The case is the first of its kind and comes as EU Customs Commissioner Algirdas Šemeta arrives in Shanghai to put pressure on China to tackle cigarette smuggling and trade in counterfeit goods (EurActiv 30/08/10).
China fears EU member states are propping up their potato starch companies in a way that damages Chinese domestic industries.
The Chinese Ministry of Commerce said it launched a probe after receiving complaints from the China Starch Industry Association.
Beijing said it would conduct an investigation in line with World Trade Organisation (WHO) and domestic rules, and said the process would be fair and transparent.
If it finds that European governments are conferring an unfair advantage on its exporters, retaliatory duties could be slapped on European imports.
Commissioner Šemeta did not plan to discuss the issue during his discussions with Chinese customs officials this week.
A spokesperson for the Commission's trade directorate told EurActiv that Beijing has notified Brussels of its intention to investigate European potato starch subsidies.
He said the Commission notes this is the first anti-subsidy case China has opened against the EU.
Brussels will "actively participate in the investigation and will carefully monitor that the Chinese authorities respect the relevant WTO rules on anti-subsidy investigations," according to a spokesperson.
"The Commission will continue to monitor China's trade defence activity and will consider any adequate reaction if China would impose measures that do not comply with the WTO rules. In the meantime, the EU's bilateral relations with China continue business as usual," he added.
Europe's generally low-key potato starch industry has found itself in the headlines more than usual this year, primarily as a result of the European Commission's decision to allow BASF to manufacture Amflora – a "genetically optimised" starch potato (EurActiv 03/03/10).
