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China relies on exports to boost trade, although demand has been hit by economic pressures. By increasing subsidies, the Chinese government has succeeded in increasing exports while lowering the prices of manufactured goods, and the EU has followed suit.
The city of Brussels is currently increasing scrutiny of Chinese suppliers in Europe’s wind turbine market, estimated to be worth $4.3 billion.
EU competition chief Margrethe Vestager said in a speech on Tuesday in Princeton, New Jersey, that the EU would be able to reduce the amount awarded to Chinese turbine suppliers currently used in wind farms in countries such as Spain, France and Bulgaria. He said that he plans to dig deeper into the existing government subsidies.
Vestager announced the move just days after the European Commission decided to open an investigation into subsidies given to Chinese companies for solar power plants in Romania. Separately, the EU also launched an anti-subsidy investigation into Chinese-made battery EVs last year.
“We’re starting to see a strategy for how China came to dominate the solar panel industry,” Vestager said, adding that European companies were set up in the region as a result of China’s power struggles. It added that the production of solar panels was less than 3%.
He outlined the steps China typically takes, starting with attracting foreign investment, acquiring technology, and offering generous subsidies to domestic companies to produce products at much lower prices than rivals in other countries. Made it possible to manufacture turbines.
“We can’t afford to see what happened with solar panels happen again with electric cars, wind power, or essential chips,” she says.
European giants such as Siemens Energy still dominate the wind turbine market, but are facing competition from cheaper Chinese alternatives and are being forced to cut costs and absorb losses. With increasing attention and investment in green technology, China is entering the turbine manufacturing market.
It is unclear which Chinese companies Brussels will investigate.
Is it a subsidy issue?
Western countries are trying to counter Chinese competition by pinning it on promoting excess capacity in industries such as energy and EVs. But the Chinese government has rejected these claims as “baseless”, saying Chinese companies are thriving thanks to innovation, not subsidies, Commerce Minister Wang Wentao said this week.
If the EU’s ongoing investigation into unfair subsidies turns out to be unfavorable to China, additional tariffs could be imposed on EV imports.
Regarding wind turbines, China’s Chamber of Commerce in the EU said it was dissatisfied with the EU investigation.
“This action suggests discrimination against Chinese companies and sends a harmful signal to the world of support for protectionism,” the group, which represents the interests of Chinese companies in the European region, said in a statement.
The last time the EU launched a major investigation into China, the Asian superpower hit back at the bloc with an anti-dumping investigation into brandy imports. What will happen this time?
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