China further hit back at the European Union on Thursday over its planned anti-subsidy probe into the rapid rise of its electric vehicle exports, with the Ministry of Commerce warning about a “protectionist tendency” and a potentially negative impact on bilateral relations.
“It is nothing but a protectionist move,” the ministry said. “The move will severely disrupt and distort global auto supply chains, including in the EU.”
The ministry urged the EU, which is the second largest export destination for made-in-China products and also a big investor in China’s auto market, to start immediate negotiations to create a “just, non-discrimination and predictable” business environment.
“We’ll closely monitor the EU’s protectionist tendency and next moves, and will defend the legitimate interests and rights of Chinese firms,” the ministry added in its online statement.
European carmakers, including Volkswagen, BMW, Mercedes-Benz, PSA Peugeot Citroen, have long enjoyed a large market share in China through their local partners until the extraordinary rise of electric vehicle makers Tesla and Chinese brands BYD, Xiaopeng, Nio and Li Auto.
New energy vehicles have become one of the bright spots of the struggling Chinese economy amid rising domestic sales and exports.
Sales of new energy vehicles in China rose by 39.2 per cent from a year earlier to 5.37 million in the first eight months of the year, according to the Chinese Association of Automobile Manufacturers. It is equivalent to 29.5 per cent of the total auto sales in the same period.
European Commission President Ursula von der Leyen announced the investigation would be launched on Wednesday, saying that “global markets are now flooded with cheaper Chinese electric cars and their prices kept artificially low by huge state subsidies”.
“It’s crucial to emphasise that this advantage isn’t a product of what the commission side called ‘huge state subsidies’,” said the chamber.
“It is noteworthy that the electric vehicle industry in China enjoys a robust cooperative partnership with the European and global automotive industry networks, and the creation of each electric vehicle involves the collaborative efforts of tens of thousands of suppliers from around the world.”
But Dombrovskis also defended the decision, saying that “we’re open to competition but not to unfair practices”.
“I will travel to China next week to engage on trade and economic opportunities/challenges,” he wrote on X, formerly known as Twitter, after the announcement.
“We want to keep dialogue open; to de-risk, not decouple.”
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