EU protects against unfair competition from China

The European Commission has presented a bill that makes it difficult to access contracts for firms that receive government subsidies. The ratification of the EU-PRC investment agreement has been postponed indefinitely.

The European Commission (EC) will strengthen the protection of European companies from unfair competition from firms from China and other countries receiving subsidies from the state. The regulator on Wednesday, May 5, presented a bill obliging foreign firms to disclose information about such subsidies in the event of their takeover of European companies and when distributing tenders. Foreign companies will be required to provide such information when transactions or tenders exceed the specified threshold.

In the event of a merger or takeover, firms will have to provide data on their receipt of government subsidies if the turnover of one of the partners is at least 500 million euros, and the volume of foreign subsidies is at least 50 million euros. When distributing tenders, the bar is set at 250 million euros. In both cases, companies will have to notify the EC in advance that they have received subsidies from non-EU governments. Otherwise, they will face fines.

Ratification of the EU-PRC agreement stalled
EU Competition Commissioner Margrethe Vestager, introducing the bill, noted that in 2019 the inflow of foreign investment into the European Union amounted to 9 trillion euros. "Opening up European markets requires fairness, and this is especially important to support the EU economy during the recovery from the crisis caused by the coronavirus pandemic," she said.

Meanwhile, the solution to the issue of deepening economic relations between the EU and the PRC has been postponed indefinitely. A number of MEPs said on May 4 that they do not expect an early renewal of the procedure for ratifying the investment agreement between the European Union and China.

Chinese President Xi Jinping miscalculated by imposing sanctions on EU officials for criticizing human rights abuses in China, said Reinhard Bütikofer, an expert on China from the Green faction in the European Parliament. Earlier, the deputy chairman of the European Commission Valdis Dombrovskis, against the background of diplomatic friction with China, said that the ratification of this document would not be actively promoted. “We cannot ignore the broader context of EU-China relations,” he explained.