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China’s EV overcapacity will get worse, von der Leyen warns

China’s EV overcapacity will get worse, von der Leyen warns

by host

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

Speaking three weeks before she visits Beijing for an EU-China Summit, the European Commission president called on China not to go for a “race to the bottom” in the green tech transition.

“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 shy away in raising our concerns.”

On electric vehicles, she said: “There is a clear overcapacity in China, and this overcapacity will be exported for sure, especially if overcapacity is driven by direct and indirect subsidies.

“This will worsen as China’s economy slows down — and as its domestic demand does not pick up,” von der Leyen added. “This in the very end affects and distorts our market.”

The summit, which European Council President Charles Michel will also attend, will take place from December 7-8. The duo are expected to meet Chinese President Xi Jinping. China has been raising concerns over 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 U.S. President Joe Biden in San Francisco, where the two superpowers agreed to reestablish direct military contacts.

On Beijing’s military posture, von der Leyen said: “China’s assertive posture in Taiwan, the South and East China Seas, if you look at that, this affects not only our partners, for example, the Philippines … But that has also an effect on our posture and our global economies, our own supply chains.”

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

Von der Leyen said she would engage Beijing in order for its support for Russia to be “as limited as possible,” and would “make it very clear that the way China positions itself on Russia will define our mutual relationship over the years to come.”

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