‘Sheer protectionism!’ China condemns EU probe into electric vehicle subsidies

“In what position is @EU_Commission to launch anti-subsidy investigation into electric vehicles from #China? This is nothing but sheer protectionism,” Wang wrote.

An accompanying screengrab listed incentives buyers of electric vehicles can enjoy in France and Germany, including tax exemptions and discount bonuses.

EU officials estimate that Chinese branded electric vehicles are undercutting local models by 20 per cent on the European market. Pre-investigations have reportedly uncovered evidence of subsidies across China’s EV supply chain.

The South China Morning Post’s calculations, based on Chinese customs data, indicate that in the first seven months of 2023, Chinese electric vehicle shipments to the EU jumped 113 per cent from the same period a year earlier, 379 per cent from 2021 and 3,205 per cent from 2020.

Some European political leaders enthusiastically supported the inquiry, which could lead to the placing of import duties on EVs made in China should they be found to receive distorting subsidies.

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French Economy Minister Bruno Le Maire, in Berlin to meet his German counterpart Robert Habeck, said he “welcomed the investigation”.

“If these subsidies do not comply with the rules of the World Trade Organization, Europe must be able to fight back,” he told Politico.

Habeck, known to take a more hawkish line on China than German Chancellor Olaf Scholz, also praised the inquiry.

“It is about unfair competition. It’s not about keeping high-performance, low-cost cars out of the European market; it’s about looking to see if there are hidden, direct or indirect subsidies that create an unfair competitive advantage,” he said.

But business groups gave the commission’s inquiry a mixed reception, amid concerns that it could spark retaliation from China that could harm their interests or lead to a spiralling trade war.

“The so-called EU anti-subsidy investigations are a very formal process based on established criteria and steps. Damages must be causally measured, and the common interest must be taken into account. Possible reactions from China must also be considered,” said Hannes Schumann, a spokesman for the German Association of the Automotive Industry.

“It is clear that an anti-subsidy investigation alone does not contribute to solving the existing challenges regarding the competitiveness of the European location,” he added.

The Brussels-based ACEA struck a more positive tone, describing von der Leyen’s announcement as “a positive signal that the European Commission is recognising the increasingly asymmetric situation our industry is faced with, and is giving urgent consideration to distorted competition in our sector”.

“China’s apparent advantage and cost-competitive imports are already impacting European auto makers’ domestic market share, with a massive surge in electric vehicle imports in recent years,” Sigrid de Vries, ACEA’s director general, said.

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An industry group representing Chinese businesses in the bloc expressed its “strong concern and opposition” to the investigation.

“Chinese electric vehicle manufacturers, along with their upstream and downstream industry partners, have persistently pushed the boundaries of innovation,” read a statement from the China Chamber of Commerce to the European Union, which represents 1,000 Chinese companies in the EU.

“It’s crucial to emphasise that this advantage isn’t a product of what the commission side called ‘huge state subsidies’,” it added.

South China Morning Post