EU announces investigation into Chinese subsidies that may disrupt fair competition

Lots of cars neatly parked in a parking lot

To the displeasure of China, the European Union (EU) has announced an investigation into the unfair competition posed by subsidised Chinese electric cars in the EU. The EU suspects that China heavily subsidises its electric car industry to entice European consumers into purchasing Chinese electric vehicles that are more affordable. The investigation, aimed at combating unfair subsidisation, is, according to Pim Jansen, Associate Professor of Innovation of Public Law at Erasmus School of Law, a clear political signal that aligns perfectly with the current climate where the EU is increasingly assertive in its actions against China. In addition to the EU’s announced anti-subsidy investigation, the Foreign Subsidies Regulation has also entered into effect this year, granting the Union more authority to counteract foreign subsidies that undermine competition within the EU’s internal market. Jansen discusses these developments in Het Financieele Dagblad (FD).

The investigation aims to determine whether Chinese products are offered at significantly lower prices in the EU than in the Chinese market. If this is the case, the Union can act against the artificially low prices of Chinese products in Europe. However, as Jansen points out, this is easier said than done: “The difficulty lies in the fact that the price in China may already not be a competitive price.” Furthermore, antidumping cases are generally more common, and subsidy investigations are linked to them; unauthorised state aid and dumping can often go hand in hand. Examples are two recent cases involving fibreglass (used, among other things, in windmill blades) and a particular type of aluminium foil used in car batteries. In both cases, additional duties were imposed on these products from China.

Broader Trend

Jansen sees Brussels’ move as part of a broader trend in which the EU is becoming increasingly assertive towards China. For example, the Foreign Subsidies Regulation introduced earlier this year gives Brussels more authority to investigate foreign takeovers, especially if they are made possible through state aid. “A powerful instrument. Substantial fines can also be imposed,” says Jansen. “In essence, the EU is trying to export its state aid rules to the rest of the world. Under the motto: we open our market but on our terms.”

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Click here for the full article in Het FD (in Dutch).

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