In a sudden and significant move, the European Commission, citing concerns about “foreign subsidies,” conducted raids on the Dutch and Polish offices of an unidentified Chinese firm. According to the Chinese Chamber of Commerce in the European Union (CCCEU), these raids occurred without any prior notification.
Early in the morning, authorized enforcement agencies seized the company’s IT equipment and employees’ mobile phones, examined office documents, and required access to relevant data.
The European Commission announced a new investigation in its official journal on Wednesday morning, which will rely on input from member states, businesses, and discussions with Chinese representatives. Scheduled to last up to nine months with the possibility of a five-month extension, the probe was initiated by the Commission itself, not due to any external complaints.
Should the investigation verify the suspected practices, the Commission could impose retaliatory actions against China to balance competitive conditions. This may result in Chinese firms being excluded from the EU’s public procurement market, which is valued at over €2 trillion. Alternatively, restrictions could be placed on tenders above a certain value, or conditions could be implemented that disadvantage Chinese bids.
The investigation has the potential to conclude early if China agrees to address the issues and ensures fair treatment for European suppliers, though similar resolutions have not been observed in other sectors where the EU has voiced concerns.
Medtech Europe, representing the European medical technology sector, has endorsed the investigation, highlighting the challenges posed by China’s “Buy China” policy. The association expressed hope for constructive dialogue that might resolve the issues raised without needing further actions in the EU procurement market.
China is a key trade partner for Europe in the medical equipment sector, accounting for 11% of the market’s export destinations in 2022.
The inquiry is a pioneering application of the International Procurement Instrument (IPI), designed to counteract unfair competition from countries like China. The Chinese economy, heavily influenced by the state, utilizes tools such as subsidies and preferential policies that disadvantage foreign companies.
This approach has led to significant tensions with Western nations, prompting collaborative efforts to counteract Beijing’s strategies and mitigate the impact of inexpensive Chinese exports.
Concurrently, the Commission is conducting other significant investigations, including into Chinese electric vehicles and renewable energy equipment, all suspected of benefiting from substantial state aid.
Margrethe Vestager, the European Commission’s executive vice-president, recently described China as a partner, competitor, and systemic rival, with the latter two roles increasingly overlapping. Despite criticism from Beijing, which accuses the EU of protectionism, these measures have generally been supported by European governments as essential for safeguarding the single market and protecting local industries.
