Report: Chinese vendors facing EU subsidy probe

The European Union has found evidence that the Chinese government has been providing illegal subsidies to Huawei and ZTE, enabling them to undercut their rivals in international markets, the Financial Times reports.

According to the paper, a “closed door” meeting was held late last week at which it was revealed the EU had “very solid evidence” to support its accusations. A formal case could begin imminently, which could lead to Chinese companies being subject to “punitive tariffs,” it said.

The investigation was initiated by the European authorities themselves, rather than following an accusation of malpractice by a rival company. Indeed, it was suggested that the case has “unnerved” executives from vendors such as Ericsson, Alcatel-Lucent and Nokia Siemens Networks, all of which have significant businesses in China which could suffer if the Chinese authorities act in retribution.

This is not the first time that the European regulators have accused the Chinese authorities of unfairly supporting the country’s businesses. It was reported last year that following complaints from Belgian modem maker Option, which were subsequently withdrawn, “several important issues have come to light which remain unanswered.”

At this time, it was argued that Chinese vendors are being given access to credit from Chinese state-owned banks.

This was followed by reports that the Chinese Ministry of Commerce was alleging that European equipment vendors had received subsidies from the member states, in breach of World Trade Organisation rules. It was noted that this came in the form of research and development funds, export credits and loans.

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