context: The second-largest destination for the EU's skim-milk and whole-milk powders, the PRC launched the anti-subsidy investigation targeting EU dairy products, a day after the EU confirmed that it would move ahead with additional tariffs on most electric vehicles imported from the PRC. Since the domestic dairy industry is already facing oversupply, potential tariffs and less imports from EU is unlikely to hit the Chinese market. In June, similar investigation has been initiated against EU pork imports.
On 21 August, the Ministry of Commerce kickstarted the anti-subsidy investigation of certain EU dairy products. The subsidy investigation period is set from 1 Apr 2023 to 31 Mar 2024. The industrial damage investigation period spans from 1 Jan 2020 to 31 Mar 2024.
This anti-subsidy investigation was jointly applied by the China Dairy Industry Association and the China Dairy Products Industry Association. The manufacturers of the products under investigation include, but are not limited to, Royal A-ware from the Netherlands, Arla Foods from Denmark and DMK from Germany. The importers of the products under investigation include, but are not limited to, Pinwo Foods, Walmart and Sam’s.
The application stated that from 2020–22, the weighted average import price of the products under investigation was C¥15,000 to C¥40,000 per tonne lower than those of similar domestic products. In 2023, the difference was C¥10,000 to C¥30,000 per tonne.
The EU is the PRC's second-largest source of dairy imports, following New Zealand. In 2023, the PRC imported US$4.56 bn worth of EU dairy products, accounting for 39.8 percent of the total dairy imports. Among these, 4.65 million tonnes of fresh milk, or 27.8 percent of the total fresh milk imports, were imported from the EU.
Lin Guofa 林国发 Bric Ag Infor Group research director believes that if the investigation ultimately leads to anti-subsidy measures, it may help alleviate the issue of oversupply in the domestic dairy market.
Additionally, the gap left by reduced EU dairy imports could be filled by countries like New Zealand and Australia, meaning that there would be minimal short-term impact on domestic dairy supply. The outlook for Europe is less optimistic, as high costs due to a lack of cheap feed have made it difficult for European dairy farmers to find alternative export markets to replace the PRC in the short term.