China investigates European trade practices

On Wednesday, China announced it is investigating unfair trade practices by the European Union (EU), after the latter opened various proceedings targeting Chinese companies suspected of distorting competition.

China’s investigation is taking place as tensions are rising between the country and the EU, an essential trading partner for the Asian giant. In recent months, the EU Commission has initiated a series of proceedings against China.

The most conspicuous is targeting Chinese electric vehicles sold in the EU, whose prices are regarded by Brussels to be artificially low because of China’s public subsidies, which are distorting the market and undermining the competitiveness of European manufacturers. In early July, the EU imposed additional customs duties of up to 38% on Chinese electric car imports, a decision that is expected to become final in November.

Following each new EU measure, China warned that it would take “all the necessary steps” to respond. “The Ministry of Commerce is investigating the European Union’s practices with regards to trade and investment barriers against Chinese companies,” the Ministry said in a statement on Wednesday.

The Ministry underlined that its decision was triggered by a complaint from the Chinese Chamber of Commerce, and said it refers to “products such as locomotives, photovoltaic energy, and wind energy.” Sectors that have been specifically targeted by the EU in some of its own proceedings against China. The Chinese investigation on EU subsidies is due to end on January 10 2025, but it might be extended by three months.

The EU, China’s second key trading partner after the USA, launched its first investigation in mid-February, as part of its new anti-subsidy regulation. It targeted a subsidiary of Chinese railway manufacturer CRRC, the world’s leader in the sector. CRRC is state-owned, and had bid to supply electric trains to Bulgaria, but eventually withdrew its tender at the end of March.

In April, the EU Commission announced a second investigation, against two consortia that had applied to design, build and operate a solar power station in Romania. A subsidiary of Chinese giant Longi, the world’s leading manufacturer of photovoltaic cells, was a member of the first consortium. The second consortium was a partnership between two subsidiaries of Chinese state-owned group Shanghai Electric.

At the end of April, the EU Commission opened an investigation into Chinese public procurement of medical devices, suspecting “discriminatory” practices. Another investigation is focused on wind power.

Last month, China warned that it is “reserving the right” to file a complaint with the World Trade Organization, after the EU announced additional customs duties on Chinese electric vehicles.

In January, Beijing announced it was looking into an alleged competition rules infringement regarding wine spirits (for example cognac) imported from the EU, notably from France. This had triggered the EU’s first investigation.

In June, China also launched an anti-dumping investigation into imports of pork and pork-based products from the EU, produced mainly in Spain, France, the Netherlands and Denmark.