China bid to stem flow of EU wine

CHIna has retaliated against ­punitive European Union duties on its solar panels by launching an inquiry into imports of wine.

Chinese demand for Europes wines has grown exponentially. Picture: Reuters

Its response is an attempt to divide EU opinion. Beijing’s anti-dumping and anti-subsidy probe into wine threatens southern European nations such as France and Italy, which back the solar panel duties, but largely spares northern countries such as Germany, which oppose them. The EU duties will apply to Chinese solar panels from today, though at a lower rate than initially planned after pressure from member states, led by Germany which hope a deal can be brokered with China.

China’s commerce ministry said the EU penalties were imposed despite its sincere efforts to reach a deal through talks.

“The European side still obstinately imposed unfair duties on Chinese imports of solar panels,” the ministry said.

China’s newly wealthy, whose ranks are growing as fast as the economy, have a seemingly unquenchable thirst for European wines, especially those from France, which make up more than half the total imported into the country. EU wine exports to China excluding Hong Kong, not covered by the EU duties, reached 257.3 million litres in 2012 worth nearly £650 million. More than half – 139.5 million litres – came from France. China is now the world’s biggest importer of Bordeaux wines.

France’s trade ministry condemned the Chinese move as “inappropriate and reprehensible”. French president François Hollande called for a meeting of the 27 EU member states to show solidarity on trade issues.

Any action is unlikely to be popular with Chinese drinkers.

“We Chinese love the French wines. They’re so sophisticated and go down so well,” said Niu Lanxiang, 23, a logistics worker out shopping for wine in Beijing’s Sanlitun district.

A European Commission spokesman said there was no dumping or subsidy of European wine exports to China and the EU authorities would defend their producers. He refused to comment on talk of a trade war.

The Chinese ministry said the government had begun the inquiry into EU wines at the request of Chinese wine-makers.

“The domestic wine industry accuses wines imported from Europe of entering China’s market by use of unfair trade tactics such as dumping and subsidies,” it said. “We have noted the quick rise in wine imports from the EU in recent years, and we will handle the investigation in accordance with the law.”

“It’s a calculated move. Wine is significant enough as a signal, yet it’s not important enough to hurt industries in the European Union,” said Xu Bin, professor of economics and finance at the China Europe International Business School in Shanghai.

China’s “underlying interests” were very much in favour of resolving the solar-panel issue within the next two months without over-reacting, he said. “Neither side wants to see a trade war.”

Jim Boyce, who runs the wine blog grapewallofchina.com, said Chinese wine-makers have been upset about alleged dumping for a while. “The big issue was all this Spanish wine flowing in at incredibly low prices,” he said.

The EU now has 31 trade investigations under way; 18 involving China. The largest is into £18 billion of imports from China of solar panels, cells and wafers. The EU claims Chinese firms are selling below cost – the practice known as dumping.