Exclusive disclosure Who is deliberately provoking a “trade war”?

In the past two days, Tan continued to release exclusive information in response to the European Commission’s preliminary ruling on the anti-subsidy investigation of electric vehicles in China, which attracted great attention from the Western media.

By following their reports, you can find that The information points cited most frequently by Western media are all related to China’s countermeasures:

When the BBC and the British “Daily Telegraph” quoted Mr. Tan’s report, they both used the relevant content as “Chinese automakers urge the Chinese government to increase tariffs on European large-displacement gasoline vehicles” as headlines;

　　Bloomberg and other media paid attention to Mr. Tan’s report that “the industry is calling for the ‘toughest measures’ against Europe” and the losses that European car companies may face;

　　The Wall Street Journal and Radio France Internationale are paying attention to the progress of China’s anti-dumping investigation of brandy in Europe as mentioned by Mr. Tan.

The European Commission itself is also paying attention to China’s movements. In response to China’s continuous counterattack signals, the European side stated:

The EU is unwilling to initiate a “trade war”, but China’s behavior is provoking a “trade war”.

The implication is, I can hit you, but you can’t fight back.

Today, the European Commission is still trying to claim that it is acting within the framework of the WTO, and it is also trying to pin the label of “initiating a ‘trade war'” on China.

Mr. Tan conducted an in-depth analysis of the positions of relevant European figures, followed up on reports from the United States and Europe, and uncovered the real driving force behind this dispute.

According to the European Commission, the reason for launching a countervailing investigation against China’s electric vehicles is that China’s electric vehicle industry “threatens” Europe.

Judging from the data, in the first four months of 2024, China’s electric vehicle market share in Germany rose to 40.9%, making it Germany’s largest electric vehicle importer.

It stands to reason that Germany should be the country that feels the “threat” and “impact” of China the most. However, Germany has always been opposed to the European Commission’s imposition of tariffs on Chinese electric vehicles.

Before the start of his recent visit to China, German Deputy Prime Minister and Economic Minister Habeck specifically released Germany’s attitude to the media:

“China is Germany’s partner in all fields.”

Germany, which is so closely related to China’s electric vehicles, does not feel “threatened”. So where does the “threat” come from?

The timeline can be pushed back to before the European Commission makes a decision.

Using big data means, Master Tan analyzed reports on “Chinese electric vehicles” from the media in 27 EU countries since 2023. On the day the European Commission announced the launch of a countervailing investigation into Chinese electric vehicles, there was an obvious peak in reports.

But looking at the reports for the whole year of 2023, the words “tariffs”, “investigations” and “subsidy” are not the themes of the media reports on “Chinese electric vehicles” in most countries in the EU.

Most reports still focus on the development of their own industries. Take the German media, which has the highest coverage among them. In 2023, the high-frequency topics reported by German media are “battery”, “growth” and “investment capital”. By 2024, topics such as “battery”, “transformation” and “high-quality development” will continue to appear.

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The German media pays special attention to the topics of “investment” and “growth”. Behind this is the transformation dilemma faced by German and even European car companies in the past year.

Due to the tightening of fiscal policy, the German government will gradually reduce consumer subsidies to encourage the purchase of electric vehicles in 2023, which will reduce market demand. At the same time, high inflation has kept the cost of manufacturing electric vehicles high in Germany. In this context, reducing the manufacturing costs of electric vehicles is the most effective way for European car companies, including German car companies, to achieve transformation.

Correspondingly, it can be seen in the data that the “high quality and low price” characteristics of Chinese electric vehicles have been mentioned in reports with high coverage rates by media in Germany, the Netherlands, and Ireland. European industry insiders even bluntly stated that without China, there would be “no energy transition.”

Through cooperation with China, it has sharpened its own cost control and production and manufacturing capabilities, which has become the choice of European car companies.

However, at the same time that European car companies were in trouble and struggling to seize transformation opportunities, the European Commission began to release news that it would impose additional tariffs on Chinese electric vehicles.

According to the European side’s explanation, the European Commission’s judgment that China’s electric vehicles pose a “threat” was obtained from media reports.

As mentioned just now, there is no relevant content in the reports on Chinese electric vehicles from the 27 EU countries. So what reports are these people at the European Commission reading?

During the same period, the American media mentioned this topic the most, with more than 113,000 reports.

The first peak of US media reports will be from March to April 2023. The original cause of the matter was that the United States and Europe wanted to discuss solutions to the problem of excessive subsidies in the United States Inflation Reduction Act that harmed the interests of EU industries. However, in their reports, the US media also began to “relate” to the so-called “subsidy” problem in China’s electric vehicle industry.

After this discussion, James Bachik, assistant director of the European Center of the Atlantic Council, a US think tank, was the first to mention the word “subsidy”. He said, “Reaching a consensus on diversifying the electric vehicle battery supply chain is an important step in US-EU relations.” “Any move to avoid a subsidy war makes sense.”

The word “subsidy” began to appear in European media reports on Chinese electric vehicles.

Subsequently, two senior European Commission officials revealed in media interviews that the European Commission’s department responsible for trade protection measures is discussing whether to launch a countervailing investigation into Chinese electric vehicles.

According to the excavations of professional organizations, a reporter named Stewart Liu of the European version of Politico is also cooperating to release the news that the European Commission will launch a countervailing investigation against China and that the European Commission will impose tariffs on Chinese electric vehicles. This has become a key communication node in the public opinion field.

What is interesting is that it is not only European journalists but also American media who are cooperating with the European Commission to release the news. And the American media took the lead in launching an information bombardment, setting off multiple rounds of reports that hyped the “subsidy” issue.

In comparison, the European media’s reporting peaked later. It was only after von der Leyen officially confirmed that he would launch an investigation that the European media focused on “Chinese electric vehicles” and “subsidies” for several days.

After the peak, it quickly dropped to dullness.

It seems that the topic of subsidies alone cannot attract much attention. Subsequently, U.S. consulting companies released reports one after another, saying that “imposing a 50% tariff on Chinese electric vehicles is a ‘necessary condition’ to stop Chinese automakers.”

These actions have become the “reasons” for the European Commission to initiate action.

But that’s not the whole story.

In order to find out the deeper thoughts of the European Commission, Mr. Tan found the actual operator of the anti-subsidy investigation against China.

Tan Zhu analyzed the reports about “China” + “subsidy” + “electric vehicles” in European and American media in the past year, and found that a person named Denis Redone was frequently mentioned among them.

He is the European Commission’s Chief Trade Enforcement Officer. A year before this position was established, the U.S. government announced a 25% tariff on steel imported from the EU and other places and a 10% tariff on imported aluminum on the grounds of national security.

After the tax increase, the EU’s steel exports to the United States dropped by 4.55 million tons compared with before the tax increase, almost halving. Since then, the EU has not found a new buyer, and the steel industry has been severely weakened.

These matters were originally the responsibility of the European Commission’s Trade Commissioner. The actions of the United States have sounded the alarm to the European Union, which needs a role with more experience in law enforcement.

The European Commission has also been labeled a “geopolitical committee”.

Behind this, what best reflects the change in the European Commission’s thinking is the core of the countervailing investigation—the understanding of “subsidies.”

Take the European Commission’s initiative to initiate an investigation as an example.

When countries set up proactive clauses in their anti-subsidy legislation, they do not intend to use it as a major means of relief. Ding Ru and Tan Zhu, who have long tracked the development of international subsidy rules, shared a detail:

The WTO free trade rules intentionally leave such a policy space for countries, which is a technical blank. Because if there are no reservations, countries will not be willing to join the WTO free trade arrangement.

In other words, the purpose of retaining the initiative to initiate countervailing investigations is to promote globalization. This can also be confirmed in the official statement of the European Commission. According to the European Commission, trade defense measures such as countervailing duties were originally intended to “maintain the EU’s open market and free trade.”

However, the European Commission’s understanding of trade defense methods is gradually deviating. This can be seen clearly from the development of the European Commission’s countervailing rules.

Ding Ru told Tan Zhu that, generally speaking, subsidies refer to direct financial support or tax reductions and exemptions from the government. However, since more than ten years ago, the EU’s investigation of China’s “subsidies” has gradually expanded to include power, land, loans, upstream raw materials provided by state-owned enterprises, etc. This has far exceeded the scope of traditional countervailing investigations and is also Abuse of existing WTO rules.

In 2020, the European Commission completed the world’s first third-country subsidy case—the provision of funding by Chinese state-owned enterprises to third-country enterprises was also deemed to be within the scope of the European Commission’s countervailing duties.

After this subsidy case, the European Commission began to legislate, and finally passed the “Foreign Subsidy Regulations” in 2023, which further included the investment of foreign companies in Europe into the scope of the European Commission’s countervailing inspection.

Precisely because the European Commission continues to expand the application of countervailing measures, it can be seen that in the past two years, the frequency and density of countervailing investigations against China by the EU have been the highest in history.

As the spokesperson of the Chinese Ministry of Commerce said, the EU continues to provoke trade disputes. Since 2024 alone, the EU has intensively introduced 31 trade and investment restrictions against China, including 25 trade remedy measures, and has also launched The Foreign Subsidy Regulation (FSR) investigation and the International Procurement Instrument (IPI) investigation have seriously interfered with China-EU economic and trade cooperation.

There is a special theory for the European Commission’s use of regulation to influence foreign companies and then regulate the market, called the “Brussels effect.” What it says is that the global competitiveness of European companies is declining. At this time, Europe can change the behavior of global companies and maintain Europe’s influence in the international community by investing in regulatory legislation.

Initially, the “Brussels Effect” was used in areas such as data privacy, because there are legislative gaps in these areas and there are legislative needs for regulatory rules. But in the field of countervailing, WTO rules already exist.

At this time, the European Commission proposed new anti-subsidy rules with strong protectionist overtones, and using the “Brussels effect” will actually only bring about the regression of international free trade.

The United States has learned from the European Commission’s expansion of the scope of countervailing duties and its abuse of countervailing duties. This year, the newly revised anti-subsidy regulations in the United States also include traceability to the market. Whether it is a company with Chinese investment or an upstream industrial chain that uses Chinese products, as long as it has some connection with China, according to the new anti-subsidy regulations, the United States can launch a countervailing investigation against the relevant company.

It can be seen that countervailing has become a rhetoric for imposing additional tariffs. And when tariffs are abused, a “trade war” will begin.

Of course China does not want to see such a situation. Mr. Tan learned that China has communicated with EU institutions and 16 member states including Germany and France more than 80 times through meetings, talks, phone calls, letters, etc.

But China is not afraid of such a situation.

On the contrary, Europe should think carefully.​