CHINA on Thursday lashed out at the European Union’s anti-subsidy investigation into Chinese electric vehicles (EVs) and warned it would negatively impact economic and trade relations.

European Commission President Ursula von der Leyen announced Wednesday that the commission was launching an anti-subsidy investigation into electric vehicles coming from China.

The probe, which could take up to nine months, may lead to tariffs close to the 27.5% level already imposed by the United States on Chinese EVs, according to a person familiar with the matter.

The investigation “is a naked protectionist act that will seriously disrupt and distort the global automotive industry and supply chain, including the EU, and will have a negative impact on China-EU economic and trade relations,” China’s Ministry of Commerce said in a statement Thursday.

“China’s EV sector has grown rapidly in recent years and its competitiveness keeps improving, which is the result of persistent efforts of tech innovation. It is a competitive advantage won through hard work and its own strength.”

If the EU imposes duties, it would curtail one of the major growth markets for Chinese EV makers. While their European sales pale in comparison with market leaders like Volkswagen AG, Tesla Inc. and Stellantis NV, they are growing quickly.

While the near-term impact of the EU probe will likely be limited, it “may cast a shadow on the growth outlook of firms with aggressive expansion plans in the EU, like BYD,” Morgan Stanley analysts said in a note to clients.

The China Passenger Car Association (PCA), which represents automakers, said the nation’s booming EV exports aren’t because the industry received large subsidies, but because China’s supply chain is highly competitive. It’s only now that Chinese firms pose a competitive threat that Western nations are starting to react.

The EU’s concerns are an “inevitable accompanying phenomenon after China’s new energy vehicles became stronger,” Cui Dongshu, secretary general of the PCA, said in a statement. “Only when they become stronger will some people pay attention, and some people will feel uncomfortable.”

Over the past 12 months, Europe has woken up to the fact that China is now capable of building technologically sophisticated electric models. Rather than seeking political favors, European auto manufacturers should focus on improving their own competitiveness and developing EVs that consumers can actually afford, wrote Chris Bryant, a Bloomberg Opinion columnist.

Gavin Maguire, a columnist for Reuters, wrote Thursday that the EU itself offers an array of benefits for EV producers and consumers, including tax breaks for manufacturers, thousands of euros of subsidies per car for buyers and tax credits for households and businesses that install EV chargers.

The United States also offers tax credits of up to US$7,500 for buyers of new electric cars, and several more for manufacturers of EVs and EV components.

Maguire said von der Leyen’s call for probes into China’s EV sector is likely in some part just political rhetoric, as she is widely expected to seek a second term as the EU’s top political executive in elections set for next year. (SD-Agencies)