China’s EU relations have downshifted, and cheap cars are driving the change
- Amid mounting talk in Europe of ‘de-risking’ from China, coupled with the unstoppable rise of Chinese electric-vehicle makers, German carmakers may be losing their shine
- The EU’s anti-subsidy probe into Chinese EVs is widely expected to be discussed at length during a high-level economic and trade dialogue on Monday
In the southwest suburb of Liaoning province’s Shenyang, the commercial and industrial centre of northeast China, a 3.6km (2.2-mile) avenue boasts the Chinese name for German luxury automaker BMW.
Dubbed Baoma Boulevard, meaning “precious horse”, the road’s first address accommodates the headquarters of BMW Brilliance, a joint venture between the German brand – which holds a 75 per cent share – and Chinese firm Brilliance Auto. Having sold more than 5 million passenger cars and earned handsome profits in mainland China since its establishment 20 years ago, it has been one of the best examples of a German brand branching out in the world’s second-largest economy.
And as Shenyang’s biggest taxpayer for the past 17 years, the automaker has become a favoured darling of the local government. During pandemic lockdowns, when other manufacturing plants were ordered to halt production, the factories of BMW Brilliance and those of its suppliers were on a “white list”, allowing them to continue operating. And in Dalian, a port city of Liaoning, containers with parts destined for the automaker are always given the highest priority.
In the past two decades, such close engagement between German carmakers – not just BMW – and Chinese partners and governments has deeply shaped Beijing’s economic relations with Germany and Europe. But now, amid mounting talk in Europe of “de-risking” from China, coupled with the unstoppable rise of Chinese electric-vehicle (EV) makers, the shine may be wearing off.
“The economic interest used to have a stronger say in the German government. Many economic policies were influenced by the industry and big companies,” said Harald Kumpfert, former vice-chairman at the Shenyang branch of the European Union (EU) Chamber of Commerce in China.
“But now it’s different,” he said, adding that Germany’s current government coalition is adjusting its policy towards China, and that includes support for German firms operating in China.
