China steps up European brandy import probe with hearing, focuses on ‘industrial damage’

China stepped up its investigation into imports of European brandy on Thursday with an anti-dumping hearing taking place less than two weeks after the bloc’s additional duties on Chinese-battery electric vehicles (BEVs) took effect.

The Ministry of Commerce said the hearing would focus on “industrial damage, cause and effect, and public interest in the anti-dumping investigation of related brandy products”, with French cognac the main target.

The ministry added that the investigation would look at brandy in containers holding less than 200 litres (52 gallons) imported from October 1, 2022, to September 30, 2023, and if they caused damage to the Chinese brandy industry between January 1, 2019, and September 30, 2023.

The investigation is expected to be finished before January 5, but it could be extended for another six months under special circumstances.

Trade tensions between China and the EU have risen since last year after the bloc questioned China’s use of subsidies.

Chinese customs figures showed that China imported 43.31 million litres (11.4 million gallons) of brandy in 2023, with products from France accounting for 96.16 per cent.

Policy research organisation Trivium China said last month that agricultural products, such as French brandy or Spanish pork, were the “two biggest cheerleaders” that could help “punish the EV probe”.

“Farmers are also a highly influential bloc in EU politics, giving Beijing leverage to crank up the political pressure,” Trivium China added. “Despite the bravado, China doesn’t want a trade war with Europe.”

But Trivium China pointed out that Beijing’s response would be related to the “geography” of the EU and specific sectors.

Chinese state media claimed earlier that Beijing would launch investigations into large-engine vehicle exports from Europe, with a view to raising duties to 25 per cent, as well as EU pork exports.

Eurasia Group’s director of Europe Emre Peker said in May that Chinese duties on EU cars would hit Germany and Slovakia, while levies on pork would hurt Spanish, Dutch, Danish and French exporters.

“Going forward, we anticipate continued efforts at both the EU and member-state levels to engage with Beijing on addressing European concerns tied to market access and overcapacity,” Peker added.

“Where talks fall short, the EU will expand its trade investigations against China. Tariffs on Chinese EVs will be the bellwether of the EU’s commitment to counter Beijing’s market-distorting practices in other sectors.”

Additional reporting by Mia Nulimaimaiti