Beijing has announced an investigation in response to EU tariffs on electric car imports.
China has launched an anti-subsidy investigation into dairy products imported from the European Union, China’s Ministry of Commerce said in a statement on Wednesday, signaling a deepening trade dispute between Brussels and Beijing.
The inquiry, requested by two state-backed industry groups, was discussed during consultations with the European Commission on August 14, the statement said. The investigation must be completed within 12 months, but may be extended for a further six months.
The investigation will be conducted in relation to the EU subsidizing the production of fresh and processed cheeses, blue cheeses and other cheese, milk and cream products. According to the statement of the Chinese ministry, it is reported that 20 subsidy programs in eight EU member states – Austria, Belgium, Croatia, the Czech Republic, Finland, Ireland, Italy and Romania – will come under investigation.
These include some subsidy programs under the EU’s Common Agricultural Policy (CAP).
The reversal came less than 24 hours after the EU executive announced its intention to introduce final tariffs up to 36.3% on imports of Chinese battery electric vehicles (BEVs) after a nine-month investigation.
It found that Beijing provides generous subsidies throughout the BEV value chain, giving Chinese companies an unfair advantage and threatening to strangle the EU’s domestic industry by artificially lowering BEV prices.
The EU is also investigating the potentially damaging impact of Chinese subsidies for wind turbine and solar panel manufacturers on industry in the bloc’s 27 countries.
Beijing has already launched anti-dumping investigations into EU pork, alcohol and chemical products, as well as an investigation into government purchases of medical equipment.
European Commission official Olaf Gill “took note” of the Chinese government’s decision, according to a statement obtained by Euronews.
“The European Commission will now analyze the application and will closely monitor the progress of the investigation in coordination with EU industry and member states,” Gill added.
“The European Commission will vigorously defend the interests of the EU dairy industry and the Common Agricultural Policy, and will intervene where necessary to ensure that the investigation is fully compliant with WTO rules.”
Barel warns against “systematic confrontation”
On Tuesday, EU foreign policy chief Josep Borrell said the bloc must avoid a “systematic confrontation” with China as trade tensions between the two sides threaten to spill over to other countries.
“Our political systems are different, but this should not lead to systematic and permanent rivalry,” Borrell said, speaking at the annual Quo Vadis Europa? in the Spanish city of Santander. “It’s not in our interests.”
However, Barel, who is due to leave his post this autumn after five years as head of the EU’s diplomatic service, also warned that a trade war between China and other world powers could become inevitable.
“We are not interested in the world entering into a trade war. However, it is possible that this trade war (…) is inevitable,” he explained. “That’s the logic of things.”
He also noted that Europe’s interests will not always align with those of the US, and urged the bloc to be more willing to go its own way.
“When they (the US) take trade measures against China – because they do – they don’t ask us if we’re happy with it or not (in Europe),” Borrell said.
“When they ban the import of Chinese cars or impose restrictive tariffs, they don’t ask themselves where will these Chinese cars go that don’t make it to the US. Where will they go? What other market can they go to? Well, of course, the European market, and this creates a competitiveness challenge for our industry,” he added.