China’s recent announcement of an anti-subsidy investigation into imported dairy products from the European Union has raised tensions between the two economic powerhouses. The probe, which includes various types of cheeses, milks, and creams intended for human consumption, was initiated based on a complaint from the Dairy Association of China and the China Dairy Industry Association. Specifically, the probe will examine 20 subsidy schemes from EU member countries such as Austria, Belgium, Croatia, Czech Republic, Finland, Italy, Ireland, and Romania. With the EU being China’s second-largest source of dairy products, constituting at least 36% of the total value of imports in 2023, this investigation could have significant implications for bilateral trade relations.
PORK INDUSTRY IMPLICATIONS
In addition to the dairy industry probe, China has also initiated an anti-dumping investigation into imported pork from the European Union. This investigation, prompted by a complaint from the China Animal Husbandry Association, focuses on various pork products intended for human consumption, including fresh, cold, and frozen cuts, as well as pig intestines, bladders, and stomachs. With the EU accounting for more than half of China’s roughly $6 billion worth of pork imports in 2023, suppliers from South America, the U.S., and Russia could stand to benefit if Beijing restricts imports from European countries. Countries like Spain, the Netherlands, and Denmark are major exporters of pork to China, with significant export values at stake.
Contrary to expectations, China’s commerce ministry recently decided not to impose provisional tariffs on brandy imported from the European Union, despite finding evidence of below-market pricing. This decision comes after earlier concerns about EU brandy makers selling their products below market rates in China, impacting sentiments for cognac producers, particularly French companies like Remy and Pernod. Notably, the French cognac industry dominates China’s EU brandy imports, and the probe was seen as a potential threat to this market. However, the final decision not to impose tariffs suggests a more nuanced approach to trade issues between China and the EU.
In a separate development, Beijing initiated an anti-dumping probe into the import of POM copolymers, a type of engineering plastic, from the EU, U.S., Japan, and Taiwan back in May. This move indicates a broader trend of China scrutinizing imported goods across various industries for potential market distortions. The plastic industry investigation highlights Beijing’s commitment to ensuring fair trade practices and protecting domestic industries from unfair competition. As China continues to assert itself in the global market, these probes are likely to become more frequent and targeted, impacting trade dynamics with key partners around the world.
China’s recent actions in investigating various industries, including dairy, pork, brandy, and plastic, demonstrate a proactive approach to safeguarding its domestic market and addressing trade imbalances. While these probes may strain diplomatic relations with the EU and other trading partners, they also reflect China’s growing importance in the global economy and its willingness to address potential trade distortions. As these investigations unfold, stakeholders in the affected industries will need to closely monitor developments and prepare for potential shifts in market dynamics.