Latest news with #Merics
South China Morning Post
20 hours ago
- Business
- South China Morning Post
Sanctioned German China expert visits Beijing in sign of easing restrictions
The head of a German think tank sanctioned by Beijing four years ago has returned from a trip to China, suggesting that travel restrictions on the organisation may be easing. Mikko Huotari, the executive director of the Mercator Institute for China Studies (Merics) was in Beijing from July 14 to 17, after being invited by a leading Chinese think tank. Merics was among the European institutions hit with travel bans and asset freezes in March 2021, in retaliation for EU sanctions on Chinese officials accused of perpetrating human rights violations in Xinjiang, charges it denies. The news comes on the eve of a high-stakes EU-China summit . It also comes the week after Beijing further loosened its restrictions on members of the European Parliament, suggesting the Chinese government may be trying to improve the mood music ahead of an event that has been mired in negativity. 'We welcome the easing of travel restrictions and hope that more engagement between researchers and think tankers will be possible in the future. We look forward to future opportunities to engage with our Chinese counterparts whether in China, at MERICS or elsewhere in Europe,' Merics said in a statement. Chinese Foreign Minister Wang Yi, also a member of the Political Bureau of the Communist Party of China Central Committee, and EU High Representative for Foreign Affairs and Security Policy Kaja Kallas hold the 13th round of China-EU High-level Strategic Dialogue in Brussels, Belgium, on July 2. Photo: Xinhua One of Europe's largest China-focused think tanks, Merics researchers have been unable to travel to China for four years and EU leaders and officials have repeatedly called on Beijing to remove the sanctions.
Yahoo
28-05-2025
- Automotive
- Yahoo
The EU's black sheep helping China launch its electric car invasion
It could be the handshake that sealed the fate of the European car industry. A year ago, Xi Jinping, the Chinese president, made one of his vanishingly rare visits to Europe. The centrepiece was a stop in Budapest to meet Viktor Orban, the Hungarian prime minister. On the airport tarmac, amid a pageant of soldiers and folk dancers, the two strongmen gripped each other's arms with seemingly genuine fervour. Orban's red-carpet treatment of Xi now seems to have paid off. Earlier this month, BYD, the Chinese car giant, announced plans to establish its European headquarters in Hungary, having already built a factory in the country. By securing this foothold, BYD will be able to bypass tariffs that Brussels imposed on Chinese electric vehicles (EVs) last year, thwarting the EU's attempt to protect its struggling carmakers from a flood of cheap imports. Inevitably, it will also deepen the split between Orban and the rest of Europe, with the Hungarian leader already the bloc's bogeyman. 'It completely allows them to get around the tariffs,' says Matthias Schmidt, founder of European consultancy Schmidt Automotive Research. 'It allows them tariff-free access to the European Union member states.' Orban's move to turn Hungary into a Trojan horse for BYD comes at a crucial time. In April, the Chinese car giant leapfrogged Tesla and Peugeot to join the top 10 sellers of battery electric vehicles (BEVs) in Europe, according to industry analytics firm Jato Dynamics. Analysts predict BYD will only increase its market share once it starts producing cars from its plant in Hungary. 'If they are already selling a lot of cars, all of them imported from China, some of them exposed to the tariffs, then I cannot imagine how fast they're going to grow once they start producing locally,' says Felipe Munoz, a Jato analyst. There are already Chinese-owned companies producing cars in Europe, but they do so under the cover of local labels such as MG, Lotus and Volvo. This means that the arrival of BYD marks a new development in the market, with Orban's Hungary at the epicentre. Last year, the country pulled in 31pc of all Chinese investment into Europe. That was more than Britain, France and Germany combined, according to a study by the consultancy Rhodium Group and the German think tank Merics. More than 80pc of China's greenfield investment was also in electric vehicle projects, including the BYD factory and three other battery plants. Experts believe that if this flood of investment continues, it will no doubt pile yet more pressure on manufacturers across Germany and France. 'If there are more factories like this in future, and if production by Chinese automakers within Europe rises, then that would probably intensify the challenge that Chinese EV makers already pose to European and especially German carmakers,' says Andreas Mischer, a Merics analyst. However, the European Council on Foreign Relations (ECFR) believes the consequences could be much more severe. In a report this month, it warned that the European car industry could be crushed by China. 'China's expansion is driven by potent, subsidised industrial policy ecosystems,' the ECFR report said. 'Europeans are not up against Chinese businesses – they are up against the strategic ambitions of the Chinese Communist Party, which wields the collective financial firepower of the world's second-largest economy. 'Current trends have the potential to dissolve Germany's industrial backbone, including, first and foremost, its car industry. Vital sectors of the European economy are on the verge of being hollowed out, eradicated completely, or taken over by Chinese competitors.' However, these fears are unlikely to deter Orban, the populist premier who has been at loggerheads with Brussels since his election victory in 2010, mostly on issues such as human rights and the bloc's support for Ukraine. In the past week, the European Commission criticised the Hungarian government's draft transparency law, which it claimed would further curb the media and civil society groups. An even bigger flashpoint is looming over Orban's plan to ban a Pride celebration in Budapest next month. This schism has created an opening for Beijing, which is pumping billions into Hungarian infrastructure. However, even this has not prevented the country's economy from shrinking by 0.2pc in the first quarter. 'There have been so many other areas of Hungary's economy that are just dragging it down that this Chinese investment hasn't been large enough, really, to generate that sustained growth,' says Liam Peach of Capital Economics. Orban's wooing of China also comes with political risk, particularly with the US. Many of Donald Trump's inner circle admire Orban's muscular, anti-woke populism. But even if this means they are inclined to take a softer approach with him, Hungary could still suffer if the EU seeks to appease the US president by taking a tougher stance on China. Spurred by Trump's first presidential term, Brussels has built up new powers to screen Chinese investment, whether for security reasons or to counter the unfair advantage of Beijing subsidies. These could be used against Chinese carmakers. 'The most extreme measures would be basically limiting production,' says Gregor Sebastian, a senior analyst at Rhodium Group, highlighting how Brussels is already investigating BYD's investment in Hungary. 'That would affect not just BYD,' Sebastian says. 'It would have a strong deterrent effect as well.' Meanwhile, Brussels and Beijing are still negotiating over an alternative to the EV tariffs. Negotiators are weighing up whether to replace the tariffs, which in BYD's case are set at 17pc, with a minimum price for Chinese-made EVs. But it is unclear if they will apply to any cars made within the bloc – so the Hungarian backdoor could remain open. However, even if Orban keeps enticing Chinese carmakers, not everyone is sure they will overrun their German and European rivals anytime soon. Schmidt says BYD's sales volumes of BEVs at just under 28,000 units in Western Europe in the first quarter simply are not big enough to justify its Hungarian factory. 'It's a chicken-and-egg situation,' he says. 'They are betting that going forward, they will have enough demand in Europe to reach a relatively high and healthy utilisation rate at that production site in Europe.' Overall, he does not expect the Chinese market share to grow much beyond 10pc, landing between the Koreans with 8pc and the Japanese with 13pc. By contrast, Munoz from Jato argues that the Germans and French will struggle to match the agility and pace of the Chinese upstarts. 'I was at the Beijing Motor Show a few weeks ago, and the speed at which they are presenting and introducing new cars is impossible to match,' he says. 'Based on the regulation the Europeans have, based on the cost structure, it is very difficult for them to match this speed.' Munoz sees the Chinese companies' strongest prospects as lying in emerging markets such as Thailand and China. But if they are locked out of the US and are discouraged in the relatively hostile markets of India, Japan and Korea, they will come to Europe one way or another. 'It's the third-largest car market, behind China and the US,' says Munoz.' They definitely need to be there.' Bolder ambitions could lead the Chinese to seek more European landing points than just Hungary. But Beijing has told its car industry to pause investment in countries that voted for the tariffs last October. This led to Hangzhou-based Leapmotor last month pulling EV production at its Stellantis joint-venture plant in Poland. For now, then, the Chinese beachhead into Europe will remain in Hungary, potentially putting Budapest and Brussels on a collision course for years to come. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
