In a move anticipated since Ursula Von Der Leyen’s recent State of the Union address, the European Union has commenced an investigation into alleged state subsidy dumping by Chinese automakers.
The focus is on electric vehicle (EV) manufacturers, with BYD, Geely, and SAIC being the initial targets. These companies, giants in the automotive industry, are now under scrutiny to determine if state subsidies are providing them with an unfair advantage in the global market.
The Investigation Starts
The investigation, initiated in October and slated to last for 13 months, aims to assess whether state subsidies are distorting competition and conferring unjust advantages to Chinese-produced electric vehicles.
This development comes against the backdrop of a significant rise in global electric vehicle sales, particularly in China, where 9 million electric vehicles were sold in 2023.
The current phase of the investigation, set to conclude in April 2024 according to the EU, involves on-site inspections at the headquarters of the three Chinese automakers and other entities in question. Inspection teams will travel directly to China to verify the accuracy of the automakers’ claims regarding the absence of state aid.
Notably, Great Wall Motors, which recently redefined its European strategy, will also be part of these inspections. The company expressed its willingness to cooperate with the investigation, being the first to respond to the announcement.
China’s Response
Unsurprisingly, China has expressed dissatisfaction with the investigation, characterizing it as a “protectionist measure.” Following the announcement, the Beijing government’s discontent has further complicated the already strained relations between Brussels and the People’s Republic.
The strained relations are exacerbated by geopolitical tensions, such as the conflict in Ukraine, which has strengthened ties between Beijing and Moscow. Additionally, China has initiated its own anti-dumping investigation into brandy imported from the EU, targeting primarily France, a key supporter of the EU’s investigation.
Controversies and Responses
As of now, the European Commission, the Chinese Ministry of Commerce, BYD, and SAIC have not immediately responded to requests for comments. Geely has refused to comment directly but referred to its October statement affirming its compliance with all laws and support for fair global competition.
Interestingly, the investigation seems to exclude European or Western manufacturers with joint ventures in China from its purview. This exemption, although initially contradicting earlier statements, may be seen as a nod to countries like Germany, which had opposed the investigation. However, it does not rule out the possibility of subsidies for those foreign manufacturers building cars in China through joint ventures.
