European Commission’s investigation into Chinese EVs requires an explanation: Global Times editorial
Published: Jun 15, 2024 01:11 AM
Illustration: Chen Xia/Global Times

Illustration: Chen Xia/Global Times

The European Commission's investigation into Chinese electric vehicles (EVs) subsidies has sparked continued opposition since the initial ruling was unveiled on Wednesday. European media has noted that almost all major car manufacturers, including BMW, Volkswagen, Mercedes-Benz, and Stellantis, have voiced their opposition to the EU's decision to increase tariffs on Chinese products. Stellantis even announced the day after the initial ruling that they would expand cooperation with Chinese companies. The Norwegian Minister of Finance has stated that they will not follow the EU in raising tariffs on the EVs. Many media outlets outside China and Europe have also questioned the effectiveness of the decision, calling it a double-edged sword for the bloc.

As more details emerge, the European Commission's anti-subsidy investigation is becoming increasingly unsettling. Firstly, it is clearly a "guilty until proven innocent" investigation that disregards the appeals of Chinese companies and artificially constructs and exaggerates the so-called "subsidy" programs. Secondly, the purpose of this investigation is also questionable. Experts familiar with the issue have revealed that Chinese companies have reported that the EU requested that they provide battery formulas and other sensitive information such as trade secrets and core technology. The final outcome appears to target leading Chinese companies.

This anti-subsidy investigation initiated by the European Commission based on its subjective judgment of a "threat" rather than a complaint from EU industry players has been politically motivated from the start. The sampling basis and scope of the investigation are all questionable, and the details of the investigation that have been exposed are also shocking.

Is this the "European way" that the EU, which advocates the rule of law, rules, and free trade, insists on? At multiple hearings held in Brussels, the Chinese side's concerns have never received a positive response from the European Commission, and the hearings have been seen as a sham by Chinese companies and industry associations. With so many suspicious, irregular, and unclear aspects, how does the European Commission plan to explain its actions to the world?

We have noticed that the European Commission's announcements repeatedly emphasize the hope for a mutually agreed solution with the Chinese government, and there are two negotiation windows for both parties. China's Commerce Ministry has already initiated consultations with the EU. We hope to reach a mutually beneficial arrangement through consultations that takes into account the concerns of both sides. However, there are two prerequisites. First, it must be based on the definition of subsidies by the WTO, rather than on self-imposed standards that are incompatible with it. Second, it must be strictly based on sufficient facts rather than inferences. Without these two prerequisites, it will be difficult to reach an agreement.

In recent days, European public opinion has been generally very concerned about the possible implementation of the additional tariffs. For the European Commission, the immediate priority is still to think clearly about its own interests and goals. If the goal is to shut out Chinese EVs, then the European Commission should pay more attention to the voices that say the EU itself will also suffer heavy losses. If its goal is to force Chinese car manufacturers to invest in Europe, then it is necessary to remind it that honesty is the best investment policy, and stability is the best business environment. If companies lose trust in the European market, no strategy can make up for it. Protectionism will not build a protective wall.

After the so-called ruling was initiated, all parties, especially the European side, paid close attention to the possible retaliatory measures that China may take, including the temporary tariffs on brandy and high-displacement gasoline vehicle imports. The international dairy and pork industries are also very concerned. China's attitude is actually very clear. We will closely monitor Europe's follow-up actions and resolutely take all necessary measures to firmly defend the legitimate rights and interests of Chinese enterprises.

There is less than a month before the decision is actually implemented. There have been successful cases of consultations between China and Europe to resolve disputes in the past, and there is still a possibility of reaching a solution through negotiations, as was the case in 2013 with the solar trade dispute. The key is the EU's attitude. How to abandon unilateralism, return to WTO rules, and work with China to make the cake bigger and strive for a win-win situation, this is something that the EU needs to consider seriously.