The EU is prepared to charge China after investigations reported that telecommunications equipment companies have been benefitting from illegal state subsidies in Beijing. It is the union’s biggest ever trade case against China.
Huawei and ZTE, two Chinese makers of mobile network equipment, were accused of “dumping” products in the EU, selling goods below cost. The EU is preparing a formal case and could subject Chinese companies to punitive tariffs if proved to have been acting illegally.
The EU acted against consequences for its businesses amidst warnings from trade analysts that Brussels’s move could backfire, further straining trade relationships at a time when Europe is entrenched in a debt crisis and “desperate for growth”. Hosuk Lee-Makiyama, of trade think-tank the European Centre for International Political Economy, said, “European business is genuinely worried about possible retaliation against their market presence in China”. Karel De Gucht, EU trade commissioner, wants to toughen the EU’s posture towards China in other trade cases and halt the “widespread practice by Beijing of lavishing companies with cheap loans and real estate.”