China Launches Investigation Into Trade Barriers

• China has launched an investigation into the practices adopted by the EU under the latter's FSR investigation against Chinese firms  
• Acting on a CCCME application, the probe will involve EU's FSR scrutiny into rail locomotives, photovoltaics, wind power, and security inspective equipment 
• The Chinese probe will be completed by January 10, 2025, or latest by April 10, 2025 

The Chinese Ministry of Commerce has launched a 'barrier investigation' into the practices adopted by the European Union (EU) in its investigation of Chinese companies under the Foreign Subsidies Regulation (FSR), including solar PV producers.   

The decision follows an application filed by the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME) requesting a trade and investment barrier investigation against the EU. It mainly involves the EU's FSR investigation into rail locomotives, photovoltaics, wind power, and security inspective equipment.  

Details of the investigation launch in Chinese are available on the Commerce Ministry's website.  

Through the FSR, the EU aims to address distortions caused by foreign subsidies, to ensure a level playing field for all companies operating in a single market. However, the China Chamber of Commerce to the EU (CCCEU) accuses it of using FSR as a tool of economic coercion against Chinese enterprises to discourage them from doing business in the bloc, especially in its green and low-carbon transition market.   

A case in point is the Romanian solar auction for which the winning bidders LONGi Solar and Shanghai Electric decided to withdraw from the project when the EU launched its FSR investigation into the auction. It was preceded by Chinese company CRRC Qingdao Sifang Locomotives withdrawing from its Bulgarian bid to supply 20 trains following an FSR probe (see EU To Close FSR Investigations Against Chinese Solar Companies).  

According to the Chinese Commerce Ministry, the investigation will be conducted by its Trade Remedy Investigation Bureau. As per its timeline, it targets to complete the investigation before January 10, 2025, but not later than April 10, 2025 under special circumstances.  

The CCCEU said if the Chinese investigation confirms the EU action constitutes a trade barrier against Chinese enterprises, it may choose to hold bilateral consultations, start a settlement mechanism of multilateral dispute, or take other proper measures as countermeasures. China might implement other 'broader actions' as well, it added.