EU anti-subsidy probe into Chinese EVs likely to backfire
Published: Sep 13, 2023 11:57 PM
Visitors inspect vehicles at the booth of Chinese manufacturer BYD at the Open Space of the IAA 2023 auto show in Munich, Germany on September 5, 2023. Photo: VCG

Visitors inspect vehicles at the booth of Chinese manufacturer BYD at the Open Space of the IAA 2023 auto show in Munich, Germany on September 5, 2023. Photo: VCG

The European Commission on Wednesday started an anti-subsidy investigation into Chinese electric vehicles (EVs). But as the EU wields trade protectionist measures to suppress China's EV industry, the European economy may suffer.

The investigation comes as Chinese EV makers step up efforts to expand into overseas markets. As reported by the Guardian, Chinese carmakers sold almost the same number of electric cars in Europe in the first seven months of 2023 as they did in the whole of 2022. What really worries European policymakers are not the so-called "Chinese subsidies," but 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. 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. However, it is not necessary in Europe, which is home to many leading auto makers. The European enterprises should have enough courage to face competition from their Chinese counterparts directly.

Trade protectionism will become a poison for the European economy. It cannot boost the European automobile industry. On the contrary, it will only pass on costs to European consumers and hinder the realization of Europe's climate goals.

It is undeniable that China's EVs have price advantages, but this is not due to so-called "government subsidies." Rather, it is because of China's advantages in terms of value chain, talent, technology, infrastructure and logistics. If Europe uses an anti-subsidy investigation as an excuse to close the door to Chinese electric vehicles, European consumers will be forced to buy more expensive EVs. This will damage their enthusiasm for purchasing EVs.

Facing the grave challenges posed by the frequent extreme weather events that have caused heavy losses on every continent, it's time for all nations to make collective efforts to fight climate change. European leaders have repeatedly stressed the importance of electric vehicles for the EU's ambitious environmental objectives. However, given China's advantages in the EV supply chain, any political moves by Europe to interfere with its EV cooperation with China will in turn set back Europe's own efforts to tackle climate change.

Hopefully the EU will stop its anti-subsidy investigation against Chinese EVs and avoid being drawn into a quagmire of trade protectionism.

European policymakers should not forget that China is an important automotive market. In 2022, the production and sales of automobiles in the country were 27.021 million and 26.864 million units, up 3.4 percent and 2.1 percent year-on-year, respectively.

China and the EU are key partners for each other in areas with complementary advantages such as the automobile industry. European carmakers are increasingly venturing into the Chinese market. Although there are many concerns in the EU, prompting Europe's gradual shift toward trade protectionism, one thing is clear: Europe's auto industry cannot afford a "trade war" with China. As the world transitions toward clean energy, decision-makers in Europe should maintain strategic sobriety. If Europe and China fall into an EV trade dispute, then American automakers will become the biggest winners.

As an important automotive market, China always welcomes foreign investors, and has pledged to further open its economy to overseas firms, allowing them to share the dividends of China's consumer market. But this does not mean China has no ability to fight back against trade protectionism. If unfair action is taken by the EU, China has various tools to use as countermeasures to protect the legal interests of Chinese firms.

The author is a reporter with the Global Times.