China Requests WTO Panel on US EV Subsidies Dispute

China has requested the World Trade Organization (WTO) to establish a panel of experts to address the ongoing dispute over electric vehicle (EV) subsidies under the US Inflation Reduction Act (IRA), according to a statement from China's commerce ministry. 

The dispute began in late March when China challenged the IRA, a comprehensive law enacted by the Biden administration. The IRA offers substantial tax credits to encourage the purchase of EVs and supports the production of renewable energy as part of US efforts to decarbonize its power sector. Despite extensive consultations, China and the United States have not reached a resolution, prompting China to seek further intervention from the WTO.

China's commerce ministry expressed concerns that the IRA "excludes products from WTO members such as China, artificially sets trade barriers, and pushes up the costs of green energy transition." The ministry urged the United States to comply with WTO rules and "stop abusing its industrial policies to undermine international cooperation on climate change."

The Biden administration's IRA has been a contentious point in US-China relations. The law provides up to US$7,500 in tax credits for EV purchases but imposes restrictions on vehicles containing components or raw materials from companies on a blacklist. This list includes firms considered to be under Chinese jurisdiction or control, such as those with at least 25% ownership by the Chinese government.

In addition to these restrictions, the United States has increased tariffs on EV imports from China, raising them from 25% to 100%. Similar tariff hikes have been applied to battery components. 

The European Union (EU) has also taken steps to curb the influence of Chinese state subsidies in the EV market. The EU has temporarily imposed tariffs on Chinese EV manufacturers, citing unfair competitive advantages due to state support. This move aligns with broader concerns about the impact of Chinese industrial policies on global trade dynamics.

China's growing dominance in the global automotive market adds another layer of complexity to this dispute. In 2023, China surpassed Japan and Germany to become the world's largest automobile exporter. Additionally, BYD, a leading Chinese EV manufacturer, overtook Tesla in the fourth quarter of 2023 as the world's top-selling EV maker.