China launches probe into several European dairy producers

Several European dairy producers are being investigated by Chinese authorities as part of its anti-subsidy probe in a move that has further soured relations between the world's second and third largest economies.

Dutch company FrieslandCampina, Italian firm Sterilgarda Alimenti SPA and French producer Elvi are included in an anti-subsidy investigation.

China's Commerce Ministry says the companies were selected based on export volume, geographical distribution and product structure.

The European Union is the second-largest exporter of dairy products to China, behind New Zealand. Last year the EU exported roughly $1.8 billion of daily products to China, according to Eurostat.

"It went a little bit down over the past year but still it is an important part, even if we have to say the cheese volumes going to China from the European Union is about 0.3 percent and for cream it's about four percent," said Alexander Anton, Secretary General of the European Dairy Association.

"Nevertheless, on the market it is a very important segment for our industry."

The dairy probe focuses on certain cheeses as well as liquid milk and cream with a fat content above 10 percent.

China says its own farmers are under threat but the European Commission insists claims of market manipulation are unfounded and unsubstantiated. It has taken the dispute to the World Trade Organization.

"That we have basically never seen before so we are very happy to see that the European Commission has woken up and takes now the defense of our trade interests very very seriously," Anton said.

Earlier this month, ten EU member states voted to roll out additional duties of up to 35.3 percent on Chinese-made electric vehicles. With a dozen more abstaining and five against, it was enough to commit the entire bloc.

"It has a direct impact on export, limiting the choice of consumers and is hindering the green transition. On the other hand what is worrying now - the uncontrollable account of the tit for tat measures," said Liang Linlin, Director of Communication and Research at the Chinese Chamber of Commerce to the EU.

China has also launched investigations into European pork and brandy exports.

These trade disputes over recent months have divided lawmakers across the EU's member states, amid fears of possible ramifications across a number of sectors.

"We have to be very careful, we have to be very delicate on how to handle the situation because we can harm ourselves much more than the Chinese would harm themselves so we have to be very cautious," said Katarína Roth Neveďalová, an MEP for Slovakia's SMER-Sociálna demokracia party.

Both the EU and China say they are acting to defend their domestic dairy industries.

It's a dispute that could take years for the WTO to chew over, but producers will be hoping their politicians can quickly find a palatable resolution.