China Hits Back at EU, Opens Anti-Subsidy Probe on Dairy Imports

Beijing has cranked up threats of a trade war with Europe, in response to Brussels’ release of its revised decision to impose tariffs on electric vehicles made in China.

Chinese officials said on Wednesday they have opened an anti-subsidy probe into dairy products imported from the European Union.

The move follows the EU’s announcement on Tuesday that proposed punitive duties on imported Chinese EVs would only be cut by a small amount, from 37.6% to 36.3% – after Beijing called on the EU to abandon them.

ALSO SEE: Jump in IPOs Helps Hong Kong Exchange Return to Profit

The anti-subsidy investigation on dairy announced by China’s Commerce ministry on Wednesday will focus on various types of cheeses, milks and creams intended for human consumption.

It was prompted by a complaint submitted by the Dairy Association of China and the China Dairy Industry Association on July 29 on behalf of the domestic dairy industry, the ministry said.

China will examine 20 subsidy schemes from across the 27-strong bloc, specifically those from Austria, Belgium, Croatia, Czech Republic, Finland, Italy, Ireland, and Romania, it said in a statement.

Of the countries listed, Ireland is by far the biggest exporter of dairy products to China, having sold $461 million worth of goods to the Asian nation last year.

The EU was China’s second-largest source of dairy products with at least 36% of the total value of imports in 2023, behind only New Zealand, according to Chinese customs data.

The EU exported 1.7 billion euros ($1.84 billion) in dairy products to China in 2023, down from 2 billion in 2022, according to data from the European Commission’s Directorate-General for Agriculture and Rural Development, which cited Eurostat.

China has already launched an anti-dumping probe into imports of EU pork in June, which mainly affects Spain, the Netherlands and Denmark, in a tit-for-tat move against the EV tariffs.

“The combined value of EU pork and dairy exports to China —areas of goods potentially affected by tariffs — are smaller than the value of China’s battery EV exports to the EU, which we estimate to stand at around $13.5 billion in 2023,” Chim Lee, senior China analyst at the Economist Intelligence Unit.

“Domestic economic pressures, alongside the increasingly important role played by external demand in supporting China’s economy, will keep Chinese policymakers cautious about invoking an overly confrontational approach to trade,” Lee said.

Tesla was the main beneficiary of a cut in European tariffs announced on Tuesday. The European Commission said it will now impose tariffs of 9% on China-made Tesla vehicles, down from an earlier 20.8%.