EU “Investigation into Chinese government subsidies”
Possibility of imposition of anti-dumping and countervailing duties
China: “Resolutely protect legitimate rights and interests”
BYD and Shanghai Automobile stock prices are falling
Following the United States, the European Union (EU) has also begun full-scale regulation of Chinese electric vehicles. The intention is to protect the automobile industry of France, a key EU country. China strongly opposed the move to impose ‘punitive tariffs’ on cheap Chinese electric vehicles.
In her annual policy speech at the European Parliament in Strasbourg, France, on the 13th (local time), European Commission President Ursula von der Leyen declared, “We will launch an investigation into anti-subsidies for electric vehicles made in China.” Chairman von der Leyen said, “The global market is overflowing with cheap Chinese electric vehicles. “Thanks to massive state subsidies, prices are set low, distorting the market,” he criticized, adding, “Just as we do not accept this in the domestic market, we cannot accept this practice outside the region.”
No specific investigation method was provided. However, since the Chinese government’s subsidy payment has been defined as an ‘unfair practice’, there is talk of the possibility of imposing anti-dumping duties or countervailing duties (tariffs intended to offset the benefits of subsidies from the other country’s government). Previously, the EU began anti-dumping and anti-subsidy investigations on Chinese solar panels starting in 2012 and introduced various types of regulatory measures.
This announcement reflects concerns that European car makers are lagging behind in the global electric vehicle market. The United States has begun to revive ‘Made in the USA’ through the Inflation Reduction Act (IRA), which provides subsidies for North American electric vehicles. China also poured subsidies into electric vehicles equipped with domestically produced secondary batteries, growing the world’s largest electric vehicle market. Recently, Chinese automobiles are turning to the EU to replace the United States, where exports have been blocked due to intensifying competition for hegemony. Bloomberg News predicted that the share of Chinese electric vehicles in the EU market was around 8% last year, but is expected to increase to 15% by 2025.
Chairman von der Leyen’s ‘surprise announcement’ is being evaluated as ‘France’s victory’ in diplomatic circles in Beijing. French companies such as Renault, Citroen, and Peugeot lost their presence in the Chinese automobile market a long time ago. On the other hand, Chinese companies are increasing their sales volume in France through ‘cost-effectiveness’. The French business community, which has become increasingly urgent, has continued to demand checks on Chinese electric vehicles under the pretext of ‘European market protection measures’. France is pushing for the ‘French version of IRA’ legislation, which would make subsidy payments unfavorable to vehicles imported from distant countries, and this is also a measure targeting Chinese electric vehicles. Due to this measure, Chinese electric vehicle stock prices such as BYD and Shanghai Automobile (SAIC) fell by around 1% on this day.
A spokesperson for the Chinese Ministry of Commerce said on the 14th, “The leader of the European Union declared that it will soon begin an anti-subsidy investigation into Chinese electric vehicles,” adding, “China expresses high concern and strong dissatisfaction with this.” “We will resolutely protect the legitimate rights and interests of Chinese companies,” he said. If China takes retaliatory measures, it could spark a firestorm among European companies that are gaining popularity in the Chinese market. Germany is particularly concerned. German manufacturers such as BMW and Mercedes-Benz have a market share of about 17% in China, and if China retaliates, German cars will take a direct hit. The EU must solve complex ‘higher-order equations’ that can destroy German cars while protecting French cars.
Beijing Correspondent Ryu Ji-young
2023-09-14 15:53:40
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