflect the official position of the CCCEU.