Europe’s naivety about the China export shock is tragic

EUROPEAN Union carmakers such as Volkswagen got their wish this week when a combustion engine ban for 2035 onwards was effectively abandoned. It was seen as too ambitious, too costly and a dream for Chinese rivals, whose electric vehicle (EV) head start – powered by subsidies – has given them a 7 per cent share of the continent’s auto market. Faced with a choice between climate leadership and protecting jobs, the EU chose the latter.

While it is true that the ban failed to spark a true European EV boom, dumping it is nowhere near enough to secure the industry’s future. It will not solve Chinese competition. Worse, ditching it sends a signal that carmakers can comfortably take their foot off the investment accelerator. That is the wrong message.

The tragedy here is Europe’s industrial and geopolitical naivety in the face of China’s export engine and high-tech ambitions, rather than clumsy bureaucratic overreach. Beijing’s trade surplus with the EU has widened to close to US$300 billion this year.