Have the article read by OpenAI (Beta). Please note that AI translations may take some time to process.Last week, the EU announced investigations into Chinese suppliers of wind turbines in Spain, Greece, France, Romania and Bulgaria, the latest move by Brussels targeting the country over green tech subsidies suspected of undermining fair competition.
The bloc’s competition chief, European Commission Executive Vice-President Margrethe Vestager, announced the inquiry during a speech at the Institute for Advanced Study in Princeton in the US state of New Jersey.
“China is for us simultaneously a partner in fighting climate change, an economic competitor, a systemic rival. And the last two dimensions are increasingly converging,” Vestager said in her speech.
According to industry lobby group WindEurope, Chinese wind turbines are currently being offered in Europe at prices up to 50 percent lower than European-made ones, at a time when Brussels is seeking a major increase in renewable energy with the goal of net-zero greenhouse gas emissions by 2050. In its renewable energy production, the EU seeks to move away from over-reliance on cheaper Chinese technology.
In Spain, for example, the China Three Gorges Group is involved in the sales processes of two major renewable energy projects currently underway in the Spanish market, which together represent around 1,500 MW of green power. In both bids, the group is competing with some of the big names in European electricity, such as Naturgy, Engie and Verbund.
On Friday, China’s commerce minister accused the European Commission of pursuing “protectionist” actions at the expense of green initiatives by launching investigations into Chinese subsidies.
“We can’t understand how the European Commission on the one hand carries the flag for green sustainable development and on the other hand undertakes protectionist operations,” China’s Minister of Commerce Wang Wentao said at an Italy-China economic forum in the city of Verona.
France’s Le Maire: “Europe must regain economic power”
Fearful of the impact on their own economies, the EU and the United States are keeping a close eye on Beijing’s growing economic advance.
“Our economies cannot absorb this. It is not only dangerous for our competitiveness. It also jeopardises our economic security. We have seen how one-sided dependencies can be used against us. And this is why Europe, and not only the US, is reacting,” Vestager said in New Jersey.
The EU’s probe into wind parks comes on the heels of recent criticism from the US over China’s excess industrial capacity. US Treasury Secretary Janet Yellen recently said that Washington “will not accept” underpriced Chinese goods flooding the global market.
The US is concerned that Beijing’s subsidies are leading to more production capacity than global markets can take in, resulting in a surge of cheap exports in sectors such as solar and electric vehicles and thus stifling the growth of those industries elsewhere.
Last week, the Economy Ministers of Germany, France and Italy – the three largest economies in the eurozone – met near Paris for the third trilateral meeting on Europe’s economic power and current challenges to economic security – including from China.
“Europe must regain economic power, it must regain risk and innovation, and it must regain prosperity,” French Minister for the Economy and Finances, Bruno Le Maire, said. “No one can accept that Europeans see their relative prosperity diminished compared to that of Americans.” He added that China and the US “will not give Europe any discounts” and stressed that “there is not a second to lose” in defining an EU economic strategy.
Electric trains in Bulgaria, solar panels in Romania
The new investigations into wind turbines follows earlier EU investigations into Chinese subsidies for solar panels, electric cars and trains, as trade tensions with Beijing escalate. The initiative was launched under new rules in place since last year that aim to prevent foreign subsidies from undermining fair competition within the EU.
The EU opened its first probe under the Foreign Subsidies Regulation in February, targeting a subsidiary of Chinese rail giant CRRC, which took part in a tender in Bulgaria to supply electric trains. That investigation was closed after the subsidiary withdrew from the tender.
A second probe targets Chinese-owned solar panel manufacturers seeking to build and operate a photovoltaic park in Romania, partly financed by EU funds.
“Just last week, we opened investigations into bids by Chinese companies that may unduly have been advantaged in public tenders for solar panels in Romania,” Vestager said in her speech.
Under the EU’s Foreign Subsidies Regulation, companies are required to notify their participation in public procurement tenders in the EU when the estimated value of the contract exceeds 250 million Euro and when the company has been awarded foreign financial contributions of at least four million Euro from at least one third country in the three years preceding the notification.
The Foreign Subsidy Regulation came into force on July 12, 2023. The rules allow the Commission to tackle the distortions caused by foreign subsidies and therefore enables the EU to ensure a level playing field for all businesses which carry out their activity on the domestic market, while remaining open to trade and investments.
Following the preliminary examination of all submissions, the Commission considered that it was justified to initiate an in-depth investigation for two bidders in the Romanian tender, as there were sufficient indications that both had received foreign subsidies distorting the internal market.
Ongoing electric vehicle stand-off
In her speech in Princeton, Vestager also referred to the EU’s long-standing concerns about unfair competition from Chinese electric vehicle manufacturers.
“In October last year, the European Commission launched an anti-subsidy investigation into the import of electrical vehicles from China. If we determine that those electrical cars have been illegally subsidised, we will impose remedies,” Vestager said.
According to the Commission, Chinese electric cars are normally around 20 percent cheaper than models built in the EU. The anti-subsidy investigation could now lead to punitive tariffs being imposed.
Last week, German car manufacturers said they are against possible European punitive tariffs on the import of electric cars from China. The German Association of the Automotive Industry (VDA) called for a willingness to engage in dialogue on both sides to avoid harming the sector’s development.
“Anti-subsidy measures, such as additional tariffs, would not solve the challenges for the European and German automotive industry. On the contrary: the purpose of countervailing duties envisaged by the European Commission could quickly have a negative impact in the event of a trade conflict,” VDA president Hildegard Müller told the Sunday edition of the German newspaper Die Welt.
According to Germany’s Center Automotive Research, German car manufacturers sell 30 to 40 percent of their output on the Chinese market. In the event of European punitive tariffs, these manufacturers could therefore be the first target of possible Chinese countermeasures.
A preliminary announcement by the Commission is planned by June 5, the newspaper reported.
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Editorial note: this article has been edited to update the location of Margrethe Vestager’s speech. The speech was given at the Institute for Advanced Study in Princeton, New Jersey and not at Princeton University.