China's Ministry of Commerce (MOFCOM) announced it would extend by six months its ongoing anti-subsidy investigation into certain dairy imports from the EU until February 21, 2026, citing the case's complexity. The investigation was launched on August 21, 2024, following a formal application by the Dairy Association of China and the China Dairy Industry Association on behalf of domestic producers, which argued that EU dairy producers benefit from unfair government subsidies. In their application, the domestic industry groups said that the EU has provided substantial subsidies to its dairy-related industries. “A surge of low-priced EU dairy imports has dealt a serious blow to the production, operations, and financial health of Chinese producers, inflicting material injury on the sector,” according to the application file. Extending the probe was a reasonable measure given its complex nature, allowing for more thorough analysis and accurate conclusions, Zhou Mi, Senior Research Fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times.
Zhou said that EU policies in the dairy sector function at two levels – measures introduced by individual member states and regulations set at the bloc-wide level. “Coupled with the wide variations in competitiveness among EU countries in the sector, this makes the process of gathering evidence, conducting analysis and reaching a conclusion far more complex,” he noted. The industry applicants claim that the EU and its member state governments have provided a total of 20 subsidy programs to companies in the EU dairy sector, covering multiple countries including Ireland, Austria, Belgium, Italy, and Croatia. The investigation focuses on certain dairy imports from the EU, including fresh cheese, processed cheese, blue-veined cheese and select high-fat dairy products, examining subsidies granted between April 2023 and March 2024 while assessing industry impact over the broader January 2020-March 2024 period, according to the MOFCOM statement issued last August.
In February this year, when commenting on the progress of China-EU negotiations concerning electric vehicles as well as relevant investigations into EU pork and dairy products, MOFCOM Spokesperson He Yadong stated that the anti-dumping investigation into pork imports from the EU and the anti-subsidy investigation into EU dairy products imports are currently ongoing. MOFCOM vowed to follow WTO rules and ensure that the rights of all parties are fully protected.
Customs data revealed a steady increase in imports of the investigated dairy products, with a cumulative growth of 25.8% between 2020 and 2023, and an additional 11.3% year-on-year rise in the first quarter of 2024. As a result, the profitability of China's domestic dairy sector has fallen sharply compared with 2021. From 2020 to 2023, the sector's operating rates hovered between just 10% and 50%, remaining at historically low levels. “If subsidies are indeed found to exist, measures such as the imposition of anti-subsidy duties may be applied in accordance with relevant WTO rules,” Zhou said, as reported by the Global Times.
