China has submitted a formal complaint to the World Trade Organization (WTO) regarding the United States’ subsidies for its new energy vehicle sector, accusing Washington of engaging in unfair competition practices, Beijing announced on Tuesday.
The complaint centers around the US Inflation Reduction Act (IRA), which China’s Ministry of Commerce alleges formulates discriminatory subsidy policies for new energy vehicles, including electric cars and hybrids. According to the ministry, these policies distort fair competition, disrupt global new energy vehicle industrial and supply chains, and violate WTO rules.
China firmly opposes the IRA’s provisions and has urged the United States to rectify its discriminatory industrial policies, the ministry stated. However, US Trade Representative Katherine Tai defended the IRA, describing it as a necessary tool to address the climate crisis and enhance US economic competitiveness.
In response to China’s complaint, Tai criticized China for its unfair, non-market policies and practices aimed at undermining fair competition and promoting the dominance of Chinese manufacturers globally. She affirmed that the United States is reviewing the WTO consultation request and intends to collaborate with allies and partners to address China’s practices.
China’s emergence as the world’s largest vehicle exporter in 2023, surpassing Japan, adds significance to the WTO dispute. Customs bureau data indicates that China exported 5.2 million cars last year, with one in three being all-electric models.
The WTO complaint comes amid ongoing trade tensions between Beijing and Washington, encompassing various issues such as tariffs, technology restrictions, and concerns over the video app TikTok’s national security implications.
In recent years, Washington has sought to limit Chinese companies’ access to advanced chip technology, citing national security concerns. This has prompted the US government to push for stricter control over semiconductor exports to China, a move that has been met with resistance from Beijing.