Will the EU's announcement of an investigation into Chinese clean energy enterprises exacerbate trade tensions between China and the EU?

Does this question even suggest enhanced bilateral cooperation between China and the EU? Since November, the EU’s targeted 'trade investigations' have been based on the Foreign Subsidies Regulation (FSR), which was first applied only in July 2023. The distinct feature of this latest investigation targeting 'clean energy enterprises' is that it constitutes an 'in-depth investigation' focused exclusively on the European business operations of a single Chinese wind power company—Goldwind. This marks the first time the EU has launched such a probe against a specific Chinese enterprise. The investigation commenced in April 2024, when then-EU Competition Commissioner Margrethe Vestager announced a preliminary review of Chinese wind turbine suppliers involved in wind power projects in Spain, Greece, France, Romania, and Bulgaria—citing the need to 'avoid repeating the mistakes made in the (EU’s) solar photovoltaic sector.' The FSR, though formally applicable to all non-EU countries, is repeatedly invoked against enterprises from one major manufacturing nation—largely due to that country’s distinctive industrial development model and its habitual shift from domestic sales to export-oriented production. Trade practitioners familiar with the FSR will likely recognize its internal logic as bearing a distinctly 'Eastern flavor'—akin to the EU’s own 'anti-forced-labor law.' For instance, the burden of proof is reversed: investigated companies must proactively demonstrate they have *not* received subsidies—a principle uncomfortably reminiscent of the rhetorical trap, 'If you didn’t knock them down, why did you help them up?' Moreover, the FSR’s threshold for application is remarkably low: A company must self-report if, within three years, it has received non-EU government subsidies exceeding €4 million (approx. RMB 31.2 million) *and* participates in public procurement projects valued at over €250 million (approx. RMB 1.95 billion).

How significant is the impact of the EU’s targeted anti-subsidy investigation in 2024 on China?

According to data released by the China Association of Automobile Manufacturers (CAAM), China exported 4.91 million complete motor vehicles in 2023—a 57.9% year-on-year increase. China surpassed Japan to become the world’s largest automobile exporter, with new energy vehicles (NEVs) playing a pivotal role: NEV exports reached 1.203 million units in 2023, surging 77.6% year-on-year. Chen Shihua, Deputy Secretary-General of CAAM, analyzed that 'China’s NEV industry holds a leading global advantage, supported by a relatively complete and stable industrial chain and highly competitive products. Full-year automobile exports are expected to exceed 4 million units, with NEV exports firmly surpassing 1 million units.' 2. Impact on Chinese automakers: The EU’s anti-subsidy measures will inevitably affect Chinese NEV exports to Europe—but overall risk remains within a controllable range. Currently, most electric vehicles (EVs) China exports to Europe are produced under wholly foreign-owned or joint-venture brands; truly homegrown Chinese brands account for only a small share. Based on historical precedent, the EU is unlikely to impose excessively high tariffs on the former category; even if steep duties are levied on the latter, only a handful of enterprises and brands would be affected. Meanwhile, China’s EV industrial chain has already formed tight, mutually beneficial ties with both European and global automotive supply chains—each EV involves tens of thousands of suppliers and distributors. Consequently, the EU’s sanctions against Chinese EVs will face inherent constraints, aimed at avoiding broader backlash and protests. Notably, China ranks among the world’s largest automobile consumer markets—and serves as a primary export destination for European firms. For German automakers such as Mercedes-Benz, BMW, and Volkswagen, sales in China constitute over 30% of their global revenue. These companies have established long-term strategic plans in China; thus, should EU anti-subsidy measures trigger Chinese counter-sanctions, European auto exporters’ interests—and potentially exports of other European goods to China—would suffer. Under the principle of choosing the lesser of two evils, the EU may opt to raise EV tariffs incrementally from the current 10%, possibly approaching the U.S.-level rate of 27.5%. 3. Strategic adjustments by Chinese automakers: Clearly, facing the objective reality of EU anti-subsidy investigations, proactive strategic and tactical adjustments are vital for Chinese automakers. First, China’s automobile exports remain largely at the initial stage of complete-vehicle trade—far short of advanced-stage overseas factory investments across major global markets. Even existing European investments are concentrated upstream, primarily among battery manufacturers; substantive localization efforts by prominent Chinese automakers—including SAIC Motor, BYD, and Great Wall—will not yield locally manufactured vehicles until after 2025. Therefore, Chinese automakers should intensify investment in key export markets via 'greenfield investment' to achieve localized production, deepen relations with host countries, and simultaneously mitigate risks related to transportation costs, geopolitical uncertainties, and tariff barriers. In the long term, efforts should focus on three pillars: strengthening industrial alignment, deepening political mutual trust, and expanding mutually beneficial cooperation—delivering tangible outcomes that foster shared development and prosperity. First, enhance localized cooperation in overseas markets to jointly foster a stable trade environment for automobile exports.

EU Opens Probe Into Spain Payment to Japan's JGC Over Renewable Subsidies

Aug 4, 2026

The European Commission launched an in-depth probe into Spain's €23.5 million payment to JGC Holdings regarding renewable power subsidies, preliminarily viewing it as potential state aid.

reuters

2026-08-04

EU Opens Probe Into Spain Payment to Japan's JGC Over Renewable Subsidies

EU Opens Probe Into Spain Payment to Japan's JGC Over Renewable Subsidies

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