China’s Premier Li Qiang, speaking at the World Economic Forum in Dalian, strongly refuted accusations from the United States and the European Union (EU) that Chinese firms are benefitting from unfair subsidies and are poised to flood global markets with cheap green technologies, including electric vehicles (EVs) and batteries. Li’s remarks come amid escalating tensions between China and Western economies, particularly over the issue of tariffs on Chinese-made electric vehicles and related components.
The backdrop to Li’s statements includes the EU’s proposed tariffs on Chinese EV imports and the United States’ recent tariff hikes on Chinese products, including lithium-ion batteries. These moves have raised concerns in China, which argues that it has been unfairly targeted despite the legitimate growth of its green technology sector.
Defending China’s Green Tech Boom
In his opening address, Li Qiang emphasized that China’s production of electric vehicles, batteries, and other green technologies is not solely for export but is also aimed at meeting its domestic demand. He rejected the notion that Chinese firms are unfairly subsidized, stating that the country’s green technology boom is a result of its “unique comparative advantages.”
“China’s production of advanced electric vehicles, lithium-ion batteries, and photovoltaic products first met our domestic demand, but also enrich global supply,” Li told the forum. He argued that the rise of China’s green industries is rooted in internal investments and innovation, not excessive government support.
Li’s remarks come at a time when the European Union and China are preparing for technical talks on the imposition of tariffs on Chinese-made EVs. Meanwhile, the U.S. in May increased tariffs on a wide range of Chinese imports, including EV batteries, further straining trade relations between the two largest economies.
The West’s Protectionist Turn
The EU and the U.S. have grown increasingly wary of China’s expanding green technology sector, fearing that cheap imports could undermine their domestic industries. Both Brussels and Washington have taken steps to protect local manufacturers, with Brussels aligning its trade policies more closely with Washington’s.
China’s production-driven economic model, combined with its ability to scale industries rapidly, has fueled concerns that it could overwhelm global markets with inexpensive EVs and batteries, just as it did with other sectors like steel and solar panels in the past.
However, Premier Li warned that Brussels’ approach risks opening a new front in the West’s trade war with China, which began in 2018 when the Trump administration imposed the first round of tariffs on Chinese imports. In response to the EU’s proposed tariffs, China has initiated an anti-dumping investigation into EU pork imports, signaling the potential for retaliatory actions.
Competitive Edge or Unfair Advantage?
According to Li Qiang, China’s green tech boom is not driven by overcapacity or excessive state intervention but rather by economies of scale and focused investment in innovation. “The continuous emergence of economies of scale can effectively dilute enterprises’ innovation costs… which is the real source of the strong competitiveness of China’s new industries,” he said.
China maintains that it began investing in green technologies earlier than its Western counterparts, allowing it to scale production and drive down costs. Li suggested that the West’s protectionist measures are a response to China’s success, rather than any real concern over unfair competition.
This sentiment was echoed by experts at the Dalian forum. Benoit Boulet, professor of electrical and computer engineering at McGill University, noted, “China’s really made headway into producing these cars at low cost… so it is a lesson for us to try to get our act together and be better at it.” He predicted that Chinese EVs would eventually make their way into North American markets, despite current tensions.
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Economic Outlook and Future Growth
Premier Li used the forum to project confidence in China’s economic future, pointing to the rapid growth of new industries and the country’s strong post-pandemic recovery. He highlighted the resilience of China’s economy, emphasizing that new industries such as electric vehicles and renewable energy are driving sustainable growth.
“Since the beginning of this year, China’s economy has maintained an upward trend… and is expected to continue to improve steadily over the second quarter,” Li said. He expressed confidence that China would meet its full-year economic growth target of around 5%, attributing this to the “rapid growth of new industries and new driving forces.”
Looking Ahead
As China and the West prepare for further trade negotiations, the issue of tariffs and subsidies in the green technology sector will likely remain a contentious topic. While China insists that its success in EVs and batteries is a result of innovation and smart investments, the U.S. and the EU continue to view the country’s rise as a threat to their domestic industries.
Li Qiang’s remarks highlight China’s determination to defend its economic policies and industrial growth model against growing criticism from the West. As the world’s largest producer of electric vehicles and batteries, China’s role in shaping the future of green technology remains pivotal, even as trade tensions escalate.
