SHANGHAI -- The Chinese government criticized the launch of a probe by the European Commission into China's electric vehicle subsidies as protectionist and warned it would negatively impact economic and trade relations.
The investigation "is a naked protectionist act that will seriously disrupt and distort the global automotive industry and supply chain, including the EU, and will have a negative impact on China-EU economic and trade relations," China's Ministry of Commerce said in a statement on Thursday.
"China will pay close attention to the EU's protectionist tendencies and follow-up actions, and firmly safeguard the legitimate rights and interests of Chinese companies," it added.
European Commission President Ursula von der Leyen announced the investigation on Wednesday, accusing China of flooding global markets with electric cars that had artificially low prices because of huge state subsidies.
The probe, which could take up to nine months, may lead to tariffs close to the 27.5 percent level already imposed by the U.S. on Chinese EVs, a person familiar with the matter told Bloomberg.
The investigation prompted analyst warnings of retaliatory action from Beijing as well as pushback from Chinese industry executives who say the sector's competitive advantage is not due to subsidies.
Eurasian Group analysts warned that should Brussels ultimately levy duties against subsidized Chinese EVs, Beijing would likely impose countermeasures to hurt European industries.
Other analysts said the probe could slow capacity expansion by China's battery suppliers, although the move should not pose a big downside risk for Chinese EV makers because they could turn to other growing markets such as Southeast Asia.
Still, it could hurt perceptions of Chinese EV makers as they expand abroad, Bernstein analysts said in a client note. The manufacturers have been accelerating export efforts as slowing consumer demand in China exacerbates production overcapacity.