It was admittedly no surprise: Just a few days after the EU decision to impose additional tariffs on Chinese EVs, China announced its anti-dumping measures against European brandy imports. French cognac producers in particular see themselves as “hostages” in the trade conflict. And while the EU is already taking legal steps, China’s Ministry of Commerce has threatened to take further measures – which should now especially alarm the German car industry.
Beijing also stated that it was considering raising tariffs on imports of “large-engine vehicles” with an engine capacity of 2.5 liters or more. As Amelie Richter explains in her analysis, this would affect numerous cars from premium brands such as Mercedes-Benz, Audi, and BMW, most of which are not produced in the People’s Republic but imported.
Expectations of China’s National Development and Reform Commission (NDRC) were high, but the latest press conference left many observers disappointed. Instead of extensive economic stimulus packages, only vague promises and hardly any concrete measures were made.
While international analysts urgently call for further fiscal stimulus, China’s leadership remains surprisingly calm. The growth target of around five percent is still achievable, they say. Joern Petring has summarized for you what Beijing still has up its sleeve and how long the government can take before the economic problems get out of hand.
Expectations of the National Development and Reform Commission (NDRC) were perhaps too high. Observers had hoped that the powerful authority would announce further measures to support the economy on Tuesday and continue where the Chinese People’s Bank left off shortly before the October holidays.
However, the press conference on the first working day after the holidays did not meet these hopes. NDRC Chairman Zheng Shanjie remained very basic in his remarks and did not give the impression that urgent action was necessary. He gave a dry description of China’s economic development as “stable” and “progressing.” He emphasized that the fundamentals remained unchanged and that the growth target of around five percent was achievable.
Zheng thus appeared to contradict the general view of many international analysts, who believe that additional fiscal measures are urgently needed after the People’s Bank expanded the lending volume at the end of September and facilitated investments in the stock market. The sticking point: New debt is once again the main remedy. However, rather than new debt, the Chinese economy needs the confidence of its consumers to finally generate the urgently needed domestic demand.
Zheng and his team announced hardly anything spectacular: Loan support for medium-sized companies will be expanded, and more government bonds with long maturities will be issued next year to promote large projects. An investment package of 100 billion yuan (around 12.8 billion euros) for “important strategic areas” originally planned for 2025 will be brought forward from the budget to this year. Zheng also reiterated the need to stabilize the property market.
A reporter from the state TV station CCTV then felt compelled to ask for more details – to no avail. Reports have long been circulating that Beijing could issue special sovereign bonds worth at least two trillion yuan (257 billion euros) this year to boost consumption. However, there have been no concrete announcements, even though economists consider it a key factor in boosting household consumption in the short term.
“No press conference would’ve been better for markets,” commented Shehad Qazi from the US consultancy China Beige Book on X. However, other analysts pointed out that the NDRC is not authorized to announce a concrete special bond package anyway – this is the task of the Ministry of Finance. So there is still a chance that the hoped-for announcement will come later.
“We need fiscal, and then hopefully some real major economic reform,” said Eva Lee, head of Greater China equities at UBS Global Wealth Management in Hong Kong. Aleksey Mironenko, global head of investment solutions at Leo Wealth in Hong Kong, also told Bloomberg that the focus is now on the measures that could be announced in the coming weeks. “The durability of this China rally will depend on action following words on the fiscal side of the equation,” Mironenko said.
The unfulfilled expectations were felt almost immediately on the stock markets after the NDRC failed to provide details on how it intends to encourage its citizens to consume more. After hitting a two-year high in early trading, the stock market quickly declined after the press conference. Disappointment among investors was particularly noticeable in Hong Kong. Share prices fell drastically in some cases. The European stock markets also took a beating.
However, this trend may even play in the government’s favor. Xu Zhong, deputy secretary general of the state-backed National Association of Financial Market Institutional Investors, who previously worked for the People’s Bank for two decades, pointed out that loans must be prevented from flowing into the stock market under the guise of consumer loans. He said the stock market carries risks and investments must be made cautiously. “Investors must be aware of these risks and base their decisions on their own risk tolerance, avoiding blind speculation,” Xu wrote in a commentary on Monday for the business magazine Caixin.
In this respect, the press conference would have served a useful purpose from the government’s point of view, as it nipped too much euphoria in the bud. “However, we believe the pro-growth policy stance remains unchanged, and it is clear that the government does not want to exhaust its policy tools too quickly,” said Yue Su from the Economist Intelligence Unit (EIU), the analysis arm of the Economist Group, in a LinkedIn post, which she later deleted.
Accordingly, EIU assumes that the government will provide one to three trillion yuan of additional fiscal support this year and the next to stimulate the real economy, recapitalize banks and stabilize the property market. “This, along with investments from special long-term bonds planned for next year, is expected to primarily impact 2025’s economic growth.”
Only days after the EU decision to impose additional tariffs on Chinese EVs, China has imposed provisional anti-dumping measures on brandy imports from the European Union.
The highest rate applies to JAS Hennessy, a subsidiary of the French luxury goods group LVMH, with 39 percent of the import value. Rémy Martin, a brand of the spirits manufacturer Rémy Cointreau, received 38.1 percent. Most producers must expect 34.8 percent. The smaller producer, Martell, received the lowest rate at 30.6 percent.
As of October 11, importers must now provide a security deposit to Chinese customs. China justified the measures by stating that an investigation had come to the preliminary conclusion that the dumping of brandy from the EU could cause “considerable damage” to the brandy sector in the People’s Republic.
The Chinese anti-dumping measures against European cognac are hardly surprising – the investigation into European brandy has been ongoing for some time. Since the decision in Brussels on Friday last week, it was considered very likely that Beijing would take this step. It is also likely that this will fall on the first business day after the Chinese public holiday week.
The EU Commission was apparently prepared. Shortly after the Chinese Ministry of Commerce’s announcement, the Brussels authority announced that it would take the matter to the World Trade Organization (WTO): “The European Commission will challenge, at the WTO, the announced imposition of provisional anti-dumping measures by China on imports of brandy from the EU,” said Commission spokesman Olof Gill. “We believe that these measures are unfounded, and we are determined to defend EU industry against the abuse of trade defense instruments.”
Bernd Lange, Chairman of the Trade Committee in the EU Parliament, called China’s move “a pinprick in the negotiations.” Lange told Table.Briefings: “This is part of the poker game. If Beijing gets serious, the EU will go to the WTO.”
France’s Trade Minister Sophie Primas agreed: “Together with the European Commission, we will, of course, challenge this decision before the WTO Dispute Settlement Body,” she said. The association of French cognac producers, Bureau National Interprofessionnel du Cognac (BNIC), called on the government on Tuesday to “put an end to the escalation.” The producers are “hostages” of the trade conflict over electric cars. “These tariffs must be suspended before it is too late,” BNIC demanded.
The Commission and the Chinese government are still negotiating ways to avert the EU tariffs on electric cars. These will otherwise come into force at the end of October. On Tuesday evening, reports emerged that the Chinese government had apparently tried to avert the additional EV tariffs by offering a minimum price of 30,000 euros. This was reported by Reuters. The amount of the proposed minimum prices had not previously been known.
Paris criticized China’s leader Xi Jinping for breaking a promise he made to the French president. It “goes against the commitment made by President Xi during his visit to France,” Primas said in a statement to POLITICO. Emmanuel Macron received Xi in May in the French capital. Among the gifts Macron presented to China’s President were two bottles of cognac, a Hennessy X.O. and a Rémy Martin Louis XIII.
Cognac is the largest single category of imported spirits in China. According to BNIC data, China accounted for 19.4 percent of all French cognac exports last year. This makes the People’s Republic one of the most profitable markets for producers. The French account for 99 percent of China’s brandy imports. French shipments were worth around 1.5 billion euros in 2023. The market leader in this category in the People’s Republic is Rémy Cointreau.
However, French cognac only accounts for a fraction of the total Chinese spirits market. The most popular drink in China is locally produced baijiu, which accounts for 95 percent of the spirits market.
Cognac will probably not be the end of the story, however. On Tuesday, the Chinese Ministry of Commerce indicated that further tariffs on other products could follow: An anti-subsidy investigation into EU pork is still ongoing. Certain EU dairy products have also already been targeted. The ministry said that “objective and fair” decisions would be made.
However, one comment should cause Berlin to prick up its ears: The Ministry added that it was considering raising tariffs on imported “large-engine vehicles.” This includes vehicles with an engine displacement of 2.5 liters or more.
Numerous cars from premium brands such as Mercedes-Benz, Audi and BMW could fall under the new regulation. Although the brands operate plants in China, most large saloons and SUVs are imported and not manufactured in the People’s Republic – for example, the Mercedes-Benz S-Class, the Audi A8 or the BMW 7 Series.
Sinolytics is a research-based business consultancy entirely focused on China. It advises European companies on their strategic orientation and specific business activities in the People’s Republic.
Chinese national flags have become ubiquitous in Hong Kong. To mark the anniversary of the People’s Republic and the subsequent Golden Week, property company Shun Lee Estate has transformed a residential complex in Kwun Tong into a red checkerboard pattern. Behind every door is a patriot, seems to be the message.
It was admittedly no surprise: Just a few days after the EU decision to impose additional tariffs on Chinese EVs, China announced its anti-dumping measures against European brandy imports. French cognac producers in particular see themselves as “hostages” in the trade conflict. And while the EU is already taking legal steps, China’s Ministry of Commerce has threatened to take further measures – which should now especially alarm the German car industry.
Beijing also stated that it was considering raising tariffs on imports of “large-engine vehicles” with an engine capacity of 2.5 liters or more. As Amelie Richter explains in her analysis, this would affect numerous cars from premium brands such as Mercedes-Benz, Audi, and BMW, most of which are not produced in the People’s Republic but imported.
Expectations of China’s National Development and Reform Commission (NDRC) were high, but the latest press conference left many observers disappointed. Instead of extensive economic stimulus packages, only vague promises and hardly any concrete measures were made.
While international analysts urgently call for further fiscal stimulus, China’s leadership remains surprisingly calm. The growth target of around five percent is still achievable, they say. Joern Petring has summarized for you what Beijing still has up its sleeve and how long the government can take before the economic problems get out of hand.
Expectations of the National Development and Reform Commission (NDRC) were perhaps too high. Observers had hoped that the powerful authority would announce further measures to support the economy on Tuesday and continue where the Chinese People’s Bank left off shortly before the October holidays.
However, the press conference on the first working day after the holidays did not meet these hopes. NDRC Chairman Zheng Shanjie remained very basic in his remarks and did not give the impression that urgent action was necessary. He gave a dry description of China’s economic development as “stable” and “progressing.” He emphasized that the fundamentals remained unchanged and that the growth target of around five percent was achievable.
Zheng thus appeared to contradict the general view of many international analysts, who believe that additional fiscal measures are urgently needed after the People’s Bank expanded the lending volume at the end of September and facilitated investments in the stock market. The sticking point: New debt is once again the main remedy. However, rather than new debt, the Chinese economy needs the confidence of its consumers to finally generate the urgently needed domestic demand.
Zheng and his team announced hardly anything spectacular: Loan support for medium-sized companies will be expanded, and more government bonds with long maturities will be issued next year to promote large projects. An investment package of 100 billion yuan (around 12.8 billion euros) for “important strategic areas” originally planned for 2025 will be brought forward from the budget to this year. Zheng also reiterated the need to stabilize the property market.
A reporter from the state TV station CCTV then felt compelled to ask for more details – to no avail. Reports have long been circulating that Beijing could issue special sovereign bonds worth at least two trillion yuan (257 billion euros) this year to boost consumption. However, there have been no concrete announcements, even though economists consider it a key factor in boosting household consumption in the short term.
“No press conference would’ve been better for markets,” commented Shehad Qazi from the US consultancy China Beige Book on X. However, other analysts pointed out that the NDRC is not authorized to announce a concrete special bond package anyway – this is the task of the Ministry of Finance. So there is still a chance that the hoped-for announcement will come later.
“We need fiscal, and then hopefully some real major economic reform,” said Eva Lee, head of Greater China equities at UBS Global Wealth Management in Hong Kong. Aleksey Mironenko, global head of investment solutions at Leo Wealth in Hong Kong, also told Bloomberg that the focus is now on the measures that could be announced in the coming weeks. “The durability of this China rally will depend on action following words on the fiscal side of the equation,” Mironenko said.
The unfulfilled expectations were felt almost immediately on the stock markets after the NDRC failed to provide details on how it intends to encourage its citizens to consume more. After hitting a two-year high in early trading, the stock market quickly declined after the press conference. Disappointment among investors was particularly noticeable in Hong Kong. Share prices fell drastically in some cases. The European stock markets also took a beating.
However, this trend may even play in the government’s favor. Xu Zhong, deputy secretary general of the state-backed National Association of Financial Market Institutional Investors, who previously worked for the People’s Bank for two decades, pointed out that loans must be prevented from flowing into the stock market under the guise of consumer loans. He said the stock market carries risks and investments must be made cautiously. “Investors must be aware of these risks and base their decisions on their own risk tolerance, avoiding blind speculation,” Xu wrote in a commentary on Monday for the business magazine Caixin.
In this respect, the press conference would have served a useful purpose from the government’s point of view, as it nipped too much euphoria in the bud. “However, we believe the pro-growth policy stance remains unchanged, and it is clear that the government does not want to exhaust its policy tools too quickly,” said Yue Su from the Economist Intelligence Unit (EIU), the analysis arm of the Economist Group, in a LinkedIn post, which she later deleted.
Accordingly, EIU assumes that the government will provide one to three trillion yuan of additional fiscal support this year and the next to stimulate the real economy, recapitalize banks and stabilize the property market. “This, along with investments from special long-term bonds planned for next year, is expected to primarily impact 2025’s economic growth.”
Only days after the EU decision to impose additional tariffs on Chinese EVs, China has imposed provisional anti-dumping measures on brandy imports from the European Union.
The highest rate applies to JAS Hennessy, a subsidiary of the French luxury goods group LVMH, with 39 percent of the import value. Rémy Martin, a brand of the spirits manufacturer Rémy Cointreau, received 38.1 percent. Most producers must expect 34.8 percent. The smaller producer, Martell, received the lowest rate at 30.6 percent.
As of October 11, importers must now provide a security deposit to Chinese customs. China justified the measures by stating that an investigation had come to the preliminary conclusion that the dumping of brandy from the EU could cause “considerable damage” to the brandy sector in the People’s Republic.
The Chinese anti-dumping measures against European cognac are hardly surprising – the investigation into European brandy has been ongoing for some time. Since the decision in Brussels on Friday last week, it was considered very likely that Beijing would take this step. It is also likely that this will fall on the first business day after the Chinese public holiday week.
The EU Commission was apparently prepared. Shortly after the Chinese Ministry of Commerce’s announcement, the Brussels authority announced that it would take the matter to the World Trade Organization (WTO): “The European Commission will challenge, at the WTO, the announced imposition of provisional anti-dumping measures by China on imports of brandy from the EU,” said Commission spokesman Olof Gill. “We believe that these measures are unfounded, and we are determined to defend EU industry against the abuse of trade defense instruments.”
Bernd Lange, Chairman of the Trade Committee in the EU Parliament, called China’s move “a pinprick in the negotiations.” Lange told Table.Briefings: “This is part of the poker game. If Beijing gets serious, the EU will go to the WTO.”
France’s Trade Minister Sophie Primas agreed: “Together with the European Commission, we will, of course, challenge this decision before the WTO Dispute Settlement Body,” she said. The association of French cognac producers, Bureau National Interprofessionnel du Cognac (BNIC), called on the government on Tuesday to “put an end to the escalation.” The producers are “hostages” of the trade conflict over electric cars. “These tariffs must be suspended before it is too late,” BNIC demanded.
The Commission and the Chinese government are still negotiating ways to avert the EU tariffs on electric cars. These will otherwise come into force at the end of October. On Tuesday evening, reports emerged that the Chinese government had apparently tried to avert the additional EV tariffs by offering a minimum price of 30,000 euros. This was reported by Reuters. The amount of the proposed minimum prices had not previously been known.
Paris criticized China’s leader Xi Jinping for breaking a promise he made to the French president. It “goes against the commitment made by President Xi during his visit to France,” Primas said in a statement to POLITICO. Emmanuel Macron received Xi in May in the French capital. Among the gifts Macron presented to China’s President were two bottles of cognac, a Hennessy X.O. and a Rémy Martin Louis XIII.
Cognac is the largest single category of imported spirits in China. According to BNIC data, China accounted for 19.4 percent of all French cognac exports last year. This makes the People’s Republic one of the most profitable markets for producers. The French account for 99 percent of China’s brandy imports. French shipments were worth around 1.5 billion euros in 2023. The market leader in this category in the People’s Republic is Rémy Cointreau.
However, French cognac only accounts for a fraction of the total Chinese spirits market. The most popular drink in China is locally produced baijiu, which accounts for 95 percent of the spirits market.
Cognac will probably not be the end of the story, however. On Tuesday, the Chinese Ministry of Commerce indicated that further tariffs on other products could follow: An anti-subsidy investigation into EU pork is still ongoing. Certain EU dairy products have also already been targeted. The ministry said that “objective and fair” decisions would be made.
However, one comment should cause Berlin to prick up its ears: The Ministry added that it was considering raising tariffs on imported “large-engine vehicles.” This includes vehicles with an engine displacement of 2.5 liters or more.
Numerous cars from premium brands such as Mercedes-Benz, Audi and BMW could fall under the new regulation. Although the brands operate plants in China, most large saloons and SUVs are imported and not manufactured in the People’s Republic – for example, the Mercedes-Benz S-Class, the Audi A8 or the BMW 7 Series.
Sinolytics is a research-based business consultancy entirely focused on China. It advises European companies on their strategic orientation and specific business activities in the People’s Republic.
Chinese national flags have become ubiquitous in Hong Kong. To mark the anniversary of the People’s Republic and the subsequent Golden Week, property company Shun Lee Estate has transformed a residential complex in Kwun Tong into a red checkerboard pattern. Behind every door is a patriot, seems to be the message.
