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China is increasingly building its own production facilities in Europe and could thus also circumvent customs restrictions. This strengthens its competitiveness within Europe.
Berlin – The trade conflict between China and the EU on the import of electric cars is now entering the next round. The EU wants punitive tariffs, a vote on this will follow this week. Is China now building plants to avoid punitive tariffs? China’s investments in Europe have gradually changed in recent years: China no longer invests in Western know-how, but rather founds and builds itself. The big winner seems to be Hungary.
China is building plants in Europe: Punitive tariffs could risk trade conflict
Electric cars from China are cheaper than models produced within Europe. According to the EU, this leads to market distortion and it wants to introduce punitive tariffs. This recently led to tensions between Brussels and Beijing. A decisive vote is scheduled to take place on Friday. Germany could vote against it. Hildegard Müller, President of the Association of the Automotive Industry, sees the risk of a global trade conflict in a decision for punitive tariffs. That’s why the federal government must vote against the punitive tariffs, she warns. Other EU countries are also critical of the move.
Spanish Prime Minister Pedro Sanchez recently said during a visit to China that the EU needed to rethink its plans for punitive tariffs. Spain is also pursuing its own plans: The Chinese car manufacturer Chery is to revive a former Nissan factory in Barcelona and create a thousand jobs, writes Welt. Chery is also building one mega-factory after another in China. They also already have ten assembly plants in Africa, Asia and South America. And Europe follows. Foreign Minister Zhang: “If we are serious about our European commitment and our growth plans are working, then there should be no lack of capacity.”
Hungary is the winner when it comes to foreign investments in China: Western know-how is less in demand
“44 percent of Chinese direct investment in Europe went to Hungary in 2023. The Eastern European state attracted more Chinese investment than the three major economies of Germany, France and Great Britain combined,” writes the Mercator Institute for China Studies (MERICS) in a current study from June. Chinese companies in Hungary invested primarily in the e-mobility sector (69 percent). Overall, however, Chinese investments in Europe are declining and, at 6.8 billion euros, are at their lowest level since 2010.
And it turns out that the investment motivation has changed: While mergers and company takeovers fell again by 58 percent to 1.5 billion euros in 2023 compared to the previous year, investments in so-called “greenfield investments” increased, especially in electronics. Mobility industry – Chinese companies founded subsidiaries or built new production facilities themselves. This form of investment accounted for 78 percent in 2023 and “is now the predominant form of Chinese investment in Europe,” according to MERICS.
So it’s no longer about investing in future technologies or in Western know-how; rather, China is getting started in the West itself. And it could also be an answer to Western trade barriers such as the EU’s planned punitive tariffs. China could also avoid tariffs with construction in the future.
China is building several plants in Europe, especially in the electric car segment
The Chinese electric car manufacturer Byd is building a factory in Hungary, in Szeged, where electric cars will be produced from 2025, writes the Austrian Industrial magazine. It will also rely on Austrian suppliers such as Magna or AT&S. China’s largest automobile manufacturer is also said to be planning to build a factory in Europe to produce electric cars. It is said that the Galicia region in northwestern Spain is particularly interesting Car Motor and Sport – the decision should be made in the fall.
Car manufacturers from Germany reject the tariffs, saying they are a “wrong approach,” quotes the FUW a Volkswagen-Speaker – “They do not improve the competitiveness of the European automotive industry”. From the car dealership BMW it was said that economic success and prosperity in Germany depended largely on open markets and free trade. “But additional tariffs have exactly the opposite effect: they harm global companies in this country and can trigger a trade conflict that ultimately only has losers.” And Mercedes boss Ola Källenius also thinks little of the punitive tariffs. German car manufacturers are also affected by possible punitive tariffs, such as the electric BMW Mini or the Cupra Tavascan from VW, both of which are imported from China. This will involve top tariff rates of over 35 percent, which are in addition to the normal EU import tariffs of ten percent for cars.
