Leaked EU documents indicate that Chinese equipment vendors Huawei and ZTE are receiving significant support from the country's government, including massive credit lines from state-owned banks, according to a report in the Wall Street Journal.
A confidential EU investigation is believed to have uncovered a $30 billion facility provided to Huawei by the China Development Bank, which according to the EU document, "suggests significant state interference--in that they benefit from published government policies financed by the state-owned banking system."
The investigation claimed that ZTE had access to credit lines of "an enormous magnitude," thought to be $25 billion, compared to the company's revenues of $8 billion in 2009.
While both companies have strenuously denied receiving subsidies from the Chinese government, the EU report suggested that further investigation is needed to find out whether China's export credit policies violated World Trade Organisation rules.
In an attempt to clarify the situation, Bill Plummer, vice president of government relations at Huawei USA, told the Wall Street Journal that government loans were given to foreign companies to help finance the purchase of Huawei products, not to Huawei itself.
Plummer added that, from 2004 to 2009, purchasers of Huawei equipment benefited by using about $5.3 billion in export buyer credits, while the company's global sales during the same period were around $94 billion. Huawei did not have information since 2009.
The EU report also delved into the long-running rumours that Huawei and ZTE are controlled by the Chinese government, something both firms have long denied.
This investigation was triggered by the complaint made to the EU from Belgium-based USB modem manufacturer, Option. However, Option withdrew its complaint after it agreed to a commercial deal with Huawei. This move forced the EU to halt any further investigations into possible trading violations, the documents said.
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