The government in Beijing is investigating alleged illegal subsidies to the European dairy industry. The goal: The EU should keep its market open to Chinese imports.
Josef Borrell is neither a trade politician nor an expert on China, but the latest warning from the EU’s high representative for foreign policy is almost prophetic: An open trade conflict with China is “probably inevitable,” Borrell warned on Monday. The event in Spain – a warning that already came true on Wednesday: the Ministry of Commerce in Beijing announced an investigation into European milk producers due to illegal subsidies. Is this the first shot of a trade war announced by Borrell? “Die Presse” gives an overview of the war situation.
1 Why are the Chinese taking action against imports from the EU?
Officially, the investigation, scheduled to run until August 2025, is based on practices that distort competition in EU member states. It was applied for by the China Industry Association, which includes a total of 20 subsidy schemes that will, among other things, affect the export price of cheese and yogurt. EU countries include Italy, Ireland, Belgium, Czech Republic, Finland, Croatia and Austria.
The real reason: On Tuesday, the EU Commission announced that Chinese electric cars will be subject to tariffs when imported into the EU. The EU tariffs are a reaction to massive subsidies to the e-car industry by the government of the People’s Republic of China, which range from 19 to 47 percent depending on the manufacturer and will be applied for five years starting in the fall. – unless member states veto them. Yesterday’s warning shot was aimed at EU capitals: a Chinese Foreign Ministry spokesman said the EU must stop politicizing trade, while the Chinese Association of Automobile Manufacturers (CAAM) warned of “huge risks” for China. EU relations warned.
2 How big are these “risks” to the EU trade balance?
