China hits back over EU threat to Huawei, ZTE

China has threatened to retaliate if the European Union opens an investigation into Chinese equipment manufacturers over alleged anti-competitive behaviour.

EU trade chief Karel De Gucht had previously said the European Commission had agreed in principle to open an ex-officio anti-dumping and anti-subsidy case against China over imports of mobile network equipment, although De Gucht stressed that efforts would first be made to negotiate an amicable solution with Chinese authorities.

The Commission has not specifically named the Chinese vendors in question, but EU officials told Reuters the primary targets of the investigation would be Huawei and ZTE.

Reaction from China to the EU statement was immediate and angry: "If the European side insists on opening an investigation, the Chinese side will according to WTO rules and Chinese law take firm measures to safeguard its legitimate rights and interests, and the consequences must be borne by the party provoking the friction," Chinese Ministry of Commerce spokesman Shen Danyang told reporters in Beijing, Reuters reported.

A report in China Daily noted that the threat of the investigation into Chinese telecoms vendors by the EU further inflames trade tensions between the two regions, which have already clashed over other industries such as solar panels.

The report said Shen has warned the EU against taking measures that would benefit neither side: "The Chinese market is always open, and EU enterprises retain a larger share of the Chinese market than Chinese companies do in the EU," Shen was reported as saying.

Indeed, the EU is pressing ahead despite resistance from leading European vendors such as Ericsson and Nokia Siemens Networks, which fear they would lose significant business in China if levies were imposed against Huawei and ZTE. The investigation is described as "ex-officio," which means that the European Commission is acting under its own initiative without a complaint having being made by a European company.

Both Ericsson and Nokia Siemens have made statements urging the EU to back off from its threat of imposing tariffs against Chinese-made telecoms equipment, according to Bloomberg.

"We absolutely oppose any efforts to restrict free trade and erect trade barriers of any kind and have urged the Commission to refrain from taking such steps," Nokia Siemens spokesman Barry French told Bloomberg. "We have made that position clear to the Commission both verbally and in writing."

For more:
- see this China Daily article
- see this Reuters article
- see this Bloomberg article

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