Summary of Key Points
This article begins with the author's observations in Spain and focuses on the current intensification of trade tensions between China and Europe. It analyzes the reasons behind the EU's shifting policy towards a more aggressive stance against China, such as anxiety stemming from declining industrial competitiveness. The EU has employed various trade restriction measures, including the Cybersecurity Act 2.0 and the Industrial Acceleration Act, among others. The article proposes a new perspective on trade wars: they have become the norm in the context of globalization's restructuring. As a country with strong industrial competitiveness, China should adapt to this situation and actively respond, ultimately achieving a ceasefire and mutual benefit by expanding its domestic market and promoting the establishment of a new global order.
Detailed Breakdown and Interpretation
1. Why is the EU Suddenly So Anxious?
The EU used to have a relatively comfortable situation: it relied on the United States for defense, Russia for energy, and China for low-end manufacturing, while maintaining its own dominance in high-end sectors such as automobiles and machinery. However, things have changed. The US has become unreliable (as evidenced by the trade wars during Trump's presidency), and Russia has become a rival due to energy supply cuts. Most importantly, Chinese manufacturing has advanced from low-end to high-end, with Chinese companies catching up with or even surpassing European leaders in traditional industries such as German machinery and French industrial equipment. Statistics show that by 2025, the EU's trade deficit with China could approach 360 billion euros per year—equivalent to a giant ship filled with Chinese goods traveling to Europe and returning almost empty. What's more concerning for Europe is that Chinese products not only sell well in Europe but also compete with European products in third markets like Africa and Latin America. In 2005, European capital goods accounted for 54% of global exports; now this share has dropped to 43%, while China's share has risen from 7% to 24%. German industrial output has decreased by 10% since 2022, and even medium-sized manufacturing companies are feeling the pressure from Chinese competition. This fear of being surpassed has led the EU to call for "strategic autonomy" and reducing risks, which essentially reflects anxiety about its own declining competitiveness.
2. What Weapons Does the EU Use to Counter Chinese Companies?
The EU is not just talking the talk; it has implemented a series of measures to restrict Chinese companies:
- Direct Investigations: For example, anti-dumping and anti-subsidy investigations targeting Chinese electric vehicles.
- Green Barriers: The Carbon Border Adjustment Mechanism, which requires importing goods to account for their carbon footprint.
- Small Tariffs: Since July this year, a 3-euro fee has been imposed on small parcels from China.
- Public Procurement Restrictions: The International Procurement Instrument requires "reciprocal openness," and since China has not signed free trade agreements, its products are not considered "EU-origin" and cannot participate in public procurement.
- The Two Most Aggressive Acts:
- Cybersecurity Act 2.0: Expands the scope of security measures to 18 key sectors (such as electricity, automobiles, and cloud services). If China is identified as a "high-risk country," Chinese companies will not only be barred from entering the EU market but must also remove their existing products within 36 months; this could lead to exclusion by other countries as well.
- Industrial Acceleration Act: Requires that EU public procurement favor locally manufactured goods. If Chinese companies want to set up factories in the EU, they must engage in "substantial processing" (more than just simple assembly) to qualify; otherwise, their operations will be terminated after the deadline.
These measures effectively impose constraints on Chinese companies' development in the EU, forcing many to adopt a strategic "hibernation" approach, such as outsourcing production to local firms.
3. Are Trade Wars Accidental or the New Normal?
The author previously viewed trade wars as a problem, but now sees them as an inevitable part of globalization's restructuring:
- The competition among the world's three major economies (China, the US, and the EU) is normal; the US and EU have also engaged in trade wars, with only a temporary ceasefire last year.
- China has become a focal point for trade wars because of its economic strength. It used to have little influence in global trade, but now, with a large trade surplus and significant industrial impact, it naturally attracts attention.
- Trade wars are more civilized than cold or hot wars; they are about competing interests rather than direct conflict. We should adapt to this situation by trying to prevent them while also being prepared for their potential occurrence.
Trade wars can even occur with emerging economies like Indonesia and India, indicating that China's integration into the global economy is significant and has an impact on others, which is not necessarily a bad thing.
4. How Should China Win This "Protracted War?"
The author suggests several key strategies:
- Expand the Domestic Market: This is a powerful tool. If China increases its domestic consumption, it will reduce trade imbalances and lessen external criticism. It also aligns with the goal of shared prosperity, as relying solely on cost-cutting measures (such as the 996 workweek) is unsustainable.
- Localization and Compliance: Establish factories in the EU that engage in substantial processing and comply with local regulations (e.g., carbon and ESG standards), and cooperate with local companies (e.g., CATL's joint venture with Stellantis to build battery plants).
- Legal Countermeasures: If Chinese companies face discrimination, the Chinese Ministry of Commerce can take retaliatory actions, including seeking recourse through the WTO.
- Promote a New Global Order: As a "global anchor for goods," China has the responsibility to drive a more open and mutually beneficial globalization, avoiding creating a "Chinese bubble" while considering the concerns of other countries.
5. The Fundamental Issues of Trust and Competitiveness
The EU's distrust of Chinese companies (e.g., claims that Chinese automakers are building factories near Spanish military ports to "spy on NATO") is actually driven by US efforts to de-Chinaize certain industries (such as the US's "Clean Network" initiative). However, Europe's problems stem from a lack of entrepreneurial spirit. For example, Chinese companies like BYD can quickly adjust their products (e.g., modifying the trunk space in two months) and communicate directly with local dealers, a level of market responsiveness that many European firms have lost.
China's competitiveness is not based on an undervalued currency or subsidies but on entrepreneurial drive and efficient execution. Europe must address its own issues rather than blaming China for these challenges.
Final Conclusion
Trade wars are the new norm, and China should accept its role as a key player in global affairs. It should actively prepare (using legal tools and adopting localization strategies) while also working to expand its domestic market and promote a new, mutually beneficial global order. The ultimate goal is not to win a trade war but to achieve a ceasefire and common development through wisdom and foresight—this is the true meaning of engaging in a "great struggle."