2023-10-04 11:31:00
Three weeks following announcing the opening of an investigation into Chinese subsidies granted to electric car manufacturers – which had provoked the ire of Beijing – Brussels reveals its first evidence.
“The Commission is in possession of sufficient evidence tending to show the existence of subsidies, a threat of injury and a causal link required for the opening of an investigation”, stipulates the notice of initiation of the procedure published this Wednesday, October 4 in the Official Journal of the European Union.
The document specifies that this investigation results from the “own initiative” of the Commission which acts “without having received a written complaint filed by the industry” European automobile.
Automobile: Europe challenges China by launching an investigation into Chinese subsidies
Granting of loans, export credits, lines of credit
The practices identified can take the form of “direct fund transfers”, of “abandoned public revenue” or even “provision by public authorities of goods or services” at preferential rates, explains the notice published this Wednesday. In particular, the Commission claims to have “found evidence of the provision of loans, export credits and lines of credit provided by state-owned banks.”
The list of aid from which Chinese manufacturers would have benefited, to the detriment of their European competitors, also includes “the provision of preferential export insurance, income tax reductions and exemptions, dividend tax exemption, import and export tax rebates, tax exemptions and rebates VAT, as well as the supply of goods (such as raw materials, inputs, and components) and services by public authorities for less than adequate remuneration.”
13 months maximum investigation
European manufacturers have been storming once morest Chinese manufacturers for months, led by Luca de Meo, the general director of Renault, and Carlos Tavares, that of Stellantis. As a result, the European Union, through the President of the European Commission, Ursula von der Leyen, announced on September 13 the launch of a vast investigation into the subsidies granted by China to its industry, in order to develop electric cars, justifying it by the need to defend European industry.
“Global markets are now flooded with cheap Chinese electric cars, the price of which is kept artificially low by massive government subsidies,” she said. Beijing, for its part, denounced a measure “protectionist” which will “a negative impact on economic relations” between the two blocks.
Chinese subsidies in the automobile sector: despite threats from Beijing, the EU “must not fear any country” (Bruno Le Maire)
The investigation, which must make it possible to gather all the necessary evidence, must be completed within a maximum period of 13 months, specifies the notice of opening of the procedure. Ultimately, the EU might decide to tax vehicles imported from China, beyond the current 10%.
The fact remains that, even in the event of a proven infringement, it might waive it if it considers that it has no interest in it. “If the existence of subsidies and resulting injury is established, it will be determined (…) whether the imposition of compensatory measures is not contrary to the interest of the Union”, underlines the document. The German automobile industry, for example, generates 40% of its global turnover in China and fears a commercial conflict with its largest customer.
By opening this investigation, the EU is attempting a difficult challenge: showing its muscles without irritating Beijing too much, reducing its commercial dependence without breaking with the Asian giant. Behind this exchange of arms, Europe wants to avoid a disastrous conflict and “keep the dialogue open” with its first commercial partner, as highlighted at the end of September by the European Commissioner for Trade, Valdis Dombrovskis.
(With AFP)
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