China Mulls Anti-dumping Probe into Luxury Car Imports from EU

China is threatening to extend a trade spat with the EU to luxury cars, ratcheting up a growing battle over market access in which clashes have already broken out over solar panels and wine, and which could harm sales of high-end vehicles in one of the world's biggest growth markets.

The Chinese are mulling an official complaint to Brussels over luxury cars imported from the EU, according to two European sources with knowledge of the situation. Any action taken by China to penalise importers would hurt German carmakers in particular because they dominate the country's luxury market.

"I can confirm that the Chinese are threatening to make a complaint but we are not sure how serious the threat is," said a senior European Commission official. "It could simply be part of their strategy to force us to reach a deal on other trade matters."

The potential complaint is the latest symptom of the increasingly fractious trade relationship between Beijing and Brussels. The EU this week imposed duties on solar panels imported from China. Beijing responded by launching an anti-dumping investigation into imported European wine.

China's booming luxury car sales make the country a big growth market for global carmakers. German brands BMW, Mercedes-Benz, and Audi lead the market.

Porsche, Ferrari and Lamborghini are also targeting the booming upper class and rising salaries in China, which have been the driving force behind a surge in sales for Britain's Jaguar Land Rover.

Daimler, BMW, Mercedes, VW, Porsche and Audi all declined to comment.
Michael Geisler, a spokesman for Germany's embassy at the EU, said Berlin had not received any official confirmation about China's alleged complaint.

"We are closely monitoring the situation as it would not be without repercussions given that the auto industry plays an important role for Germany's economy," he said.

A senior EU official played down the threat of Beijing lodging a complaint against Brussels over luxury car imports, arguing that China would risk alienating its main trade ally in Europe.

"I can't believe China is seriously considering to escalate the trade dispute over luxury cars," said the official in Brussels. "Cars are not like wine. It hits Germany more than anybody else and China knows that the Germans are their best friends in Brussels."

A third EU official said that they had not received any formal communication from Beijing linked to luxury cars. However, he admitted to growing concern in Brussels that the trade dispute was getting out of hand.

"We are not in a position to fight with Beijing. We need to be reasonable and try to find a conciliatory solution . . . All this can be fixed," he said.

Total bilateral trade between China and the EU stands at €433.7bn.

European carmakers exported almost 500,000 passenger cars to China in 2012, according to the European car industry association (Acea). Tariffs on cars imported into China stand at 25 per cent.

"Clearly it is in all parties interests that an amicable solution to current trade tensions can be found," the industry group said in a statement. "The stakes for the world economy and the companies affected are simply too high."

VDA, the German automotive industry association, said China and Germany were important partners with decades of partnership.

"The current differences between the [European Commission] and the Chinese government must be solved at the negotiation table. Punitive duties are a cul de sac. The [European Commission] must pursue the path of constructive dialogue, as the German federal government wishes," the association said.