Sander Tordoir<\/p>\n
Chief economist at the Centre for European Reform<\/p>\n
Berlin\u2019s \u201cnein\u201d in the vote on introducing EU tariffs<\/a> on Chinese electric vehicles came despite the fact that the European Commission was following World Trade Organisation\u2019s rules to offset China\u2019s automotive subsidies. Chancellor Olaf Scholz appeared to be protecting the short-term export interests of German car manufacturers and may have hoped to divert Chinese retaliation toward exports like Spanish pork or French brandy.<\/p>\n But his decision signals two strategic risks. First, Berlin must weigh the exposures of its firms operating in China\u2014and their still sizeable but declining exports\u2014against the threat that Beijing poses to Germany\u2019s long-term future as a manufacturing hub. Few Western countries\u2019 industrial structures overlap more with China\u2019s emerging one than Germany\u2019s.<\/p>\n Second, If Germany pushes for a minimum price instead of tariffs, as China is still advocating, it would demonstrate that Beijing was able to force the EU to back down. This could backfire, as it would make it harder for European Commission President Ursula von der Leyen to collaborate with the United States on China in exchange for more support for Ukraine while also potentially negatively impacting Germany\u2019s access to the U.S. market, which has overtaken China as Berlin\u2019s largest trading partner.<\/p>\n Over time, Berlin may find itself thanking its true friends and more principled free-trade bulwarks like the Netherlands or Ireland for avoiding a strategic blunder.<\/p>\n Abiga\u00ebl Vasselier<\/p>\n Director for Policy and European Affairs at MERICS<\/p>\n Germany is expected to play a leadership role in shaping the EU\u2019s China policy due to its unique economic and trade relationship with Europe\u2019s second trading partner. So far, Germany has fallen short of expectations, using its political weight to support the European agenda but not driving it.<\/p>\n Germany\u2019s decision to vote against<\/a> EU tariffs on Chinese electric vehicles instead of abstaining is a clear signal that Germany has growing concerns over the politicization of the trade relationship which could lead to a trade war with China. The visible fragmentation of the German political landscape and business communities also shows that like in many other member states, there is more work to be done on coherence, cohesion, and derisking. Following defeats in local elections and pressure from German industry, the chancellery chose to prioritize national considerations over European interests. Given Germany\u2019s importance, this is a serious setback for European cohesion.<\/p>\n In such a context, it is difficult to see a German strategic culture and leadership role emerging. Regardless, the German vote is part of a constellation of twenty-seven national interests and on October 4, Europe came across as united on imposing countervailing duties on Chinese electric vehicles. This makes Europe more consequential in its relationship with China.<\/p>\n Daniel Gros<\/p>\n Director of the Institute for European Policymaking at Bocconi University<\/p>\n The vote on EU tariffs on Chinese electric vehicles (EVs) is not the first time that Germany is outvoted in the Council. It happens quite often. For the German government this serves as a healthy antibody to the notion that Germany dominates the EU.<\/p>\n The proximate reason for the German vote was to show support for its domestic car makers that are heavily invested in China and maybe provide a nod to China that it wants to keep the EU market open. But instead of focusing on the political symbolism, one should concentrate on the substance of the issue, which is simply that taxing imports of EVs made in China is bad economics and bad for Europe\u2019s green transition, which can succeed only if electrical vehicles become cheap.<\/p>\n Importing EVs from China does not create a dependency. The European economy can function without them\u2014but not without natural gas. But these imports serve as a source of cheap green goods and competitive pressure for EU industry to become more productive.<\/p>\n The fear that Chinese imports will destroy the EU automotive industry is vastly overblown given that, after an initial spurt, imports from China have slowed down, and the EU maintains a trade surplus in EVs.<\/p>\n Judy Dempsey<\/p>\n Nonresident senior fellow at Carnegie Europe<\/p>\n Chancellor Olaf Scholz could have abstained instead of voting against EU tariffs on Chinese electric cars. He didn\u2019t. He feared retaliatory measures from Beijing at a time when Germany\u2019s car industry is in a profound crisis\u2014thanks to the complacency of the political elites, the car lobbies, and lack of strategic foresight.<\/p>\n For decades they supported the automobile sector, taking for granted that the Chinese consumer would buy a fancy German car. Not anymore. China is speeding ahead with electric cars that Germans are buying. It\u2019s not just because they are less expensive than German models. It\u2019s because Volkswagen and co. refused to embrace innovation, digitization, and artificial intelligence. German governments have paid lip service to modernizing an infrastructure to spur competitiveness.<\/p>\n It\u2019s the same short-sightedness as when Germany depended on Russian gas. That deterred pushing ahead with renewable energy and countering climate change. Russia\u2019s invasion of Ukraine in 2022 finally changed the German mindset on energy policy.<\/p>\n Berlin\u2019s mindset over China, despite the European Commission\u2019s \u201cderisking<\/a>\u201d strategy toward Beijing, won\u2019t change until there is a fundamental strategic shift in the German economic model. That would mean Scholz, his coalition partners, and the lobbies accepting that de-industrialization is the future. Don\u2019t count on it.<\/p>\n Thorsten Benner<\/p>\n Co-founder and director of the Global Public Policy Institute<\/p>\n It\u2019s not exactly news that German policymakers allow the outsized dependencies on the Chinese market of a few large German companies\u2014especially in the automotive sector\u2014to lead to decisions against the overall long-term national interest. The vote against EU countervailing duties is just the most recent example.<\/p>\n But the even more worrying trend is that Germany is on track to becoming the primary victim of the second China shock with Chinese competitors increasingly eating the lunch of German industrial majors and small and medium enterprises, not just on the Chinese market but also in third markets and the European home market\u2014from automotive to machine tools.<\/p>\n German Chancellor Olaf Scholz\u2019s big gamble is that German companies will thrive in the competition from China as they always have. He seems to think that given its own economic dire straits Beijing will be cooperative without much pressure and that there is no need for protective measures. Scholz is literally betting the house on this. If he turns out to be wrong, the erosion of Germany\u2019s base of prosperity will have ripple effects comparable to the U.S. election of Donald Trump and\u00a0Brexit<\/a>, which were the by-products of the first China shock that never hit Germany.<\/p>\n Zsuzsa Anna Ferenczy<\/p>\n Assistant professor at National Dong Hwa University, Taiwan<\/p>\n