Brussels has raided the offices of a Chinese security equipment supplier, deploying new anti-foreign subsidies powers, a move that will further inflame tensions between the trading superpowers.
The attack by the European Commission and local law enforcement on the offices in Poland and the Netherlands of Nuctech, which makes luggage security scanners, comes as Brussels attacks what it considers Beijing to be unfair trade practices.
The searches took place at the Rotterdam and Warsaw offices of Nuctech, a state-owned company formerly run by the son of former Chinese President Hu Jintao. The company's products have been banned by some Western countries for national security reasons.
I can confirm [the raids] and of course we are cooperating, Nuctech Europe said after the Financial Times reported earlier that the company was the target of the raid.
Everything is fresh, let's see what happens. We have given our full cooperation, he adds.
Washington added Nuctech to the Commerce Department's Entity List for its involvement in activities contrary to U.S. national security interests and warned that several countries have raised concerns about security risks posed by the equipment Nuctech… given the PRC's control of the company. government.
Nuctech baggage scanners have been installed at European airports, including Pisa and Zurich, according to company officials. MEPs condemned the decision taken in 2022 by Strasbourg airport to acquire Nuctech scanners. The parliament is based in the French city.
This is the first time that Brussels has used its new anti-foreign subsidies rules to justify a raid on a company.
The European Commission declined to comment.
The sudden and unannounced inspection on April 23 undermines the business environment for foreign companies in the EU under the guise of foreign subsidies, the Chinese Chamber of Commerce said, without naming the company.
The raids follow a wave of arrests in Germany of people suspected of spying for China, including three accused of trying to sell sensitive military technology to Beijing.
The EU is China's second largest trading partner and one of its largest sources of foreign investment. But tensions have increased between Beijing and Brussels, the latter having launched several anti-subsidy investigations in recent months.
The bloc has accused China of fueling industrial overcapacity, particularly in the electric vehicle and renewable energy sectors, which compete directly with European companies, increasing the risk of dumping in European markets.
The growing friction could complicate Chinese President Xi Jinping's planned trip to Paris next month, where he is expected to meet his French counterpart Emmanuel Macron.
In a statement, the commission said the searches followed indications that the inspected company may have received foreign subsidies that could distort the internal market.
The unannounced inspections are a preliminary step in investigating suspected distortive foreign subsidies, he said.
The chamber of commerce said enforcement agencies authorized by the European Commission seized computer equipment and mobile phones, examined documents and demanded access to relevant data.
He accuses the EU of using anti-subsidy investigations as a weapon to crack down on Chinese businesses and carry out unjustifiable dawn raids.
We call for the creation of a truly fair and non-discriminatory business environment for Chinese companies, the statement said.
The EU announced on Wednesday that it had also opened an investigation into China's medical device market on the grounds that European manufacturers were being unfairly blocked from supplying doctors and hospitals.
The commission said Chinese laws, including the Buy From China policy, favor the purchase of domestic medical devices and services.
This survey is the first use of a new international procurement instrument. If the EU determines that discrimination exists, it can take steps to hinder China's access to its market.
The EU Chamber of Commerce in China said the lack of fair access to China's public procurement market for medical devices has been a problem since Beijing launched import substitution industrial policies in the sector in 2015.
The European Chamber supports the ultimate goal of this action, which is to ensure that European companies have the same access to the Chinese public market as Chinese companies enjoy in Europe, she said.
Wang Wenbin, a spokesperson for China's Foreign Ministry, said Wednesday in response to both the raid and the investigation: We urge the European side to respect its commitment to the principles of market openness and fair competition, to respect the rules of the World Trade Organization and to stop using various pretexts to unjustifiably repress and restrict Chinese companies.
Raids and anti-subsidy actions raise the specter of tit-for-tat reprisals. China has responded to Western accusations of oversupply by saying the United States and its allies are trying to suppress and contain its industry. It opened an anti-dumping investigation into French brandy.
Chinese authorities have also carried out a series of raids on the offices of foreign consultancies over the past year, often without any explanation or official recognition, although such operations are generally considered linked to national security.
Additional reporting by Ryan McMorrow in Beijing and Javier Espinoza, Alice Hancock and Laura Dubois in Brussels
