Habeck savors the triumph of his firm China foreign policy.
Robert Habeck has concluded his Asia tour contentedly, aiming to have resolved a tariff dispute between the EU and Asia. During his visit to China, the Vice-Chancellor and Federal Economy Minister didn't get a chance to relax after an exhausting 14-hour day, filled with intense negotiations. His final engagements included addressing German news viewers about his discussions with Chinese government representatives before 10 PM local time, against the backdrop of Shanghai's striking skyline. Following the program, the German delegation received an unexpected announcement: China's government signaled its willingness to engage in genuine negotiations with the EU Commission. Habeck was jolted awake.
Did Habeck avoid a trade war between China and the EU in Beijing? Such a conflict could have arisen during Habeck's meetings with three high-ranking government officials on that Saturday. These discussions primarily revolved around the EU Commission's plan to impose tariffs on electric cars manufactured in China starting from November to counterbalance the subsidies that Brussels considers unfair and which make the low selling prices possible. China's government vehemently opposed this measure and threatened retaliation. Talks on the issue had been suspended for months – until Habeck.
The reasons behind China's decision are unclear.
"All I can say is that I did what was expected of me as German Economy Minister in this situation," Habeck informed journalists late at night. At this point, Brussels had also confirmed the direct negotiations with Beijing. The Minister appeared before the press at an unusual hour, in the tropical heat, to provide an update on the negotiations. "Whether it was a contributing factor and to what extent remains for others to determine," Habeck added humbly.
Modest as it may seem, Habeck's contribution to the rapprochement between Brussels and Beijing cannot be accurately assessed. China's government remains a mystery. Perhaps they would have initiated negotiations anyway, or maybe they are now negotiating without serious intentions. However, the timing suggests a direct link: Shortly after Habeck's meetings in Beijing, the Chinese government agreed to specific negotiation formats, previously strongly opposing the Europeans.
Habeck stands firm
Habeck didn't back down during his discussions, as he described his negotiation approach in ARD. Such a direct confrontation with the hosts in Beijing is rare for a German government representative. The contrast with Olaf Scholz's visit to State Council Chairman Xi Jinping in April is striking. Scholz primarily focused on the development of economic relations, with representatives of some DAX companies chiefly active in China present. However, what and how Scholz raised criticism points remains a secret known only to the few participants present behind closed doors.
Habeck didn't even spare a smile for Zheng Shanjie, the most influential economic politician of the 1.4 billion population country. In a public conversation between the two, Habeck accused Zheng of supporting Russia's invasion of Ukraine. He criticized the construction of numerous new coal power plants and advocated for China to implement stringent climate protection measures. Additionally, Habeck contradicted China's claim that the EU intended to punish China for producing better and less expensive electric cars to protect domestic manufacturers.
If there were no market-distorting subsidies, China could prove this during negotiations with the EU Commission and potentially avoid the "compensatory tariffs." Germany and the federal government endorse a world without trade barriers but support fair trade relationships, Habeck told Chinese ministers.
Support from Scholz
German car manufacturers may have hoped for a sign of leniency from Habeck, but they were left disappointed. Habeck made it clear that he would adhere to EU Trade Commissioner Valdis Dombrovskis' course. However, German automakers expressed concern: Daimler collaborates with Chinese Geely to manufacture the fully electric small car Smart in China, and BMW produces the electric Mini and the Chinese brand Great Wall. The Commission plans to impose additional import tariffs of 20% on the Smart and 38.5% on the Mini. In addition, Beijing could impose additional tariffs on cars from Europe.
When Habeck visited the development center of Mini owner BMW in Shanghai, the deputy development chief of the company, Robert Kahlenberg, stated, "Tariff-free trade is crucial for BMW." The minister was presented with models built in China and sold in Europe, as well as those produced in Europe and sold in China.
Neither the car manufacturers nor Federal Chancellor Olaf Scholz has remained silent about the potential consequences of a European market closure in Brussels in recent weeks. Scholz has repeatedly advocated for a negotiated solution between the Commission and Beijing.
An opening for a solution
With the "surprising" agreement on a negotiation format, at least a crack has been created for a resolution. Habeck doesn't need to openly claim credit for himself, but he won't resist attributions. He at least demonstrated that the Chinese responded to Habeck's clear stance, not instinctively in a confrontational manner.
However, the Chancellery and the two Greens, Foreign Minister Annalena Baerbock and Habeck, have been at odds for months over Germany's China strategy, which was passed in June 2023. The Chancellery had rejected a clear distance from and criticism of China – out of fear of the relationships between the two countries.
Straight-shooting criticism from Habeck might have averted a trade conflict, and the Greens could see this as their validation. It's no big surprise that the final takeaway from Habeck's Eastern Asia trip, which he shared with the media in Guangzhou, was this: "These are initial moves that were unforeseen yesterday," says Habeck. "In essence, yes, I am extremely pleased."
Read also:
- Following Habeck's firm stance during negotiations in Beijing, China expressed its willingness to engage in genuine discussions regarding the EU's plans to impose tariffs on electric cars from China, aiming to counterbalance perceived unfair subsidies.
- As a result of Robert Habeck's visit to China, Punitive tariffs on electric cars manufactured in China were temporarily avoided, potentially preventing a full-blown trade conflict between China and the EU.
