Chinese authorities have launched an investigation into alleged subsidies on European dairy imports, the latest sign of escalating trade tensions between Brussels and Beijing.
China's Commerce Ministry's announcement on Wednesday came a day after the European Commission announced revised tariffs on Chinese-made electric vehicles as part of an investigation into unfairly cheap cars that threaten European auto jobs.
The China-EU Chamber of Commerce said Beijing's investigation was launched following complaints from China's dairy industry on July 29, and that consultations with the EU took place on August 14.
China will look into 20 subsidy programs supporting milk, cream and cheese production across the EU's 27 member states, including in countries with large agricultural sectors such as Austria, Italy, Ireland and Romania.
Germany is the EU's largest milk producer, followed by France, Italy and Poland, but Ireland is by far the biggest exporter to China among EU countries listed by the EU trade ministry, sending $461 million worth of goods last year, according to Reuters.
Beijing has already launched retaliatory competition investigations into politically sensitive European imports of pork and cognac.
The European Commission said it had taken note of China's decision to open an investigation into the import of certain dairy products.
“The Commission will now analyse the application and follow the process closely, in collaboration with EU industry and Member States,” the spokesman said.
“The Commission will resolutely defend the interests of the EU dairy industry and the Common Agricultural Policy and will intervene as appropriate to ensure that the investigation is fully compliant with the relevant WTO rules.”
Earlier this week, the EU's top diplomat, Josep Borrell, said the EU should avoid a “systematic confrontation” with China, but warned that a trade war may be inevitable.
By the end of October, Chinese automakers that fail to cooperate with the EU's electric vehicle investigation could face tariffs of up to 36.3 percent, on top of the 10 percent tariffs on existing EU cars.
The European Commission's investigation found that Chinese authorities are giving electric car makers heavy subsidies at every stage of the production process, making cars artificially cheap and potentially forcing European rivals to close factories and lay off staff in future.
EU authorities have launched separate anti-dumping investigations into Chinese-made solar panels and wind turbines.
