China's Ministry of Commerce (MOFCOM) has raised concerns about the European Commission's enforcement of the EU Foreign Subsidies Regulation (FSR), deeming it a barrier for Chinese businesses in Europe. 🏢🌐
The FSR, implemented on July 12, 2023, mandates that companies operating in Europe disclose any subsidies received from foreign governments. This includes investments through mergers and acquisitions or public procurement processes.
One notable case involved Chinese company CRRC Qingdao Sifang Locomotive Co. Ltd., which withdrew from a 610 million euro tender in Bulgaria for electric trains following an FSR investigation. Similarly, Shanghai Electric pulled out of a Romanian photovoltaic park project under the same regulation.
The first lawsuit under the FSR targeted Nuctech, a Chinese security inspection equipment firm. The European Commission demanded information stored on servers outside the EU, a request that the EU General Court did not suspend.
In response to these challenges, the China Chamber of Commerce for Import and Export of Machinery and Electronic Products has formally complained to MOFCOM, highlighting vague definitions within the FSR that make compliance difficult for Chinese companies, potentially leading to hefty penalties.
As MOFCOM continues to advocate for clearer regulations, Chinese enterprises navigating the European market face significant hurdles in maintaining their growth and investment strategies.
