TMTPost -- China is working to impose indirect export restrictions on electric vehicle (EV) technology amid increasing trade conflict between the country and the Western world.

Credit：Xinhua News Agency

China has strongly advised its automakers to keep the advanced EV technology stays at home and is encouraging the companies to export the kockdown kit (KD), or a collection of parts that required to assemble a product,to their plant overseas, which would ensure the key auto parts produced domestically, Bloomberg reported, citing people familiar with the matter.

In a meeting held in July, the Ministry of Commerce of China (MOFCOM) told more than a dozen automakers that they should not make any auto-related investments in India, and should first notify the Ministry of Industry and Information Technology (MIIT), which oversees information technology, mail, telecommunications and software industry, if they want to invest in Turkey, according to the report.

During the meeting, MOFCOM reportedly noted he countries inviting Chinese automakers to build plants are usually those that are enacting or considering trade barriers to Chinese cars. Officials was reported to ask attendees that manufacturers should not blindly follow trends or believe foreign governments' calls for investment.

The MOFCOM didn’t respond to the report. When asked about why Beijing tries to block the EV tech export per the report at a regular press conference Thursday, Chinese foreign ministry spokesperson Mao Ning suggested seeking response from competent authorities.

The reported Beijing’s instructions come as Chinese auto companies are working on mitigate tariff risks in Europe as additional tariffs went into effective two months ago and the proposed long-term tariff rates are set to be determined by the end of October.

The European Commission disclosed last month its draft decision to impose definitive countervailing duties on imports of BEVs from China to interested parties.The Commission said it would make a slight adjustment of the proposed duty rates based on substantiated comments on the provisional measures, though it still believes Chinese EV production has been benefited from subsidies. The regulatory body proposed to add up to 36.7% to the current 10% duty faced by Chinese exporters, modestly lowered from the initial maximum planned duty of 37.6% set in the start of July. 

The EU remains open to reaching an effective solution with the Chinese authorities in a World Trade Organization (WTO)-compatible manner, the European Commission said. According to the executive arm of the EU, EV companies subjected to proposed tariffs have ten days until August 30 to provide comments and request hearings. If a qualified EU majority votes in favor of the final regulation, the tariffs could become law by October 30 and remain in effect for five years, with the option extensions upon review.

As the EU is hiking duties on Chinese EVs to as much as 48%, China's new generation of EV manufacturers is teaming up with local industry so as to make their cars are considered homegrown. Barcelona will  play host to the Omoda E5, made by China's Chery Automobile, which has partnered with Spain's Ebro-EV Motors. Chinese maker Leapmotor's T03 city cars are rolling off an assembly line a Stellantis plant in Tychy, Poland. China's No. 1 EV maker BYD has announced plans for its own factory in Hungary, with another on the horizon in Turkey. Zeekr plans to use existing production facilities in Europe owned by its parent Geely and is considering building its vehicles in Europe to avoid EU duties.

But Valdis Dombrovskis, an executive vice president of the European Commission, warned recently that such moves would only work if the firms meet rules-of-origin requirements that dictate a minimum level of value must be created in the EU. “How much of the value added is going to be created in the EU, how much of the know-how is going to be in the EU? Is it just an assembly plant or a car manufacturing plant? It’s quite a substantial difference,” Dombrovskis told the Financial Times last month.