Electric vehicles (EVs) can become a trigger for a new trade war. As Europe is hitting China where it hurts the most by raising duties on China’s cheap and efficient EVs, China too is looking for soft targets in Europe.Last week, the European Commission, the EU’s executive arm, said the preliminary results of its ongoing investigation into Chinese EV subsidies show that the country’s battery electric vehicle value chain benefits from “unfair subsidisation” that hurts EU rivals. It said it plans to impose provisional tariffs of up to 38.1% on electric vehicles shipped from China. That’s on top of the 10% duties for all imported EVs. The commission took aim at three of the biggest Chinese EV players in Europe, saying it would impose extra duties of 17.4% on electric cars from BYD, 20% on those from Geely and 38.1% for vehicles exported by China’s state-owned SAIC.Also Read: Counterstrike! China eyes trade war targets across EuropeChina is now looking for pain points in Europe. It has just found one: the farmers, who carry a lot of political influence across Europe. While Chinese automakers have urged their government to hike tariffs on imported European gasoline-powered cars in retaliation for curbs on exports of Chinese-made EVs, China has found a more sensitive pressure point: the pork imported from EU countries. Chinese firms have formally applied for an anti-dumping probe into pork imports from the EU, the state-backed Global Times has reported,China finds a raw nerve China has been known to target food products in trade spats with other countries. The logic for Beijing is “because farmers losing out on China’s giant market has immediate repercussions for elected officials,” Even Pay, agriculture analyst at Beijing-based consultancy Trivium China, has told Reuters.”If pig by-products are hard to export to China, European producers will hardly find a new market massive enough to accommodate those products, which will have a certain impact on EU pig prices, further affecting the European farming end. Once affected, it will be difficult to recover,” an industry insider told Global Times.Europe’s farmer lobby will not take kindly to China’s duties on the EU pork. “This is of course not acceptable for us,” Ksenija Simovic, senior policy adviser for trade at Copa-Cogeca, Europe’s largest farmer lobby, told Politico. “The Commission should make sure that once again our sector is not the one picking up the bill for disputes concerning other sectors.”Leading EU pork exporter Spain on Monday said it was working with European Union officials to avoid damaging tariffs after Beijing said it would open an anti-dumping inquiry. China’s investigation appears mainly targeted at Spain, the Netherlands, France and Denmark, the three biggest EU exporters of pork to China.“The Chinese market is so crucial for the European pork sector. One reason is the size China has: The sheer volume of the Chinese market is so big, that no one can ignore” Joris Coenen, manager at the Belgian Meat Office, an export coordinating body, told Politico.In 2023, China imported roughly $3.5 billion worth of pork, and about half came from the EU, as per the Global Times report, Spain exported $865.3 million worth of pork to China, accounting for about 25 percent of China’s total pork imports in 2023, while Denmark exported $288.9 million worth of pork, accounting for 8.3 percent, according to the General Administration of Customs (GAC) of China. The Netherlands’ pork exports totaled $267.3 million and France’s reached $152.8 million. Industry insiders told Global Times that China imports pig by-products from the EU, including ears, noses, feet and other parts. These exports provide Europe with a massive market. Restricting or ending these orders would result in a significant loss of business for the European pork industry. China can find alternative sources such as Brazil and Russia for pork import.Pork may also be China’s way of sparing Germany, which is reluctant to hit Chinese EVs, while pressuring other EU countries, said Chim Lee, senior China analyst at the Economist Intelligence Unit. “Spain and France, which are major pork suppliers, were pro-tariffs,” he said.China has its hand on more soft spotsThings were different in the big trade war with the US, which featured sweeping penalties on both sides. This time, Beijing’s targeted playbook looks more like the one it deployed against Australia a few years ago — with the government and state media already publicly identifying specific products that could be about to get taxed, Bloomberg has reported.Besides food and agricultural goods, which have often been China’s target in trade wars, China can also choose a variety of goods which are not essential to it but mean a lot for the exporting country due to a large market China provides for such goods. One such product could be brandy. China was France’s second-largest brandy export market in 2023, according to data from the International Trade Centre. While the Chinese consumers can always find alternatives to French brandy, it may be hard for France to find alternative export destinations. France is also the largest European exporter of wine to China. The global wine market is in a historic glut right now, meaning growers elsewhere would rush to fill any gaps.Another soft target for China, as per the Bloomberg report, could be dairy products. New Zealand supplies about half of China’s dairy imports, while another third or so comes from the European Union. Denmark, Netherlands, Germany and France would all be affected by new barriers.(With inputs from agencies)
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