Beijing and Brussels close to ending trade dispute

9 Oct 2014

China and the European Union (EU) are close to resolving a long-running trade dispute over the import of Chinese-made equipment into European markets, Reuters cites people close to the matter as saying. The dispute revolves around claims that Chinese manufacturers ZTE and Huawei have employed anti-competitive practices, with Beijing accused of subsidising the pair by providing cheap loans to the two vendors and their customers from state-owned banks. According to the unnamed sources, China is considering a deal in which it will limit its export credits to Huawei and ZTE, and both Beijing and Brussels will monitor the market shares of Chinese companies in Europe and European companies in China. Further, the EU and China will cooperate more closely on industrial research and standardisation. For its part, the European Commission (EC) will drop an anti-dumping investigation against ZTE and Huawei.

According to an EU document seen by Reuters, the EC believes that Huawei’s rapid expansion in the EU – from a 2.5% market share in 2006 to 25% in 2014 – could only be achieved through illegal state aid. The document also noted that two Chinese vendors offer prices that are 18% lower than EU manufacturers, hurting the latter’s profitability. As previously reported by CommsUpdate, the issue came to the fore in May 2013 when EC trade chief Karel de Gucht began calling for an investigation into the matter. The commissioner found little support, however, and European vendors such as Ericsson, Nokia and Alcatel-Lucent spoke out against initiating a probe, lest they be excluded from lucrative 4G equipment contracts in China. One unnamed source told Reuters that the commissioner was keen to end the dispute before stepping down at the end of the month: ‘The investigation was De Gucht’s issue. He doesn’t want to leave this with his successor.’