China candidly calls European probe into unfair competition ‘spying’

“Unprecedented” and “shocking”. The Chinese automotive players involved in the EU survey into state subsidies are stirred by the resulting tariff proposal. They have joined forces and called upon Beijing to impose retaliating import duties, which could hurt the premium brand’s sales performance in the region.

Chinese manufacturers are urging their government to implement punitive measures in response to the European Union’s recent announcement of additional tariffs on imported Chinese electric cars.

Specifically, they advocate a 25 percent tariff on large European vehicles with combustion engines over 2.5 liters in capacity. This development, first leaked in May, was reiterated during a confidential meeting in Beijing, attended by representatives from the Chinese Ministry of Commerce, six European and four Chinese car manufacturers, and various industrial and research organizations.

‘Appropriate business secrets’

Tension between the two trade zones is rising. During the meeting, a Chinese representative accused the EU of using the investigation as a pretext to “appropriate business secrets from Chinese EV manufacturers”. According to the Chinese delegation, the details of the information and cooperation demanded by the EU officials exceed plausibility. It was labeled as ‘unprecedented.’

The Chinese Ministry of Commerce criticized the European Commission for exaggeration during its eight-month anti-subsidy probe. The commission demanded extensive data on sourcing raw materials for batteries, manufacturing components, pricing, and sales channels, which China views as an overreach and even an attempt to undermine fair competition.

Espionage sentiments

However, the starting point for the EU probe is unfair competition, as Beijing has been accused of unjust state subsidies. The EU’s tariffs are based on the level of cooperation with its officials and government subsidies received by Chinese manufacturers. The reasoning is that brands with more subsidies can offer lower prices and should be subject to higher tariffs.

Chinese state media have echoed the ‘espionage’ sentiments, suggesting that the European Commission’s inquiry was no more than an intent to usurp business secrets from Chinese car companies.

This is a flawed conclusion as the European Union, unlike the Chinese government, doesn’t hold shares in car companies. The Chinese Ministry of Commerce emphasized that the commission’s actions lack legal basis and harm global green transition efforts and open cooperation.

250,000 cars could be affected

The counter-tariffs could hurt premium brands, especially from Germany, as China is their top market for sales. According to Car News China, around 250,000 combustion-engined cars exceeding 2.5 liters were imported into China in 2023.

This represents roughly one-fourth of the combined yearly sales of the German premium brands in the region. In 2023, Audi sold 396,330 cars in China, followed by Mercedes (379,665 units) and BMW (360,713 units).

The EU and China are still negotiating their positions. The European automotive industry, for instance, needs to reckon with more exposure to the Chinese market than its American counterpart. Above all, the Chinese automotive industry’s call for increased tariffs marks an escalation. The move is intended to pressure Europe to reconsider its additional customs duties.