China EU Photo:VCG

 
The China Chamber of Commerce to the EU has expressed serious dissatisfaction regarding two investigations launched by the European Commission (EC) on Wednesday under the Foreign Subsidies Regulation (FSR) into China-linked companies, calling the FSR "a new tool of economic coercion."

Analysts said that the latest move by the EU targeting Chinese companies reflects a trend of protectionism against Chinese and other foreign companies operating in the EU, which hurts both the companies involved and the EU economy. It also would take a toll on the bloc's business reputation and cast a shadow over the economic cooperation between the two economies, observers said, while urging Brussels to create a fair, non-discriminatory and predictable environment for Chinese companies operating in Europe.   

To date, the EC, the EU executive's arm, has launched three FSR investigations, all targeting Chinese enterprises. 

"We express our serious dissatisfaction with the abuse of the new tool by the relevant EU authorities and the use of the FSR as a new tool of economic coercion to interfere with the reasonable and lawful economic operations of Chinese enterprises in the EU's green and low-carbon transition market," the chamber said in a statement sent to the Global Times.

"We reiterate our opposition to the excessive discretionary authority granted to the EC under the FSR. The regulation's overly broad and ambiguous definitions of key concepts, such as foreign financial contributions, not only place undue burdens on enterprises but also potentially discriminate against foreign enterprises, including Chinese ones. This situation is distorting the level playing field for Chinese enterprises operating in the EU," the chamber said.

"We are gravely concerned about the consecutive in-depth investigations against Chinese enterprises conducted by the EC under the FSR in the solar photovoltaic sector," read the statement.

The chamber urged the EU to promptly enhance transparency and ensure the full protection of the rights of Chinese enterprises.

"As Europe and the global economy navigate a critical juncture, particularly amid the imperative of a green transformation, we call for the reduction of barriers to investment, public procurement and business operations in the EU. It is imperative for the EU to establish a legal and market environment that is fair, transparent and non-discriminatory toward Chinese enterprises," the statement noted.

On Wednesday, the EC launched two in-depth investigations under the FSR to determine whether two companies with links to China have used state subsidies to underbid rivals for a Romanian solar project, according to a release published by the EC.

The first investigation concerns a consortium involving a German subsidiary of LONGi Green Energy Technology Co and the second investigation concerns two subsidiaries of Shanghai Electric Group Co. The EC claimed that "there are sufficient indications" that both companies have been granted foreign subsidies that "distort the internal market."

Chinese company CRRC, the world's biggest producer of rolling stock, withdrew from a public train tender in Bulgaria worth 610 million euros ($661 million) after the EU launched a probe under the FSR, the EC confirmed on March 26.

CRRC's withdrawal from the Bulgarian train tender adds to evidence suggesting that the EU side has wielded the FSR as a new tool to deter foreign companies, coercing them into withdrawal and subsequent business exclusion, the chamber told the Global Times in a previous statement.

China's Ministry of Commerce also slammed the EU probe in February. It urged the EU side to strictly abide by WTO rules, prudently use the tools of foreign subsidy regulations, conduct open and transparent investigations, and provide Chinese enterprises with a fair, just and non-discriminatory business environment, so as to jointly "safeguard the overall situation of China-EU economic and trade cooperation."

"As the Chinese and EU economies are closely intertwined, the EU's sanctions and crackdown targeting Chinese firms will have a negative impact," Zhao Junjie, a research fellow at the Institute of European Studies, Chinese Academy of Social Sciences, told the Global Times. 

Zhao noted that the growing protectionism in the EU reflects its internal economic woes and is influenced by rising protectionism in the US. Analysts warned that such practices would eventually lead to the EU shooting itself in the foot, weighing on its reputation as an investment destination. 

In October last year, the EC launched an anti-subsidy investigation into the imports of battery electric vehicles (EVs) from China. The probe has drawn strong pushback across the EV industry chain, with some warning that additional duties could fuel an EV price mark-up and hurt the interests of European consumers and local EV suppliers. 

Bloomberg reported on Saturday that the bloc could impose additional tariffs on Chinese imports as soon as July.

Analysts pointed out that Europe's green transformation cannot be achieved without China. As a global player in many green technologies, China is crucial to the EU's low-carbon development.

According to solar industry estimates, the manufacturing cost of solar equipment produced in Europe is about twice that of China per watt of installed capacity.