China and the European Commission are to launch consultations on the European Union anti-subsidy investigation into Chinese electric vehicles (EVs).

The State Council of The People's Republic of China made the announcement on June 22, confirming that China's Commerce Minister Wang Wentao and Valdis Dombrovskis, executive vice president of the European Commission, had a discussion via video link on the issue.

The discussion comes as a trade war between China and the EU looks set to escalate. The EU appeared set on raising tariffs on Chinese-made EVs earlier this month as an anti-subsidy investigation rumbled on. Those tariffs, if levied, would be as much as 48.1 percent for companies that did not cooperate with the EU.

China called the move "notably unfair" and the proposed hikes "typical double standards," pointing out that the EU provided subsidies for its own domestic EV and battery manufacturers.

The dispute then escalated, with China initiating an anti-dumping investigation into EU pork imports, something the EC's spokesperson for Trade and Agriculture said the commission was taking note of.

Politico reported that Gill said that Dombrovskis and Wentao had a "candid and constructive call on Saturday on the EU's anti-subsidy investigation into battery electric vehicles produced in China."

According to Chinese government mouthpiece Xinhua, the country was ready to open discussions with the EU and "consider both parties' reasonable concerns to avoid the escalation of trade frictions in a rational and professional manner."

Xinhua noted that Wentao made the remarks during a meeting with German Vice Chancellor Robert Habeck. It claimed Germany was "deeply concerned about the EU's anti-subsidy investigation into Chinese EVs," noting fears that the investigation could negatively impact Europe's green transition and consumer interests.

According to Xinhua, "Habeck believes that imposing tariffs is the worst approach as it could lead to a vicious spiral of trade friction escalations, stressing that dialogue and consultations are the only way to solve problems."

Politico reported Habeck as clarifying that the proposed tariffs were not punitive but were instead aimed at leveling the playing field in the light of alleged unfair benefits enjoyed by Chinese companies.

The agreement to hold consultations is a clear sign that both sides are seeking a way to de-escalate the situation and end the spat over subsidies. ®

https://www.theregister.com//2024/06/24/china_and_the_eu_agree/