China retaliates in EU trade row by launching liquor probe

China will investigate whether European producers of liquors are dumping their products on the Chinese market in apparent retaliation against a European Commission probe into subsidies for electric vehicles made in China.

Though the Ministry of Commerce didn’t mention any countries or distillers by name in its announcement on Friday, the probe likely will target cognac, Armagnac and other varieties of French brandies. The ministry describes the focus as “spirits made from distilled wine originating in the EU and imported into containers of less than 200 liters.”

The inquiry comes only three months after the official start of the EU’s investigation into whether subsidies for electric vehicle producers from China are unfair. Beijing has argued the ramping production of the cars is not due to subsidies but rather the result of carefully planning its access to raw materials plus a decade-long march to improve its industrial innovation.

The commerce ministry launched the probe in response to a complaint from the China Liquor Industry Association.

Other EU liquors like Irish whiskey, jenever, pálinka or Šljivovica would not be implicated since they aren’t distilled from wine.

By focusing on wine-derived brandy, the probe would likely focus on French brands like Remy Martin or Hennessy. The apparent focus of the Chinese probe into French spirits comes after Paris lobbied hard last year for the Commission to launch its electric vehicle investigation and has implemented an electric vehicle subsidy regime that favors locally made vehicles.