EU foreign subsidy rules a setback for Brussels-Beijing ties

China's Ministry of Commerce emphasized on Jan 9 that the European Union's moves under the framework of its Foreign Subsidies Regulation would create trade and investment barriers, with He Yadong, a spokesman for the ministry, urging the EU to change its policy in order to provide a fair, open and non-discriminatory business environment for Chinese enterprises operating in the EU.

The EU says the FSR was implemented in July 2023 to address foreign subsidies, which according to the bloc, disrupts its single market. But Chinese companies have become its primary target. For instance, in February 2024, the European Commission launched an investigation into a subsidiary of a Chinese company, CRRC Corporation Limited, which was bidding for an electric train project, alleging that subsidies distort market competition. This prompted the Chinese company to withdraw from the bidding process. By November 2024, all initial FSR investigations — three in-depth and two self-initiated — were directed at Chinese companies, reflecting the EU's bias.

The Chinese Ministry of Commerce, in response, launched its own investigation into the EU's FSR practices. The investigation revealed the FSR has significant flaws that are harming Chinese businesses. The European Commission's investigations were found to be discriminatory, as all the earlier five cases targeted Chinese companies.