Solar panels, electric cars and microchips: the beginning of an EU trade war against China?

It looks like 2024 is set to be a year of EU probes and tariffs against Chinese companies. In February, the EU in its 13th package of sanctions against Russia included a few Chinese firms with the allegation they help Russia in its war with Ukraine. Last month, the EU announced that it has found proof that the government of China subsidizies electric vehicles from China and that more tariffs are on the way. Last week, it was the turn of the probe against large Chinese companies making solar panels.

So, under the Foreign Subsidies Regulation the EU launched in-depth investigation against NEVO Group including LONGi Solar Technologie GmbH, and on the other hand Shanghai Electric UK Co. Ltd. and Shanghai Electric Hong Kong International Engineering Co. Ltd. The reason being EU’s alleged evidence they had been subsidized by the Chinese state while bidding for the construction of a photovoltaic park in Romania.

Coincidentally enough, last Thursday the Trade and Technology Council (TTC) took part in Leuven whereby the EU and the US talked trade and cooperation and parroting. US Trade Representative Katherine Tai highlighted there threats from China menacing trade in the western world (aka US and EU) and that the two parties need to partner with each other to tackle them. Basically, the Representative didn’t innovate there but reiterated the standard US rhetoric of labelling China as a large trade competitor/rival, regardless of the gains US companies have historically benefited from exporting to China or that iPhones are made in China and so on and so forth.

Not to mention that high level rumours have it that China’s legacy chips in the semi-conductor industry are the next target of the EU/US joint front to curb reliance on Chinese technologies. In fact, the West fears there a dump in prices that will put Western chip makers out of business. Also, if China rules the chip making world, then there are allegations of threats against cybersecurity.

Some years ago, however, world prosperity praised globalization and reaped the benefits of an open world market. Obviously, China with its 1.4 billion population has been a huge market for both the US and the EU, selling premium brands from the West at high pices and increasing their turnover and GDPs. Basic economics teach us though that one cannot have it one way in capitalism, which means that it goes both ways, the West exports to China handsomely and China exports to the West too.

The so called “distortion” of the market that the Chinese electric cars, solar panels or legacy chips may do is none other but competitive pricing in capitalism. The European consumer will have the purchasing power to decide on a BYD electric car or a BMW just as the Chinese consumer decides to buy a BMW or a BYD car. The West of course knows all that but is keen to apply large tariffs et al. which means more taxes for the West and less business for China, with the latter being the overt and overarching goal as if the world market in 2024 is a zero sum game.

So, one might ask if this is capitalism still though, the great economic system that the West has been historically praising for as opposed to bad socialism. The answer is that this is a new economic system that is being promulgated in recent years by the West, and that is “protected capitalism” (The European Sting, 2024), as capitalism and protectionism go neck and neck nowadays. Hence, on the one hand we have the West’s “progressive” capitalists that want to block the exports of the conservative socialists from China but on the other hand the West wants to keep selling freely Teslas and BMWs in China? If this isn’t a paradox, then words have just lost their meaning in 2024.

The truth is that prosperity needs trade, imports and exports, the West is huge and China too. If someone in Madrid wants to buy a BYD because he cannot afford a Tesla, this is perfectly fine because this is how capitalism works. At the same time if a wealthy Chinese in Beijing can afford a Mercedes to show off, then he will do so too. Starting trade wars is a lose-lose business for all parties concerned and of course the consumer mostly.

Therefore, the EU should try its best to finally have its own trade policy instead of parroting the US, who see the globe as a huge enemy to its “state of the art” economy with the Guiness record debt of $34.4 trillion or its impeccable Biden administration that cannot walk straight or soon to be replaced by MAGA Trump who has been convicted for fraud with $355 million + interest…

A possible multi-layer trade war mix with China in cars, electric panels and microchips is bound to get China’s fierce trade reactions and so on, which will just shrink the global economy and bring a new crisis in the world, again and again. And the one to pay for the Brussels/Washington imperialism will be always the average EU citizen who will keep suffering from high prices at the supermaket for absolutely no reason whatsoever and all sorts of crises lurking.