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Brussels has raided the offices of a Chinese security equipment supplier, using new powers to crack down on foreign subsidies, in a move that will further escalate tensions between the trading superpowers.
The raid by the European Commission and local law enforcement on the offices of Nuctech, a maker of baggage security scanners, came as Brussels is cracking down on what it sees as Beijing’s unfair trade practices.
The raids took place at the Warsaw and Rotterdam offices of Nuctech, a state-owned company once run by the son of former Chinese President Hu Jintao. The company’s products have been banned in some Western countries on national security grounds.
“I can confirm [the raids] and of course we cooperate,” Nuctech Europe said after the Financial Times previously reported that the company was the target of the raid. “It’s all fresh, let’s see what happens. We gave our full cooperation.”
Washington placed Nuctech on the Commerce Department’s list of companies for “its involvement in activities contrary to U.S. national security interests” and warned that “several countries have expressed concerns about the security risks posed by Nuctech devices.” . . given the company’s control by the government of the People’s Republic of China.
According to company officials, Nuctech baggage scanners have been installed at European airports such as Pisa and Zurich. Members of the European Parliament condemned a 2022 decision by Strasbourg Airport to buy Nuctech scanners. The parliament is based in the French city.
The company’s scanners are also used in Rotterdam, Europe’s largest port, to check containers, trucks, luggage and packages entering or leaving the EU.
The move marks the first time Brussels has used its new rules targeting foreign subsidies to justify a raid on a company.
China’s Commerce Ministry said it was closely following the EU investigation and warned that it would “take all necessary measures to resolutely protect the legitimate rights and interests of Chinese companies.”
It said the Nuctech investigation and other recent anti-subsidy investigations were “protectionist” actions carried out in the name of fair competition. The raid “violates the principle of due process. . .[and]“This underlines the further deterioration of the EU business environment,” the ministry said.
The raids follow a spate 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 main sources of foreign investment. But tensions between Beijing and Brussels are rising as Brussels has 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 that compete directly with European companies, raising the risk of dumping in EU markets.
The rising tensions could complicate a planned trip by Chinese President Xi Jinping to Paris next month, where he is expected to meet his French counterpart Emmanuel Macron.
In a statement, the commission said the raids “followed indications that the inspected company may have received foreign subsidies that could distort the internal market.”
“Unannounced controls are a first investigative step when there is suspicion of distorting foreign subsidies,” it said.
The Chinese Chamber of Commerce to the EU said law enforcement agencies “authorized by the European Commission” had confiscated IT equipment and cell phones, examined documents and demanded access to “relevant data.”
She accused the EU of “weaponizing” anti-subsidy investigations to “suppress” Chinese companies and carrying out “unwarranted dawn raids.”
“We call for the creation of a truly fair and non-discriminatory business environment for Chinese companies,” it said.
The EU said on Wednesday it had also launched an investigation into China’s medical equipment market, saying European manufacturers were being unfairly blocked from supplying doctors and hospitals.
The commission said Chinese laws, including the “Buy China” policy, “favor the procurement of domestic medical equipment and services.”
The investigation is the first use of a new international procurement tool. If the EU finds that discrimination has occurred, it can take measures to prevent China from accessing its market.
The EU Chamber of Commerce in China said the lack of fair access to the public market for medical equipment procurement in China has been a problem since Beijing introduced an import substitution industrial policy in the sector in 2015.
“The European Chamber supports the ultimate aim of this action, which is to ensure that European companies have the same access to the Chinese procurement market that Chinese companies have in Europe,” it said.
The crackdowns and anti-subsidy measures raise the specter of retaliation. China countered Western accusations of oversupply by arguing that the United States and its allies were trying to suppress and contain its industry. It has launched an anti-dumping investigation into French brandy.
Chinese authorities have also carried out a series of raids on the offices of foreign consulting firms over the past year, often without official explanation or confirmation, although these are widely believed to be related to national security.
The European Parliament on Wednesday adopted rules requiring member states to inform the European Commission about foreign companies investing in the EU’s cross-border transport networks and infrastructure “in order to assess their impact on security or public order in the Union.” to make possible”.
The rules allow the Commission to examine the ownership structures of any third country investors in transport infrastructure.
Additional reporting by Ryan McMorrow in Beijing and Javier Espinoza, Alice Hancock and Laura Dubois in Brussels