EU Ramps Up Investigation Into China’s Green Tech Subsidies With Wind Turbine Probe

European Commission Vice President Margrethe Vestager speaks during an interview with Reuters in Brussels on March 28, 2022. Johanna Geron/Reuters

Following the investigations into electric vehicles (EVs), trains, and solar panels, the European Union (EU) has launched a probe into China’s wind turbines. The EU’s antitrust commissioner, Margrethe Vestager, said a systemic approach is needed to prevent a repeat of past mistakes.

On April 9, the European Commission announced an investigation into Chinese wind turbine suppliers to determine if the Chinese regime’s subsidies provided them with an unfair advantage in the EU market.

This move is the latest measure by the EU to protect its member states’ companies from the impact of cheap, clean energy products. Previously, the European Commission had conducted a series of investigations into potential unfair competition by China.

Subsidy Investigations

On April 3, the European Commission announced an investigation into two Chinese solar panel companies, including a subsidiary of LONGi Green Energy Technology Co., Ltd., one of the world’s major manufacturers of solar modules and a developer of solar power projects. The investigation is expected to be completed within four months.

Both companies participated in tenders for solar-powered industrial parks in Romania. The European Commission stated that there was sufficient evidence to suggest that these two Chinese companies had received subsidies from the Chinese regime, distorting market conditions.

This investigation was launched after the EU’s new “Foreign Subsidies Regulation,“ which came into effect in July last year. The regulation stipulates that companies must report if they have received more than €4 million ($4.2 million) in foreign financial subsidies in the last three years when the contract value exceeds €250 million ($265.7 million) in public tenders.

On Feb. 16, the European Commission also announced an investigation into a subsidiary of CRRC Corporation Ltd, the Chinese state-owned railway giant and the world’s largest rolling stock manufacturer. The company is suspected of receiving subsidies from the Chinese regime, distorting the EU market.

Since October last year, the European Commission also initiated anti-subsidy investigations into EVs imported from China. If sufficient evidence is found, punitive tariffs may be imposed.

In the past two years, the export of EVs from China to the EU market has increased significantly. According to data from China’s General Administration of Customs, in the first eight months of last year, China exported 339,000 EVs to the EU, an increase of 95 percent year-on-year.

Due to the lack of sales networks after entering Europe, a large number of Chinese-made EVs are stranded in ports, according to the Financial Times. European ports have now become “car parks,” with the majority of them being Chinese-made EVs, some of the vehicles stay in ports for up to 18 months, the Financial Times added.

Past Lessons

On April 9, Ms. Vestager said in her speech, “Every time we suspect that any foreign company has been unduly advantaged in a public tender, we dig further.” She stated that the investigations have already led to the Chinese state-owned CRRC subsidiary withdrawing its bid in a public tender for trains in Bulgaria.

According to German public broadcaster Deutsche Welle, when China’s solar industry entered the EU market, its huge capacity and low prices made it impossible for European solar energy companies to survive. In just a few years after 2011, many European companies went bankrupt. Q-Cells, which applied for bankruptcy proceedings in 2012, was once the world’s largest solar cell manufacturer.

Workers are making solar photovoltaic modules used for small solar panels at a factory in Haian in China's eastern Jiangsu Province on Jan. 7, 2022. STR/AFP via Getty Images

According to Ms. Vestager, the EU relies heavily on Chinese photovoltaic products. In her speech, she said that less than 3 percent of solar panels installed in the EU are now produced in Europe.

The anti-trust commissioner added that the reliance has raised concerns, especially after the outbreak of the Russia-Ukraine War, making the energy transition more urgent for the EU.

In her April 9 speech, Ms. Vestager listed China’s tactics: “First, attracting foreign investment into its large domestic market, usually requiring joint ventures. Second, acquiring the technology, and not always above board. Third, granting massive subsidies for domestic suppliers, while simultaneously and progressively closing the domestic market to foreign businesses. And fourth, exporting excess capacity to the rest of the world at low prices.”

Beijing’s Heavy Subsidies

On April 10, a new study by the Kiel Institute for the World Economy (KIEL) in Germany alleges that the Chinese regime heavily subsidizes domestic industries, especially green technologies such as EVs and wind energy. The study estimates that the total amount of government subsidies in China is estimated to be three to nine times that of other OECD countries such as the United States or Germany.

The study claimed that Chinese EV manufacturer BYD is one of the main beneficiaries. Its direct subsidies received in 2020 were estimated to be around €220 million ($233 million), skyrocketing to €2.1 billion ($2.23 billion) in 2022. According to the study, these subsidies have led to significant expansion of BYD’s technology and capacity and continuous enhancement of competitiveness.

A BYD Seal U model car is seen at the stand of the Chinese carmaker at the Geneva International Motor Show in Geneva, on Feb. 27, 2024. Fabrice Coferini/ AFP via Getty Images

KIEL alleged that government subsidies are widespread in China, with over 99 percent of listed companies receiving direct subsidies from the government in 2022.

The study said that Chinese companies are rapidly expanding in various green technology fields. In addition to direct subsidies, these companies also receive other support measures from the Chinese regime, such as priority access to key raw materials, forced transfer of technology from foreign investors, and preferential treatment in public procurement and administrative procedures. These companies not only dominate the Chinese market but are also taking over the EU market.

Although Western countries sometimes provide subsidies to companies, they are fundamentally different from those provided by China.

Chinese dissident and scholar Li Hengqing, who currently lives in the United States, said on April 12 to The Epoch Times, “When a new industry is just emerging, there may not be a market for it. At this time, the government implements some policy subsidies to support the development of such industries, which is common. However, when the industry has passed this stage, subsidizing every link from raw materials to sales and exports is unfair competition. It is necessary to investigate the stage of the subsidy. So there is a need for antitrust laws and anti-unfair competition laws.”

China’s Future Agenda

To offset the severe downturn in China’s real estate sector, the Chinese Communist Party (CCP) is directing investment into the vast manufacturing sector. Supported by cheap loans and subsidies, Chinese companies are seeking overseas buyers for the massive surplus of goods that the domestic market cannot consume. However, now it seems that neither the EU nor the United States is willing to tolerate this anymore.

On April 9, Secretary of Treasury Janet Yellen left Beijing after her visit. She stated at a press conference the day before that the focus of her trip was to address the problem of overcapacity in China’s EVs, solar panels, and other clean energy products, which poses a threat to manufacturers in the United States and other countries.