Editor's Note: This week at Davos, global leaders and industry leaders gathered to addresspressing issues while Donald Trump's return to the White House sparked a majorpolitical shift. In China-EU relations, SAIC, BYD, Geely, Tesla, BMW, and the CCCMEhave filed lawsuits against the European Commission's definitive countervailingmeasures on Chinese EVs. The EU referred China's patent licensing case to theWTO, while considering dropping its trade dispute over Lithuania. In Beijing,MOFCOM hosted a roundtable with European businesses to foster collaboration. Enjoyyour read!

Focus

The ongoing China-EU electric vehicle (EV) anti-subsidy dispute remains a focal point of bilateral trade discussions. On January 23, reports surfaced that SAIC, BYD, Geely, Tesla Shanghai, BMW China, and the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME) had filed lawsuits against the European Commission (EC) at the EU General Court. The companies are challenging the EC's final decision on imposing tariffs on Chinese EVs.

Documents from the EU's second-highest court confirm that BYD, Geely, and SAIC have formally contested the countervailing duties imposed on Chinese-made EVs. Media outlet Mlex reported exclusively that Tesla Shanghai, BMW, and the CCCME have also joined the legal action. At the heart of the case lies the EC's methodology for calculating subsidies, its interpretation of their impact on the EU market, and the harm attributed to European industries. On Jan. 24, the CCCME confirmed its legal action against the commission.

In October 2024, the EC imposed anti-subsidy tariffs on Chinese EVs for a five-year period. The tariffs, ranging from 17% to 35.3%, were applied based on the manufacturers, with Tesla Shanghai receiving a relatively lower 7.8% rate. Other cooperating companies faced a 20.7% average tariff, while non-cooperative firms were penalized with the highest rates. Since September 2024, China and the EU have engaged in intensive negotiations, holding talks in Brussels, Beijing, and via video conferences.

The European Commission said it has two months and ten days to prepare its defense, according to Reuters. Notably, Tesla Shanghai and BMW reportedly joining the lawsuit marks a significant development. EV makers in China, despite facing different tariff rates, are responding to what they view as the mounting pressure of punitive duties. The tariffs could force automakers to reconsider their export strategies, potentially hampering the EU's green transition.

For European manufacturers in China, such as BMW, the tariffs add yet another layer of complexity to an already competitive landscape. Firms like Volkswagen, which have built a "In China, for global" strategy, rely on the country's manufacturing strengths to stay competitive in global markets. Yet, despite accelerating the localization of EV production within the EU, high production costs remain a critical issue. The announcement of Volkswagen's historic layoffs and the closure of Audi's Belgian EV plant underscore the mounting pressures facing the European automotive sector. Given these circumstances, BMW's lawsuit against the European Commission comes as no surprise.

The European EV market is already facing challenges, with high prices and phasing-out subsidies contributing to sluggish sales in several member states. At Davos, an EU senior official floated the idea of subsidizing domestic EV sales while ensuring that Chinese manufacturers would not benefit. These moves raise questions about the EU's broader protectionist stance, which, despite its intentions, risks stymieing the very transformation it seeks to achieve in the green sector.

From an industry perspective, the China-EU EV dispute underscores the need for more open and cooperative trade relations. While the tariffs and selective subsidies might seem to protect European interests in the short term, they risk weakening the sector's competitiveness in the long run. Despite the tariffs, China's EV exports to the EU increased significantly in December, highlighting the growing demand for Chinese-made vehicles. This reality reinforces the urgency for both sides to move beyond protectionist impulses and focus on deeper collaboration to ensure a sustainable, competitive EV future for both Europe and China.

Hot Topics

Chinese vice premier urges tech innovations for global benefit

Xinhua reported, Chinese Vice Premier Ding Xuexiang has called for advancing artificial intelligence and other technological innovations to benefit humanity.

Ding, also a member of the Standing Committee of the Political Bureau of the Communist Party of China Central Committee, made the remarks during a session at the World Economic Forum (WEF) Annual Meeting 2025 in Davos on Tuesday. He was responding to questions from WEF founder Klaus Schwab after delivering his address.

China, Netherlands pledge to build open world economy, strengthen green development cooperation

Chinese Vice Premier Ding Xuexiang met with Dutch leaders on Wednesday and Thursday in The Hague. The two sides agreed to jointly promote an open world economy, and strengthen cooperation in various fields including green development.

This year marks the 50th anniversary of the establishment of diplomatic ties between China and the European Union (EU). The vice premier said China is willing to strengthen dialogue and deepen cooperation with the EU to promote the sound and stable development of the China-EU relations, and hopes the Netherlands will play a constructive role in this regard.

Von der Leyen now looks east: India and China as alternatives to Trump's America

Eunews reported that Ursula von der Leyen is looking for alternatives to Donald Trump's America, and the president of the European Commission is now thinking of China and India. It is a necessary move for the EU, which lacks finances and raw materials and is grappling with all-new growth needs and, therefore, less predictable. The choice, however, risks antagonizing the United States.

MOFCOM pledges to provide service guarantees for foreign enterprises to invest, operate in China

Global Times reported that, China's Ministry of Commerce (MOFCOM) will continue to provide a good service guarantee for foreign enterprises, including European enterprises, to invest and operate in China, Ling Ji, a vice minister of the MOFCOM, said on Tuesday when chairing a roundtable for European enterprises, soliciting questions and suggestions from European companies operating in China. Representatives from more than 70 foreign companies, including BNP Paribas, ENI, Roche Diagnostics, Novartis, IKEA, SAP, Traton and Nokia attended the event. Representatives from European business associations also attended.

Von der Leyen announces visit to India

Politico reported that, European Commission President Ursula von der Leyen will go to India for the first trip of her new term to shore up relations with the world's largest democracy, she said Tuesday. Speaking at the World Economic Forum in Davos, Switzerland, von der Leyen said Europe was an increasingly attractive partner from Africa to Asia.

Brussels to hold Chinese Spring Festival Fair on Jan. 25

Mark your calendars! A vibrant Chinese Spring Festival Fair is set to take place on January 25 from 10 :00 AM to 4 :00 PM at the iconic Parc du Cinquantenaire, promising a day of cultural celebration and excitement.

What are experts talking about?

China Tendencies and Policy Implications of Trump and His Second-Term Foreign Affairs Team

Source: Centre for Strategic and Security Studies, Tsinghua University

Authors: Diao Daming, Xi Qianhan

With Donald Trump winning the 2024 U.S. election and returning to the presidency, considerable attention has focused on the potential impact of his re-election on U.S.-China relations. Trump and his diplomatic team are notably hawkish on China, maintaining a strategically competitive stance. However, their approaches to key issues—ranging from trade and commerce, science and technology, and military security to Taiwan, human rights, climate change, and drug policy—exhibit subtle differences.

Trump himself emphasizes framing China as a "competitor," focusing on economic and trade issues. His preferred tools include tariffs and other economic measures, aligned with his goal of "making America great again." This transactional and selective approach positions him as a pragmatist. In contrast, his diplomatic team takes a more hardline stance, treating China as an "enemy" and advocating comprehensive containment strategies across multiple fronts. These "super hawks" push for a "New Cold War" mindset, favoring aggressive policies aimed at achieving a swift victory over China.

These differences likely stem from variations in personal backgrounds, political experiences, and ideological leanings. They will shape Trump's decision-making environment as he assembles his team, potentially creating friction and raising new China-related challenges during his second term.

Political contagion in Europe: can the European Union survive Trumpism?

Source: Bruegel

Authors:  Heather Grabbe Jean Pisani-Ferry

When economists talk about contagion, they usually refer to the propagation of shocks to other countries and regions through economic or financial channels. President Donald Trump's promised policies threaten shocks that will affect aggregate demand, prices and exchange-rates and create investor uncertainty. But Trump could also bring political contagion that harms the very functioning of the European Union.

Political contagion could arrive via several channels. The first is through Russian-style direct interference in elections. Second, Trump is changing the norms of international relations by loose talk of US takeover of Greenland or the Panama Canal, or the absorption of Canada. Third, Trump is taking up again his drive to weaken global institutions, through moves such as withdrawal from the Paris climate agreement and imposition of tariffs that undermine rules-based trade. Fourth, Trump is changing the norms of good corporate behaviour.

Europe's political leaders need to set the right expectations. Historically, there are many examples of economic effects of changes in the zeitgeist, with expectations driving widespread behavioural changes – from the 1930s depression to 1990s globalisation. The private sector followed the signals of political leaders to bring about structural changes in the economy. The response of European leaders to Trump's attacks on democracy, international norms and rule of law need to be robust and clear. In particular, the EU should not go soft on the Big Tech broligarchy. No less than the survival of the EU is at stake.

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.