The European Union’s Antitrust Chief stated that the EU will conduct more subsidy investigations on foreign companies investing in EU countries to strengthen efforts against unfair competition practices.
On July 14, Teresa Ribera, the Vice President responsible for clean, fair, and competitive transformation in the EU, told Agence France-Presse reporters during an interview that the EU aims to engage in “fair competition” with China, rather than engaging in a race to the bottom in terms of wages and environmental standards.
Ribera, speaking in Beijing during the EU-China summit, rebuffed the Chinese Communist Party’s claims that the EU is promoting “protectionism.”
“We Europeans do not want to fall into a vicious cycle of low wages, low labor rights, or low environmental standards,” she said. “It is obvious that if our markets are overly flooded, and prices do not reflect real costs, it may harm our interests, putting us at a disadvantage.”
Brussels believes that massive government subsidies leading to manufacturing overcapacity could exacerbate significant trade deficits and flood the market with large quantities of cheap Chinese goods, weakening the competitiveness of European businesses.
In October last year, the EU imposed additional import duties of up to 35% on Chinese electric car imports and conducted investigations into Chinese solar panel manufacturers.
Since the enforcement of the EU’s Foreign Subsidies Regulation in 2023, many Chinese companies have come under scrutiny.
According to reports from the Financial Times on July 13 from Beijing and Brussels, Teresa Ribera told journalists that industries with increasing foreign investment interest are expected to face strict scrutiny. The EU covers a wide range of industries under this investment sector, including “basic and modern industries; chemicals, pharmaceuticals, automobiles, and batteries.”
The Foreign Subsidies Regulation (FSR) allows Brussels to block companies supported by foreign governments from participating in public procurement, mergers and acquisitions, or even selling goods and services in a single market.
The EU has utilized this regulation to investigate Chinese companies participating in European public tenders, ranging from electric car manufacturer BYD and a state-owned train manufacturer to a solar panel company and its state-owned partner. Additionally, a Chinese security scanner manufacturer and a wind turbine sales company have also been under investigation.
Ribera further stated that the purpose of enacting the Foreign Subsidies Regulation is to ensure that enterprises investing in the EU can create value and foster talent and innovation within the EU.
Citing past practices in Beijing, she pointed out that the Chinese authorities once required foreign companies to invest in China through joint ventures and introduce technology into the Chinese market. She stated that it might also happen in Europe to develop such joint ventures but cautioned against falling into a lack of innovation and knowledge.
Otherwise, she said, one might end up with products but without substantial technological know-how.