the looming tensions over China’s subsidies

In a speech that delivered China’s assessment of world trade conditions in 2024, commerce minister Wang Wentao last week warned the “environment is poor”.

“Rising trade protectionism” and “intensified geopolitical conflicts” were among the main challenges, he told reporters in Beijing on Friday.

But in China’s favour, he reassured his audience, were record exports from its “new three” industries: electric vehicles, solar energy products and lithium batteries.

The rapid growth of China’s new breed of green exports — which rose 30 per cent year-on-year to Rmb1tn ($139.3bn) in 2023, according to Wang — has boosted the world’s second-largest economy as it struggles with a deep property slump, deflationary pressure and low investor confidence.

But for its developed country trading partners, the prospect of China’s low-cost imports flooding their markets and wiping out jobs in important industries such as the automotive sector and solar and wind power is prompting growing alarm.

Later this year, the European Commission is set to conclude an anti-subsidy investigation into Chinese EV production that could lead to higher tariffs for Chinese imports. Brussels is also considering emergency support measures for its solar panel manufacturing industry, including an anti-dumping investigation. The US, meanwhile, has slapped export controls on high-technology shipments to China.

The EU and US are, to use officials’ preferred term, “de-risking” — in effect diversifying their sources of key products — and tightening investment screening for Chinese companies, essentially scrutinising transactions for national security concerns.

Beijing has attacked the EU anti-subsidy investigation into EVs as “naked protectionism” and has criticised “de-risking”. But western critics argue China’s policymaking has been mercantilist for decades, with the methodical setting of targets to increase domestic supply chain self-reliance. Foreign companies…