A PYMNTS Company

EU Accused of Protectionism in China’s Electric Vehicle Probe

 |  September 14, 2023

The European Union (EU) has been accused of rampant protectionism after launching an unexpected “anti-subsidy” investigation into China’s electric vehicle (EV) makers. The reaction has been swift, with both the Chinese government and industry body representatives voicing their criticism towards the EU’s actions.

China’s top auto industry official stated that Chinese EVs were retailing at nearly double the prices in mainland markets. According to Cui Dongshu of the China Passenger Car Association, “China’s new energy vehicles exports are seeing stronger volumes not due to huge state subsidies, but because of the highly competitive China industrial supply chain from strong market competition domestically.”

The Eurasia Group analysts also weighed in, noting that “Brussels’s willingness to go after a key Chinese export underscores growing protectionist tendencies in Europe, as the EU seeks to compete with China and the US on the green and digital transitions. If the EU finds harm from Chinese subsidies, Brussels is likely to impose tariffs on Chinese EVs despite the risk of political and economic backlash from Beijing.”

Read more: EU Investigates Chinese Electric Vehicle Subsidies for Market Protection

China has accused the EU of “blatant protectionism” and believes the investigations were made in the name of “fair competition” as a way to protect its own industries. Beijing is worried that Brussels’ actions will have a serious disruptive effect on the global automotive industry and supply chain, and will have negative implications for the economic and trading relationship between China and the EU.

EU members have become increasingly vocal on the need for the bloc to shield European carmakers from Chinese EVs which are allegedly heavily subsidized by Beijing. However, China is urging the EU to view the development of the EV industry objectively instead of introducing trade barriers and restrictions.

It remains to be seen how much protectionism the EU is willing to pursue, as its options for providing subsidies and state aid are limited due to uneven authority among the members. Debate continues to rage around Europe, as it attempts to carve out a space for itself between China and the US on key transitions like the green and digital transitions.

Source: CNBC