Sweden fears trade war if EU probes Huawei, ZTE over subsidies

Planned European Union investigations into possible state subsidies received by Chinese vendors Huawei and ZTE have raised fears in Sweden that Chinese authorities could retaliate if tariffs were imposed.

The country's trade minister, Ewa Bjorling, said EU officials had privately informed member states it had evidence that Huawei and ZTE have been benefiting from government subsidies, according to Dow Jones Newswires.

While Bjorling said the EU's allegations are likely correct, she called for the EU to enter into talks with China and the United States about guidelines for state supported export-credit financing.

Fearing that any EU action against the two Chinese infrastructure vendors could trigger a trade war and harm Sweden's Ericsson, Bjorling told Dow Jones Newswires: "While Chinese companies' share of the EU's wireless equipment market is 30 per cent, one has to remember that the EU's share of China's wireless equipment market is 45 per cent. So if China were to hit back with similar measures, it would hurt us more than what it would hurt them."

Ericsson has also registered its own opposition to the EU probe, claiming that an anti-dumping action against Huawei or ZTE could potentially lead to punitive import tariffs being imposed against Ericsson.

"Ericsson is a strong supporter of free trade and we don't believe in this type of unilateral measure,"Ulf Pehrsson, who heads government and industry relations at Ericsson, told Dow Jones Newswires. "The EU faces the risk of initiating a negative spiral by targeting individual Chinese firms."

Huawei said in a statement carried by the Reuters: "We deny claims made in the media that Huawei employs dumping practices and has benefited from illegal state subsidies," while ZTE responded that it "receives no illegal or hidden subsidies, nor does it dump products in any markets where it operates."

Similarly, ZTE said in a statement that it "receives no illegal or hidden subsidies, nor does it dump products in any markets where it operates."

For more:
- see this Dow Jones Newswires article
- see this separate Dow Jones Newswires article
- see this Reuters article

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