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China targets dairy imports in latest barb in trade row

Investigation would cover EU subsidy schemes implemented

Beijing on Wednesday launched a probe into EU subsidies of some dairy products imported into China, the day after the bloc said it planned to impose five-year import duties of up to 36 per cent on Chinese electric vehicles (EVs).

The investigation, which marks the latest barb in a trade standoff between the two, will cover a range of items including fresh cheese and curd, blue cheese, and some milk and cream, Beijing’s commerce ministry said.

“The Ministry of Commerce has decided to initiate an anti-subsidy investigation on imported relevant dairy products originating in the European Union from August 21, 2024,” the ministry said in a statement on its website.

Officials said they had received an application from the Dairy Association of China for an anti-subsidy probe into European products on July 29, and held consultations with the European Union on August 14.

Beijing said the investigation would cover EU subsidy schemes implemented in the year up to the end of March 2024, and damages to China’s domestic industry between the start of 2020 and the end of March this year.

The probe takes aim at major pillars of the bloc’s setup including the common agricultural policy as well as national subsidy plans in Ireland, Austria, Belgium, Italy, Croatia, Finland, Romania and the Czech Republic.

It will last one year but may be extended for up to six months “under special circumstances”, the ministry said.

The EU exported 1.68 billion euros ($1.87 billion) of dairy products to China last year, according to figures from the European Commission’s Directorate-General for Agriculture and Rural Development, which cited Eurostat.

The EU Chamber of Commerce in China said the investigation “should not be considered a surprise” in the wake of the bloc’s own imposition of import tariffs on Chinese EVs.

“Regrettably, the use of trade defence instruments by one government is increasingly being responded to seemingly in kind by the recipient government,” the chamber said in a statement.

It said it “will be monitoring the ongoing investigation and hopes that it will be conducted fairly and transparently”, adding that it expected its affected member firms to cooperate.

The news comes a day after the European Commission said it planned to impose five-year import duties on Chinese EVs, unless Beijing can offer an alternative solution to a damaging trade row over state subsidies.

Brussels last month hit EVs imported from China with hefty provisional tariffs -- on top of current duties of 10 per cent -- after an anti-subsidy probe found they were unfairly undermining European rivals.

China said this month it had filed an appeal with the World Trade Organization (WTO) over the tariffs, saying the EU’s decision “lacks a factual and legal basis”.

Its foreign ministry has kept up a steady drumbeat of opposition to the measures, on Wednesday slamming them as a “typical protectionist and politically driven act”.

“It ignores objective facts, disregards (WTO) rules, goes against the historical trend, (and) damages the EU’s green transformation process and global efforts to address climate change,” foreign ministry spokeswoman Mao Ning said.

She added that the EU “will only harm itself” with the imposition of tariffs.

Brussels has sought to tread carefully as it tries to defend Europe’s crucial auto industry and pivot towards green growth while averting a showdown with Beijing.

But it has launched further investigations into Chinese subsidies for a range of transport and green energy firms.

Beijing, for its part, has begun its own probes into certain imported European beverages and meat products.