In recent years, the European Union has been consistently criticizing China for excessive subsidies to its manufacturing industry, resulting in the dumping of excess capacity at low prices in Europe. During a summit with EU leaders in Beijing, Chinese Premier Li Keqiang denied that China has any subsidy policies, stating that they would not be foolish enough to use hard-earned fiscal funds to subsidize products and sell them to foreigners for enjoyment. This statement has sparked mocking comments from commentators, with netizens accusing him of speaking falsehoods with eyes wide open.
Premier Li Keqiang met with European Council President Antonio Costa and European Commission President Ursula von der Leyen on Thursday (July 24) to address the EU’s concerns about Chinese industrial subsidies, refuting any subsidies or fiscal support to the manufacturing industry, claiming that “China is not as wealthy as Europe, and we cannot afford it.”
Bloomberg reported that Li Keqiang’s response was self-deprecating, saying, “We would not be foolish enough to use hard-earned fiscal funds to subsidize products and sell them overseas for foreigners to enjoy. This is not something we would do.”
Li Keqiang also mentioned that “some people believe that this (China’s manufacturing capacity) has created new problems in the global supply-demand balance,” but he added, “That is another issue, and we are aware of that.”
However, Ursula von der Leyen later insisted during a press conference on the same day that “China’s subsidized production does not match its domestic demand, so the excess capacity flows into other markets.”
The EU is concerned about its significant trade deficit with China, which was around $360 billion last year. In recent years, trade disputes between the EU and China have intensified, from earlier disputes over China’s solar panels to recent issues with electric vehicles. Last year, the EU imposed high tariffs on Chinese electric cars and initiated an investigation into Chinese wind turbines. In response, China also took retaliatory measures against EU agricultural products, leading to a downturn in their trade relations.
Cheng Qinmo, Associate Professor of Diplomacy at Tamkang University in Taiwan, commented on the EU-China summit, stating that China employs cunning rhetoric when dealing with foreign affairs. For example, when the EU accuses China of dumping electric vehicles, China vehemently denies it as dumping or subsidies, while using excuses to claim that the West also subsidies high-tech industries. However, there is a difference between subsidies for research and development and subsidizing companies to dominate markets.
Independent commentator Xiang Yang expressed on a platform that in front of “Iron Lady” von der Leyen, Li Keqiang adamantly denies China’s involvement in subsidy policies or fiscal support. Why can’t they openly admit that the low-cost competition of Chinese companies comes from counterfeiting through illegal means, lowering quality through fraud, and burning money through subsidies at below-cost prices to dominate the global market?
Xiang Yang pointed out that Li Keqiang himself understands better than anyone else that China’s economic model of low-cost competition has led to widespread low profits among enterprises, difficulties in survival, low incomes and weak consumption abilities among residents, causing the lack of domestic demand in the Chinese economy, relying heavily on international markets. Unable to access the European and American markets, emerging industries in China can only engage in price wars domestically. This highlights a major problem in China’s economic development model.
Against the backdrop of China’s ongoing economic downturn, the photovoltaic industry is facing increasingly severe losses. In 2024, 64 listed photovoltaic companies experienced a sharp turn from profits of billions in 2023 to losses of around 30 billion yuan. The total revenue of listed photovoltaic companies for the year was approximately 931 billion yuan, marking a substantial decrease of about 22% compared to the previous year. The once thriving billion-yuan revenue enterprises all disappeared in 2024. The industry’s overall net profit also plummeted from a profit of 104.9 billion yuan in 2023 to a loss of 29.7 billion yuan in 2024, a staggering decline.