China's Ministry of Commerce (MOFCOM) has raised concerns over the European Union's Foreign Subsidies Regulation (FSR), stating that its enforcement practices are creating significant trade and investment barriers for Chinese enterprises operating in Europe.
The FSR, implemented on July 12, 2023, mandates that companies conducting business within the EU must disclose any subsidies received from foreign governments. This requirement extends to investments made through mergers and acquisitions, as well as public procurement activities.
Recent cases highlight the impact of these regulations. Chinese company CRRC Qingdao Sifang Locomotive Co., Ltd. withdrew from a Bulgarian tender for electric trains valued at approximately 610 million euros. Similarly, Shanghai Electric pulled out of a Romanian public tender for constructing a photovoltaic park following an EU investigation.
The first legal challenge under the FSR involved Nuctech, a Chinese security inspection equipment firm. The European Commission demanded access to data stored on Nuctech's servers outside the EU. When Nuctech sought to suspend this demand, the EU General Court dismissed the request.
In response to the growing concerns, the China Chamber of Commerce for Import and Export of Machinery and Electronic Products filed a formal complaint with MOFCOM. The chamber highlighted that the FSR's vague definitions of "foreign subsidies" are causing substantial difficulties for Chinese companies, which face hefty penalties if they fail to comply with the notification requirements.
MOFCOM's investigation revealed that the unclear criteria for what constitutes a foreign subsidy under the FSR are problematic. Chinese businesses are struggling to navigate these regulations, potentially hindering their ability to compete effectively in European markets.
As the EU continues to enforce the FSR, the debate over its impact on international trade dynamics intensifies, with Chinese enterprises advocating for clearer guidelines to ensure fair competition.
Reference(s):
cgtn.com
