Electric car: China is furious with Europe after the opening of an investigation

The European Commission, through its President Ursula von der Leyen, has opened an investigation into Chinese subsidies on electric cars. A decision that does not go down well with Beijing, which promises negative consequences for economic and trade relations with the EU.

It didn’t take long to receive the response from Beijing after the EU opened an investigation into Chinese subsidies for electric cars.

Accusation of protectionism

In Beijing, the opening of this investigation is described as a decision protectionist, threatening that the opening of such an investigation will have a negative impact about relationships economic et commercial between the EU and China.

China reacted in a press release from the Chinese Ministry of Commerce:

This is a pure and simple protectionist act that will disrupt and will seriously distort the global automotive industry and supply chain, including that of the EU, and will have a negative impact on economic and trade relations between China and the EU. China will pay close attention to the EU’s protectionist tendencies and follow-up actions, and protect firmly the legitimate rights and interests of Chinese companies.

According to Automotive Newssome executives in China’s electric car industry say their sector’s competitive advantage in Europe is not due to subsidies. According to them, the boom in exports of electric cars is due to a supply chain highly competitive.

In Europe, some are worried about menaces exercised by Beijing. Indeed, if Brussels ends up taking measures against subsidized Chinese electric vehicles, Beijing could then respond with punitive measures against different European industries. It is important to remember that China is the first global partner of the European Union.

The investigation is open!

In Europe we have fear of the Chinese electric car. It’s here France who pushed for the opening of an investigation at European level concerning these subsidies. An initiative that was greeted by European manufacturers who denounce a unfair competition.

Ursula von der Leyen says:

Global markets are today flooded of cheap Chinese electric cars, the price of which is kept artificially low by massive public subsidies. Europe is open to competition. Not a race to the bottom.

It is true to say that Chinese electric cars are starting to flood seriously the European market. The European Commission announces that the share of sales of Chinese electric cars has reached the mark 8 % and could even reach 15% in 2025.

A phenomenon which can be explained by the fact that Chinese electric cars are displayed in Europe at unbeatable prices. EU officials say Chinese electric cars are on average 20 % cheaper than their European counterparts.

Our Minister of the Economy, Bruno Le Maire, also reacted after the announcement of the investigation into Chinese subsidies. He declares :

If the subsidies do not comply with the rules of the World Trade Organization, Europe must be able to fight back. We want fair cooperation between China and Europe. It’s not and it can’t be weakness.

While waiting for the investigators to deliver their verdicts, Ursula von der Leyen wishes to initiate the dialogue with China.