At the forefront of the trade dispute between China and the European Union (EU), there is a French brandy called the “King of Alcohol.” Analysts say that the economic conflict between the two sides, which has cooled sharply since last year, is intensifying.
According to the Financial Times (FT) on the 6th, China’s Ministry of Commerce said it has decided to conduct an anti-dumping investigation on brandy from the European Union the previous day. Anti-dumping is a measure to regulate imports by imposing high tariffs on products exported by other countries to protect their own industries. The Ministry of Commerce said, “The Chinese Liquor Industry Association applied for an anti-dumping investigation on behalf of the brandy industry in China.”
The survey is expected to deal the biggest blow to the French liquor industry. 99.8 percent of the brands that the EU exports are from France. France, a wine powerhouse, is also the largest supplier of alcoholic beverages to China. Politico said, “The Ministry of Commerce did not mention the name of a particular country or distillery in the announcement, but it was clearly aimed at the French brandy.” Brandy is a liquor made by distilling fermented fruit juice or wine. Although it is called variously depending on the country of origin, it is best known as ‘cognac’ in the French cognac region. Remy Quantro Group, famous for its cognac brand ‘Remy Martin’, saw its stock price fall shortly after the announcement by the Ministry of Commerce.
Analysts say that China’s surprise attack on Brandi is retaliation against the EU. The EU and China have been engaged in a trade war since last year. While the EU’s trade deficit with China reached an all-time high of $426 billion last year, complaints about unfair trade among member countries erupted one after another. In response, the EU launched a subsidy investigation on Chinese electric vehicle companies in September last year, and has been conducting anti-dumping investigations on biofuel imports from China since last month.
It was against this backdrop that the “French brandy” became a target. Last year, the EU’s survey of subsidies for electric vehicles in China was heavily pressured by France, a major member country. The French government, which produces cars such as Renault, provides up to 7,000 euros in cash subsidies to buyers of electric vehicles, with more than a third of the total subsidy budget going to Chinese EV buyers, who have been concerned about the continued decline in the competitiveness of European electric vehicles. Last month, the government announced the “French version of the IRA (Price Reduction Act),” which subsidizes vehicles imported from far-flung countries that are disadvantageous to the country, to actively defend its dominance in the domestic market. Politico said, “Last year, France lobbied strongly for the EU to conduct an investigation into Chinese-made electric vehicles. This is clearly related to China’s decision to target the French brandy.” In response, the French Ministry of Economy said, “We will make all-out efforts to protect our companies.”
SALLY
ASIA JOURNAL
