Both China and the EU have recently agreed on price undertaking guidance for Chinese battery electric vehicle makers. This was confirmed by China’s Ministry of Commerce and has been hailed as a major step forward in resolving the dispute, which has lasted for two years.
From the perspective of China, this resolution has strengthened its argument that major economic powers are capable of resolving trade disputes through consultation and dialogue. This statement and messaging are most definitely a hint toward economic relations with the U.S., where China believes the U.S. is acting aggressively through tariffs and sanctions to induce a trade war. Chinese analysts have also stated that the resolution sets a positive and much-needed example, especially at a time when the global economy is facing a rising trend of unilateralism and protectionism, again a reference to Trump’s tariffs and protectionist policies.
Context of the Dispute
In 2023, the EU put into force an anti-subsidy investigation into imports of Chinese electric vehicles following a strong statement from the President of the European Commission, who stated that imported Chinese electric vehicles would flood Europe and distort the auto market.
These statements were resolutely denied by Chinese officials, who clarified in their response that China’s electric vehicle manufacturing industry has seen rapid growth as a result of continuous technological innovation and a secure and resilient supply chain system, which experts have noted to be the strongest supply chain in the industry.
The EU further imposed definitive countervailing duties on Chinese electric vehicles for a period of five years to counteract what it declared to be market manipulation, due to what it perceived as a heavily subsidised industry in China. This, the EU argued, would create an unfair advantage over EU electric vehicle manufacturers.
Consultations and Negotiation
China and EU technical and industrial teams in 2025 proceeded to engage with one another in negotiations on electric vehicle pricing commitments. This engagement was spurred when the Chinese Minister of Commerce and the EU Commissioner for Trade held talks. The discussions resulted in a well-considered framework and guidance document that attempts to outline and protect the interests of both sides.
It can be argued that engaging in intensive dialogue and producing a guidance document that seeks to protect both sides’ interests can also serve as a roadmap for further cooperation. The current agreement could result in expanded cooperation not only in the automotive industry but also in emerging energy technology fields, where the EU has significant interest in modernisation and innovation.
Future Outlook
Currently, China and the EU still face barriers and disagreements on trade issues. However, the example of cooperation and the development of a guidance framework reduce the future risk of extreme disruption caused by trade frictions.
BakuTiflis 