The UK is reportedly considering launching an investigation into Beijing's subsidies for Chinese electric vehicle manufacturers, Politico EU reported on February 27, citing sources familiar with the matter.
If Britain does take action, it would be the second investigation into Chinese-made electric vehicles, following a similar investigation launched by the European Union (EU) last October.
British carmakers are calling on the government to act quickly amid growing fears that the UK will see a wave of Chinese-made electric cars diverted from the EU to its market, if the bloc imposes additional tariffs following the results of an investigation due to be published in the second half of this year.
According to Politico EU sources, the process of reviewing options related to the issue has begun in recent weeks, with UK Trade Secretary Kemi Badenoch likely preparing to instruct the UK Trade Remedies Authority (TRA) to open an investigation.
British carmakers themselves are “reluctant” to come forward because they fear facing retaliation in China, which is an important market for them, Politico EU sources said.
Beijing reacted angrily when European Commission President Ursula von der Leyen announced the investigation, warning that the electric car probe could damage business relations and raise prices for car buyers in the “old continent”.
In a rare interview with Bloomberg last month, China’s ambassador to the EU, Fu Cong, called the investigation “unfair.” Fu also raised the risk of a trade war between Brussels and Beijing following the Commission’s decision to investigate financing for Chinese electric vehicle components in Europe.
A Sea Lion SUV from electric vehicle giant BYD is displayed at the Guangzhou Auto Show in Guangzhou, China, November 2023. Photo: Bloomberg
If the EU investigation finds that there is indeed unfair subsidy, “it will be very difficult for the UK government to disagree with this,” explained Alex Boyd, a former economic and trade adviser to the UK Prime Minister's Office and now director of consultancy Strand Partners.
The EC investigation is expected to conclude in the second half of this year, after the European Parliament elections in June.
The UK “will be looking very closely to see if there is similar unfair trading practice” if the EU investigation leads to additional tariffs on Chinese electric vehicles, Mike Hawes, chief executive of the UK’s motoring lobby SMMT, told reporters at a press conference last month.
London is also looking to support its own electric vehicle industry. Last year, the UK government pledged £2 billion in investment in electric vehicles and battery manufacturing from the likes of Jaguar Land Rover, Nissan and BMW.
However, any trade dispute could worry British exporters, after seeing Beijing retaliate against Paris. France was a key backer of the EU investigation. China retaliated earlier this year by launching an anti-dumping investigation into French spirits imports.
The UK government “seems to be hoping that they won’t have to make that decision [to launch an investigation into Chinese electric vehicles],” a senior figure at a major British carmaker told Politico EU. “They are still exploring what they can do,” he added .
Minh Duc (According to Politico EU, Euronews, Bloomberg)
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