EU's Growing Concerns Over Chinese Investments in Morocco
The Chinese government's ambition to establish an industrial base in Morocco is generating increasing apprehension within the European Union. Brussels is particularly worried that the substantial investments, amounting to billions of dollars, from various Chinese corporations could transform Morocco into a hub for exporting subsidized products to European markets. Maros Sefcovic, the European Commissioner for Trade, expressed these concerns in a recent statement to the Financial Times, highlighting that these Chinese investments are indicative of Beijing's strategy to offload its production overcapacity by redirecting exports to Europe through partner countries, which he regards as a significant issue for the European economy.
Amid escalating trade tensions, the EU has fortified its defenses against what it perceives as circumvention of customs duties by China. Last year, the European Commission determined that aluminum wheels exported from Morocco had received undue subsidies from both Rabat and Beijing, aligning with China's Belt and Road Initiative. However, European officials acknowledge the complexity in distinguishing between genuine industrial cooperation between China and Morocco and potential attempts to bypass European customs barriers. This has led the EU to impose tariffs as high as 45% on Chinese electric vehicles.
China-Morocco Cooperation and Investment Opportunities
Chinese investors emphasize Morocco's increasingly pivotal role in the European automotive supply chains, a factor that complicates the implementation of any protectionist measures. Junji Cai, the project manager at the Chinese braking systems group APG, revealed that the company's planned factory in the Tanger Tech zone, with an investment of $70 million, would leverage both local labor and materials alongside Chinese technologies and inputs. According to Cai, the collaboration among European, Moroccan, and Chinese enterprises yields mutual benefits, enabling the supply of European factories at competitive prices. APG is expected to join about ten other Chinese firms already operating in the industrial zone, where Sentury Tire has commenced operations for its factory, while BTR New Material Group, a leading global supplier of anode materials for batteries, is constructing a new unit.
Among other notable Chinese investments in Morocco is a $1.3 billion gigafactory project for batteries spearheaded by Gotion High-tech in Kénitra, with German automotive giant Volkswagen owning a 2% stake in the company. This initiative marks the first of its kind in the Middle East and North Africa. Mehdi Iraqi, the president of the Morocco-China Business Council, informed the Financial Times that since the onset of the Covid-19 pandemic, potential Chinese investor delegations have been visiting Morocco at a pace of two to three per week.
Morocco's appeal to foreign investors is bolstered by several advantages, including a five-year tax exemption, a youthful workforce, the potential use of renewable energy to mitigate the impact of the European carbon tax, and access to a consumer market of approximately 2.5 billion people through nearly 50 free trade agreements, notably with the EU and the United States. However, Morocco firmly rejects allegations of being a conduit for Chinese overcapacity into Europe. Yassine Lahyani, director of emerging industries and other sectors at the Moroccan Agency for Investment and Export Development (AMDIE), argues that the kingdom can indeed be "one of the best industrial partners for the EU." He frames this cooperation as a mutual opportunity while urging Chinese investors to adhere to rules of origin, which require that a product undergo sufficient industrial transformation in Morocco to qualify for customs exemptions when exported to the EU.
As reported by yabiladi.com.
