By Joe Cash
BEIJING, Dec 7 (Reuters) – China said on Thursday that Biden administration plans to limit Chinese content in batteries eligible for generous electric vehicle tax credits from next year violate international trade norms and will disrupt global supply chains.
The plans will make investors in the U.S. electric vehicle (EV) supply chain ineligible for tax credits should they use more than a trace amount of critical materials from China, or other countries deemed a “Foreign Entity of Concern” (FEOC).
“Targeting Chinese enterprises by excluding their products from a subsidy’s scope is typical non-market orientated policy,” said He Yadong, a commerce ministry spokesperson.
“Many World Trade Organization members, including China, have expressed concern about the discriminatory policy of the U.S., which violates the WTO’s basic principles,” he said.
China’s dominant position in the global battery supply chain has prompted United States and European officials to take action over fears that cheap Chinese EVs could flood their markets.
The European Commission is currently investigating whether Chinese manufacturers benefit from unfair state subsidies.
Washington has already passed two laws explicitly excluding investors from being able to benefit from a $6 billion allocation of tax credits for batteries and critical minerals, as well as subsidies of $7,500 for every new energy vehicle produced, should they include FEOCs in their supply chains.
