China: EU car subsidy probe will have 'negative impact' on trade ties

China has warned that a probe by the European Union into Chinese state subsidies for electric cars will have a "negative impact" on trade relations between the bloc and Beijing.

"The Chinese side believes that the EU's proposed investigative measures are to protect its own industry in the name of 'fair competition'... and will have a negative impact on China-EU economic and trade relations," a commerce ministry statement said on Thursday.

It said the investigation was "naked protectionist behaviour that will seriously disrupt and distort the global automotive industry supply chain, including the EU".

European Commission President Ursula von der Leyen announced the anti-subsidy investigation on Wednesday, vowing to protect the bloc's automakers against unfair competition.

"The Chinese side urges the EU... to carry out dialogue and consultation with the Chinese side, create a fair, non-discriminatory and predictable market environment for the joint development of the China-EU electric vehicle industry," the commerce ministry statement said.

Highly competitive industrial chain

In China, EV prices start as low as $14,500 for a compact SUV with a 400-kilometre range on one charge.

On Thursday, Cui Dongshu, head of the China Passenger Car Association, also opposed the investigation in comments written on his WeChat social media account.

“I personally firmly oppose the EU’s evaluation of China’s new energy vehicle exports, not because it has received huge state subsidies, but because China’s industrial chain is highly competitive,” Cui said.

He said that China had phased out new energy subsidies in 2022.

Cui urged the EU to take an “objective view of the development of China’s electric vehicle industry” instead of using what he said are economic and trade tools to increase the costs of Chinese electric vehicles in Europe.