The European Commission has officially opened an investigation into China’s electric vehicle sector.
It says it is “in possession of sufficient evidence” that Beijing has provided subsidies that would damage the electric vehicle (EV) market in the EU. Should member states agree with the severity of the Commission’s finding, it could lead to an import duties on Chinese vehicles.
A statement published in the Official Journal of the European Union said that based on public information, the subsidies “pose an imminent threat of injury to an al. A statement from the Chinese Ministry of Commerce branded the move “naked protectionist behaviour that will seriously disrupt and distort the supply chain of the global automotive industry chain, including the EU”.
The statement continues: “China expresses strong dissatisfaction with this. The European side requested the Chinese side to conduct consultations within a very short period of time and failed to provide effective consultation materials, which seriously jeopardised the rights of the Chinese side.”
The EU says it offered to consult with China before the investigation was opened. Trade spokesman Olof Gill said: “In essence: a formal meeting took place, the commission took note of China’s views on the matter, there was no mutually agreed solution and therefore the Commission decided to initiate the investigation.
“The government of China and industry representatives in China will have the possibility to intervene and make their case in the following stages of the proceeding.”
Speaking in the EU Parliament, trade chief Valdis Dombrovskis said the investigation would have to be “fact-based”, meaning China and Chinese firms would have to be given chance to provide evidence.
China expresses with this. The European side requested the Chinese side to conduct consultations within a very short period of time and failed to provide effective consultation materials, which seriously jeopardised the rights of the Chinese side
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The investigation, which is set to last for a year, will look for subsidies including direct transfers of funds, tax breaks and state provisions for both Chinese companies and businesses based in China. Wang Lutong, China’s top official for Europe criticised the investigation on social media.
Wang said: “The move violates #WTO rules, and seriously hurts China’s interests and #China-#EU relations. History proves that those who engage in protectionism will eventually find their own interests hurt.”
Estimates suggest Chinese EVs make up around 8% of the EU market in 2022. The cost of the Chinese vehicles is thought to be around 20% less than their European counterparts.
The South China Morning Post estimates Chinese electric vehicle shipments to the EU soared to US$7.9 billion in the first seven months of 2023. This is up 113% from the year before.