Economic war: China extends its investigation and worries European exporters

World trade is going through a period marked by increasing tensions, where diplomacy and economics are intertwined in strategic rivalries. Indeed, China's opening of an anti-dumping investigation into imports of European cognac provides information on a new front in the trade conflict with the European Union. This move, seen as a direct response to European accusations against Chinese subsidies for electric vehicles, reflects an escalation of economic retaliation between two major powers. Such a case goes beyond a simple commercial dispute. It asks fundamental questions about the balance of international trade and the role of institutions like the World Trade Organization in arbitrating these disputes in a context of increasingly complex rivalries.

A prolonged investigation and controversial measures

The affair took a decisive turn last January, when China announced the opening of an anti-dumping investigation into imports of European brandies and cognacs. This approach followed accusations from the European Commission, which denounced the subsidies granted by Beijing to Chinese manufacturers of electric vehicles, deemed unfair and distorting competition. In response, China appears to have retaliated by targeting one of Europe's iconic exports, cognac.

On Wednesday December 25, the Chinese Ministry of Commerce announced an extension of this investigation until April 5. This decision, according to Beijing, explains itself by “the complexity of this file”. At the same time, China has already introduced “temporary anti-dumping measures”. Thus, in November, the Chinese authorities required European importers to post a customs bond. This initiative, widely seen as a response to European surcharges on Chinese electric vehicles, has triggered concern in Brussels.

Cognac, which alone represents 95% of brandy exports from Europe, is directly at the center of this battle. This flagship product of French industry, worn by giants such as Hennessy, Martell and Rémy Martin, thus becomes a symbol of the growing tensions between two major economic blocs.

French luxury and the future of bilateral trade

Beyond anti-dumping measures, tensions between China and the European Union risk lastingly weakening key industries, in particular that of French luxury. Among them, cognac, a true flagship of French exports, plays a central role. This emblematic product generates several billion euros each year, and its dependence on the Chinese market accentuates the concerns of players in this sector. The lengthening of the Chinese investigation and the prospect of additional sanctions are creating a climate of uncertainty which weighs heavily on the economic prospects of major houses like Hennessy, Martell and Rémy Martin.

Faced with this situation, the European Union has chosen to engage in a diplomatic standoff. Brussels has contacted the World Trade Organization (WTO) and denounces what it describes as “unfair” commercial practices on the part of Beijing. This approach reflects a clear desire not to give in to Chinese pressure. However, some observers fear that these reprisals will go beyond just the cognac sector. Other strategic industries, such as the entire luxury market, could in turn be targeted, which would increase tensions. This trade dispute illustrates a broader upheaval in the global economic balance, where each tariff or regulatory conflict becomes a tool of political and economic pressure.

The dispute over European cognac illustrates the way in which trade relations are increasingly intertwined with geopolitical issues in a multipolar world. As tensions between China and the European Union intensify, this affair questions the ability of the great powers to maintain balanced trade. The coming months will be decisive for the future of the cognac sector, but also for the stability of Sino-European trade relations.