China’s state support for its electric car manufacturers has been causing problems for European companies for a long time. EU Commission chief Ursula von der Leyen is now announcing steps.
The EU is targeting state support for Chinese electric cars. EU Commission President Ursula von der Leyen announced a so-called anti-subsidy investigation into vehicles from China.
“The price of these cars is artificially depressed by huge government subsidies – this distorts our market,” said the top German politician in the European Parliament in Strasbourg. That is not acceptable. World markets would be flooded with cheaper Chinese electric cars.
An anti-subsidy investigation can lead to, for example, punitive tariffs being levied. In the past, the EU had already introduced so-called anti-dumping duties on solar panels from China, among other things.
“We have to defend ourselves against unfair practices”
Europe is open to competition, but not to an unequal race to the bottom, explained von der Leyen. “We must defend ourselves against unfair practices.”
At the same time, she emphasized that it was essential to maintain dialogue with China. There are issues on which we need to work together. At a planned EU-China summit this year, she will take the position that risks should be minimized but not decoupled.
The risks include, for example, that sectors of industry that are important for the future will relocate even more of their production abroad. “We have not forgotten how China’s unfair trade practices have affected our solar industry,” said von der Leyen. The production of solar systems has increasingly shifted to China in recent years, and the German solar industry has lost its great importance.
Risks for the German auto industry
According to an expert, the planned EU subsidy investigation could backfire. There is a lot at stake, especially for the German auto industry, said the director of the Center Automotive Research, Ferdinand Dudenhöffer, to the dpa. The Germans sold 30 to 40 percent of their cars on the Chinese market and, in his opinion, would be the first target of countermeasures.
Dudenhöffer warned of punitive tariffs: “If measures are taken against Chinese imports in Europe, we can expect with absolute certainty that China will react. A break with China would seriously hurt the German auto industry.” The announcement from Brussels alone will cause anger among the Chinese.
The car expert suspects the French car industry is behind the EU initiative. This is actually directed against the German auto industry. Stellantis and Renault hardly have a presence in China, but fear strong competition from Chinese car manufacturers such as BYD on the domestic market.
German MEPs initially reacted positively to the announcement. CSU Vice President Angelika Niebler said on the X platform (formerly Twitter) that she “completely agreed” with von der Leyen’s words about Europe’s competitiveness. “The EU should not engage in a race to the bottom.”
The chairwoman of the Internal Market Committee in the EU Parliament, Anna Cavazzini, called the Commission President’s announcement “remarkable”. “China’s unfair competition is becoming more and more aggressive and many green industries in the EU are suffering from it,” said the Green politician.
The SPD trade politician Bernd Lange emphasized that an investigation should be based on facts and not be intertwined with politics. There should be no race to the bottom, but at the same time one should resist acting in a protectionist manner.