Between 2019 and 2023, Chinese exports of electric vehicles grew from 0.5% of Europe’s EV market to 9.5% and are projected to reach 25% in 2025. China now exports more cars than Japan. Exports of solar panels, designated as a strategic industry by Beijing along with EVs and lithium batteries, have similarly exploded, increasing by 35% from 2023 compared to 2022, and representing over 80% of global production. These numbers, like Shakira’s hips, don’t lie.

The result? Undermining domestic production and, in Western eyes, the creation of risky dependencies, a worry amplified during the pandemic. Having encouraged China since 1980 to be the workshop of the world, Western governments now agonize about what the Wall Street Journal and some others have dubbed “China Shock 2.0”.

Calibrating China strategy

For the US, and to a lesser extent Europe, reducing reliance on Chinese technology is a matter of national security. Five years ago, the US decided on national security grounds to prop up its steel and auto industries (located mainly in blue states) with tariffs on imported steel and aluminium, a bludgeon that caught even the EU in its broad sweep. Those duties are still in place. For some six years now, Washington has ratcheted up a campaign to deny China access to high technology, notably semiconductors, spending more than US$100 billion in subsidies, tax credits, and grants to develop domestic capacity, reduce dependence on Chinese manufactured imports, and curb the export of American technology to China.

Europe, politically about half as far from the US as it is from China, tries to accommodate its old transatlantic ally but without irritating China too much. So more hesitantly Brussels followed, including opening last autumn antidumping investigations on Chinese EV imports and last week anti-subsidy investigations into Chinese solar panels; and, through the EU-US Trade and Technology Council, aims to reorganize semiconductor production to prevent Chinese market dominance by 2035.