China Strikes Back: Probing the Probe on Renewable Energy Products

In a development that could further strain the already tense trade relationships between two global economic powerhouses, China announced on Wednesday that it would launch an inquiry into the European Union’s (EU) trade practices. This investigation, initiated by the Chinese Commerce Ministry, aims to scrutinize whether the EU has been engaging in unfair trade practices in its probes of Chinese companies bidding on projects within the 27-member bloc. The scope of China’s investigation will encompass sectors such as wind power, photovoltaics, security equipment, and electric trains.

This move by China comes in response to the EU’s recent actions under a new regulation that permits investigations into companies bidding for projects within the Union. Specifically, the EU has been probing whether Chinese subsidies provide an undue advantage to Chinese wind turbine companies competing for projects in countries like Spain, Greece, France, Romania, and Bulgaria. China has labeled these actions as protectionist, accusing the EU of distorting the definition of subsidies recklessly. The Chinese Commerce Ministry’s investigation will be completed by January 10, with the possibility of a three-month extension until April.

Notably, the EU has also been scrutinizing Chinese companies bidding for a substantial 455-megawatt solar park in Romania and for the procurement of 20 electric trains in Bulgaria. These actions have seemingly intensified the trade tensions between China and the EU, prompting China to take a more assertive stance in defending its commercial interests. The request for this investigation came from China’s Chamber of Commerce for Import and Export of Machinery and Electronic Products, signifying the importance of these sectors to the Chinese economy.

Adding another layer of complexity to this unfolding trade drama, the EU recently imposed provisional tariffs on Chinese-made electric vehicles. These tariffs are based on allegations that Chinese subsidies provide an unfair competitive edge to automakers exporting from China. This action has drawn sharp criticism from Beijing, which has retaliated by launching an investigation into European pork exports to China. The tit-for-tat nature of these measures underscores the fragile state of international trade relations between these two major economies.

The concerns of both the EU and the United States over inexpensive Chinese automobiles flooding their markets only add fuel to the fire. With Chinese auto exports surging by approximately 30% in the first half of the year, fears of undercutting domestic producers and potential factory layoffs have become more pronounced. This situation highlights the broader economic implications of trade policies and underscores the interconnectedness of global markets.

As China and the EU continue to navigate these turbulent waters, it remains to be seen how these investigations and retaliatory measures will impact their economic relationship. The outcomes could have significant ramifications for various industries and set precedents for future trade practices. Both sides will need to tread carefully to avoid further escalation and find a path toward more balanced and fair trade relations.