Beijing criticises probe into wind turbine subsidies
Protectionist EU move breaks rules of free trade, commerce ministry says
Beijing has voiced strong opposition to the European Commission’s plan to investigate Chinese wind turbines over state subsidies and has decried a report from Brussels alleging “distortions in the economy” – developments expected to further strain two-way ties but not deter China in the long run.
The European Commission’s executive vice-president, Margrethe Vestager, said during a speech in the United States that her agency, an operating body for the 27-member European Union, planned to conduct an investigation into subsidies offered for wind turbines in China.
On Wednesday, the commission’s director for trade defence, Martin Lukas, said via LinkedIn his agency had published an updated report on “significant state-induced distortions in the economy” in China.
A Chinese Ministry of Commerce official met Lukas the same day in Brussels to rebut both the planned investigation and the report, Xinhua News Agency said.
The European Commission has also launched investigations into Chinese electric vehicles and solar panels under its Foreign Subsidies Regulation, which took effect in July.
“China believes that the Foreign Subsidies Regulation investigations initiated by the EU so far … have not only severely damaged the confidence of Chinese enterprises in investing and trading in Europe, but also interfered with mutually beneficial industrial cooperation between China and Europe,” the Ministry of Commerce said in a statement.
“The [investigations] will also affect the global response to climate change efforts and the process of green transformation.”
On Tuesday, Vestager said the commission would look into the Chinese suppliers of wind turbines and the “conditions for the development of wind parks” in Bulgaria, France, Greece, Romania and Spain.
Subsidies stand to lower unit prices, making goods more competitive in overseas markets.
Also on Tuesday, the commission announced a preliminary anti-dumping ruling on Chinesemade alkyl phosphate esters and imposed a 45.1 per cent levy on the fire-retardant plasticisers.
European leaders had already been fretting over perceived Chinese market-access barriers and trade imbalances.
The EU’s trade-in-goods deficit with China was ¤291 billion (HK$2.4 trillion) last year, when
China was the EU’s largest import source at 20.5 per cent of the total.
China is the world’s largest wind power producer, and it exports turbines to quench global demand for clean power while the domestic clean-energy space faces overcapacity.
Chinese turbines were priced at about one-fifth less than US and European products, research service BloombergNEF has found.
The EU’s 700-page Commission Staff Working Document on economic “distortions” in China updates a 2017 report by summarising recent Chinese legislation and industrial policies. The content was meant to guide any anti-dumping investigations if prices and costs were “affected by significant state-induced distortions”, Lukas said.
Following the meeting with Lukas in Brussels, the commerce ministry’s statement said: “The EU updated its relevant report and once again distorted China’s policies, market environment and economic system, creating excuses for subsequent discriminatory anti-dumping practices.” “China expresses great concern and strong opposition,” it said.
And yesterday, the criticism continued, with ministry spokesman He Yadong saying that the EU’s investigation into Chinese wind turbines “obviously violates the principles of free trade and severely disrupts normal bilateral industrial cooperation”.
“It is typical protectionism, which will deal a heavy blow to the global response to climate change and the green transition,” he said, adding that the decision stood to hurt multinationals’ confidence in the EU and “impairs China-EU mutual trust”.
Analysts said China would probably respond further, albeit cautiously, to avoid losing too much trade with Europe.
With near-term solutions difficult, China “won’t take these European actions lying down”, said Nick Marro, lead analyst for global trade with the Economist Intelligence Unit.