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21st Century Business Herald trainee reporter Zhou Di reports from Beijing

On July 4, the European Commission (hereinafter referred to as the "EC") announced a preliminary ruling after a nine-month anti-subsidy investigation into Chinese electric vehicles (BEVs), imposing temporary anti-subsidy duties of 17.4% to 37.6% on Chinese electric vehicles. This temporary tariff will take effect on July 5, 2024 and will last up to four months, during which time EU member states will vote on whether to convert it into a formal tariff for five years. Industry analysts believe that the EC will disclose the final ruling by the end of August 2024 and make a final ruling by November 4.

On June 22, Minister of Commerce Wang Wentao held a video conference with European Commission Executive Vice President and Trade Commissioner Valdis Dombrovskis at his request. The two sides agreed to launch consultations on the EU's anti-subsidy investigation into Chinese electric vehicles. On August 9, China took the EU's temporary anti-subsidy measures on electric vehicles to the WTO dispute settlement mechanism.

On August 16, at a media briefing held by the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (hereinafter referred to as "China Chamber of Machinery and Electronics"), Shi Yonghong, vice president of China Chamber of Machinery and Electronics, stated that authorized by 12 major Chinese electric vehicle companies, including three Chinese sampled companies, China Chamber of Machinery and Electronics participated in the damage investigation procedure as a stakeholder. Many of the preliminary findings of the European Commission lack objectivity and fairness, and some procedures lack transparency. The unreasonable findings made by the European Commission in the preliminary ruling of this case seriously violated the relevant anti-subsidy rules of the WTO and the EU, and affixed the so-called "subsidy label" to Chinese companies through artificial manipulation.

Shi Yonghong said that many EU countries have always hoped that Chinese electric vehicle companies would invest and set up factories in Europe. Some analysts believe that the European Commission's imposition of anti-subsidy duties on Chinese electric vehicles, which hinders the export of Chinese electric vehicle products to Europe, is intended to promote Chinese companies to invest in Europe, thereby driving the development of the EU's automobile industry, increasing local employment opportunities in the EU, and achieving green and sustainable development goals. However, judging from the response of Chinese companies, the EU's approach has backfired. Before the EU launched an anti-subsidy investigation on electric vehicles, many Chinese car companies had already begun or planned to invest or operate in Europe. However, since the European Commission decided to impose temporary anti-subsidy duties, the Chinese electric vehicle industry has repeatedly expressed strong opposition to the EU's approach. Many Chinese electric vehicle companies have expressed their concerns about the results of the investigation to the China Chamber of Mechanical and Electrical Industry, as well as their great concerns about the risks of investing in Europe and the possible investigation of the EU's "Foreign Subsidies Regulation".

According to Shi Yonghong, the EU Foreign Subsidies Regulation came into effect on July 12, 2023. The Regulation empowers the European Commission to review the financial assistance provided by non-EU member governments to companies engaged in economic activities in the EU. The European Commission will take relevant measures such as prohibiting investment, divesting assets, and terminating concentration based on the review results. Since the beginning of this year, the EU has frequently launched investigations into the Foreign Subsidies Regulation against Chinese companies. So far, it has launched three in-depth investigations, one proactive investigation, and one surprise inspection against Chinese companies. Among them, the three in-depth investigations forced Chinese companies to withdraw from bidding projects.

Shi Yonghong pointed out that the EU has launched a number of investigations on the EU Foreign Subsidies Regulation against Chinese companies, which are clearly targeted and discriminatory in nature. They are suspected of violating the WTO's most-favored-nation treatment, national treatment and other related rules, which seriously distort the fair competition environment and bring great risks and uncertainties to Chinese companies operating in and investing in Europe. The "subsidy label" identified by the EU in the anti-subsidy investigation is likely to become an excuse for the EU to conduct investigations on the EU Foreign Subsidies Regulation against Chinese companies investing in Europe in the future, which has aroused deep concern and worry among companies.

"On the one hand, the EU forces Chinese companies to invest in Europe by imposing trade restrictions such as anti-subsidy duties. On the other hand, it has formulated the Foreign Subsidies Regulation, which hangs a sword over the investment and operation of non-EU companies in Europe. This practice itself is contradictory and illogical." Shi Yonghong said that to attract global investors, including China, to invest in Europe, the most important thing is for the EU to provide a friendly and stable business environment. Frequently launching various unfair and unjust investigations against companies will obviously increase companies' concerns about the business environment and investment risks.

Shi Yonghong stressed that EU countries that intend to attract Chinese automakers to invest need to see this clearly. Supporting tariffs will lead to losing investment, while an open and fair EU market will be more attractive to Chinese companies. Chinese electric vehicle companies are closely following the progress and results of the EU's anti-subsidy investigation, and will assess the risks of investing in Europe and make investment decisions accordingly.

Shi Yonghong also mentioned that the China-Europe automotive industry chains are interdependent and have broad prospects for cooperation. The China Machinery and Electrical Chamber of Commerce hopes that the EU will maintain an open and cooperative attitude, terminate the investigation as soon as possible, support comprehensive cooperation between the China-Europe automotive industries, and work together to promote the healthy development of the global electric vehicle industry chain, respond to global climate change, and achieve carbon neutrality goals.