China's Probe Into EU Pork 'Dumping' Seen as Trade Retaliation

China has begun a trade probe into pork imported from the European Union – a week after the EU announced tariffs on Chinese electric vehicles.

Analysts say the anti-dumping investigation appears to be aimed at countries such as Spain, France, the Netherlands and Denmark in response to provisional levies of up to 38% on its EVs.

The investigation announced by China’s commerce ministry on Monday will focus on pork intended for human consumption, such as fresh, cold and frozen whole cuts, as well as pig intestines, bladders and stomachs. The probe will begin on June 17.

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It was prompted by a complaint submitted by the China Animal Husbandry Association on June 6 on behalf of the domestic pork industry, the ministry said.

Global food companies have been on high alert for retaliatory tariffs from China following the European Commission’s announcement on June 12 that it would impose additional anti-subsidy duties of up to 38% on imported Chinese cars from July.

The move on Monday came as no surprise, because of reports in the country’s state media, and Beijing’s increasing use of “punitive” trade strategies.

The state-backed Global Times news outlet reported late last month that Chinese firms planned to ask authorities to open an anti-dumping investigation into some European pork products, citing an unidentified “business insider”.

That was followed by a second report in the same outlet on June 8 requesting officials probe European dairy imports.

Chinese authorities have previously dropped hints about possible retaliatory measures through state media commentaries and interviews with industry figures.

$6 billion worth of pork imports in 2023

China imported $6 billion worth of pork in 2023, including offal, with the EU accounting for more than half, according to customs data.

Spain accounted for $1.5 billion worth of outbound swine shipments from the bloc, almost three times as much as second and third ranking the Netherlands and Denmark, which exported $620 million and $550 million of pork products, respectively.

Growing alarm over Chinese industrial overcapacity flooding the EU with cheap products, including EVs, is opening a new front in the West’s trade war with Beijing, which began with Washington’s import tariffs in 2018.

EU trade policy is turning increasingly protective against the global ramifications of China’s production-focused, debt-driven trade model.

Governments typically place anti-dumping duties on imported goods when they suspect the item in question is being sold for less than it cost to produce in order to protect domestic firms.

European pork producers should be able to keep exporting to China tariff-free while the investigation is underway, pending a decision and a tariff announcement by the Chinese side.

The commerce ministry said that the investigation should be completed by June 17, 2025, but could be extended by another six months if required.

Leapmotor starts EV production in Poland

Meanwhile, in related news, a Stellantis-led joint venture has started production of electric vehicles of China’s Leapmotor at a plant in Poland, analysts at Jefferies said, quoting Leapmotor’s management.

Jefferies said in a report late on Sunday that Leapmotor’s management said at an analyst call the first units of its T03 small EV rolled off Stellantis’ assembly plant in Tychy, Poland last week and was on schedule for mass production in September.

Reuters reported in March that Stellantis had chosen its Polish facility as the first production base in Europe for Leapmotor’s cars, primarily for cost-saving reasons.

Stellantis did not immediately respond to a request for comment.

Stellantis and Leapmotor have created a joint venture, led by the Franco-Italian automaker with a 51% stake, giving Stellantis exclusive rights to build, export and sell Leapmotor products outside China, a first for a legacy Western automaker.

The venture, called Leapmotor International, is part of a wider cooperation between the two groups, which sees Stellantis buying a 21% stake in Leapmotor in a $1.6 billion deal.

Jefferies said the JV plans to manufacture a second model at Stellantis’ Polish plant, the Leapmotor’s A12 SUV, starting from the first quarter of 2025. Leapmotor has also started to prepare localized production of components, it added.

Manufacturing costs at the Polish plant amount to around 400-500 euros ($428-$535) per car, similar to those at Leapmotor’s base in China, versus around 1,000 euros in Italy, the management said according to Jefferies.

Leapmotor plans to make its C10 SUV in China and export it to Europe at an initial stage as this model can be sold at higher prices, Jefferies said.