The European Commission has scheduled an investigation to examine the imposition of punitive tariffs to protect EU carmakers from Chinese electric vehicle imports. This has triggered a huge response from the body within a few hours. The Chinese government has now also positioned itself.
The anti-dumping investigation now launched is based on the European Commission’s assumption that Chinese electric vehicle importers are benefiting from excessive state subsidies at home. EU Commission President Ursula von der Leyen put it this way yesterday in the European Parliament in Strasbourg: “Global markets are now flooded with cheaper electric cars. And their price is kept artificially low by huge state subsidies. So I can announce today that the Commission is launching an anti-subsidy investigation into electric vehicles coming from China. Europe is open to competition. Not for a race to the bottom.” In the eyes of the EU Commission, China’s subsidy programme distorts the local European market.
In the meantime, a number of reactions to this initiative have been released. The Chinese Ministry of Commerce, for example, commented on its website. In short, it calls on the EU to create a fair, non-discriminatory and predictable market environment for the joint development of the EV industry in China and Europe and to jointly oppose trade protectionism.
Here are some succinct passages in the statement: According to the Ministry of Commerce, the investigation measures proposed by the EU aim to “protect its own industry under the guise of fair competition”. This, it says, is blatantly protectionist behaviour that will seriously disrupt and distort the global automotive industry chain and suppliers, including the EU. With negative consequences for economic and trade relations between China and the EU.
“In recent years, China’s EV industry has developed rapidly and improved its competitiveness, which is the result of relentless scientific and technological innovation and the establishment of a complete industrial and supply chain,” the ministry said elsewhere. This, it said, is a competitive advantage achieved through hard work and by its own efforts, and is welcomed by global users, including EU consumers, while contributing greatly to the global response to climate change and the green transformation, including the EU.
The ministry also calls for dialogue, as “China and the European Union automotive industry have a wide range of cooperation opportunities and common interests. (…) EU automotive companies have invested and operated in China for many years, and the Chinese market has become the largest overseas market for many EU automotive companies. China has always maintained an open and cooperative attitude and welcomes EU automotive companies to further expand their investments in China, including in the field of electric vehicles.”
It concludes by saying that China will closely follow the protectionist tendencies and follow-up measures of the European side and firmly protect the legitimate rights and interests of Chinese enterprises.
As expected, the Chinese Chamber of Commerce for the EU criticises the measure in a similar tone. Their statement in full: “Chinese electric vehicle manufacturers, together with their upstream and downstream industry partners, have continued to push the boundaries of innovation. These concerted efforts have resulted in a significant industrial lead in both the highly competitive Chinese domestic market and the global market. They are delivering high-quality or low-cost e-vehicles that meet a wide range of consumer needs and are gaining recognition worldwide, including in Europe.”
It is important to stress that this advantage is not due to what the Commission calls “huge state subsidies”, the Chinese Chamber of Commerce continues. And: “[…] We urge the EU to look at the progress of the Chinese electric vehicle industry with objectivity, rather than resorting to unilateral economic and trade measures that could hinder or increase the development and operating costs of Chinese electric vehicle products in the European market. […] Efforts to restrict products solely on the basis of their country of origin would run counter to the EU’s WTO commitments.”
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In Germany and France, on the other hand, there are quite a few supporters. “It’s about unfair competition, it’s not about keeping efficient, low-priced cars out of the European market,” said German Federal Minister of Economics Robert Habeck at a press conference with his French counterpart Bruno Le Maire and the German Federal Minister of Finance Christian Lindner. The aim is to “see whether there are hidden, direct or indirect subsidies that give an unfair competitive advantage”.
Le Maire also welcomed von der Leyen’s announcement as a “good decision”. If there are subsidies that flout international trade laws, Europe must respond to remain competitive and defend its economic interests, he said. France has been pushing for more protection of European companies from China’s protectionism at the EU level for some time.
UK Trade Minister Kemi Badenoch commented, “I think it just highlights the difficulties that all countries are having with the supply chain for electric vehicles. At the moment, what we need to make sure is that our auto industry survives and thrives.”
The VDA also immediately published a statement – rather of the hesitant kind: “The VDA is committed to free, fair and rule-based trade, both for exports and imports from third countries … Damage must be causally quantifiable and the community interest must be taken into account. Possible backlash from China must also be taken into account.” One thing is clear, he said: an anti-subsidy investigation alone will not help solve the existing challenges to the competitiveness of the European landscape. “Policymakers in Brussels and Berlin must create the framework conditions to ensure that the transformation succeeds.”
The European Automobile Manufacturers Association (ACEA) made public the following quote from Director General Sigrid de Vries: “We will now study the details, and stand ready to participate in the enquiry as an interested party. 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. At the same time, the US Inflation Reduction Act (IRA) is also a game-changer in the electric vehicle value chain. Von der Leyen’s announcement is 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.”
Reuters also printed the first reaction by a Chinese manufacturer. Alexander Klose, Vice President Overseas Operations at Aiways, says: “Aiways is in a special position here. Since we are currently concentrating exclusively on markets outside China, we do not participate in the consumer subsidies in the Chinese market – from which, incidentally, all manufacturers in China benefit, including Volkswagen, BMW and Tesla.” He said they were also curious about how possible reviews would affect non-Chinese manufacturers producing vehicles for the global market inside China. “Additionally, we are surprised that affordable NEVs are constantly demanded to make the switch to electric mobility attractive and now suddenly there are complaints that vehicles are too cheap. We would also strongly welcome NEVs becoming cheaper overall so that Europe remains a strong manufacturer and the automotive industry does not go the way of the mobile phone industry.”
ec.europa.eu, en.ccceu.eu, tagesschau.de (in German), reuters.com, mofcom.gov.cn (in Chinese) via cnevpost.com