China slams European Union foreign subsidies regulation

Beijing (Brussels Morning Newspaper) – China’s Commerce Ministry said that the investigations led by the EU into Chinese companies constituted “unfair trade and investment barriers.”

China announced the investigation in July after the EU launched probes into whether Chinese government subsidies were sabotaging European competition. The two economic forces have been at odds mainly due to Beijing’s renewables and electric vehicle industry. 

China’s Commerce Ministry said on 9 Jan 2025 that the EU’s enactment of its Foreign Subsidies Regulation (FSR) had discriminated against Chinese companies and “constitutes trade and investment barriers”. 

Why does China call FSR enforcement discriminatory and unfair?

The ministry stated that “selective enforcement” of FSR standards contributed to “Chinese products being treated more unfavourably during the procedure of export to the EU than products from third nations”.

Beijing further added that the FSR had ambiguous criteria for scrutinising foreign subsidies, put a severe burden on the targeted firms and had unclear procedures that created massive uncertainty. EU estimates like surprise checks clearly surpassed the necessary limits, while investigators were “subjective and arbitrary” on matters like market contortion, according to the ministry.

Firms considered not to have complied with probes also confronted severe fines, which placed enormous pressure on Chinese companies, it stated. The ministry expressed FSR investigations had pushed Chinese firms to leave or curtail projects, inducing losses of over 15 billion yuan.

What did the EU conclude in its investigation?

The European Union concluded its probe into Chinese enterprises, particularly relating to foreign subsidies, by listing practices that it viewed as being violative of the regulations of the EU. Its inquiries focused on sectors such as locomotives, photovoltaics, wind power, and security check equipment. The findings reflected that the investigation was characterised by the selective application of laws and vague requirements for the application of foreign subsidies, which China argues placed burdens on Chinese enterprises.