Fabian Bohnenberger

Confused by the recent flurry of announcements on EU investigations into China’s trade and industrial policies?

With Chinese President Xi Jinping due to arrive in Paris for his first trip to Europe in five years, now is a good time to brush up on your knowledge of the EU’s trade enforcement powers. I am sharing my cheat sheet on ongoing EU investigations below.

Political shift

As the expanding list of investigations shows, the EU is increasingly acting on concerns about a lack of reciprocity in the EU-China trade relationship. Returning (commercial) relations to a more stable and predictable footing will therefore be high on Xi’s agenda. Unfortunately, visiting France, Serbia and Hungary over the coming days, he is unlikely to hear the same vision for EU/Europe-China relations from his hosts.

Despite the mixed messaging, the EU’s thinking and discourse on China has clearly shifted over recent months. As fears about EU competitiveness and economic security have moved up the political agenda, China is no longer primarily seen as an export market supporting EU jobs. Instead, China is increasingly framed – also by the G7 – as a competitor boasting “harmful” industrial overcapacity and engaging in unfair trading practices.

The shift is notable insofar as even liberal members of the Commission like Executive Vice President Vestager have moved from extolling the virtues of the EU’s open market to announcing new investigations in her speeches. This shows the new urgency and growing support that a more “assertive” EU trade and industrial policy has gained.

Or, as French President Macron just put it “we regulate too much, we don’t invest enough, we don’t protect enough. That’s not a dirty word. […] we must behave respectfully towards China in terms of trade, but in a way that defends out interests, is reciprocal and promotes national security.” Foreshadowing an interesting conversation with Xi, he added: “Very clearly, on electric vehicles, photovoltaics and wind power, I defend the investigations that have been opened by the European Commission.”

Cracking down on unfair trade

Few of the recently announced investigations have already yielded results or materially affected trade. But the ongoing work signals a toughening of the EU’s stance that has not gone unnoticed. For example, Commissioner Breton could quickly celebrate the withdrawal of the Chinese bidder following the launch of the first investigation under the Foreign Subsidies Regulation.

The Commission’s current rhetoric does not signal a quick de-escalation. EVP Dombrovskis just hinted at provisional duties on Chinese electric vehicles “before the summer break”. The Commission also required customs authorities to register EV imports from China, allowing tariffs to be imposed retroactively. Commission President von der Leyen said that banning TikTok in the European Union remains an option.

Here is my overview of current investigations against China, the legal tools being used, timelines to be observed, remedies available – and how the decisions will ultimately be made:

Other developments

But this one-pager of active investigations only tells part of the story. The EU is doing much more to pursue its interests against China. For example:

• Legislation: The EU adopted the Corporate Sustainability Due Diligence Directive and is close to finalising a regulation prohibiting products made with forced labour. While not exclusively designed to address issues with China, these rules are likely to negatively impact EU-China trade. They require businesses to better police their supply chains and make them liable for violations. This might lead firms to move their production out of China to reduce risk.
• Sanctions/restrictive measures: The EU has started to designate a small number of Chinese businesses that assist Russia in circumventing sanctions. This prohibits the sale and export of dual-use goods and technology to these entities.
• Export controls on advanced semiconductor manufacturing equipment: Mostly because of US pressure, the Dutch government last year imposed export controls on ASML’s lithography equipment.
• Monitoring: The Commission’s trade department also recently published an updated version of its assessment of the Chinese market. In case you had any doubts why DG TRADE produced this 700-page report, it is fittingly titled: “On Significant Distortions in the Economy of the People’s Republic of China for the Purposes of Trade Defence Investigations”
• Economic Security initiatives: In January 2024, the Commission announced plans to strengthen existing tools (foreign investment screening, dual use export controls, research security, etc.) to address economic security risks. While not always mentioned explicitly, much of this work is conducted to counter Chinese influence.
• Espionage: Not to forget, there are also various investigations against alleged Chinese spies and intelligence activities across Europe.

What next?

Despite the growing list of investigations and restrictions, Europe’s signalling to China remains muddled. As China’s foreign minister Wang Yi described the situation in March: “It’s like driving to a crossing and finding the red, yellow and green lights all on at the same time. How can one drive on?” (Presumably he sees himself sitting in a Chinese EV.)

It is on EU Member States and the European Council to collectively define a clear and united approach on China for the next mandate. The Commission cannot do this crucial work for them.