When it announced massive increases in tariffs on imports of electric vehicles from China last week the European Union offered Beijing a window of opportunity to avert a damaging full-scale trade war.
“Our objective is to engage China and get Beijing to course-correct and address the problems at their root,” the European Commission’s president, Ursula von der Leyen said at the G7 summit in Italy on Friday. It could also offer wider trade concessions. The EU had a €291 billion trade deficit with China last year. China could offer Europe greater market access in exchange for a gentler treatment of its EV manufacturers.
Increasingly shut out of the US, China needs the European markets for its exports if the manufacturing-led strategy it switched to after its property sector melted down in 2021 is to be effective and its economy is to grow at respectable rates. It can’t afford a full-scale trade war with Europe.