The looming trade tensions over Chinas subsidies

The US and EU are busy 'de-risking' supply chains, but Beijing has its own plan for economic autonomy.

In a speech that delivered China's assessment of world trade conditions in 2024, Commerce Minister Wang Wentao last week warned that the "environment is poor".

"Rising trade protectionism" and "intensified geopolitical conflicts" were among the main challenges, he told reporters in Beijing on Jan 26.

But in China's favour, he reassured his audience, were record exports from its "new three" industries: electric vehicles (EVS), solar energy products and lithium batteries.

The rapid growth of China's new breed of green exports which rose 30 per cent year on year to one trillion yuan (S$189 billion) in 2023, according to Mr Wang - has boosted the world's second-largest economy as it struggles with a deep property slump, deflationary pressure and low investor confidence.

But for its developed-country trading partners, the prospect of China's low-cost imports flooding their markets and wiping out jobs in important industries such as the automotive sector and solar and wind power is prompting growing alarm.

Later in 2024, the European Commission is set to conclude an anti-subsidy investigation into Chinese EV production that could lead to higher tariffs for Chinese imports. Brussels is also considering emergency support measures for its solar panel manufacturing industry, including an anti-dumping probe. The United States, meanwhile, has slapped export controls on high-tech shipments to China.

The European Union and US are, to use officials' preferred term, "de-risking" - in effect diversifying their sources of key products and tightening investment screening for Chinese companies, essentially scrutinising transactions for national security concerns.