EU confronts Chinese subsidies with electric car probe

EU confronts Chinese subsidies with electric car probe

China's BYD has become a major producer of electric cars
China's BYD has become a major producer of electric cars. Photo: - / AFP/File
Source: AFP

PAY ATTENTION: Let yourself be inspired by real people who go beyond the ordinary! Subscribe and watch our new shows on Briefly TV Life now!

Brussels will investigate Chinese state subsidies for electric cars, the EU chief said Wednesday, vowing to defend Europe's industry from unfair competition.

The move is a victory for France which has expressed concerns that Europe will fall behind during the green transition if it is not more assertive when confronted with China's alleged protectionism.

But some EU member states, including Germany, are wary of angering Beijing, since they rely on trade relations with China, although Berlin welcomed the probe Wednesday.

European Commission president Ursula von der Leyen announced the anti-subsidy investigation, vowing to defend Europe's manufacturers.

"Global markets are now flooded with cheaper Chinese electric cars. And their price is kept artificially low by huge state subsidies," von der Leyen said, during a speech at the European Parliament in Strasbourg.

Read also

EU confronts Chinese subsides with electric car probe

The probe could lead the European Union to impose duties on those cars that it believes are unfairly sold at a lower price, thereby undercutting European competitors.

PAY ATTENTION: Follow us on Instagram - get the most important news directly in your favourite app!

"Europe is open for competition but not for a race to the bottom," the European Commission president said.

A Chinese official accused the EU of "protectionism" in a social media post.

Pointing to information from the European Automobile Manufacturers Association (ACEA), Wang Lutong, director-general of the Chinese foreign ministry's department of European affairs, said "many EU members subsidise their electric vehicle industries".

"In what position is the commission to launch anti-subsidy investigation into electric vehicles from China? This is nothing but sheer protectionism," he said.

French Finance Minister Bruno Le Maire said the probe was a "very good decision" during a visit to Berlin. Germany's Economy Minister Robert Habeck said it showed the "right attitude" and was about tackling "unfair competition".

Read also

Von der Leyen vows 'fair' green deal for EU farms and industry

Paris has already announced measures that would provide subsidies for new electric cars based on the manufacturers' emissions output. This would be more difficult for Chinese cars since their production often relies on coal-powered electricity.

'Distorted competition'

European car makers also hailed the EU's investigation as a "positive signal".

"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," said Sigrid de Vries, director general of the ACEA.

EU chief Ursula von der Leyen has called on the bloc to define its own approach to Beijing
EU chief Ursula von der Leyen has called on the bloc to define its own approach to Beijing. Photo: FREDERICK FLORIN / AFP
Source: AFP

There are growing concerns across Europe about how much the continent relies on Chinese products, especially those needed for the EU's focus on clean energy.

The EU's internal market chief Thierry Breton last week warned about a trend emerging where Europe was "being relegated to net imports of electric vehicles or solar panels".

China could overtake Japan to become the world's largest car manufacturer this year, according to some experts.

Read also

EU to probe China electric car subsidies

But European manufacturers have also to contend with state subsidies for electric vehicles across the Atlantic.

The US Inflation Reduction Act directs some $370 billion in subsidies towards America's energy transition, including tax breaks for US-made electric vehicles and batteries.

As she made the announcement, von der Leyen harked back to the bitter dispute with China over solar panel imports a decade ago.

"We have not forgotten how China's unfair trade practices affected our solar industry. Many young businesses were pushed out by heavily subsidised Chinese competitors," she said.

The EU imposed anti-dumping duties in 2013 after European panel manufacturers complained they were being forced out of business by underpriced Chinese imports.

The restrictions were scrapped five years later.

'Vital' dialogue

Von der Leyen has called on the EU to define its own approach to Beijing, although some of Europe's larger powers want to be cautious to avoid severing business ties.

Read also

EU cuts eurozone 2023 growth forecast, sees German recession

Despite her strong comments, von der Leyen said it was "vital" for Europe to maintain "communication and dialogue with China".

"Because there are also topics, where we can and have to cooperate. De-risk, not decouple –- this will be my approach with the Chinese leadership at the EU-China Summit later this year," she added.

The EU's trade commissioner Valdis Dombrovskis will head to China next week, he said in a social media post, "to engage on trade and economic opportunities/challenges".

PAY ATTENTION: Сheck out news that is picked exactly for YOU ➡️ click on “Recommended for you” and enjoy!

Source: AFP

Authors:
AFP avatar

AFP AFP text, photo, graphic, audio or video material shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. AFP news material may not be stored in whole or in part in a computer or otherwise except for personal and non-commercial use. AFP will not be held liable for any delays, inaccuracies, errors or omissions in any AFP news material or in transmission or delivery of all or any part thereof or for any damages whatsoever. As a newswire service, AFP does not obtain releases from subjects, individuals, groups or entities contained in its photographs, videos, graphics or quoted in its texts. Further, no clearance is obtained from the owners of any trademarks or copyrighted materials whose marks and materials are included in AFP material. Therefore you will be solely responsible for obtaining any and all necessary releases from whatever individuals and/or entities necessary for any uses of AFP material.