China has instructed its domestic automakers to pause investments in European Union (EU) countries that support new tariffs on Chinese-made electric vehicles (EVs).
The EU implemented tariffs on Chinese EVs, which can reach up to 45.3%, after a year-long investigation revealed a split within the EU.
Ten member states, including France, Poland, and Italy, backed the tariffs, while five, including Germany, opposed them, and twelve abstained.
The Chinese Ministry of Commerce held a meeting advising major automakers such as BYD, SAIC, and Geely to halt heavy asset investments in countries that supported the tariffs.
This move is part of China's strategic maneuver to negotiate an alternative to the tariffs and protect its position in the European EV market.
The introduction of tariffs in Europe adds to the challenges faced by the Chinese automotive industry, which is already dealing with overcapacity issues and 100% tariffs imposed by the US and Canada.
Chinese automakers are now reassessing their investment strategies in Europe, with a cautious approach towards independent production sites.
European nations are actively seeking Chinese investments, but they are also aware of the competitive pressures posed by low-cost Chinese EVs.
The evolving dynamics between China and the EU over EV tariffs reflect the larger trend of geopolitical considerations influencing investment decisions in global trade.
The Chinese government's directive to its automakers is a strategic move to preserve its competitive edge in the global EV market.
The outcome of negotiations between Chinese automakers and European nations will have far-reaching implications for the automotive industry and international trade.