In foreign trade, dumping means selling a product below production cost, which violates international trade rules.
Cognac is the most imported spirit in China and mainly comes from France. The launch of the Chinese investigation comes barely four months after the European Union started a dumping investigation into imports of Chinese electric vehicles. Brussels had already warned at the time of possible Chinese retaliatory measures.
French companies, which have an important sales market in China, will likely be most affected by the investigation. Because the French government under Emmanuel Macron strongly supported the investigation into electric cars, some analysts do not believe the cognac test was a coincidence.
In addition to the EU investigations, France has taken its own steps to promote products made in Europe. Soon, purchase subsidies for electric vehicles will be limited, so that they cannot apply to most cars made in China, based on their environmental performance.
In the past, China has taken similar measures against Australia when relations between Canberra and Beijing were tense. At that time, China imposed measures on Australian dairy and meat. Since last year, the trade relations between the two countries have been improving again.