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China has signalled it will retaliate against trade barriers introduced by the US and the EU as it launched an anti-dumping probe into chemical imports.
The Ministry of Commerce announced on Sunday that it is probing imports of polyoxymethylene copolymer, a thermoplastic widely used in the consumer electronics and automotive industries, from the EU, the US, Japan and Taiwan.
Beijing’s move suggests it will take tit-for-tat action against foreign trade barriers, but the narrow investigation into chemicals also highlights the limits on its ability to respond, given the huge trade surpluses it runs with the US and EU.
Its action came after the Biden administration this week unveiled a raft of tariffs on Chinese goods including clean energy technologies and computer chips. The most striking was a quadrupling of tariffs on electric vehicles to 100 per cent, aimed at preventing players such as BYD and Nio from gaining a foothold in the US automotive industry.
The White House said $18bn of goods in “strategic sectors” would be affected by the tariff rises, claiming they would give US companies time to catch up with Chinese rivals in clean energy technology.
In response, China last week vowed to take “resolute measures to defend its rights and interests”. The tit-for-tat action follows a pattern established during the Trump presidency, where Washington introduced tariffs on a wide range of Chinese imports and Beijing responded with targeted action on a narrower range of goods.
Beijing’s probe into the chemical imports will take a year, but could be extended by six months, the commerce ministry said.
The investigation follows a number of probes by the EU into Chinese government subsidies for manufacturing.
Brussels began an anti-subsidy investigation into Chinese electric vehicles in October, amid accusations that Beijing was supporting the industry with huge state subsidies and flooding the European market with cheap EVs. The investigation will determine whether Beijing’s policies have “caused economic injury” to European manufacturers.
Chinese-made electric vehicles are forecast to make up a quarter of all battery car sales in the EU this year, up from 19.5 per cent last year, according to analysis from policy group Transport & Environment.
Beijing’s announcement comes ahead of a July 4 deadline for the European Commission to decide on whether it will impose provisional tariffs or quotas on Chinese EVs.
The European Commission said on Sunday that it will “carefully study the contents” of Beijing’s investigation into the chemical imports “before deciding on next steps”.
In April, the EU initiated probes into two Chinese solar panel manufacturers that it accused of benefiting from market-distorting subsidies. The European solar industry blames Chinese rivals for undercutting them on price, resulting in huge losses and several plant closures across the continent.
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