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Antonio José Pagán Sánchez
Researcher at the Center for China and Asia-Pacific Studies
Universidad del Pacífico (Lima, Perú)

The President of the Spanish Government, Pedro Sánchez, has made a four-day state visit to China with a view to strengthening economic cooperation between Spain and the Asian country to counterbalance the deterioration of trade relations between the European Union (EU) and China.

The visit included a meeting with Chinese leader Xi Jinping and comes at a time of heightened trade and political tensions between China and the EU. A major concern among Chinese officials is the possibility that the European Commission will decide in October to impose additional tariffs on Chinese electric vehicles in order to protect its own automotive industry.

This visit to China and discussions held might be viewed as a China success in terms of diplomacy. This is because Spain before the visit had supported imposing tariffs on Chinese electric vehicles, given that the automotive sector accounted for 10% of its GDP and 18% of its exports.

However, on Wednesday, September 11, while on the visit to Shanghai, Pedro Sánchez surprisingly announced that his government was reviewing its stance and suggested the European Commission consider doing so. It was on this very issue that China gave this turn of position, which underlined the flexibility of a political leader bound to change his position on internal and international issues alike. His decision has caused discontent within the European Commission, which was not informed in advance.

Part of Spain’s change in position could be explained by concerns over potential economic retaliation against its pork exports to China, which amounted to over 1.2 billion euros in 2023. This would further demonstrate the success of China’s strategy of targeting specific countries with retaliatory measures to avoid the adoption of a unified European position.

Nevertheless, it remains to be seen whether China will ultimately manage to prevent an increase in tariffs on its electric vehicles within the EU. When member states vote on the matter (potentially on September 25, according to unconfirmed information from Bloomberg), China will need 15 countries, representing 65% of the EU population, to reject the tariffs. Otherwise, the tariffs could rise from the current 10% to as much as 17% for companies like BYD, or even 35.3% for those companies that have not cooperated with the EU’s investigation into possible unfair state subsidies.

Unconfirmed reports by Bloomberg suggest that the tariff imposition vote might happen any moment now, as soon as September 25. That would probably be the explanation for the unexpected arrival of China’s Minister of Commerce Wang Wentao in Europe. His visit has not avoided Italy openly supporting the imposition of tariffs earlier this week.

If such a measure were ultimately approved, an intensification of trade disruptions between the EU and China can be expected in the forthcoming months.