(Bloomberg) — China said the European Union’s measures to shield its companies from foreign subsidies are a barrier to trade and investment, marking the latest clash in the ongoing trade dispute between the two sides.
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The Ministry of Commerce released the findings of its investigation into the EU’s Foreign Subsidies Regulation on Thursday, highlighting “selective implementation” as a major concern. The inquiry started in July last year after the EU started examining Chinese subsidies for electric vehicles.
Beijing did not specify any actions it plans to take following the investigation results. It said previously if foreign policies were determined to be trade barriers the ministry could conduct bilateral talks, start a multilateral dispute settlement and take “other appropriate measures.” The ministry also said these steps could involve recommending “retaliatory measures.”
In a briefing later in the day, the ministry’s spokesman He Yadong said Beijing would take steps such as asking the EU for talks, without providing details.
China’s probe comes amid a broader trade dispute with Brussels, where the EU has imposed tariffs of up to 45% on Chinese-made EVs after determining that state subsidies gave China’s EV industry an unfair advantage.
China said Thursday that the EU has launched in-depth probes into only Chinese companies participating in public procurement, along with surprise inspections and other strict enforcement measures against Chinese firms.
This meant “Chinese products are being treated more unfavorably in the process of exporting to the EU than products from third countries,” the Commerce Ministry said.
Jens Eskelund, president of the European Union Chamber of Commerce in China, defended the regulation as “country agnostic” in a statement following Beijing’s move. He said the measure is “aimed at countering distorting effects that subsidies can have, with a view to ensuring a level-playing field for businesses in the EU’s single market.”
The rules give Brussels the power to vet subsidies it deems capable of distorting markets in the 27-member bloc. Regulators can issue fines, suspend tenders or block state takeovers outright.
Using this law, the EU started an probe last year into a Chinese train manufacturer planning to sell trains in Bulgaria, causing the company to pull out. The European Commission also raided the offices of Chinese security equipment supplier Nuctech in Poland and the Netherlands last year.
