China’s commerce minister Wang Wentao talked with the heads of major car manufacturers including BYD and Geely on April 7 in Paris, as the companies scramble for solutions to an ongoing probe by the European Commission that could result in substantial tariffs on their imports of electric vehicles into the EU. 

Why it matters: The meeting comes as the EU prepares to publish its findings on whether Chinese automakers have benefited unfairly from state subsidies. Brussels could raise tariffs from the current 10% to at least 25% according to an estimate by European environmental lobby group Transport & Environment (T&E). 

• Chinese automakers have called for government support to push for a reduced tariff hike and to counter increased international political involvement in the industry, sources with knowledge of the matter told financial media outlet Caixin (in Chinese). Representatives of BYD, SAIC, and Geely were said to have accompanied Wang during his trip.

Details: At a roundtable discussion with the business leaders, Wang stressed the importance of Chinese automakers expanding overseas markets “in an orderly fashion” and embracing competition, according to a Twitter post by the China Chamber of Commerce to the EU (CCCEU)

• China also expects its manufacturers to bolster the integrated development of investment and trade, and maintain their commitment to technological innovation, Wang said. He added that claims that China’s EV competitiveness stems from state subsidies and comes with overcapacity issues in China are false and baseless. 
• During the April 7-9 trip, Wang also met with Franck Riester, France’s foreign trade minister, state broadcaster CGTN reported, as well as Renault chief executive Luca de Meo, acting chairman of the European Automobile Manufacturers’ Association. De Meo suggested that Chinese automakers establish their supply chain locally, sources told Reuters.

Context: France has backed the Commission investigation, according to Reuters, and has recently changed subsidy rules in a way that effectively excludes Chinese EV models. 

• China has in return requested French cosmetics giants including L’Oreal and LVMH comply with its data security rules by reporting details related to manufacturing processes and ingredients. It also launched an anti-dumping investigation into EU brandy exports in January. 
• Wang’s trip comes ahead of Chinese President Xi Jinping’s expected visit to Paris and discussions on trade tensions with French counterpart Emmanuel Macron, scheduled for May. This will be Xi’s first trip to Europe in five years, as tensions grow between China and the EU.
• The Commission reportedly carried out visits to BYD, SAIC, and Geely for verification work early this year, followed by the launch of a special custom registration process for China-made EVs, as imports rose by 14% year-on-year since formal investigations began last October. 
• Major Chinese automakers, including BYD, SAIC, and Chery, are also planning to construct their own car factories in Europe while also building vessels for shipments, as they look to capture a significant market share in the region with their affordable EVs.