China: EU subsidises infrastructure vendors

Having accused Chinese equipment vendors Huawei and ZTE of benefiting from massive credit lines from state-owned banks, the EU is now at the receiving end of similar allegations in a study made by China's Ministry of Commerce.

The leaked internal report claims that EU member states have been providing research and development  funding together with export credits and loans that are in breach of World Trade Organisation rules, according to a report in the Wall Street Journal.

According to the Chinese ministry report, the EU has granted R&D funds in excess of €9 billion to three of Europe's largest infrastructure vendors for projects starting in 2007 and extending through until 2013. Additionally, the report claims, guaranteed loans on non-commercial terms were made by export credit agencies in Sweden, Finland and France for more than €25.5 billion to support telecoms infrastructure-related projects over the past five years.

The study added that the European Investment Bank loaned more than €1.45 billion to three unnamed equipment makers on non-commercial terms, and that Nokia Siemens Networks and Ericsson benefited from substantial subsidies.

"There have always been such subsidies in Europe and the Chinese authorities' latest move is essentially a gesture and a signal of its intention to help Chinese manufacturers obtain a better operating environment in Europe," Hu Jiaming, an analyst at Capital Securities, told the Journal. Hu maintains that the impact of this Chinese study is likely to be small, and would not dent existing EU restrictions to foreign investment in Europe's telecoms sector.

For more:
- see this WSJ article (sub. req.)

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