Pressed by France, the President of the European Commission Ursula von der Leyen announced on Wednesday the opening of an investigation into Chinese subsidies for electric cars. A “very good decision”, commented immediately the French Minister of the Economy, Bruno Le Maire, who considers that it is necessary that “Europe can retaliate” if these subsidies “do not comply” with the rules of international trade. “This is generally the right attitude,” commented his German counterpart Robert Habeck, Minister of the Economy, at a joint press conference, because it is necessary to check “whether there are hidden subsidies, direct or indirect, which confer an unfair competitive advantage.
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“Global markets are now flooded with cheap Chinese electric cars, the price of which is kept artificially low by massive public subsidies,” Ursula von der Leyen said in a speech to the European Parliament in Strasbourg. “Europe is open to competition. Not a race to the bottom,” said the German official, receiving loud applause.
This announcement represents a gesture towards France which has been pushing in recent months for a Europe that is more assertive in the face of practices considered protectionist by Beijing. But other member countries, like Germany, which rely more on international trade, fear offending the Asian giant. It was immediately welcomed by the Association of European Automobile Manufacturers (ACEA), the main lobby for the sector in the EU. This announcement shows that “the European Commission recognizes the increasingly asymmetrical situation that our industry is facing and is urgently addressing the distortions of competition in our sector,” said Sigrid de Vries, Director General of ACEA. .
China has long been relying on electric engines in automobiles and has taken a lead over Europe, particularly in battery technologies. Its manufacturers rely on their immense domestic market, the first in the world, to now conquer Europe thanks to the strong economies of scale from which they benefit.
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Cheap imports from China “are already having an impact on the market shares of European manufacturers at home, with a massive increase in imports of electric vehicles in recent years”, underlined Sigrid de Vries. She also recalled that American government subsidies reserved for products manufactured in the United States, within the framework of the IRA (“Inflation Reduction Act”), favored the establishment of activities across the Atlantic. European companies “are often beaten on price by competitors benefiting from enormous public subsidies. We have not forgotten how much our solar industry has suffered from China's unfair trade practices,” the president of the European executive acknowledged on Wednesday. Ursula von der Leyen, however, pleaded for a “dialogue” with Beijing.
“We must defend ourselves against unfair practices. But it is equally essential to keep our lines of communication open and continue our dialogue with China. Because there are also issues on which we can and must cooperate,” she said. “Risk reduction, not decoupling,” she insisted. Trade Commissioner Valdis Dombrovskis immediately announced that he would travel to China next week “to discuss trade and economic opportunities and challenges”, in a message posted on X (formerly Twitter). The French Minister for Foreign Trade, Olivier Becht, welcomed the opening of a European investigation. “It’s legitimate: We need to restore a level playing field,” he said. “France is committed to ensuring that the playing field is the same for everyone.”
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Paris and Berlin on Wednesday welcomed the “very good” decision by the president of the European Commission to open an investigation into Chinese subsidies for electric cars. Regarding this “very good decision”, the French Minister of the Economy, Bruno Le Maire, considered it necessary that “Europe can retaliate” if these subsidies “do not comply” with international trade rules.
“This is generally the right attitude,” commented his German counterpart Robert Habeck, Minister of the Economy, at a joint press conference, because it is necessary to check “whether there are hidden subsidies, direct or indirect, which confer an unfair competitive advantage.
Furthermore, the French government is preparing a reform of subsidies for electric cars in France, which should soon be subject to an “environmental score” likely to limit Chinese imports.