Chinese business lobby hits back at EU ‘dawn raid’ on security equipment supplier

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

The China Chamber of Commerce to the EU has attacked what it called a “dawn raid” by European authorities on a Chinese security equipment supplier, a move that will further inflame tensions between the trading superpowers.

The European Commission and local law enforcement officers raided the company’s offices in Poland and the Netherlands on Tuesday morning, the chamber said. The raids, the first time the commission has conducted such an action under anti-foreign subsidy powers, came as the EU reportedly prepared to launch a separate investigation into China’s procurement of medical devices.

“The sudden unannounced inspection on April 23 undermines the business environment for foreign companies within the EU in the disguise of foreign subsidies,” the Chinese chamber of commerce said. Neither the chamber nor the EU identified the company.

The EU is China’s second-largest trading partner and one of its most important sources of foreign investment. But tensions have been growing between Beijing and Brussels, with the latter launching several anti-subsidy investigations in recent months.

The bloc has accused China of stoking industrial overcapacity, especially in the electric vehicle and renewable energy sectors that compete directly with European companies, raising the risk of dumping.

The growing friction could complicate a planned trip by China’s President Xi Jinping to Paris next month, when he is expected to meet his French counterpart Emmanuel Macron.

In a statement, the European Commission said the raids followed “indications that the inspected company may have received foreign subsidies that could distort the internal market”.

“Unannounced inspections are a preliminary investigative step into suspected distortive foreign subsidies,” it said.

The chamber said enforcement agencies “authorised by the European Commission” had seized IT equipment and mobile phones, scrutinising documents and demanding access to “pertinent data”.

It accused the EU of “weaponising” anti-subsidy investigations to “suppress” Chinese companies and conduct “unjustifiable ‘dawn raids’”.

“We call for the provision of a genuinely fair and non-discriminatory business environment for Chinese enterprises,” it said.

The raids and the anti-subsidy actions raise the spectre of further tit-for-tat retaliation. China has countered western accusations of oversupply by arguing that the US and its allies are trying to suppress and contain its industry. Beijing has opened an anti-dumping investigation into French brandy.

During a meeting with German Chancellor Olaf Scholz in Beijing last week, Xi said China’s exports were helping to ease global inflation and support a clean energy transition.

Chinese authorities have also conducted a series of raids on the offices of foreign consultancies over the past year, often without any official explanation or acknowledgment, though these are usually believed to be related to national security.

Bloomberg reported on Wednesday that the EU’s probe into China’s acquisition of medical equipment, which must be concluded within nine months, would seek to determine whether there was a lack of reciprocity in procurement markets in China. That could lead the EU to restrict Chinese access to medical equipment tenders in Europe.