Electric vehicle overcapacity in China will worsen, warns von der Leyen – POLITICO

BERLIN – Ursula von der Leyen on Thursday doubled down on the need for the EU to investigate Beijing’s state subsidies for the electric vehicle industry, saying China’s economic slowdown will accelerate overcapacity.

Speaking three weeks before her visit to Beijing for an EU-China summit, the European Commission president called on China not to embark on a “race to the bottom” in the transition to green technologies.

“Europe is open to competition, but it is not open to a race to the bottom,” von der Leyen said. “We will go to China in good faith. We will never hesitate to express our concerns.”

Regarding electric vehicles, she said: “There is obvious overcapacity in China, and this overcapacity will certainly be exported, especially if the overcapacity is fueled by direct and indirect subsidies.

“This will get worse as China’s economy slows – and its domestic demand does not recover,” von der Leyen added. “Ultimately this affects and distorts our market.”

The summit, which will also be attended by the President of the European Council Charles Michel, will take place on December 7 and 8. The two men are expected to meet Chinese President Xi Jinping. China has raised concerns about the Commission’s investigation, saying it would disrupt the global supply chain.

Von der Leyen’s speech, at an event jointly organized by the European Council on Foreign Relations and MERICS, a Berlin-based think tank sanctioned by Beijing, comes a day after Xi met with US President Joe Biden in San Francisco, where the two superpowers agreed to reestablish direct military contacts.

Regarding Beijing’s military posture, von der Leyen said: “China’s assertive posture in Taiwan, in the South and East China Seas, if you look at it, it doesn’t just affect our partners, for example the Philippines …But it also has an impact. effect on our posture and our global economies, our own supply chains.

She also stressed the need to discuss with Xi his ties to Russian leader Vladimir Putin.

Von der Leyen said she would engage with Beijing so that its support for Russia would be “as limited as possible” and that she would “make very clear that how China positions itself towards Russia will define our mutual relationship in the years to come. “