Dear readers,
The past week has been a week of record-breaking hot June in Northern China, and we bring you what summers are notorious for-the storms. Following the United States' lead, the European Commission is initiating a whirlwind of additional tariffs ranging between 17.4% and 38.1% on Chinese electric vehicles. The decision will take effect in July, despite a lack of consensus within Europe over the issue, with explicit opposition from the Hungarian and German. After months of tug-of-war, the "tariff sword" is no longer hanging over our heads; where it will eventually strike remains to be seen.
While European politicians spare no effort pandering to the US, the general public, on the other hand, refuses to follow suit. From TikTok to YouTube, countless ordinary tourists who benefit from China’s recent 144-hour and 72-hour visa-free policies are impressing the world with their experiences in the country. Among them, we find fans of the beloved panda star, Fu Bao, who made her debut in China this week.
Without further ado, let’s dive into the vibrancy that China has to offer.
European Commission adds tariffs to Chinese EVs
Recently, the European Commission released the results of its anti-subsidy investigation into Chinese electric vehicles (EVs). The report claims that China's EV value chain benefits from unfair subsidies, harming EU manufacturers. As a result, the EU has decided to impose tariffs of up to 38.1% on Chinese EVs starting no later than July 4th. The proposed tariffs include:
17.4% on BYD
20% on Geely
38.1% on SAIC Group
21% on other companies cooperating with the investigation
38.1% on non-cooperative companies
Tesla vehicles produced in China may face separate tariff rates.
On June 13-14, China's National Development and Reform Commission (NDRC) criticized the EU investigation, calling it "unfounded, predetermined, unreasonable, and non-compliant," and accused the EU of weaponizing and politicizing the investigation tools. The NDRC warned that imposing tariffs on Chinese EVs would temporarily protect the EU market but ultimately weaken the global competitiveness of the EU automotive industry.
Background:
Since 2016, China has led the world in annual sales and ownership of EVs. In 2023, China's EV production and sales surged, with 9.58 million units produced and 9.49 million sold, accounting for 66% of global sales. China's vehicle exports surpassed Japan's in 2023, making it the world's largest vehicle exporter, thanks to the rapid growth of EV exports.
The US government imposed restrictions on Chinese EV market access in February 2024. The Alliance for American Manufacturing urged the Biden administration to prevent Chinese industrial goods, including vehicles, from entering the US market via investments in Mexico. Around the same time, Apple announced the abandonment of its EV project after a decade and billions of dollars in investment.
European nations and automakers had previously announced timelines for phasing out internal combustion engine vehicles and pushed for "carbon tariffs." However, in February 2024, Mercedes-Benz adjusted its schedule, deciding to continue producing internal combustion engine vehicles.
Focus Points in China’s Online Discussions:
The recent European Parliament elections saw a significant rise in support for right-wing factions in France and Germany, reflecting a shift in public sentiment. This split in opinion is evident in the divergent stances of France and Germany on the tariffs against Chinese EVs.
Netizens sarcastically suggested that proactive France and Spain might face a backlash, with potential retaliatory measures targeting luxury goods, brandy, wine, and ham.
Some mentioned that the EU's anti-dumping investigations into Chinese pork and dairy products by Reuters could conclude soon.
Ironically, the EU's substantial tariffs on Chinese-made EVs will most impact Western companies manufacturing in China and exporting to the EU. For example, Tesla accounts for 68% of EV imports from China to Western Europe. This could explain the fierce opposition from Germany's top three automakers.
Current protectionist policies against Chinese EVs resemble the US-Japan "car wars" of the late 20th century.
Despite the early stage of domestic EV penetration, with a 40%-50% market share, China’s global market penetration is slowing. In 2023, Toyota sold 10.65 million vehicles globally, while BYD, the largest EV company, sold 3.02 million. The potential for electric vehicles remains vast, especially for pure electric vehicles.
A key issue is whether the EU will allow Chinese automakers to invest and establish production bases in Europe, as China permits EU companies to do. This contrasts with the US approach, which not only imposes a 100% tariff but also blocks Chinese automakers from establishing factories in the US.
Politico EU mentioned that an EU official admitted that despite talks of an "evidence-based solution that adheres to global trade rules," the decision will ultimately be political, involving top leaders like Ursula von der Leyen.
For Deeper Insights, Check Out Our Exclusive Coverage:
The US Forgets How They Made Toyota World's Leading Car Company
Is the EU too Dependent on China?
Why the Western automakers are ceding the EV sector to China?
Premium Section Update
We are pleased to announce that our premium section on the website has been updated with the following content for June. Experience the full value with a FREE 7-Day Trial and start exploring. (Note: Due to pricing differences, some content may not be available on Substack yet.)
Intelligence Upadate:
1. Poll:How do Pro-Palestinian campus protests boost communist appeal in China?
For the Chinese youth, the current pro-Palestine protests at U.S. universities feel oddly reminiscent of a revolutionary chapter in China’s modern history: the May Fourth Movement in 1919. A harbinger of the rise of communism in China , the May Fourth Movement bear witness to an awakening body of student protestors and a ruthless authority who tried to silence the outcry. The association has driven many Chinese youth to sympathize deeply with the current student demostrators in the US, and at the same time remain realistic about what the demonstrations can accomplish.
To explore this issue further, we conducted a survey on Bilibili and Weibo, posing the question: “How do you view the U.S. students’ pro-Palestine protests and their potential implications?” Bilibili and Weibo rank among the most popular social media platforms for China’s Generation Z. Drawing on the total 2,199 votes collected and the vibrant comment sections, we arrived at several interesting conclusions.
2. China’s AI Revolution: Leapfrogging the West With Pragmatic Models
Faced with resource constraints by US, China is creating a unique AI ecosystem focused on practicality and efficiency. This approach could revolutionize various industries by enabling intelligent devices and autonomous systems. Can "More With Less" Win the Race?
Learn more China’s three AI strategies: MOE (Mixture-of-Experts), Specialist Models, and Compact Edge-Side Models.
KEY TAKEAWAYS
Challenges Faced by China: Limited access to venture capital funding compared to US counterparts; difficulty obtaining high-end computing chips due to US embargoes.
China’s Unique AI Strategies: MOE (Mixture-of-Experts), Specialist Models, and Compact Edge-Side Models.
China is creating a unique AI ecosystem focused on practicality and efficiency. This approach could revolutionize various industries by enabling intelligent devices and autonomous systems.
China’s advancements in compact AI models will likely strengthen its position as a global manufacturing leader.
Talks Update
Is China’s economy really in trouble?
-An in-depth conversation between Professor Wen Yi, an Economics Professor at Shanghai Jiao Tong University, and Mr. Peter Walker, a veteran consultant in the field of finance.
Here is the first part of their discussion:"Is China's economy in big trouble?"
Peter Walker:
What is being said about the Chinese economy in the us the consensus. of view is that the Chinese economy is in trouble. It's going to be in decline, not just in the short term, but decline in the long term.
Wen Yi:
I can take it from two perspective.
China in the past 40 years after economic reform, if not including the earlier 30 years under social planning, has achieved in the degree of industrialization, which took western countries, especially european countries more than 200 years.
Naturally, China necessary have also accumulated the problems encountered by european nations during their 200 years of industrialization. Those problems also need to be dealt with one by one.
China encounters some new problems which the western advanced economies has not encountered before.
For example, China's aging population comes earlier than Japan, than Uk ,than US. And also unemployment is even a bigger issue for china. Why? Because of the global market, even with the development of entire world, the potential purchase power has been increasing.
But still, the global market as a whole is quite limited. During the british industrial revolution, the Uk had the entire world as its market. But with just the population, a tiny fraction of China. And when the US rose to global stage, even though the US population was 10 times, probably more than ten times than the UK , but still, the US relied on the entire global market.
And the same global market in front of china is too small. That means even if China supply everything to the global market, China would not be able to achieve full employment.
……
Courses Update
China 101 by Christopher Kutarna ——Bonus Episode
In this updated episode, Chris shares the great division he sees between China and the West, and how each side, especially the West, would benefit from shifting their stance from judgment to curiosity. Chris argues that the Chinese Model holds the key not only to understanding China but also to remedying the West.
Key Point
“China is going to create a sputnik moment for the rest of the world.”
“The China model is quite good at a sort of setting a vision, and mobilizing public resources and planning towards collective goods.”
“It’s really telling that was the moment where U.S administrations woke up when China announces Made in China 2025”
"China Travel" Go viral
In the first quarter of this year, the number of foreigners visiting China tripled compared to the same period in 2023. The total number of visas issued to foreigners reached 466,000, a year-on-year increase of 118.8%, with 1.988 million visa-free entries, up 266.1%.
Since last year, China has been implementing 144-hour and 72-hour visa-free transit policies for several countries. In March, China further expanded this policy to include 15-day visa-free stays for six European countries, including Switzerland.
These favorable visa policies have led to a surge in foreign tourists visiting China. Content related to "China Travel" has been trending on YouTube and TikTok since late last year, with countless vloggers documenting their travels in China, garnering millions of views. Offline, Chinese residents have noticed an increase in foreign visitors, joking that a trip to Wangfujing feels like a trip to Paris, and that any tourist spot resembles a mini-United Nations.
Initially, most tourists arrived in mega-cities like Shanghai, Beijing, and Guangzhou. Now, more Chinese cities are being discovered and gaining popularity among foreign visitors. Travelers are exploring places like Shijiazhuang by high-speed rail, dining in Yangshuo, and marveling at Chongqing's 8D cityscape. They are also venturing into Xinjiang, Tibet, and Harbin.
In the past, China was often portrayed in Western media as a contradictory nation—"constantly collapsing yet continuously growing stronger." Whether China is collapsing or strengthening often depended on the policies of other countries at different times. Regardless, the message conveyed was that visiting mainland China was dangerous for Westerners. However, the visa-free policies over the past six months have begun to change this narrative.
"Seeing is believing," as the saying goes. Strengthening people-to-people exchanges can counteract the Western media's ideological monopoly on the narrative about China, exposing lies and presenting a more authentic and diverse China to the global public.
The openness of the world and truly people-to-people exchanges are essential to break the invisible shackles of discourse power. These shackles not only bind Chinese but also others, especially Westerners. Most ordinary people in the world are not too concerned about matters beyond their daily lives, making them easily trapped by these shackles. It is based on this perspective that we believe the world has always been open, especially in the information age. Western media, operating in accordance with past practices, has inevitably experienced a significant decline in credibility both domestically and internationally. It seems that the glass shackles have a chance to be broken.
Here are some recommended videos of foreigners traveling in China that even Chinese netizens love. Feel free to explore more:
Panda Highlights
To end on a heartwarming note: the debut of panda star Fu Bao in China.
Fu Bao, born on July 20, 2020, is the first giant panda born in South Korea to parents Ai Bao (Huan Huan) and Le Bao (Yuan Xin). Over the years, Fu Bao has garnered immense love from both Chinese and Korean fans, earning nicknames like "Princess Fu" and "Fu Dung Dung."
According to the agreement between China and South Korea, Fu Bao was required to return to China before turning four. On April 3rd, Fu Bao left Everland Resort in Yongin, South Korea, and began her journey home. After completing a two-month quarantine period, Fu Bao made her public debut at the China Conservation and Research Center for the Giant Panda in Wolong's Shenshuping Base on June 12th.
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Head to The China Academy website to learn more.