EU Finds Evidence of Chinese Government Unfairly Providing Subsidies

The EU’s European Commission announced that after months of investigation, it had found evidence that the Chinese government was unfairly providing subsidies for electric vehicles exported to Europe through direct fund transfers.

In October 2023, Europe began an official investigation into China’s electric vehicle industry. As European companies enter the European Union, they are competing with cheap, high-tech Chinese imports made with low-wage labor.

The European Commission visited BYD, Geely, and Shanghai Motor to gather information as part of its investigation into the Chinese government’s subsidies and bank loans that have fueled China’s massive growth.

Meanwhile, the US and Europe have been strengthening regulations on Chinese electric vehicles and electric vehicle parts sold within their countries. Due to high tariffs in the US, Chinese companies have turned to other regions such as South America, Asia, and Europe.

But now it looks like Europe may enforce its own tariffs. The investigation is scheduled to continue until November of this year, but provisional tariffs could be imposed as early as July. The European Commission also said it would require customs registration for electric vehicles made in China from March 7, 2024. According to Reuters, this means that if an EU trade investigation later concludes that China is receiving unfair subsidies, it could face retroactive tariffs from then on.

As Chinese electric vehicles arrive in the EU via shipments, the European Commission stated it did not know what the tally of retroactive tariffs would be if that were to happen.

In response, the China Chamber of Commerce to the EU said it was disappointed by this measure and argued that the surge in imports was only a reflection of consumer demand for electric vehicles.

On March 5, 2024, the European Commission published a document saying that it had sufficient evidence to make the move, adding that Chinese imports had increased by 14% year-on-year since the investigation was formally launched back in October of 2023. While the report didn’t detail specific instances, it said it found subsidies including government revenue “foregone or not collected” and government supplies of goods and services “for less than adequate remuneration,” Automotive News Europe reports.