Under pressure from France, the President of the European Commission Ursula von der Leyen announced on Wednesday the opening of an investigation into Chinese subsidies for electric cars, a gesture welcomed by EU manufacturers who denounce unfair competition . “Global markets are now flooded with cheap Chinese electric cars, the price of which is kept artificially low by massive public subsidies,” von der Leyen said in a speech to the European Parliament in Strasbourg.
If, at the end of its investigation, the Commission finds violations of trade rules, it could impose punitive customs duties on Chinese vehicles, at the risk of triggering a trade war with Beijing. “Europe is open to competition. Not a race to the bottom,” said the German official, garnering loud applause.
A Chinese official immediately protested. “This is nothing more than outright protectionism,” protested Wang Lutong, head of European Affairs at the Chinese Foreign Ministry, in a message on X (formerly Twitter). “Many EU member countries subsidize their electric vehicle industries,” he said.
The opening of the investigation represents a gesture towards France which has been pushing in recent months for a Europe that asserts itself more in the face of practices considered protectionist by Beijing. Other member countries, such as Germany, which rely more on international trade, are traditionally more reserved, for fear of offending the Asian giant. But this time Paris and Berlin approved the initiative in unison.
If Chinese subsidies “do not comply with the rules of the World Trade Organization, Europe must be able to retaliate,” declared French Minister of the Economy Bruno Le Maire, welcoming “a very good decision” from Mrs von der Leyen. “We want fair cooperation between China and Europe. This is not and cannot be weakness,” he insisted.
“This is generally the right attitude,” said his German counterpart Robert Habeck during a joint press conference in Berlin. “It is not a question of excluding high-performance, cheap cars from the European market, but of seeing if there are hidden subsidies, direct or indirect, which represent an unfair competitive advantage,” he explained. .
The “anti-subsidy” investigation was also welcomed by the European Automobile Manufacturers’ Association (ACEA), the sector’s main lobby in the EU. This announcement shows that “the European Commission (…) is urgently looking into the distortions of competition in our sector,” declared Sigrid de Vries, Director General of ACEA.
European companies “are often beaten on price by competitors benefiting from huge public subsidies. We have not forgotten how much our solar industry has suffered from China’s unfair trade practices,” Ursula von der Leyen stressed on Wednesday. The president of the European executive, however, pleaded for a “dialogue” with Beijing. “We must defend ourselves against unfair practices. But it is equally essential to … continue our dialogue with China,” she said. “Risk reduction, not decoupling,” she insisted.
