Why the EU Wants a Trade War with China

this video was brought to you by ground news cars are a part of Europe's economic identity and that's because most large European countries have domestic car Industries and certain brands have become if not points of national pride at least household names unfortunately for Europe however China's recent rapid rise as a car exporter especially with electric vehicles threatens to put many of these Brands out of business which is why the EU is currently considering starting a trade war with its biggest trading partner to protect its domestic industry so in this video we're going to take a look at China's rise why European politicians are so anxious about it and whether it's even feasible for Europe to protect its car industry [Music] so the proximate cause of all of this drama is China's recent and Rapid rise as a car exporter now there's actually a companion video to this topic over on the tldr global Channel where we'll discuss this in more detail so go and watch that if you want to know more but the trdr is that as recently as 15 years ago China didn't really have a domestic car industry and until just a couple of years ago the cars it did produce weren't really sold abroad or exported this is basically because the Chinese car companies weren't very good at making bog standard combustion engine cars or at least not as good as the German and Japanese car companies that dominated the industry however over the last couple of years as Chinese car companies have got better at building combustion engine cars and especially electric and hybrid vehicles China's car exports have shot up in 2021 China's car exports basically doubled going from 800 000 to 1.6 million then just last year China overtook Germany to become the second biggest exporter After Japan and then promptly overtook Japan to become the biggest exporter of cars in the first quarter of 2023 official figures claimed that China exported 1.07 million vehicles in that period up 58 percent compared to the first quarter of 2022 and about a hundred thousand more than Japan now most of these cars ended up going to Asian Nations but a non-trivial number are sold in Europe and the vast vast majority of those sold in Europe are electric cars including Teslas made in shanghai's gigafactory now this is provoked real anxiety within the EU with many member states worried that this sudden influx of cheap Chinese manufactured elect Vehicles will undercut European producers and possibly even put them out of business so early this month Politico reported that the block was considering starting a car focused trade war with China in order to protect Europe's domestic automobile industry with French president Emmanuel macron being particularly keen on the idea macron is essentially arguing that China isn't playing fair and that China's generous State subsidy regime makes it impossible for European manufacturers to compete with China's unfeasibly cheap cars some European officials have even accused China of dumping its EVS into the European market for context dumping is basically when country a deliberately floods country B's Market with super cheap Goods usually heavily subsidized in order to put companies in country B out of business in fact China did exactly this with steel in the mid-2010s they deliberately dumped a whole load of super cheap Steel on the market to bring down prices and even though that meant that Chinese steel producers temporarily took a loss it was ultimately in an attempt to bankrupt European and American Producers to consolidate China's control over the international steel market and macron suspects that China is trying to do something similar with EVS trying to flood the European market and squeeze out once dominant European manufacturers now at this point you might be asking why are European politicians so worried about cars why is macron even considering starting a trade war with the eu's largest trading partner just because European consumers like cheap Chinese EVS well sometimes this myopic focus on one industry can feel a bit like when British politicians were obsessing over fishing in the run-up to brexit which could sometimes look a bit shallow if not silly but European politicians obsession over cars is actually pretty understandable when you consider quite how enormous an industry the car industry has been and will probably continue to be for many Western countries including the UK US and Germany cars are actually their number one import by value ahead of even big Commodities like oil and the global automotive industry raked in nearly three trillion dollars of Revenue last year and politicians across the world including in the US and China are especially keen on maintaining their domestic car Industries at the moment because the electric vehicle business is expected to be huge in coming years the numbers vary but Bloomberg for example expects the EV industry to be a 46 trillion dollar market by 2050. politicians therefore hope that a domestic EV industry will help nurture other domestic green Industries like battery manufacturing and green hydrogen production and that these industries will provide the country with a whole range of jobs and growth all while reducing strategic dependencies as part of a more General move towards friends Shoring or onshoring but that being said European politicians are particularly anxious about maintaining their car Industries for a couple of Europe specific reasons for starters the car Lobby wields significant political power especially in places like Germany in part because the fate of politicians in car producing regions basically depends on keeping car companies and their workers happy more pertinently Russia's invasion of Ukraine and the accompanying disruption to Europe's gas and oil supply have made Europeans particularly wary of energy dependencies European politicians therefore worry that if they don't protect their domestic EV industry they won't be able to have a domestic battery industry and this will leave them dependent on China for a key component in renewable energy generation and this will make Europe's sort of indirectly energy dependent on China and other battery producers in a similar way to how Europe became energy dependent on Russia in the hydrocarbon era Europe is also particularly anxious about the threat of de-industrialization cars and heavy industry are a part of Europe's economic identity especially in Germany but thanks to the continent's relatively High Energy prices and Biden's inflation reduction act industry is already moving to America therefore Europeans are understandably anxious about the prospect of simultaneously losing industry to both America and China which would accelerate deer industrialization that's already proven to be economically and politically difficult but while European anxieties might be understandable there are no easy answers here imposing anti-dumping measures on China would almost certainly provoke a reaction which could escalate into a full-on trade war and this would clearly be bad news especially for German car companies who have invested so heavily in China which is why Germany has been reluctant to follow France's lead on this issue furthermore it's not clear that this is a sustainable strategy while China clearly isn't playing Fair Europe will continue to struggle competing against China and America's industries and to be fair Europe's car companies have been conspicuously slow to adapt to the electric vehicle era all in all while European anxieties about de-industrialization are well founded protecting Europe's car industry will be expensive and possibly futile ultimately though the economics of issues like this are often complex and nuanced and as such our goal at trdr has always been to try and shed some light on these stories so that you can better understand what's going on in the world around you unfortunately though many news outlets use this complexity and 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Channel: TLDR News EU

Views: 223,087

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Id: cNmE_-JaM0M

Length: 10min 40sec (640 seconds)

Published: Fri Jun 30 2023