China state media warns of retaliation on EU subsidy probes

China is prepared to take countermeasures against the European Union if it continues a series of anti-subsidy investigations into Chinese companies, according to a post on a state-media affiliated social media account.

The EU has launched three high-profile probes targeting Chinese companies in railway, solar and security sectors this year under a new foreign subsidies regulation. It has also started a trade investigation into Chinese-made electric vehicles sold in the EU.

“China has sufficient countermeasures, and if the EU continues to take action, China will very likely have to take a series of measures to hit back,” the post by Yuyuan Tantian stated on Saturday, without giving specifics.

The Chinese Chamber of Commerce to the European Union said in a statement that the warning was “significant,” adding that “European wine and dairy products may find themselves caught in the crossfire.”

The European Union said this month that it will close probes into bids by Chinese firms for a Romanian solar park because the companies are pulling out of the tender. That was the second time that Chinese companies have withdrawn from a tender after officials opened an inquiry under the subsidy regulation. 

The European Commission raided Chinese security equipment supplier Nuctech’s offices in Poland and the Netherlands last month under the foreign subsidy regulation.

The Commission has increasingly warned that Chinese subsidized production threatens the EU’s internal market.

But member states are divided on the issue of tariffs. The European Union should boost electric-vehicle subsidies and avoid following the US into a tariff conflict with China, according to a proposal by Hungary earlier this month. German and Swedish leaders have also called for a cautious approach to tariffs.