**From: Xia Ke Island |Original**: Mission of the People's Republic of China to the European Union
Recently, Fu Cong, head of the Chinese Mission to the European Union, was interviewed by Bloomberg and responded to hot issues such as electric vehicle investigation, anti-subsidy and anti-dumping, and "de-risking". Xia Kedao has made an excerpt from the interview record, let's take a look.
(Source: Mission of the People's Republic of China to the European Union).
**War is not what China wants
Bloomberg:China and the EU have recently announced the launch of anti-subsidy, anti-dumping and other remedial investigations, are the two sides heading for a war? How to avoid ** war?
Fu Cong:War is not what China wants, but we do have a high degree of concern about some of the measures taken by the EU. According to our statistics, there are currently 9 categories of Chinese products exported to Europe that have been subject to anti-subsidy or anti-dumping investigations by the European side, among which electric vehicles have attracted the most attention. According to reports, the European side is also considering similar measures for solar panels, wind turbines, biodiesel and other products.
China's opposition to these measures is protectionist in nature. We note that many of the subjects of the EU survey are related to renewable energy. In fact, Chinese and European companies have established a lot of cooperation in this field and have also formed joint ventures. The imposition of high tariffs or other restrictive measures will not only hurt the interests of Chinese companies, but also European companies, and even undermine the EU's green transition efforts.
There have been reports in the West urging the EU to exercise caution, calling on it to assess the impact of these measures on the EU's green transition goals. There is news that one of Europe's major political parties has proposed to abandon the goal of stopping the sale of internal combustion vehicles by 2035. If the EU restricts cooperation with China in the field of renewable energy, it will have a negative impact on the EU's green transition efforts.
I would also like to stress that China hopes to resolve the issue through amicable means, and that relief, high tariffs and even sanctions can only be the last resort. It is hoped that the two sides will be able to find a mutually acceptable solution through friendly consultations.
(Source: Xinhua News Agency).
The EU's countervailing duty investigation against China is very unfair
Bloomberg: The EV survey is the big deal. Do you think the EU's countervailing investigation against China is well-intentioned and serious? If the EU finally decides to impose tariffs, will China take countermeasures?
Fu Cong:First, representatives of some EU member states said that the EU launched an investigation into Chinese electric vehicles for political motives. I hope this is not the case. To put it bluntly, the EU's investigative procedures are not without their flaws. The initiation of such an investigation usually requires an application from an industry in the Union, but this time it was initiated by the European Commission on its own. Second, the EU side has very limited time for the Chinese side to prepare for the pre-filing consultations. Third, in terms of sampling, the EU only selected 3 local Chinese companies, deliberately excluding the company with the largest export volume to Europe in the Chinese market, which is a US-funded company in China; In the sampling of European companies, the top companies in production and sales were also deliberately excluded. This will inevitably distort the results of the investigation, which is very unfair to the Chinese side and needs to be addressed.
Bloomberg: But China has so far been cooperating with the EU.
Fu Cong:That's right. Despite the procedural flaws on the part of the European side, we are still consulting with the European side. Because we want to avoid a situation in which the two sides have to take the best measures against each other.
Bloomberg: In your opinion, will China react if the EU ends up imposing tariffs on electric vehicles?
Fu Cong:Hopefully this won't happen.
Bloomberg: We noted China's recent announcement of an investigation into EU brandy, which has been widely interpreted as a response and warning. Do you think other goods in the EU are also at risk of similar investigations, such as cosmetics, luxury goods, etc.?
Fu Cong:The investigation of brandy was initiated by China** in response to the application of China's domestic industry. EU brandy exports to China have increased sharply, and ** are declining rapidly. This is the reason why the Chinese side launched the investigation. The European side has been accusing China of providing various subsidies. But in fact, from 2020 to 2022, a total of 38 trillion euros in subsidies. If China follows the EU's example, many products could be the subject of investigation.
(Source: Internet).
Chinese electric vehicles are not "flooding" in the European market
Bloomberg: Do you think the EU is also subsidizing like China, so is it a double standard for the EU to restrict China** on the grounds of subsidies?
Fu Cong:Some form of subsidy is common practice. The United States has the Inflation Reduction Act, and many European countries have also implemented subsidies, either to supply industries or to consumers, all with the aim of stimulating their own industries. So it's unfair to blame China for subsidies.
As for whether China will give subsidies to certain industries, I would like to take the electric vehicle industry as an example again. China** only provides subsidies during the R&D phase, which is fully in line with WTO rules. But at the production stage, ** no subsidies are provided at all. It is unfair to accuse Chinese companies of accepting subsidies, or to imply that Chinese companies rely on subsidies to grow and develop. The reason why Chinese car companies, especially electric vehicle companies, can stand out is due to the ingenuity of Chinese scientists and engineers, as well as the hard and efficient work of Chinese workers, not because of subsidies.
Secondly, some European politicians blame China for overcapacity, saying that it is precisely because of China's overcapacity and subsidies that China's cheap electric cars are "flooded" in the European market. I don't think this assessment is fair. First of all, electric cars in China are not cheap. Chinese EV companies are targeting the mid-to-high-end European market, and their cars** are comparable to those produced in Europe and the rest of the world. Speaking of "flooding", according to EU statistics, China's exports of electric vehicles to Europe account for only 8% of the European electric vehicle market share. If this is also called "flooding", then what do you think of European cars that account for more than 20% of the Chinese market?
Bloomberg: But it's all made in China, isn't it?
Fu Cong:Now it is difficult to say which car was produced by **, as its parts and components can come from all over the world. I would like to emphasize that the figures of 8 per cent and 20 per cent just mentioned are different. 8% is just the share of Chinese electric vehicles in the European electric vehicle market, while 20% is the share of European cars in the overall Chinese car market.
The argument of overcapacity is even more untenable. Large companies don't just focus on the domestic market when designing their production capacities, but look globally. Last year, Germany produced more than 3.6 million cars, of which more than 2.8 million were sold abroad, but no one said that there was an overcapacity of German cars. It is unfair to baselessly accuse China of overcapacity.
China's new energy vehicles were unveiled at the Munich International Motor Show in Germany (Source: Xinhua News Agency).
The "de-risking" strategy is not good for the EU
Bloomberg: The EU often talks about "de-risking". What do you think when the EU**, European leaders, US leaders all use the same wording?
Fu Cong:The "de-risking" strategy has already hampered China-EU relations. We perfectly understand the desire of the European side to strengthen economic security, but the question is that the border is in **? How do you balance economy and security? This is a question that people need to think about further. For Europe to play a bigger role, it must have a strong economy. This can only be achieved by remaining open to the outside world. Europe has been a staunch advocate of globalization and a free economy in the past, but frankly, it is now more inward-looking and protectionist, which does not benefit the EU. That's how I think about "de-risking".
Bloomberg: So you think it's more of a different political strategy than a legitimate need to protect the chain and the economy?
Fu Cong:We understand the desire to protect economic security, but with clear boundaries. If you go too far, you will only eat yourself. China's reform and opening up has been very successful for more than 40 years, and one of the main lessons is that in order to develop, it must open up. Closing oneself off oneself and keeping others out of the door will not "protect" one's own economy, but will only harm oneself. The EU should recognize this. The EU's policy measures, such as the Investment Review Tool, show that it seems to perceive the factors undermining EU security as ubiquitous. If the EU excludes all external investment, especially from China, it will not be possible to achieve real economic prosperity. In addition, there is also talk about high-tech export controls. Many scientists and scholars have told me that China-EU cooperation in science and technology is a two-way street, and that preventing scientific and technological cooperation with China is not only detrimental to China, but also to the loss of the EU.
Another thing is the outbound investment review, which goes far beyond "de-risking". How can a ban on investment in other countries maintain one's own economic security or "de-risking"? For high-tech companies, how long can they thrive if they abandon the super-large Chinese market? It is good to see that many Member States are resisting the Commission's approach. Hopefully, common sense and reason will eventually prevail. We are willing to achieve win-win cooperation with the EU. Restricting mutual investment and high-tech exports would create a lose-lose situation for either side.
I would also like to stress that China attaches great importance to its relationship with the EU. At present, the world has entered a period of turmoil and geopolitical tensions. We believe that Europe is an important global power, both politically and economically.
(Source: Internet).
Never underestimate the ingenuity of Chinese scientists and engineers
Bloomberg: China also has a policy of self-sufficiency, and the president often talks about "self-reliance", and China and the EU are doing the same. This should be part of the sovereignty of States.
Fu Cong:Every country needs to think about its own security, and there is no problem with that, the problem is to draw the line at the **. We do need to be more self-reliant. The United States, with the support of some European countries, is cutting the ** chain against China in certain areas. The most obvious example is the lithography machine. In the face of "supply cuts", can China sit idly by? We certainly need to emphasize self-reliance, but that doesn't mean not cooperating with other countries.
There are doubts about China's "dual circulation" development pattern. China has a super-large market, and its economic development must first rely on its own market. **The President has repeatedly pointed out that we will actively cooperate with all countries, regions and enterprises that are willing to cooperate with China. We are taking various measures to attract foreign investment, the latest example of which is the visa-free treatment for seven European countries. We are willing to provide convenience for more tourists and business people to come to China. Since the second half of last year, China has also introduced a number of measures to improve the business environment for foreign investors.
As another example, China is the only country in the world to host an import expo. We hope that by holding the CIIE, it will provide a platform for potential foreign investors and exporters to showcase their products and technologies. It is an annual show that attracts a growing number of foreign companies, as well as American companies. China is not isolated from the rest of the world, and the days of isolation are gone.
Bloomberg: You mentioned lithography machines. It is clear that the Netherlands obeyed the pressure of the American side. Are you concerned about the EU adopting such an approach on a larger scale?
Fu Cong:Truly. The European Commission is making recommendations on export controls and wants to introduce them at EU level. I don't think this is a good sign and will hinder the scientific and economic cooperation between the two sides, as well as the development and progress of European enterprises. As I believe everyone knows, executives of the Dutch company ASML have complained about the restrictions on exports to China. Without the Chinese market, I don't know how long their dominant position can be maintained. Never underestimate the ingenuity of Chinese scientists and engineers
Bloomberg: Will China's recent visa-free policy be extended to the entire EU?
Fu Cong:The EU is calling for this, and I don't want to rule it out. There are now more and more countries enjoying visa-free access. I'm optimistic about that.