Electric Car, EU-China Accusation Exchange: Dumping Or Protectionism?

China is responding to the investigation into dumping practices in the electric vehicle market announced by the EU. For the Ministry of Commerce in Beijing, the said investigation will only be a way to protect its industry; this is unfair competition.

The debate was opened on September 13 with statements by European Commission President Ursula von der Leyen in her state of the EU speech. Speaking about the issue of fairness in the global economy, she stated, “Global markets are currently flooded with cheap Chinese electric vehicles, prices of which are kept artificially low by huge government subsidies. This practice causes distortions in our market. And just as we do not accept them when they come from within, we do not accept them from the outside. Therefore, I can announce to you today that the Commission will launch an investigation into the fight against subsidies for electric vehicles from China. Europe is open to competition, not an endurance race.”

Beijing’s reaction was not long in coming: “This is a purely protectionist act that will disrupt and severely distort the global automobile industry and supply chain, as well as have a negative impact on economic and trade ties between China and the EU.”

In the first quarter of 2023, China became the world’s number one exporter of automobiles, overtaking Japan. According to data from OICA (International Organization of Motor Vehicle Manufacturers) published by Italian economic newspaper Il Sole 24 Ore, 4.4 million vehicles are expected to be exported from Beijing in 2023. 1.3 million of them are electric vehicles. According to the newspaper, the Chinese government allegedly subsidized the electric vehicle industry by $57 billion between 2016 and 2022. The USA, in turn, supported this sector of the economy with $12 billion over the same period.