European Commission President Ursula von der Leyen announced Wednesday an anti-subsidy investigation into electric vehicles coming from China.
Global markets are flooded with cheap Chinese electric cars, von der Leyen said, addressing European Union lawmakers in Strasbourg, France.
Their price is kept artificially low by "huge state subsidies," she said, leading to market distortion in the EU.
The EU however does not tolerate market distortions either from within the bloc or from outside of it, von der Leyen said.
"Europe is open to competition, not for a race to the bottom," she said.
An anti-subsidy investigation can potentially lead to punitive duties being imposed on imports to the EU.
Different efforts are currently underway in several EU economic sectors to reduce the bloc's dependence on imports from countries like China or Russia and to protect domestic companies.
In the global race for profitable clean tech industries, von der Leyen previously called for greater independence from Chinese imports and the production of more emissions-reducing technology in the bloc.
In March, the European Commission presented a proposal for a law on the supply of critical raw materials needed for clean-tech technologies, including powerful batteries.
The draft bill, which still needs to be approved by EU capitals and the European Parliament, aims to ensure that the bloc does not remain overly dependent on raw material imports from individual countries, including China but diversifies its suppliers.
On Wednesday, von der Leyen reiterated the EU needs to improve its economic security.
At the same time it was "vital to keep open lines of communication and dialogue with China," she said in Strasbourg.
At a planned EU-China summit later this year, von der Leyen is to advocate for reducing trade and economic risks in the EU's relations with China while maintaining dialogue with the country, she said.
