Trade tensions between China and the European Union have escalated, with China hinting at possible countermeasures targeting key European exports such as wine, dairy products, and aviation. This response follows the EU’s ongoing anti-subsidy investigations into Chinese companies, a move that has drawn Beijing’s ire.
The European wine industry is at the heart of this conflict. Major exporters to China include France, Italy, Spain, Germany, and Portugal, with France accounting for nearly half of the EU’s wine exports to China. Despite a decline in recent years, EU wines still represented nearly 70% of China’s wine imports last year, valued at over $777 million.
Potential Chinese tariffs or restrictions could significantly disrupt the $800 million wine trade, threatening the livelihoods of vintners and related businesses across Europe. For France, renowned for its wine, this issue transcends economics, striking at the heart of its cultural heritage.
The dairy industry, another crucial EU export sector, is also at risk. European dairy products are highly valued in China for their quality and variety. Tariffs or restrictions could impact a wide range of products, from cheese to powdered milk, with far-reaching consequences.
The aviation sector, already reeling from the COVID-19 pandemic, faces further uncertainty. European aerospace companies are key players in the Chinese market, and retaliatory measures could disrupt passenger and cargo air services, with global repercussions.
These tensions stem from a series of EU investigations into Chinese companies in sectors like railway equipment, solar panels, and security technology, part of an effort to enforce new foreign subsidies regulations for fair competition within the EU market. Adding to the strain, the EU has also launched a trade probe into Chinese electric vehicles, viewed by Beijing as a direct challenge to its economic interests.
China has a history of using trade measures in response to EU actions. In 2014, it threatened to investigate EU wines during a solar panel dispute. More recently, in January, China initiated an anti-subsidy investigation into EU brandy, threatening a $1.56 billion spirits trade.
The wine sector has experienced similar disputes before. In 2021, China imposed tariffs of up to 218% on Australian wines, which were only lifted in March 2023. This incident highlights how quickly trade policies can shift and their profound impact.
Yuyuan Tantian, a Chinese social media account linked to state-owned CCTV, has emphasized the seriousness of the situation, citing “informed sources” that China is prepared to retaliate if the EU persists. A Chinese lawyer quoted by Yuyuan Tantian noted the EU’s reliance on the Chinese market, especially in wine, dairy, and aviation sectors.
The European Chamber of Commerce in China has expressed concern, describing potential countermeasures as “significant.” The Chamber’s statement, reported by Bloomberg, underscores the vulnerability of European exports to Chinese retaliation, a sentiment echoed by the European business community.
As the EU continues its investigations and China considers its response, the global trade landscape faces heightened uncertainty. Both businesses and policymakers must navigate these challenges carefully. For European exporters, particularly in the wine, dairy, and aviation sectors, the coming months could bring significant obstacles.
The hope is that cooler heads will prevail, with dialogue and negotiation preventing a full-blown trade war. In the meantime, all eyes will be on the developments in this evolving story as both sides prepare for their next moves.
