China has initiated an anti-subsidy investigation into dairy imports from the European Union, escalating tensions with the bloc just a day after the EU revised its tariff plan for Chinese electric vehicles (EVs). The new tariff on Chinese EVs has been set at 36.3%, slightly reduced from the previously proposed 37.6%, but still not eliminated, which was China’s request.
In response to the EU’s actions, China’s commerce ministry expressed strong opposition and concern, pledging to take necessary measures to protect Chinese businesses. The investigation will focus on various dairy products, including cheeses, milks, and creams, following a complaint from the Dairy Association of China and the China Dairy Industry Association submitted on July 29.
China plans to scrutinize 20 subsidy schemes from multiple EU countries, including Austria, Belgium, Croatia, Czech Republic, Finland, Italy, Ireland, and Romania. The European Commission has stated that it will defend the interests of the EU dairy industry and ensure compliance with World Trade Organization (WTO) rules during the investigation.
Ireland is the largest exporter of dairy products to China, with exports valued at $461 million last year, while France is noted as the second-largest supplier of cream to China. In 2023, the EU accounted for 36% of China’s dairy imports, exporting €1.7 billion ($1.84 billion) worth of dairy products, a decrease from €2 billion in 2022.
This investigation follows China’s earlier anti-dumping probes into EU pork and brandy, indicating a pattern of increasing scrutiny on EU agricultural goods. Analysts suggest that while the combined value of EU pork and dairy exports to China is smaller than China’s battery EV exports to the EU, domestic economic pressures may lead Chinese policymakers to adopt a cautious approach in trade relations.