Editor's note: Greetings! This week, China and the EU are expediting negotiations on electric vehicle "price undertakings," aiming for a deal before the final ruling. Amid signs of easing tensions, the U.S. announced proposed regulations banning the import or sale of connected vehicles using VCS hardware or software linked to China or Russia. The EU appears to echo this move, with reports of a draft "ICT Supply-Chain Toolbox" to assess the "risks" of Chinese tech in the auto industry. Additionally, the European Commission plans to introduce new rules in December to limit Chinese hydrogen firms' competition. Meanwhile, Chery has delayed its production plans in Spain, assessing policy impacts on its imports for assembly in Europe. 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

"Price Undertakings" Negotiations in Full Swing

 On Thursday, Chinese Ministry of Commerce spokesperson He Yongqian stated that technical teams from China and the EU are working closely to negotiate a flexible electric vehicle (EV) 'price undertakings' solution, following the clear direction set during the meeting between China's Commerce Minister Wang Wentao and EU Trade Commissioner Valdis Dombrovskis on September 19.

Meanwhile, debates within the EU over EV tariffs are intensifying. According to a podcast released by Euraciv, at the industrial ministers' meeting in Brussels on Thursday, member states expressed differing views on the EV tariff. Spain made it clear that it does not want to "escalate" trade tensions, while countries like Sweden and Germany are still deliberating their positions. The report indicates that unless Germany can persuade enough member states to oppose the tariffs, it might abstain from the vote.

According to the podcast, Germany faces significant pressure, as it has strong automotive industry ties with China. Harsher EU tariffs could severely impact its car industry. Additionally, the uncertainty surrounding the U.S. election adds another layer of complexity; former President Trump has indicated that if re-elected, he would impose an additional 20% tariff on the EU. Currently, the U.S. has surpassed China as Germany's largest trading partner, and if trade tensions escalate under a potential Trump administration, Germany may "look towards" China.

At present, the European Commission has not disclosed the final tariff proposal to member states. On the one hand, this is to avoid prematurely revealing its position and intensifying debates with member states. On the other hand, the Commission may hope to reach an agreement with China to ease current trade pressures, as suggested by the Euractiv reporter.

Additionally, according to a Bloomberg report on September 25, the Commission's executive body stated that a "price undertakings" mechanism, which could serve as an alternative to tariffs, is highly complex. It must comply with WTO regulations, address the issue of Chinese "subsidies", and ensure EU supervision. Therefore, even if member states vote to impose electric vehicle tariffs in the coming days, negotiations are expected to continue. The Commission is currently working on including a clause in the legislative draft to allow ongoing negotiations, with a vote on this clause expected early next month.

Amidst Cybersecurity Concerns, EU Drafts "ICT Supply-Chain Toolbox"

While negotiations over electric vehicle tariffs are ongoing, the issue of "cybersecurity" in connected EVs has become another target. According to a Politico report on Friday, the EU is "slowly but surely" moving in sync with the U.S. in erecting barriers against Chinese connected-car technology.

On Monday, the U.S. Bureau of Industry and Security (BIS) announced a proposed rule to ban the import or sale of connected vehicles equipped with VCS hardware or software linked to China or Russia. U.S. National Security Advisor Jake Sullivan recently stated that the U.S. has discussed national security risks with multiple countries in the Indo-Pacific region, Europe, and North America. Several EU and Indo-Pacific allies, driven by national security concerns, are expected to adopt similar measures to enhance the security of the automotive supply chain.

On Tuesday, Margrethe Vestager, the EU's Executive Vice-President and the Digital Age and Competition Commissioner, echoed these concerns during an interview in the U.S., saying that connected cars "can register everything where it is, and it can also transmit that data to those who have access to the data." She added, "The EU's services are looking at this, also with our economic security experts. It's legitimate to look into whether or not that kind of technology can be misused when it comes to security issues."

The report mentioned that EU officials are working on measures to better understand and address the perceived risks posed by Chinese technology in cars. One potential route is the "ICT supply-chain toolbox" that EU cybersecurity officials are drafting, expected to be completed in the coming weeks. According to an anonymous source, connected by Politico, the document will include measures related to EV connectivity and renewable energy, similar to the previous 5G Security Toolbox that limited Huawei's development in the EU.

However, these "toolboxes" are non-binding, and their adoption will largely depend on the willingness of individual governments.

European Automakers Oppose the ICT Toolbox, Fearing New Supply Chain Crisis

The EU's collaboration with the U.S. on information security has sparked strong opposition from Europe's automotive industry. According to Politico, European industrial leaders have warned that U.S. measures could cause "significant pain" to Europe's automotive sector.

Under the proposed U.S. ban, European manufacturers could be forced to find new suppliers if they use specific parts in vehicles exported to the U.S. Additionally, brands like BMW, which imports its Mini and iX3 models from China to the European market, could also be affected by EU regulations. European carmakers are reluctant to engage in direct conflict with China, especially those like German brands that rely on the Chinese market for a significant portion of their revenue.

As negotiations on "price undertakings" progress and the drafting of the "ICT supply-chain toolbox" continues, the future direction of EU trade policy remains uncertain. CCCEU will closely monitor and report on these developments.

News

China to implement visa-free policy for Denmark

According to CGTN, China is to implement a visa-free policy for Danish citizens, Chinese Foreign Minister Wang Yi said on Friday.

Wang, also a member of the Political Bureau of the Communist Party of China Central Committee, made the remarks when meeting with his Danish counterpart, Lars Lokke Rasmussen, in New York.

Senior CPC official visits Germany

Xinhua reported Liu Jianchao, head of the International Department of the Communist Party of China (CPC) Central Committee, led a CPC delegation on a visit to Germany from Sept. 22 to 25.

During his visit, Liu attended the first strategic dialogue between the CPC and Germany's Social Democratic Party (SPD), the 13th party dialogue between the CPC and the Christian Democratic Union and the Christian Social Union (CDU/CSU), as well as the 186th Bergedorf Round Table.

China will follow WTO rules to handle EU's challenge of dairy products anti-subsidy probe

According to Xinhua, Ministry of Commerce of People's Republic of China(MOFCOM) on Monday said that it has received the consultation request that the European Union (EU) issued through the World Trade Organization (WTO) regarding China's anti-subsidy investigation into imports of EU dairy products.

In a statement, the MOFCOM said China regrets that the EU has challenged the case through the WTO dispute settlement mechanism, but the country will handle the challenge in accordance with relevant WTO rules.

China's Chery delays plan to build EVs in Spain on EU tariffs

Reuters reported on Friday that CHERY Automobile has pushed back a goal to bring electric-vehicle (EV) production to Europe by a year, after the European Union (EU) imposed provisional tariffs on EV imports from China.

The Chinese carmaker is now targeting output of its flagship Omoda 5 EV in Spain from October 2025, sources said. Chery is assessing how the tariffs will affect its plan to bring in partially built cars for final assembly, they added.

EU aim to block Chinese hydrogen tech in new auction guidelines

According to Bloomberg, the EU will take steps to exclude Chinese manufactured hydrogen electrolyzers from an upcoming auction.

The European Commission will conduct a second wave €1.2 billion auction through its hydrogen bank from Dec. 3, according to a statement Friday. The process will include new "resilience requirements" to help stave off Chinese competition in the nascent energy sector. Winning projects will have to limit the sourcing of electrolyzer stacks from China to not more than 25% of total capacity, the new guidelines stipulate.

China cuts reserve requirement ratio by 0.5 percentage points

According to Xinhua, China's central bank on Friday announced a cut in the reserve requirement ratio (RRR) by 0.5 percentage points for financial institutions.

Starting Friday, the weighted average RRR for lenders will come to around 6.6 percent, while those having already implemented a 5 percent RRR will not be involved, according to a statement of the People's Bank of China.

Nordics for Climate Action Kick-Off Meeting with Shanghai Climate Week

Nordics for Climate Action, in collaboration with Shanghai Climate Week, announced an upcoming series of sustainability events aimed at fostering public engagement in climate innovation at a press event in Shanghai on Sept 23.

Google launches EU antitrust complaint over Microsoft cloud practices

According to a report by CNBC, Google has complained to EU regulators that using Windows Server and Office products on non-Azure cloud infrastructure is difficult and prohibitively expensive because of Microsoft's licensing terms. This tactic of Microsoft has been alleged by Google to result in a curb in competition in the cloud computing industry, which is believed to be worth several billion dollars. Currently, Google is in third place in the cloud market, behind Microsoft and Amazon.

What are the experts talking about?

Reassessing the Role of the European Union in Global Climate Governance: A Historical Inquiry

Source: Institute of European Studies of Chinese Academy of Social Sciences
Author: Zhao Jizhou

In the past few decades, as the only integrated organization among the signatories of the UNFCCC (United Nations Framework Convention on Climate Change) and its Kyoto Protocol, the European Union has played a unique role in global climate governance. This is due to various internal and external factors that influence the EU's role compared to individual nation-states. This study applies role theory and reviews research on the EU's climate policies, taking "role" as the core concept and analyzing how "recognition" and "power" affect the foundational elements of the EU's role capacity. From this basis, the study focuses on the dual aspects of "opportunity" and "cohesion" that have influenced the EU's role in five distinct stages of global climate governance from the mid-1990s to the 2023 COP (Conference of the Parties) summit in Dubai. This historical analysis compares the key variables that have shaped the EU's role during these stages.

Simplifying EU law: a cumbersome task with mixed results

Source: Bruegel

Authors：Kamil Sekut J. Scott Marcus

A survey by the European Investment Bank (EIB) indicates growing concern on the part of businesses. 60.2 percent of large firms and 65.4 percent of small and medium-sized enterprises (SMEs) perceived business regulations such as licences and permits, together with taxes, as a serious impediment to investment. It is not surprising for businesses to complain about regulation, but in this case, we think that there are good grounds.

A study for the European Parliament on the impact of EU legislation such as the digital and green transitions on SMEs – which tend to feel regulatory burden the most – found that one should take seriously the concerns of SMES on "the introduction, in a short period of time, of a large number of new EU rules driving the digital and green transition [and] about the cumulative impact of the changes and the perception that rules may not be fully consistent in all cases". Even though many of the new measures include articles that seek to reduce the impact on SMEs, those provisions are only partly effective because SMEs are often suppliers to larger firms that are obliged to flow their obligations down to their suppliers.

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.