China’s leadership has entered the highest level of alert.

The Swiss publication Neue Zürcher Zeitung (NZZ) has noticed that China has recently introduced a series of heavy policies aimed at halting the continued economic downturn, suggesting that this indicates the crisis is extremely severe. On the eve of the EU vote on additional tariffs on Chinese electric vehicles, Germany’s DPA (Deutsche Presse-Agentur) summarized the views of representatives from Germany’s business and political sectors.

NZZ has focused on the recent economic stimulus policies introduced by the Chinese government, believing that the severe economic difficulties have pushed China’s leadership to enter the highest level of alert.

“The authorities in Beijing are now on high alert. First, last Tuesday, China’s central bank announced a series of monetary policy measures aimed at stabilizing the faltering economy.

To stabilize commercial banks and the stock market, the central bank lowered key benchmark interest rates, mortgage rates for existing homes, and reduced the reserve requirement ratio for banks, releasing liquidity.

Two days later, Xi Jinping convened a Politburo meeting. Normally, the top decision-making body does not discuss economic issues at the September meeting, but this time was different, highlighting the severity of the situation.

Following the emergency Politburo meeting, Reuters reported that Beijing is planning to launch an economic stimulus package worth approximately $280 billion. Some of the initiatives are aimed at reviving weak consumption, with the government considering providing a monthly subsidy of about $110 for families with more than two children.”

The article further states, “Xi Jinping’s support for these measures demonstrates the seriousness of the problem, as such ‘handout’ policies run counter to the philosophy of strongman Xi, who believes that such actions would make people lazy and rob them of their drive to succeed.”

EU Response Should Not Lead to Self-Harm

This Friday (October 4), the 27 member states of the EU Council will vote on the European Commission’s proposal to impose tariffs of up to 45% on imported Chinese electric vehicles. The European Commission has accused China’s government subsidy policies of affecting the entire supply chain of electric vehicles, thus distorting the market. Chinese electric vehicles are often priced around 20% lower than comparable European products.

The DPA writes that Hildegard Müller, president of the German Automobile Industry Association, said, “The vote at the end of October on imposing additional tariffs on Chinese electric vehicles is yet another step away from global cooperation. This measure will increase the risk of global trade conflicts.” She urged the German government to reject the tariff proposal, stating that abstaining is not an option.

BMW’s CEO Oliver Zipse also called on the German government to vote against the proposal. He noted that Germany’s prosperity depends on open markets and free trade. Additional tariffs would only harm globally active German companies and could spark a trade conflict that would leave “only losers.”

Similar sentiments have come from Mercedes-Benz and Volkswagen. Mercedes-Benz CEO Ola Källenius urged the EU to seek a negotiated solution with China rather than resorting to tariffs. He said, “If the federal government votes against the tariffs on Friday, it will signal a commitment to finding a negotiated solution, rather than sparking a trade conflict.”

A spokesperson for Volkswagen responded to DPA’s inquiry, stating, “The proposed tariffs are the wrong approach; they won’t enhance the competitiveness of Europe’s auto industry.”

DPA continues by noting that Chancellor Olaf Scholz has repeatedly expressed concerns about punitive tariffs. He said, “Of course, we must protect our economy from unfair trade practices,” but added, “The EU’s response should not lead to self-harm. Therefore, negotiations with China on electric vehicles should continue.”

Germany’s Federal Minister for Economic Affairs, Robert Habeck, also supports resolving the issue through political means. On Wednesday, he emphasized at the Berlin Global Dialogue, “Tariffs are not the solution, and I agree.” He said China has proposed a political solution to the conflict, “Now, I urge the EU to be open to this discussion.”

Germany’s Federal Minister of Finance, Christian Lindner, also stressed, “Germany cannot agree to a potential trade war with China in key areas.”