China reacted sharply to the EU Commission’s announcement that it would investigate the People’s Republic’s subsidies for electric cars. Brussels wanted to “protect its own industry” under the guise of fair competition, it was said from Beijing.
The EU Commission sees the domestic car industry at risk from cheap electric cars from China. She therefore wants to consider introducing anti-dumping duties. The Ministry of Commerce in Beijing reacted irritably to this announcement. China is very concerned and dissatisfied with the commission’s investigation, a spokesman said. The EU is simply concerned with “protecting its own industry” under the guise of fair competition.
This is “blatant protectionism” that will severely affect the global supply chain in the automotive industry and have a negative impact on Chinese-European economic and trade relations. China will closely monitor the protectionist tendencies and subsequent measures of the European Union and protect the interests of Chinese companies.
Ministry of Commerce emphasizes long-term relationships
The Ministry of Trade called on the EU to “dialogue and consult” to “create a fair, non-discriminatory and predictable market environment” for the joint development of the automotive industry. At the same time, it emphasized the long-standing relationships between Europe and China in the automotive sector. China’s auto industry has developed rapidly and become more competitive.
This is the result of constant technological innovation and the establishment of a complete industrial supply chain. Car companies from the EU area have invested in China for many years. China maintains an open and cooperative attitude and welcomes EU companies to further invest and expand in China. This also applies to electric cars.
Von der Leyen: “This is distorting our market”
EU Commission chief Ursula von der Leyen announced on Wednesday that the EU would open an investigation into state support for electric cars from China. “The price of these cars is artificially depressed by huge government subsidies – this distorts our market,” she said in the European Parliament in Strasbourg. That is not acceptable.
World markets would be flooded with cheaper Chinese electric cars. She will therefore initiate an “anti-subsidy investigation”. This can lead, for example, to punitive tariffs being levied. The car industry and the switch to electric drives are a “crucial industry for a clean economy – with enormous potential for Europe,” the Commission President continued. Europe is open to competition, but not to an unequal race to the bottom.
Dozens of local brands have emerged in China in recent years. BYD, Geely, XPeng and Nio have already surpassed foreign manufacturers on the Chinese market and are now pushing abroad – with the financial strength of the huge domestic market behind them. In addition, Chinese manufacturers have been waging a price war for months against the background of the sluggish domestic economy and weak consumer spending.
DIHK against new punitive tariffs
The European Chamber of Commerce in China, however, spoke out in favor of fair competition. Free and open markets depend on rules-based trading practices, the Chamber of Commerce said. “The European Chamber expects a fact-based investigation with a view to ensuring such principles for all market participants,” said Chamber President Jens Eskelund.
The German Chamber of Commerce and Industry (DIHK) also emphasized the importance of fair conditions on the markets. “Chinese distortions of competition are a special problem that Europe should tackle decisively, but if possible not through its own excessive subsidies or new punitive tariffs as a result of lengthy anti-dumping proceedings,” said DIHK foreign trade chief Volker Treier. Global subsidy races are increasingly placing more strain on free competition, to the detriment of German companies.
EU wants to reduce dependence on raw materials
Measures are currently underway in several economic sectors to reduce the EU’s dependence on countries such as China and to protect domestic companies. In March, the EU Commission presented a proposal for a law on the supply of raw materials. This is intended to ensure that the EU does not remain dependent on imports from individual countries such as China for important raw materials.