China has launched an investigation into illegal subsidies relating to imports of pork and dairy products from the European Union, the Trade Ministry in Beijing announced on Monday.
The anti-dumping probe is seen as a response to punitive tariffs the EU is considering on electric vehicles imported from China, following an EU investigation into subsidies to Chinese carmakers that are allegedly distorting competition in the European market.
The Global Times, a Chinese Communist Party mouthpiece, reported that evidence was being prepared for an anti-subsidy investigation into the two categories. The newspaper cited "business insiders."
Products intended for human consumption were at the centre of the probe, the Trade Ministry said.
Last year China imported pork worth 23.2 billion yuan ($3.2 billion), according to Chinese customs statistics. EU authorities say the figure was much lower at around $500 million.
In January, the Chinese Trade Ministry said it was probing brandy imports from the EU, with French producers the main target.
In a first reaction, the EU said on Monday that it reserved the right to take legal action against the new Chinese investigation.
A spokesman for the European Commission in Brussels said the proceedings would be very closely followed in consultation with industry and the EU member states.
If necessary, the commission would also intervene to ensure that the investigation fully complies with all relevant World Trade Organization (WTO) rules, the spokesman said.
Analysts had predicted that the announcement by the European Commission last week that it was considering tariffs on Chinese electric cars would provoke a response.
But Beijing would not impose tariffs on products that it really needed, Jacob Gunter of the Berlin-based Merics Institute said. "These include machinery, high-value industrial goods, chemicals, medical technology and other products," he said.
Major European carmakers could also be spared, as they invest heavily, create jobs and pay taxes in China, Gunter said.
Chinese consumers could get by without agricultural imports, or Chinese producers could provide the same foods, as in the case of pork, he said.