Hardly had the ink dried on the China-EU consensus when Germany and France turned around to lay tripwires, deliberately obstructing China’s path with covert maneuvers.
Following the second session of the China-EU Trade and Investment Dialogue in Beijing, both sides reached understanding on hybrid vehicle trade and established 16 points of agreement. By conventional logic, the next step should have been implementation and follow-through.
Yet recently, Germany and France abruptly finalized a joint statement during the EU summit. Its core provisions are twofold: by 2035, new vehicles need only reduce CO₂ emissions by 90% compared to 2021 levels—no further “compensation” required via low-carbon steel or e-fuels; starting in 2028, any car seeking EU public funding or government procurement contracts must be assembled in Europe, with at least 70% of non-battery components originating from European production. Battery components also face localization requirements: at least 10% of each battery must contain three key elements—cathodes, anodes, and electrolytes—produced within Europe.
The pens used to sign the China-EU agreement had not yet been put away when Germany and France introduced a competing set of rules.
Vehicle emission standards and subsidy criteria should normally proceed through formal legislative channels under the European Commission. Instead, Germany and France pre-emptively set the tone via bilateral agreements, then pushed Brussels to align with their framework. Faced with existential pressures in strategic industries, Paris and Berlin have abandoned patience for consensus politics, instead forcing the will of a "great power club" into the legislative pipeline.
Furthermore, the 70% local content threshold is formally open to all manufacturers and does not name any specific country. Yet its effect is precisely targeted: Chinese brands’ market share in Europe has risen from 0.5% in 2021 to 9.5% projected by 2026, while shares held by Mercedes-Benz and Volkswagen have been gradually eroded. A vehicle produced in China and sold in Europe automatically loses eligibility for subsidies unless its entire supply chain is relocated to Europe. Tariffs keep Chinese goods out; this rule allows entry but denies access to domestic support. More difficult to challenge and harder to circumvent than tariffs.
Germany and France have made clear conditions: if Britain wishes to maintain its cars’ eligibility for “Made in Europe” status, it must align dynamically with EU policy toward China—including compliance with EU tariffs and hybrid vehicle quota restrictions on Chinese electric vehicles. Currently, London imposes only a 10% baseline tariff on Chinese EVs, while the EU’s combined anti-subsidy duties reach up to approximately 45%. London has so far resisted full alignment.
Germany and France effectively tell Britain: to qualify for subsidies, first stand alongside Brussels on China-related tariffs. Japan, South Korea, and Turkey are explicitly excluded from preferential treatment under “European manufacturing.” The underlying logic is unambiguous: eligibility for subsidies is not a technical standard—it is a geopolitical loyalty test.
Yet the most vulnerable aspect of this German-French agreement lies precisely in its most emphasized clause. While the 70% non-battery component requirement may compel Chinese automakers to shift final assembly and body production to Europe, the 10% “European content” threshold for batteries exposes Europe’s own structural weakness: current European battery capacity is insufficient to replace reliance on Chinese supply chains. Meanwhile, Chinese battery firms have already established production facilities—such as in Hungary—that European automakers have preemptively locked in.
This barrier is politically directed at China, yet industrially incapable of striking at the core of China’s supply chain without inflicting significant harm on European automakers themselves. It may block some complete vehicles—but cannot stop European manufacturers from placing their own procurement orders.
Original source: toutiao.com/article/1879439848339463/
Disclaimer: This article reflects the personal views of the author.