US discriminatory subsidies disrupt NEV supply chain: expert

BEIJING - The United States' subsidies for new energy vehicles (NEVs) are discriminatory and will seriously disrupt the global supply chain, a trade expert has told Xinhua.

Tu Xinquan, head of the China Institute for WTO Studies of the University of International Business and Economics, made the remarks in an interview on the subsidies under the US Inflation Reduction Act. China has initiated dispute settlement proceedings on the matter at the World Trade Organization (WTO).

Elaborating on why the measures are discriminatory, Tu said that for carmakers to obtain the related tax credits, their production must take place in North America, and a certain proportion of key minerals in power batteries must come from the United States or countries that have signed free trade agreements with it.

In particular, if the key minerals come from several specific countries, including China, the production will not be able to benefit from the subsidies, Tu added.

The seasoned trade expert believes the US measures are not designed to promote the green transition, as the country claims, but to block vehicles from other countries, especially China, from entering the US market.

Such subsidies violate the national treatment principle of the WTO, Tu said.

It is not only Chinese companies that bear the brunt, but also those from the Europe, Japan, the Republic of Korea and even the United States itself. Tu said the number of pure and plug-in electric vehicle models eligible for the subsidies will drop from 25 in 2023 to 13.

"The US government has repeatedly claimed that it has no intention of decoupling from China, but only wants de-risking. However, the discriminatory policies explicitly aimed at China in the US Inflation Reduction Act obviously violate its public commitment and will increase the risk of failure on climate change response, not only for the United States but the globe at large," Tu said.

The United States should correct the discriminatory policies from the perspective of the common interests of the global response to climate change, compliance with the WTO rules, and the stability of China-US relations, Tu said.