The Electric Vehicle Competition between German and China: Based on RCA and IIT Analyse New Energy Vehicle Trade

Abstract

In recent years, under the backdrop of accelerating global energy transition, new energy vehicles have become a new focus of strategic competition among major countries and international trade negotiations. Currently, most research on new energy vehicles focuses on the competition among developed countries' new energy vehicle industries, especially the competition between China and the United States. As a traditional automotive manufacturing power, Germany has conducted relatively less research on the electricization competition of new energy vehicles between China and itself. This paper, from the perspective of international trade, takes new energy vehicle complete vehicles (HS: 870380), lithium-ion batteries (HS: 850760), and motors/electronics control systems (HS: 850131/8503710) as research objects. Using methods such as RCA index (explicit comparative advantage) and IIT index (industry internal trade index), based on data from UN Comtrade and WTO Tariff Database, it studies and analyzes the international division of labor in intra-industry trade between China and Germany and the comparative advantages of each product of the two countries. At the same time, this paper combines China and Germany's tariff measures, the EU's subsidies and localization policies for new energy vehicles, as well as China's dual-subsidy policy, to analyze the impact of these trade policies on bilateral trade. The research finds that China has a significant comparative advantage in new energy vehicle complete vehicles (including pure electric plug-in hybrids), while Germany attempts to protect its domestic industry by means of anti-subsidy, localization requirements, etc., even though it does not have a comparative advantage. Based on this, this paper proposes that China should consolidate its advantages in battery power and vehicle manufacturing to stabilize the market and actively expand the market through subsidies, export tariff policies, etc., in order to maintain its initiative in the new round of energy trade competition.