An Idea for the EU’s New Year’s Resolutions

This article is an editorial contribution by Ms. Wen Ying, a freelance writer based in Beijing with a focus on the Chinese economy. The opinions expressed within reflect the writer’s views.

It is that time of the year again—making plans, setting goals, and envisioning a better self. 

But it is always a good idea to stay realistic. That is why I have started my list with a very achievable goal: Go to Copenhagen and explore the incredible city on one of those red and yellow e-buses running in the streets.

Yes, with a fleet of 13-meter-long electric buses, Copenhagen—the famed green capital of the world—is partnering with the Chinese carmaker BYD (“Build Your Dreams”) to make public transport even greener. 

In fact, Denmark is not alone. Belgium, Germany, France, Greece and a number of other European countries are embracing electric vehicles (EVs) from China. 

The EU, a longtime leader on green issues, has found China an impactful partner for its climate goals. China’s strength in EVs can make a real difference for the EU’s efforts to deliver its Green Deal, especially the Fit for 55 package, which stipulates zero emissions for cars and vans by 2035. In 2022 alone, European countries imported 393,000 EVs from China. As each can help save 1.66 tons of emissions a year, the EU is looking at a reduction of around 660,000 tons of carbon emissions from the fleet. 

China is also a leading producer of solar panels. And the EU is aiming to raise the share of renewable energy sources in the overall energy mix to at least 40 percent by 2030. The 62 gigawatt of solar panels imported from China in the first half of 2023 can generate as much electricity as by 6.7 billion cubic meters of natural gas, greening power supply for 18 million European families. 

As well as being good for the planet, Europe’s green cooperation is also good for corporate balance sheets. In 2022, greenfield investment became the dominant form of Chinese FDI into Europe for the first time since 2008, according to a report by Rhodium Group and MERICS. Behind the rise is growing investment in EV-related industries. CATL, a leading Chinese manufacturer of new energy products, is working on its plans to invest over 7 billion euros in building a battery factory in Hungary. About 9,000 job opportunities are expected to be filled by locals. Volkswagen has bought around 5 percent of Chinese EV firm Xpeng’s share, allowing the two to jointly develop automobiles for both the European and Chinese markets. The German firm also increased its stake in Gotion Hi-tech, a China-based battery maker, for stable supply of lithium batteries so that it can secure a leading position in the global EV market.

A year of rewarding partnerships indeed.

However, all of this is at risk of being knocked off course by ill-advised regulatory interventions. Nearing the end of last year, the European Commission launched an anti-subsidy investigation into the imports of battery electric vehicles (BEVs) from China, and the European Commission president seems to be pushing a narrative of “Chinese overcapacity in the clean tech sector”, sending signals of possible sector-wide probes or even trade restrictions.

Grounds for the probes are unclear. No formal industry complaint has been lodged, no convincing evidence has been produced, and no answer has been provided as to their legitimacy under WTO rules. All we are given are politicians chanting “unfair competition”, risks of working with China, and “China is a challenge”.

The overcapacity argument is dubious at best. Cleantech remains an urgent need in many parts of the world. Even as the EU aims at having 40 percent of clean technologies produced within the bloc, there is still a shortfall of 60 percent that can only be closed with products from other sources. 

While the rationale for sounding alarms against China’s green products looks shaky, the damage is very real. A chilling effect on the business community is palpable, dampening confidence, disincentivizing much-needed investments, and threatening to block healthy competition which is good for the European auto industry. 

As we enter 2024, “curbing climate change” remains a high priority on the EU’s wish list. To make it a realistic goal, the EU would do well to summon the courage to stay above politics, ideology, anxiety or whatever it is that stands in the way of sensible judgment. Perhaps a better start for its New Year’s resolutions is this: Embrace healthy cooperation and competition. 

About the author

Wen Ying is a freelance writer based in Beijing with a focus on the Chinese economy; the author can be reached at ywen00906@gmail.com.