The European Commission president stated that Europe must do more against China’s hidden handouts to its industries. This is as the EU rushes in to combat a wide range of global subsidies that could threaten its competitiveness.
Ursula von der Leyen, speaking after European leaders discussed how they would respond to Joe Biden’s US climate bill of $369bn, which is wooing eco-friendly businesses, said that the EU also had to do more to combat Beijing’s support for their domestic industries.
In a press conference following a summit of EU leaders, von der Leyen stated that China has given massive subsidies to the clean-tech sector. The topic is more than just the Inflation Reduction Act of Biden. We are therefore developing a more comprehensive strategy to address that.”
EU leaders are worried that Biden’s legislation will attract businesses from across the Atlantic, as it includes tax breaks and subsidies for green technologies.
“In the face the new geopolitical realities, the European Union will take decisive action to ensure its long term competitiveness, prosperity, and role on the international stage,” EU leaders said in a joint statement Friday morning.
Von der Leyen stated that the IRA was “clearly identified and targeted” at six clean tech sectors. This meant that the EU found it “very transparent and open” to work with.
She stated that China’s situation was more opaque, with hidden subsidies and a greater number of affected sectors. She said that European companies had struggled to access the Chinese market, and complained about a lack of respect for intellectual property rights.
The Chinese Embassy in Brussels said that her comments were “simply false” and that the subsidies paid by his country were compliant with World Trade Organization rules. “We hope that the European side will also be able to comply with WTO rules, in the spirit of maintaining an international economic and trade environment open, fair, just, and non-discriminatory.”
Emmanuel Macron, the French president, said that the EU must “respond with great force” against the IRA. He also said that European state aid was necessary “to support our strategic areas at the right level and to counter the relocation risks.”
He urged the bloc to respond quickly to the “unfair competition”.
EU leaders agreed to simplify, speed up and be more predictable state aid procedures. This includes tax credits and the use of EU funds for Green Technology. They also agreed to simplified and faster-track regulations for climate-friendly investment.
EU has complained for years about China’s support of its green industries including solar panel manufacturing. In 2013, Brussels placed anti-dumping duties against Beijing, claiming that Chinese producers were receiving unfair subsidies. New rules were approved by the EU that allow it to investigate foreign companies receiving government cash.
Chinese electric cars, which have a growing share of Europe’s market, are considered a threat.
Olaf Scholz, the German chancellor, stated that the EU has a long-standing policy to counter Chinese subsidies. He also suggested “some ways to respond”.
He said, “It’s not helpful for the planet if everyone works with subsidies, trying competition to distort.”
Mark Rutte (the Dutch prime minister) said that he opposed the raising of new EU funding for industry support. He stated that the bigger issue was reducing red tape in order to make money available to businesses.
He stated that his country was investing EUR60bn in its economy between now and 2035 and is only 6 percent of the European economy.
It is not that Europe isn’t taking action. Problem is that money can’t be moved quickly enough.