German ruling parties urge EU to act against Chinese overcapacity

Parliamentary groups of Germany’s ruling CDU-SPD coalition have called for stronger European protection against “unfair competition” and concrete measures to support car manufacturers.

According to Reuters, parliamentary sources indicated that these proposals primarily target China’s “overcapacity”, although China was not explicitly mentioned in the document obtained by Reuters.

The document called for a “decisive” response against “market-distorting practices and unfair competition”, including a faster and broader deployment of anti-dumping and anti-subsidy measures at the EU level.

This development comes as German industry steps up pressure on Chancellor Friedrich Merz to take a harder line against Beijing.

This also marks a shift in a country that has long resisted trade barriers for fear of Chinese retaliation.

According to one demand, once the German government develops local content criteria that comply with EU law and can be harmonised across the bloc, these criteria should be incorporated into Germany’s existing electric vehicle subsidy scheme, addressing concerns that taxpayer-funded German incentives are also supporting imported Chinese electric cars.

To support the country’s automotive industry, the parliamentary groups asked the European Commission to allow plug-in hybrids, range-extender electric vehicles, and highly efficient internal combustion engine vehicles alongside battery-electric vehicles beyond 2035.

The parties also called on Brussels to suspend plans to tighten the so-called “utility factor” metric used in calculating plug-in hybrid emissions from early 2027.

Under current plans, carmakers will need to sell significantly more electric vehicles starting in 2027 to meet mandatory fleet CO2 targets.