China rebukes EU after formal launch of EV subsidy probe

Miniature car, “Electric vehicles (EVs)” words, EU and Chinese flags are seen in this illustration, Sept 26, 2023. REUTERS/Dado Ruvic/Illustration/File photo

SINGAPORE/BRUSSELS  -China voiced dissatisfaction on Wednesday at a demand by the European Union to engage within a “very short” time in consultations on the bloc’s inquiry into subsidies for electric vehicles.

The remarks came as the European Commission formally launched the investigation on whether to set tariffs to shield its producers from a “flood” of imports of cheaper Chinese electric vehicles (EV) it says benefit from state subsidies.

However, China was “very much dissatisfied” with the anti-subsidy investigation as it lacked adequate evidence and did not conform with World Trade Organization rules, the country’s commerce ministry said in a statement.

The Chinese side had not been given adequate consultation materials, it said, and would pay close attention to the Commission’s investigative procedures so as to safeguard the rights and interests of its firms.

China also urged the European Union to safeguard the stability of the global supply chain and a strategic partnership between the two, while “prudently” applying trade remedies.

Rise of cheap imports

The formal launch of the EU investigation came with an announcement in the bloc’s official journal, which said China had been invited for consultations, although it did not give a timeframe.

Information gathered by the Commission tended to show that producers in China benefited from subsidies to the detriment of EU industry, it added.

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It enumerated these as being in the form of grants, loans from state-owned banks on preferential terms, tax cuts, rebates and exemptions and state provision of goods or services, such as raw materials and components, at less than adequate prices.

It said subsidies had allowed a rapid rise of cheap imports into the European Union, with expected overcapacity in China likely to lead to further increases in the near future.

The European Commission has said China’s share of EVs sold in Europe has risen to 8 percent and could reach 15 percent in 2025.

The journal advised all parties wanting a hearing to request one within 15 days, and set a deadline of 37 days to receive comments.