China hit back at the European Union’s investigation into electric vehicle subsidies, with the top industry body criticizing the move and a leading Communist Party newspaper suggesting retaliatory steps could be taken.
(Bloomberg) — China hit back at the European Union’s investigation into electric vehicle subsidies, with the top industry body criticizing the move and a leading Communist Party newspaper suggesting retaliatory steps could be taken.
European Commission President Ursula von der Leyen on Wednesday said the global market is overrun with cheap Chinese cars kept “artificially low by huge state subsidies.” The probe, which could take up to nine months, may lead to tariffs close to the 27.5% level already imposed by the US on Chinese EVs, according to a person familiar with the matter.
“China’s strong export of new energy vehicles isn’t because it has received huge state subsidies, but because China’s industrial chain is highly competitive,” Cui Dongshu, secretary general of the China Passenger Car Association, said in a statement Thursday. “The EU should take an objective view of the development of China’s electric vehicle industry, rather than arbitrarily using unilateral economic and trade tools” to stymie growth, he added.
In a commentary Thursday, China’s Global Times newspaper said Europe’s economy may suffer if protectionist measures are used to suppress China’s EV industry.
“Clearly, Europe is afraid,” the commentary said. “They are afraid of competition from China, so they want to seek trade protectionism as a protective umbrella for European automakers who are slowly transitioning toward electrification. If unfair action is taken by the EU, China has various tools to use as countermeasures to protect the legal interests of Chinese firms.”
The newspaper stressed that the price advantages enjoyed by Chinese EV makers aren’t a result of government subsidies, but “because of China’s advantages in terms of value chain, talent, technology, infrastructure and logistics.”
The China Chamber of Commerce to the EU pushed a similar line, saying the substantial industrial edge of Chinese EV makers is a result of concerted innovative efforts from both upstream and downstream players.
“The EU’s commitment to market openness must be translated into tangible measures, ensuring a fair, impartial, and non-discriminatory business environment for foreign companies,” the chamber said.
What Bloomberg Opinion says:
Over the past 12 months, Europe has woken up to the fact that China is now capable of building technologically sophisticated electric models. Rather than seeking political favors, European auto manufacturers should focus on improving their own competitiveness and developing EVs that consumers can actually afford. — Chris Bryant
Shares of leading Chinese EV makers fell in early Hong Kong trade Thursday. BYD Co. declined as much as 3.8% and SAIC Motor Corp., which owns MG, dropped as much as 3.4%. Xpeng Inc. shed as much as 1.6% and Nio Inc. fell 2.5%.
While Chinese EV manufacturers’ European sales pale in comparison to market leaders like Volkswagen AG, Tesla Inc. and Stellantis NV, they are growing quickly. Zhejiang Geely Holding Group Co. is the top Chinese presence with brands that include Polestar, Volvo Cars and Lotus, and the likes of BYD and Nio are also pushing into the continent.
The EU’s concerns are an “inevitable accompanying phenomenon after China’s new energy vehicles became stronger,” the PCA’s Cui said. “Only when they become stronger will some people pay attention, and some people will feel uncomfortable.”
Read More: Rise of China’s EV Makers Threatens Western Firms, UBS Says
While the near-term impact of the EU probe will likely be limited, it “may cast a shadow on the growth outlook of companies with aggressive expansion plans in the EU, like BYD,” Morgan Stanley analysts including Tim Hsiao said in a note to clients.
Nio, SAIC and Geely all declined to comment on the European probe.
–With assistance from Chunying Zhang and Jinshan Hong.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.