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China has told its automakers to halt big investment in European countries that support extra tariffs on Chinese-built electric vehicles, two people briefed about the matter said, a move likely to further divide Europe.

The new European Union tariffs of up to 45.3% came into effect on Wednesday after a year-long investigation that divided the bloc and prompted retaliation from Beijing.

Ten EU members including France, Poland and Italy supported tariffs in a vote this month, in which five members including Germany opposed them and 12 abstained.

Chinese automakers including BYD, SAIC, and Geely were told at a meeting held by the Ministry of Commerce on Oct. 10 that they should pause their heavy asset investment plans such as factories in countries that backed the proposal, said the people.

They declined to be named, as the meeting was not public.

Several foreign automakers also attended the meeting, where the participants were told to be prudent about their investments in countries that abstained from voting and were “encouraged” to invest in those that voted against the tariffs, the people said.

Geely declined to comment. SAIC, BYD and the commerce ministry did not immediately reply to requests for comment.

The move by Chinese authorities to suspend some investment in Europe would suggest the government is seeking leverage in talks with the EU over an alternative to tariffs, keen to avoid a sharp fall in EV exports to the key market.

Europe accounted for more than 40% of EVs shipped from China in 2023, according to Reuters’ calculations using data from the China Passenger Car Association.

Given 100% tariffs on Chinese-made EVs in the United States and Canada, a drop in EV exports to Europe would risk deepening overcapacity Chinese automakers face in their home market.

Investments in Europe

During a visit to China by Spanish Prime Minister Pedro Sanchez last month, a Chinese company agreed to build a $1 billion plant in Spain to make machinery used for hydrogen production. Spain was one of the 12 EU states that abstained.

Italy and France are among EU countries that have been courting Chinese automakers for investments, but they have also warned of the risks that a flood of cheap Chinese EVs pose to European manufacturers.

State-owned SAIC, China’s second-largest auto exporter, is choosing a site for an EV factory in Europe and has been separately planning to open its second European parts center in France this year to meet growing demand for its MG-brand cars.

An aide to France’s junior trade minister Sophie Primas said they had no comment to make ahead of her trip to China next week.

The Italian government is in talks with Chery, China’s largest automaker by exports, and other Chinese automakers, including Dongfeng Motors, about potential investments.

Italy’s industry ministry declined to comment. Dongfeng didn’t immediately respond, while Chery declined to comment.

BYD is building a plant in Hungary, which voted against the tariffs. The Chinese EV giant has also been considering relocating its European headquarters from the Netherlands to Hungary due to cost concerns, two separate people with knowledge of the matter said.

Even before Beijing issued its guidance, Chinese companies were cautious about independently setting up production sites in Europe, as it requires large sums of investment and a deep understanding of local laws and culture.

The automakers were also told at the Oct. 10 meeting that they should avoid separate investment discussions with European governments and instead work together to hold collective talks, the people said.

The directive follows a similar warning in July when the commerce ministry advised China’s automakers not to invest in countries such as India and Turkey, and to be cautious with investments in Europe.
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U.S. Treasury Secretary Janet Yellen has joined several independent economists to express her frustration about low consumer spending and the property crisis in China. Some experts have expressed disappointment over Beijing’s limited measures to stimulate consumer spending, which is one of the biggest hurdles in the Chinese economy.

“Our view has been that raising consumer spending in China as a share of GDP (gross domestic product) is really important, along with measures to address problems in the property sector,” Yellen said recently. “So far, I would say, I haven’t really heard any policies on the Chinese side that address that.”

Yellen has criticized China for its focus on subsidizing large state-owned companies instead of working to revive the wider economy, the world’s second largest. Analysts have suggested that China should stop subsidizing manufacturing companies with the money of households.

The World Bank has predicted that China’s GDP growth will be 4.8% this year, short of the country’s 5% goal. It will slip further to 4.3% in 2025, the bank predicted.

Low consumer demand in China can bring down the rate of growth in the global economy and affect the prospects of businesses in the U.S. and other parts of the world.

“For U.S. companies like Apple, Nike, Microsoft, KFC, Starbucks, Coca-Cola, Tesla or General Motors, to name a few, China is a big market. Any increase or decrease in consumption in China can influence their bottom line,” Lourdes Casanova, director at Cornell University’s Emerging Markets Institute, told VOA.

There are serious fears about the U.S. and the European Union slipping into recession, said Francesco Sisci, an expert on China affairs and director of Appia Institute, an Italy-based think tank.

“In China, there’s deflation and no sign of getting out of it. If China doesn’t get out of deflation, it could multiply recessionary forces worldwide. It might actually happen,” Sisci said.

Tendency to save, not spend

China has taken several measures to revive the economy in recent weeks. They include lowering mortgage rates and cutting the reserve requirement ratios (RRR) to encourage banks to lend more money. The idea is to support households repaying home loans and encourage people to purchase more houses from the crisis-hit property business.

However, analysts are not convinced about the effectiveness of the move. “Housing demand is unlikely to see any meaningful revival just because of lower mortgage rates and down payment requirements, as experience shows,” the Peterson Institute for International Economics (PIIE) said in a commentary.

Casanova thinks low consumer demand is not an easy problem to resolve because the average Chinese believes in savings more than spending. Personal consumption expenditures (PCE) as a percentage of GDP stands at 68% in the United States, 53% in Europe and 39% in China. Americans represent 31% of global PCE, while China’s people represent just 11%.

“There is room for improvement in China but, you can’t change consumers’ habits overnight and, clearly, Chinese consumers are much thriftier than the American ones,” she said. Americans often keep their cars outside the garage because garages are full of household items, clothes, toys, garage tools and other things, she pointed out.

One way to increase consumer demand is to increase salaries and take additional social security measures. But for companies that would increase production costs and hurt exports, Sisci said.

“What China needs is transformative reforms that would have a political price, and the ruling Communist Party is not eager to pay it,” he said.

Contradicting the World Bank’s view, China’s Vice Minister of Finance Liao Min said the economy was responding positively to a series of stimulus measures taken by the government.

“These initiatives aim to leverage government spending to stimulate overall social investment and consumption, thereby increasing effective market demand,” Liao said.
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Beijing — Beijing said Wednesday it had lodged a complaint with the World Trade Organization over the European Union’s decision to impose hefty tariffs on Chinese-made electric cars.

The extra taxes of up to 35% were announced Tuesday after an EU probe found Chinese state subsidies were undercutting European automakers, but the move has faced opposition from Germany and Hungary, which fear provoking Beijing’s ire and setting off a bitter trade war.

China slammed Brussels’s decision on Wednesday morning, saying it did not “agree with or accept” the tariffs and had filed a complaint under the World Trade Organization’s (WTO) dispute settlement mechanism.

“China will… take all necessary measures to firmly protect the legitimate rights and interests of Chinese companies,” Beijing’s commerce ministry said.

EU trade chief Valdis Dombrovskis said Tuesday that “by adopting these proportionate and targeted measures after a rigorous investigation, we’re standing up for fair market practices and for the European industrial base.”

“We welcome competition, including in the electric vehicle sector, but it must be underpinned by fairness and a level playing field,” he said.

But Germany’s main auto industry association warned the tariffs heightened the risk of “a far-reaching trade conflict,” while a Chinese trade group slammed the “politically motivated” decision even as it urged dialogue between the two sides.

The duties will come on top of the current 10 percent on imports of electric vehicles from China.

The decision became law following its publication in the EU’s official journal on Tuesday, and the duties will enter into force from Wednesday.

Once they do, the tariffs will be definitive and last for five years.

The extra duties also apply, at various rates, to vehicles made in China by foreign groups such as Tesla, which faces a tariff of 7.85%.

Chinese car giant Geely — one of the country’s largest sellers of EVs — faces an extra duty of 18.8%, while SAIC will be hit with the highest at 35.3 percent.

Ailing companies

The tariffs do not have the support of the majority of the EU’s 27 member states but in a vote early this month, the opposition was not enough to block them, which would have required at least 15 states representing 65% of the bloc’s population.

The EU launched the probe in a bid to protect its automobile industry, which employs around 14 million people.

France, which pushed for the investigation, welcomed the decision.

“The European Union is taking a crucial decision to protect and defend our trade interests, at a time when our car industry needs our support more than ever,” French Finance Minister Antoine Armand said in a statement.

But Europe’s bigger carmakers, including German auto titan Volkswagen, have criticized the EU’s approach and have urged Brussels to resolve the issue through talks.

The extra tariffs are “a step backwards for free global trade and thus for prosperity, job preservation and growth in Europe,” the German Association of the Automotive Industry’s president Hildegard Mueller said on Tuesday after the announcement.

Volkswagen, which has been hit hard by rising competition in China, has previously said the tariffs would not improve the competitiveness of the European automotive industry.

That warning came weeks before the ailing giant announced plans on Monday to close at least three factories in Germany and cull tens of thousands of jobs.

Retaliatory moves

Talks continue between the EU and China, and the duties can be lifted if they reach a satisfactory agreement, but officials on both sides have pointed to differences.

Discussions have been focused on minimum prices that would replace the duties and force carmakers in China to sell vehicles at a certain cost to offset subsidies.

“We remain open to a possible alternative solution that would be effective in addressing the problems identified and WTO-compatible,” Dombrovskis said.

The Chinese Chamber of Commerce to the EU urged Brussels and Beijing “to accelerate talks on establishing minimum prices and, ultimately, to eliminate these tariffs.”

The EU could now face Chinese retaliation, with Beijing already saying on October 8 it would impose provisional tariffs on European brandy.

Beijing has also launched probes into EU subsidies of some dairy and pork products imported into China.

Trade tensions between China and the EU are not limited to electric cars, with Brussels also investigating Chinese subsidies for solar panels and wind turbines.

The EU is not alone in levying heavy tariffs on Chinese electric cars.

Canada and the United States have in recent months imposed much higher tariffs of 100 percent on Chinese electric car imports.
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BEIJING — China’s stimulus efforts could come with a cost and they must be carried out alongside reforms to ensure sustainable economic growth, Liu Shijin, a former central bank adviser, said in remarks published Wednesday.

“Stimulus could come with a cost and we should combine stimulus with reforms,” Chinese media outlet Yicai quoted Liu as saying at a forum on Tuesday. Liu said funds should be used for enhancing areas that are critical for long-term economic development.

China should prioritize improving basic healthcare services for the country’s 300 million internal migrant workers as it faces a significant public healthcare shortfall, Liu said.

On Tuesday, Reuters reported that China is considering approving next week new debt issuance of more than 10 trillion yuan ($1.4 trillion) to help tackle hidden local debt and fund buybacks of idle land and reduce a giant inventory of unsold flats, in coming years.

Analysts expect such efforts to be a stabilizer for the economy rather than the instant growth booster that markets have craved.

China is struggling to tackle a debt overhang from previous stimulus. In 2008-2009, a 4 trillion yuan ($575 billion) spending package largely shielded China’s economy from the global financial crisis but saddled local governments with mountains of debt.

Liu said last month that China could issue ultra-long-term treasury bonds within two years to generate at least 10 trillion yuan ($1.4 trillion) worth of stimulus to the economy, according to state media.

At a key meeting in July, Chinese leaders outlined reform steps ranging from developing advanced industries to improving local government finances, but it remains unclear on how quickly such steps will be implemented.

China needs to expand its middle class group from around 400 million, currently about a third of the population – to 800-900 million in the next decade by speeding up urbanization and addressing disparities in urban-rural public services, Liu said.

But Liu cautioned against stimulus through “helicopter money,” or direct cash handouts for residents, arguing this would primarily benefit wealthier residents, while low-income groups would see minimal relief given their basic needs.

 
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NAIROBI, KENYA — Some companies are coming up with creative ways of making electric vehicles a more realistic option in power-challenged areas of Africa.

Countries in Africa have been slow adopters of battery-powered vehicles because finding reliable sources of electricity is a challenge in many places.

The Center for Strategic and International Studies described Africa as “the most energy-deficient continent in the world” and said that any progress made in electricity access in the last five years has been reversed by the pandemic and population growth.

Onesmus Otieno, for one, regrets trading in his diesel-powered motor bike for an electric one. He earns his living making deliveries and ferrying passengers around Nairobi, Kenya’s capital, with his bike.

The two-wheeled taxis popularly known as “boda boda” in Swahili are commonly used in Kenya and throughout Africa. Kenyan authorities recently introduced the electric bikes to phase out diesel ones. Otieno is among the few riders who adopted them, but he said finding a place to charge his bike has been a headache.

Sometimes the battery dies while he is carrying a customer, he said, while a charging station is far away. So, he has to end that trip and cancel other requests.

To address the problem, Chinese company Beijing Sebo created a mobile application that allows users of EVs to request a charge through the app. Then, charging equipment is brought to the user’s location.

Lin Lin, general manager for overseas business of Beijing Sebo, said because the company produces the equipment, it can control costs.

“We can deploy the product … in any country they need, and they don’t need to build or fix charging stations,” Lin said. “We can move to the location of the user, and we can bring electricity to electric vehicles.”

Lin said the mobile charging vans use electricity generated from solid waste and can charge up to five cars at one time for about $7 per vehicle — less for a motorbike.

Countries in Africa have been slow to adopt electric vehicles because there is a lack of infrastructure to support the technology, analysts say. The cost of EVs is another barrier, said clean energy expert Ajay Mathur.

”Yes, the capital cost is more,” Mathur said. “The first cost is more, but you recover it in about six years or so. We are at the beginning of the revolution.”

Electric motor bike maker Spiro offers a battery-swapping service in several countries to address the lack of EV infrastructure.

But studies show that for many African countries, access to reliable and affordable electricity remains a challenge. There are frequent power cuts, outages and voltage fluctuations in several regions.

Companies such as Beijing Sebo and Spiro are finding ways around the lack of power in Africa.

”We want to solve the problem of charging anxiety anywhere you are,” Lin said. 

This story originated in VOA’s Mandarin Service.
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U.S. farmers are facing economic headwinds as they head to the polls this election year. VOA’s Kane Farabaugh has more from Illinois
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RIYADH — Saudi Arabia is “committed” to maintaining crude capacity at 12.3 million barrels per day, Energy Minister Prince Abulaziz bin Salman said on Tuesday.

Speaking at the Future Investment Initiative (FII) conference in Riyadh, he said the world’s largest oil exporter would maintain its crude targets while also pursuing its climate aims.

“We will monetize every molecule of energy this land has, period,” Prince Abdulaziz said. That policy would be carried out hand in hand with other goals, such as emission reduction, he added.

“We are committed to maintaining 12.3 million (barrels per day) of crude capacity and we are proud of that,” he said.

He was speaking ahead of an announcement, expected on Tuesday, about a carbon credit exchange involving the kingdom’s sovereign wealth fund.

Saudi Arabia backed a deal at last year’s U.N. climate conference, COP28, giving countries more leeway to follow their own pathways to cleaner sources of energy.

More than 100 countries had lobbied at that summit, held in the United Arab Emirates, for the “phase out” of fossil fuels, but faced opposition from the Saudi-led oil producer group OPEC, which argued that the world can cut emissions without shunning specific fuels.

“We are not ashamed of our record when it comes to emissions,” Prince Abdulaziz told the FII conference. “We are proud of it, but the pundits try to create a smoke screen not to allow us to be on the so-called higher moral ground.”

He also said Saudi Arabia would update its national climate pledge under the Paris Agreement to raise its target.

“We ensure we will have a refreshed NDC [Nationally Determined Contribution] next year, and I can guarantee you out of knowing the number will be higher.”

 
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Nairobi — Bioeconomy is the production, use, and conservation of biological resources to produce goods that sustain communities. A new report says the promotion of bioeconomy as a way to deal with climate change holds promise for rural areas in Africa and elsewhere.

As the world grapples with how to cope with the effects of climate change on the environment, food production, and people’s livelihoods, experts say the bioeconomy can offer solutions to those challenges and help achieve sustainable development.

Their conclusions are presented in a new report, The State of the Bioeconomy in East Africa Report 2024, authored by the Stockholm Environment Institute, the East African Science and Technology Commission, and the International Center of Insects Physiology and Ecology, or ICIPE.

The authors say the use of renewable biological resources, and the application of related knowledge, science and technology offers a chance to drive economic growth and — most importantly — boost food security while protecting the environment.

For example, Regina Muthama is a farmer who trains other farmers in her community in Eastern Kenya, where there is often a shortage of rain to grow food. She says she plants several types of crops and trees together to maximize the water supply, and so the trees can shade crops from the strong African sun.

“We are growing trees, which we integrate with crops so that when we water the trees, we can also water the crops that can give us food. The kind of trees we plant can mitigate climate change, prevent soil erosion, and give us good oxygen,” she said.

Experts say Eastern Africa is home to vast agricultural fertile lands, biodiversity, and a youthful population, which positions the region as a leader in bioeconomy innovation.

Abdou Tenkouano is the director general of ICIPE Kenya. Speaking at the Global Biodiversity Summit (GBS) this week in Nairobi, he said bioeconomy development needs to provide opportunities for young people, and develop ways to meet people’s food needs.

“We must also meet the employment needs of the youth, who are the largest demographic segment in Africa and the global south,” he said. “We are in a climate crisis, which is now an existential threat. We must adopt new ways of production and consumption that are sustainable. The bioeconomy offers this new model of sustainable economic growth.”

According to the Stockholm Environment Institute, more than 65 percent of people living in Eastern Africa depend on biological resources for food, energy, medicine, and other purposes.

Venter Mwongera is the chairperson of national and international engagements at the Intersectoral Forum on Agrobiodiversity and Agroecology in Kenya. She explains the benefits of embracing the bioeconomy.

“We can continue growing our economy, contributing to GDP and contributing to job creation because these industries that manufacture the produce or products we get from agriculture minimize the emission of greenhouse gases, which means that we will have a cleaner environment. It also means that jobs will be retained and more will be created, and there will also be sustainable food production,” said Mwongera.

The East African Community regional bloc has developed a bioeconomy strategy that aims to have sustainable industrialization, improve food and nutrition security, improve health, and create bio-based products which are derived from plants, animals and microorganisms.

Tenkouano says ICIPE is trying to show the way.

“We develop and deploy nature-positive solutions for insect pests and vector management. We also lead research in insects as alternative sources of protein for food and feed and agents of organic waste conversion,” he said.

Experts say the bioeconomy as a principle is winning supporters. However, a lack of financing, poor infrastructure, low agricultural productivity, and excessive government regulation still present challenges to broader adoption.
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