China protests new European investigation into wind turbines and report alleging 'distortions in the economy'

Beijing has expressed strong opposition to the European Commission's plan to investigate Chinese wind turbines over state subsidies, and denounced a report from Brussels alleging “distortions in the economy” – developments that are expected to further strain bilateral relations but will not deter China in the long term. .

European Commission Executive Vice President Margrethe Vestager said during a speech in the United States on Tuesday that her agency, an operating body for the 27-nation European Union, plans to conduct an investigation into subsidies for wind turbines in China. According to the committee's website.

On Wednesday, Commission Director for Trade Defense Martin Lucas said on LinkedIn that his agency had published an updated report on “significant state-induced distortions in the economy” in China.

China's official Xinhua news agency said a Chinese Commerce Ministry official met with Lucas on the same day in Brussels to refute the planned investigation and report.

Chinese Foreign Minister Li Qiang dismissed “excess capacity” concerns in his talks with Janet Yellen

The European Commission also launched investigations into Chinese electric cars and solar panels Foreign support listwhich took effect in July.

“China believes that the investigations on foreign subsidy regulation initiated by the EU so far… have not only seriously damaged Chinese enterprises' confidence in investment and trade in Europe, but also interfered with mutually beneficial industrial cooperation between China and Europe,” the ministry said. Commerce said in a statement on Wednesday.

“the [investigations] It will also impact the global response to climate change efforts and the green transition process.

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In her speech on Tuesday, Vestager said the commission would look into Chinese suppliers of wind turbines and “conditions for the development of wind parks” in Bulgaria, France, Greece, Romania and Spain.

The subsidy would lower unit prices, making goods more competitive in foreign markets such as Europe.

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Also on Tuesday, the commission announced a preliminary anti-dumping ruling on Chinese-made alkyl phosphate esters and imposed a 45.1 percent tax on fire-resistant plastics.

European leaders were already concerned about Chinese barriers to market access and trade imbalances. The trade deficit in goods between the EU and China reached €291 billion (US$312.6 billion) last year, when China was the largest source of EU imports at 20.5% of the total.

China is the world's largest producer of wind energy and is exporting turbines to dampen global demand for clean energy while the domestic clean energy industry faces excess capacity.

The price of Chinese turbines is approximately One-fifth less Of American and European products, research service BloombergNEF found.

Analysts: Investigation into Chinese wind turbines may harm clean energy projects in the European Union

A 700-page EU Commission staff working document on China's economic “distortions” updates the 2017 report by summarizing recent Chinese industrial legislation and policies. The content is intended to guide any antidumping investigations if prices and costs are “affected by significant state-induced distortions,” Lucas said on LinkedIn.

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After meeting with Lucas in Brussels, the Commerce Ministry's statement said: “The EU has updated its relevant report and once again distorted China's policies, market environment and economic system, creating excuses for subsequent discriminatory anti-dumping practices.”

She added, “China expresses its deep concern and strong opposition.”

On Thursday, the criticism continued, with ministry spokesman He Yadong saying the EU investigation into Chinese wind turbines “clearly violates free trade principles and severely disrupts normal bilateral industrial cooperation.”

“It is a typical protectionist policy, which will deal a strong blow to the global response to climate change and the green transition,” he said, adding that the decision will damage the confidence of multinational companies in the EU and “weaken mutual trust between China and the EU.” .

Analysts expect China will likely respond more, albeit cautiously, to avoid losing too much trade with Europe.

Nick Marrow, senior global trade analyst at the Economist Intelligence Unit, said that while solutions are difficult in the near term, China “is not going to take these European measures on its knees.” He pointed to China's investigation into French brandy subsidies, announced in January, as an example of China's possible responses in the future.

But he said China was unlikely to strike unless it was a direct response to provocations, because it was “interested in the stability of its relations with Europe.”

Chinese companies may also double shipping goods to Europe from third countries if the EU and China cannot bury their differences, said Song Seng Won, an economic consultant at financial services firm CGS in Singapore.

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They can ship to Europe from Vietnam or other developing countries, just as they now export from Mexico to the United States, Song said.

“China can play the long game,” he added. “They can build that scale too.”

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