For having launched an anti-subsidy investigation into Chinese wind turbo operations in five member countries, the European Union is accused by Beijing of protectionism.

The EU announced on Tuesday that it will look into whether China’s wind turbine firms were given unfair subsidies or other forms of support from the Chinese government to gain advantage in the competition for projects in Spain, Greece, France, Romania and Bulgaria.

It is the EU’s fourth investigation in two months against Chinese new energy equipment suppliers. Previous probes related to Chinese state-owned firm’s bidding on a solar energy project in Romania and procurement of electric trains in Bulgaria.

Also, prior to those, the EU launched an anti-subsidy investigation into Chinese electric vehicles last October. 

“The EU’s approach obviously violated the free trade principle and seriously interfered with the normal cooperation between Chinese and European industries,” He Yadong, a spokesperson of China’s Ministry of Commerce, said Thursday. “It is a typical form of protectionism.”

China’s market share

China contributed more than half of the global renewable energy installed capacity of 510 million kilowatts in 2023, making it a major contributor to the growth of global renewable energy power generation, according to a report published by the International Renewable Energy Agency (IRENA). 

The report says that, over the past decade, the production costs of wind and solar power have fallen by 60% and 80%, respectively, thanks to China’s innovation, manufacturing and engineering projects.  

Pan Huimin, an official at China’s National Energy Administration (NEA), said in a media briefing on January 25 that China’s wind and photovoltaic power products have been exported to more than 200 countries and regions over the past decade. 

She said the total value of China’s exported wind and photovoltaic power products has amounted to US$33.4 billion and US$245.3 billion, respectively, so far. 

She said China will continue to contribute its green technology, products and projects to the world. 

However, the EU sees the matter in a different way. 

On Wednesday, it published an updated report on state-induced distortions in China’s economy. The last report had published in 2017.

The latest report examines recent Chinese legislation, evolving industrial policies and other development to find what its authors call significant state-induced distortions including:

• cross-cutting distortions, such as the role of the state in the allocation of resources and identification of economic objectives, the role of the planning system, and the importance of state-owned enterprises;
• distortions in the factors of production, such as discriminatory allocation and access to resources, such as land, labour, raw materials, and energy; and
• distortions in selected sectors, such as state support, including preferential access to finance, in specific industrial sectors.

The report highlights distortions in selected sectors in China, including metals, chemicals, telecommunications equipment, semiconductors, railways, environmental goods and new energy vehicles. It says China built these sectors with its socialist economic system. 

A pundit speaks

“The EU’s anti-subsidy investigations are hard for us to accept but they have at least given us a warning – the West has started suppressing China’s leading industries,” a Chongqing-based columnist called Minsu says in an article. 

“China is now a manufacturing power and has a 35% share in the global manufacturing market,” he says. “But when Chinese companies enter the western markets, they still try to use their low-price strategy to win projects. It’s natural that people think we are subsidized and only want to gain market shares.”

He says China’s advantages are low labor costs, matured technologies, complete supply chains and economies of scale. He says that, from now on, Chinese firms should raise their bidding prices in foreign tenders and use the extra profits to improve their products and labor welfare. 

50% discount

On April 3, the European Commission launched two in-depth investigations under the Foreign Subsidies Regulation to try to identify the potentially market distortive role of foreign subsidies given to Chinese bidders in a 455 MW solar power project in Romania.

One of the probes will target the Chinese state-owned Shanghai Electric Group and its wholly-owned units including Shanghai Electric UK and Shanghai Electric Hong Kong International Engineering. 

Another will target Romania’s ENEVO Group, which includes LONGi Solar Technologie GmbH, a fully-owned German subsidiary of the Hong Kong-listed LONGi Green Energy Technology.

In February, the EU said it was probing a unit of China’s state-owned train manufacturer CRRC over its bid for a €610 million (US$654 million) Bulgarian public procurement contract to provide electric trains along with maintenance and staff training. 

In late March, it closed the investigation after CRRC’s unit withdrew from the tender.

CRRC’s unit was questioned by the European Commission as its bid undercut rivals by 50%.

China’s response

“The EU should not hold high the banner of fighting climate change with one hand while wielding the stick of protectionism with another hand,” He, the Commerce Ministry spokesperson, said Tuesday. 

He said the EU should abandon its protectionist practices and return to the right track of win-win cooperation with China. He said China will reserve its rights to take necessary measures to protect the lawful rights and interests of Chinese companies. 

Mao Ning, a spokesperson of the Chinese Foreign Ministry, said China is highly concerned over the EU’s discriminatory actions against Chinese companies.

She added that many in the world are deeply unsettled by the EU’s rising protectionist tendency.

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Follow Jeff Pao on Twitter at @jeffpao3