Unlock the Editor’s Digest without spending a dime
Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly e-newsletter.
Brussels is planning to power Chinese language corporations to switch mental property to European companies in return for EU subsidies as a part of a harder commerce regime for clear applied sciences.
New standards requiring Chinese language companies to have factories in Europe and share technological knowhow might be launched when Brussels invitations bids for €1bn of grants to develop batteries in December, in keeping with two senior EU officers. The pilot may very well be rolled out to different EU subsidy schemes, they mentioned.
The necessities, whereas at a lot smaller scale, echo China’s personal regime, which pressures overseas corporations into sharing their mental property in change for entry to the Chinese language market. The standards may very well be topic to alter forward of the tender, officers mentioned.
The plans signify a part of a hardening stance from Europe in direction of China because it seeks to guard corporations within the bloc — topic to strict environmental laws — from being undercut by low cost and extra polluting imports.
Final month, the European Fee confirmed tariffs of as much as 35 per cent on Chinese language electrical automobiles, on high of an present 10 per cent levy. It has additionally launched stricter necessities for corporations making use of for hydrogen subsidies, decreeing that solely 25 per cent of components within the electrolysers used to make hydrogen may be sourced from China.
Folks near US president-elect Donald Trump have mentioned he’ll put strain on the EU to comply with his lead and erect extra limitations to Chinese language items and investments.
If Trump presses forward along with his risk of 60 per cent tariffs on Chinese language exports, Beijing would then be more likely to look to divert them to different areas such because the EU — which in flip would search measures to stem the flood.
“If we want to play along with Trump on some of his agenda then we need to decide what to do about China,” a senior EU diplomat mentioned.
However the transfer additionally comes amid deepening concern in regards to the weak spot of the EU’s economic system and the flexibility of corporations to fulfill formidable local weather targets with out counting on low cost imports.
Brussels has additionally launched home manufacturing targets into laws aimed toward boosting clear applied sciences adopted in Might.
Elisabetta Cornago, senior analysis fellow on the Centre for European Reform think-tank, mentioned the fee was “trying to find plenty of ideas” to shore up its commerce defences “against a possible flood or redirection of Chinese trade flows towards Europe”.
The elevated scrutiny of Chinese language know-how imports has already incentivised corporations reminiscent of China’s CATL, the world’s largest electrical car battery producer, to arrange so-called gigafactories in Europe. It has invested billions of euros into crops in Hungary and Germany.
Shanghai-based Envision Vitality can also be investing lots of of thousands and thousands of euros into services in Spain and France.
However in a closed-door assembly earlier this yr, China’s commerce ministry warned home carmakers in opposition to making heavy investments in Europe and suggested them to determine manufacturing traces within the continent solely for the ultimate meeting step, citing political uncertainty in Brussels, in keeping with an individual acquainted with the matter.
In the meantime, the EU’s personal battery champion Northvolt, based mostly in Sweden, is teetering on the sting of chapter because it struggles to ramp up manufacturing.
Batteries kind a major a part of electrical automobiles, accounting for greater than a 3rd of the associated fee, making battery provide chains crucial to the European automotive manufacturing business because it tries to transition to much less polluting fashions.
Cornago warned {that a} harder stance in opposition to Chinese language parts may backfire on the EU’s decarbonisation efforts.
“You are temporarily putting a trade protection shaped like innovation support . . . to support your industry but that isn’t bringing down prices for consumers,” she mentioned. The measure may add a “level of confusion over what the EU automotive sector should do to grow and compete with China”, she added.
The fee declined to remark.
Further reporting by Gloria Li in Hong Kong
