China investigates European trade practices

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

The Chinese investigation comes amid growing tensions between the country and the EU, an essential trading partner for the Asian giant. In recent months, the European Commission has launched a series of proceedings against China.

The most striking is that of Chinese electric vehicles sold in the EU, whose prices Brussels considers artificially low due to Chinese public subsidies, which distort the market and undermine the competitiveness of European manufacturers. At the beginning of July, the EU imposed additional tariffs of up to 38% on imports of Chinese electric cars, a decision that is expected to become final in November.

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

The ministry stressed that its decision was due to a complaint from the Chinese Chamber of Commerce and said it concerned “products such as locomotives, photovoltaics and wind energy”. These sectors have been the subject of special attention by the EU in some of its own proceedings against China. The Chinese investigation into EU subsidies is due to end on 10 January 2025, but could be extended by three months.

The EU, China’s second-largest trading partner after the US, launched its first investigation in mid-February as part of its new anti-subsidy regulation. The probe focused on a subsidiary of Chinese train manufacturer CRRC, a world leader in the sector. CRRC is a state-owned company that had submitted a bid to supply electric trains to Bulgaria, but eventually withdrew its offer at the end of March.

In April, the European Commission announced a second investigation into two consortia that had applied to design, build and operate a solar power plant 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 European Commission launched an investigation into Chinese public procurement of medical devices, on suspicion of “discriminatory” practices. Another investigation is focusing on wind energy.

Last month, China warned it “reserves the right” to lodge a complaint with the World Trade Organisation after the EU announced additional tariffs on Chinese electric vehicles.

In January, Beijing announced that it was investigating an alleged infringement of competition rules concerning spirits (e.g. cognac) imported from the EU, in particular from France. This had triggered the first EU investigation.

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