China said December 7 that the Biden administration's plans to limit Chinese materials in batteries eligible for EV tax credits starting next year violates international trade rules and will disrupt global supply chains.

According to Reuters, the plan will make U.S. EVs ineligible for tax credits if they use more than a trace amount of critical materials from China as well as other nations designated as a “foreign entity of concern,” or FEOC. The term FEOC applies to China, Russia, Iran and North Korea.

The rule will take effect in 2024 for completed batteries and 2025 for critical minerals.

"Targeting Chinese enterprises by excluding their products from a subsidy's scope is typical non-market orientated policy," said He Yadong, a commerce ministry spokesperson. "Many World Trade Organization members, including China, have expressed concern about the discriminatory policy of the U.S., which violates the WTO's basic principles.”

The Biden administration has already passed two laws explicitly excluding investors from benefitting from $6 billion worth of tax credits for batteries and critical minerals as well as subsidies of $7,500 for every new EV produced if they include any FEOCs in their supply chains.

"By establishing 'glass barriers', the U.S. is doing more harm than good to the development of EV technologies and the industry more broadly," He Yadong said.