Editor's Note: Europe faced cold and snow recently, with Brussels raising concerns about commission chief von der Leyen's absence. On January 9, China criticized the EU's Foreign Subsidies Regulation as a trade barrier, while the EU imposed anti-dumping duties on Chinese goods. The Brussels Motor Show returned on January 10 with Chinese exhibitors, aiming to draw 300,000 visitors. The EU reported nearly 300,000 EV registrations in France for 2024, with Renault and Volkswagen leading the market. Meanwhile, Trump's interest in Greenland stirred controversy.

On January 9, 2025, China's Ministry of Commerce (MOFCOM) officially labeled the European Union's (EU) Foreign Subsidies Regulation (FSR) investigation as a trade and investment barrier. He Yadong, a MOFCOM spokesperson, announced that China is considering bilateral consultations and other measures to push the EU towards establishing a fair, open, and predictable environment for Chinese enterprises operating in Europe.

Unpacking the Investigations

By late 2024, the European Commission (EC) had initiated multiple investigations under the FSR, grouped into three categories: declaration-based investigations, ex officio investigations, and reviews of operator concentrations.

In the realm of declaration-based investigations, the EC launched three in-depth probes focusing on public procurement. Notably, all these cases targeted Chinese companies and their affiliates. These investigations were ultimately closed when the scrutinized firms withdrew their bids for the projects in question.

Ex officio investigations followed a similar pattern. The EC independently initiated two such cases, again targeting Chinese enterprises and their affiliates without prior declarations by the entities involved. Meanwhile, the EC's public records reveal that 13 reviews of operator concentrations have been conducted, though it remains unclear if any of these involved Chinese firms.

This pattern underscores the EC's focus on foreign subsidies, with a disproportionate emphasis on Chinese entities, sparking concerns over fairness and transparency.

The Concerns Over FSR Practices

The FSR investigation has attracted criticism for alleged selective enforcement and discriminatory practices. Chinese enterprises have been subjected to in-depth investigations, dawn raids, and "coercive measures", while companies from other countries appear to have been spared similar scrutiny. The EC has been accused of vague and inconsistent standards for identifying "foreign subsidies," often presuming subsidies based on limited evidence and misclassifying standard business practices, such as tax rebates and market-based loans, as foreign financial contributions.

The scope of these investigations is another source of concern. Companies have been required to provide extensive data, including information on non-EU projects, often within unreasonably tight deadlines of 2 to 7 days. Such demands place significant burdens on businesses and, in some cases, conflict with international norms and Chinese data protection laws.

Transparency has also been lacking, leaving enterprises uncertain about the investigation's progress, criteria for subsidy determinations, and timelines for resolution. The threat of high fines, coupled with unclear exemption criteria, has added to the challenges. Procedural flaws, including armed raids without sufficient justification, mishandling of trade secrets, and disruption of operations, have further exacerbated tensions.

The EC's methodology for determining market distortion has drawn criticism for being overly simplistic and subjective. It frequently focuses on comparing subsidy amounts with bids, without conducting comprehensive analyses. This approach has led to mischaracterizing reasonable offers as low-priced competition, even when evidence was provided to the contrary. Moreover, reversing the burden of proof forces enterprises to demonstrate the absence of market distortion, a process fraught with ambiguities and severe penalties.

Barriers to Trade and Investment

The fallout from the FSR investigations has been tangible. Chinese enterprises have reportedly abandoned bidding projects worth approximately RMB 7.6 billion and other projects valued at over RMB 8 billion, incurring compliance costs exceeding RMB 100 million. Several EU member states have excluded Chinese firms under the guise of "national security threats," causing delays, contractual uncertainty, and strategic shifts in investment plans.

Operational uncertainty has surged, with 90% of stakeholders reporting disruptions to supply chains and workforce stability. More than 70% of respondents noted weakened customer cooperation, loss of business opportunities, stricter assessments by financial institutions, and diminished competitiveness for Chinese investors.

These barriers have reverberated across the EU's economy as well. Reduced Chinese investment in clean energy jeopardizes the EU's green transition goals. Meanwhile, rising trade uncertainty, complex supplier qualifications, and delayed or aborted projects risk higher costs and job losses for EU citizens.

Final Findings

The investigation concluded that the measures met the criteria outlined in Article 3 of the Rules for the Investigation of Foreign Trade Barriers, officially designating them as trade and investment barriers. This determination adds a new layer of complexity to China-EU economic relations, raising questions about the future of bilateral trade and investment in an increasingly fraught global landscape.

Media outlets reported on Brussels' response to China's accusations, with EU competition spokeswoman Lea Zuber emphasizing that the regulation applies equally to all companies, irrespective of their origin. Meanwhile, European experts voiced concerns about the potential next steps and the broader implications for both sides.

News

French EV Market Sees Mixed Trends in 2024

The European Commission has released its analysis of the French electric vehicle (EV) market for 2024. Registrations of BEVs were 291,143 units. Renault remains the leader with 425,116 deliveries and a 24.7% market share. Toyota's hybrid-driven growth saw an 18.57% surge to 134,722 units, while Volkswagen rose 5.73% to 258,437 units. Stellantis, despite a 6.98% decline, retains the largest share at 26.4%. Diesel cars continues its decline, with market share dropping to 7.3%.

Looking ahead to 2025, France plans to cut EV subsidies to €1 billion, with grants ranging from €2,000 to €4,000 based on income and stricter eligibility criteria linked to CO2 emissions. While promoting cleaner EV production, the changes could impact European and Chinese imports. Social leasing for low-income households and subsidies for light commercial EVs will remain, alongside stricter penalties for high-emission vehicles.

EU Imposes Anti-Dumping Duties on Chinese Imports

On January 9th, the EC imposed anti-dumping duties on key Chinese imports:

· Mobile Access Equipment (MAE): Duties ranging from 20.6% to 54.9% were introduced to protect an EU industry employing over 3,000 people. MAE, used in construction and aerial work, sees annual EU sales of €1 billion.

· Titanium Dioxide (TiO2): Duties of €0.25–€0.74/kg were applied to address dumping, which has "impacted an EU industry employing nearly 5,000 workers". TiO2 is critical in coatings, paints, plastics, and laminates.

EC President von der Leyen Recovering from Pneumonia

European Commission President Ursula von der Leyen has been discharged from the hospital after a week of treatment for severe pneumonia. She is recovering at home in Hanover and remains in contact with the Commission remotely. Her condition delayed key economic strategy releases and raised questions about the transparency of her health disclosures.

Brussels Motor Show Returns After Hiatus

The 101st Brussels Motor Show is back after a year off, showcasing 63 car and commercial vehicle brands.The show will feature three world premieres, seven European premieres, and 27 Belgian premieres. Organizers aim to attract 300,000 visitors.

Armenia Moves Toward EU Accession

Armenia's government has approved a bill to begin the EU accession process. Prime Minister Nikol Pashinyan emphasized that the final decision will be made via a national referendum, marking a significant step toward closer ties with the EU.

What are experts talking about?

"Eyes on Greenland and the Panama Canal: Decoding Trump's Intentions"

Author: Xiao He
Source: Institute of World Economics and Political Science, CASS Global Strategy Think Tank

Donald Trump's recent statements, ostensibly directed at allies and Western Hemisphere partners, are more than just empty rhetoric designed for bargaining. On issues like Greenland and the Panama Canal, Trump has invoked so-called national security concerns, which align with broader U.S. geopolitical strategies.

A growing faction within American politics is increasingly wary of China's deepening cooperation with Panama, viewing it as a strategic challenge in the Western Hemisphere. In Greenland, the U.S. has repeatedly intervened to block standard Chinese business investments. Similarly, actions taken against neighboring Canada and Mexico reveal a broader U.S. strategy to limit opportunities for Chinese companies in the region.

While Trump may not explicitly harbor territorial expansion ambitions, his administration's actions suggest a clear aim: to curb China's rising influence by consolidating control over the Americas. This includes disrupting and undermining China's partnerships across the region.

Despite the often-absurd tone of Trump's rhetoric, the underlying intentions and their potential consequences demand serious attention. His actions highlight a calculated effort to reinforce U.S. dominance while countering China's growing global reach.

China-EU Trade Conflict: Implications for the Global Economy

Author(s): Kawsar Uddin Mahmud

Source: Modern Diplomacy

In recent months, an escalation has been spurred by the European Commission's decision to impose hefty tariffs of up to 35.3% on Chinese state-owned automotive giant SAIC Motor and its subsidiaries, what analysts refer to as a 'trade war' between two of the biggest economic powers—the EU and China. This conflict, however, is not only about electric vehicles or specific trade measures but also exhibits a shift in the EU's policy toward China, changing from what was once described as a "partner for cooperation" to an increasingly confrontational stance where China is regarded as an "economic competitor" and a "systemic rival."

Looking at the wider economic scenario, the trade tensions are reshaping the global economic power dynamics. The EU's position as a regulatory powerhouse is being tested, while China's economic influence continues to grow despite increased scrutiny from Western powers. While the term conveys the real impact of this shifting balance, it also has implications for international standard-setting. The dispute's impact on international institutions and trade governance mechanisms is also noteworthy. Moreover, this could have long-term implications for the future of bilateral and multilateral trade governance.

Please note: the English version of this issue is slightly different from our Chinese one. The views and opinions expressed in this article do not necessarily reflect the official position of the CCCEU.