China firms seek probe into EU pork as trade row deepens

By Mei Mei Chu

BEIJING (Reuters) -Chinese firms have formally applied for an anti-dumping probe into pork imports from the European Union, the state-backed Global Times reported, escalating tensions after the bloc imposed anti-subsidy duties on Chinese-made electric vehicles.

The move opens a new front in bilateral strains in one of the world's key trading relationships after Brussels slapped tariffs of up to 38.1% on EVs made in China to shield its auto industry from competition.

China imported $6 billion worth of pork in 2023, including offal, with the EU accounting for more than half, customs data showed.

The Global Times report, posted on X, gave no details of the requested anti-dumping probe, and did not make clear which pork products would be targeted. The report did not name any companies and cited a "business insider" as the source of its information.

Pig parts such as feet, ears and offal that are largely not favoured in Europe are popular among Chinese consumers, providing a valuable and important market for Europe.

"Much of the imports from Europe are not muscle meat," said a livestock analyst who declined to be identified due to the sensitivity of the matter. If offal is targeted, China would need to import more offal from other countries where it is not consumed in the local market, the analyst added.

Global food companies are on tenterhooks for possible retaliatory measures after the EU said this week it would impose tariffs on Chinese-made EVs.

China has been known to target food products in trade spats with other countries. The logic for Beijing is "because farmers losing out on China's giant market has immediate repercussions for elected officials," said Even Pay, agriculture analyst at Beijing-based consultancy Trivium China.

Spain was China's top supplier of pork last year, followed by Brazil and the United States. Other major suppliers are France, Denmark and the Netherlands.

Spain's pork producers association Interporc said its position as the leading supplier to China was based on quality and food safety, as well as "the trust that our companies have earned among Chinese operators as serious, loyal and rigorous partners".

In France, industry association Inaporc was waiting to see if a probe would be launched, its vice president Thierry Meyer said, adding: "it's very hard to do without the Chinese market."

Loss of trade to China could depress the European market, as when Germany was shut out of export markets including China in 2020 due to outbreaks of African swine fever, creating a supply glut in Europe.

Beijing already targeted brandy in a probe in January, a move perceived as retaliation for France's support of the EU investigation into Chinese-made EVs.

Pork may also be a way of sparing Germany, which is reluctant to hit Chinese EVs, while pressuring other EU countries, Chim Lee, senior China analyst at the Economist Intelligence Unit.

"Spain and France, which are major pork suppliers, were pro-tariffs," he said.

Chinese firms reserve the right to submit applications to prompt anti-subsidy and anti-dumping inquiries into European dairy and pork imports, China's commerce ministry said on Thursday.

Chinese companies also plan to request anti-subsidy investigations into EU dairy imports, the Global Times newspaper reported last week, which may hurt major suppliers the Netherlands, France and Germany.

The European Commission, in an email response to Reuters about potential investigations by China into EU pork and dairy imports, said: "The Chinese government can request a dispute settlement at the World Trade Organisation without needing to resort to retaliation."

On Friday, Chinese Premier Li Qiang, on a visit to New Zealand, told businesses he sees increasing demand for high-quality goods such as dairy, health products, beef and lamb.

Li has pledged on the trip to further expand market access and create a market-oriented business environment, state media Xinhua reported.

On Thursday, China said it would take "all necessary measures" to safeguard its interests in the wake of the EU tariff decision, which is due to take effect from July.

The EV tariffs drew a strong rebuke from China as well as European and Chinese automakers, with industry insiders saying both sides have reasons to strike a deal in the months ahead, as the EU process allows for review.

(Reporting by Mei Mei Chu; additional reoprting by Emma Pinedo in Madrid, Gus Trompiz in Paris and Michael Hogan in Hamburg; Writing by Anne Marie Roantree; Editing by Michael Perry, Jamie Freed , Raju Gopalakrishnan, Peter Graff)