“They Are Afraid Of Competition”: China Responds To EU Investigation Into EV Subsidies

China has responded to the EU’s plans to investigate EV subsidies, as we first wrote about earlier today. 

Chinese state mouthpiece The Global Times published a rebuttal late on Wednesday, claiming that the EU’s probe would likely “backfire” and that the EU’s economy would suffer as a result. 

The publication said that “…as the EU wields trade protectionist measures to suppress China’s EV industry, the European economy may suffer.”

The article claims that the EU isn’t bothered by the subsidies, but rather “the rapidly growing market influence of Chinese EV companies” and “the concern that homegrown European enterprises may be unable to compete.”

“Clearly, Europe is afraid,” The Global Times wrote. “They are afraid of competition from China, so they want to seek trade protectionism as a protective umbrella for European auto makers who are slowly transitioning toward electrification.”

China says that the EU should “have enough courage to face competition from their Chinese counterparts directly.”

Recall earlier today we wrote that the EU had launched an investigation into Chinese subsidies for electric vehicles. 

At a time when tensions between China and the EU have been simmering for months, European Commission President Ursula von der Leyen is taking exception with the fact that “the global market is flooded with cheap Chinese cars”, we noted, citing Bloomberg.

Speaking to parliament recently, von der Leyen said: “Their price is kept artificially low by huge state subsidies. This is distorting our market. And as we do not accept this distortion from the inside in our market, we do not accept this from the outside.”

“Von der Leyen’s announcement is a positive signal that the European Commission is recognizing the increasingly asymmetric situation our industry is faced with,” added Sigrid de Vries, director general of the European Automobile Manufacturers’ Association.

The results of the investigation could wind up furthering the divide between China and the EU. Recall, the EU also complained when President Joe Biden’s administration passed the Inflation Reduction Act, claiming it “violated free trade rules”. 

Von der Leyen has been working to “de-risk” the EU’s relationship with China without “decoupling” it, the report says. 

And China’s take on the situation may hold some water. As we noted back in July, Chinese domestic automakers have started to officially dethrone Western competition after the West’s decades of dominance.