European Union initiates probe into Chinese rail giant CRRC’s subsidiary over suspected unfair practices
European Union opens investigation into China Railway Rolling Stock Corporation’s subsidiary, for alleged use of state subsidies to gain unfair advantage over European competitors
The European Union took a major step on Friday, escalating trade tensions between China and the EU by opening an investigation into a subsidiary of the Chinese rail giant China Railway Rolling Stock Corporation (CRRC). The investigation is based on suspicions that the company used state subsidies to obtain an unfair advantage over competitors in Europe.
With the implementation of the EU’s new foreign subsidy restrictions last year, the inquiry represents the first move in that direction. According to a statement from Internal Market Commissioner Thierry Breton, CRRC Qingdao Sifang Locomotive is being investigated for allegedly using subsidies to submit a “unduly advantageous offer” in response to a Bulgarian procurement for electric trains.
As the biggest train maker in the world, CRRC is the parent firm of the business under inquiry. The transportation ministry of Bulgaria has released a tender for the purchase of twenty electric “push-pull” trains and the maintenance of such trains for a period of fifteen years. The projected total cost of the project is 610 million euros.
According to the recently passed regulations, businesses must notify the commission of any EU public procurement bids that are more than 250 million euros, if they have received foreign financial help of at least four million euros in the three years before.
The European Commission used “sufficient indications” to support its decision to launch a thorough inquiry, claiming that CRRC Qingdao Sifang Locomotive had distorted the domestic market by benefiting from a foreign subsidy.
The commission has been tasked with reviewing the company’s suggested solutions until July 2 in accordance with the Foreign Subsidies Regulation. The choices include no objection rulings, approving suggested solutions, and forbidding contract granting.
Maintaining equity in the European market is crucial, as Thierry Breton said, adding that “European openness presupposes that everyone plays by the rules.” He emphasized how important it is to protect the EU single market from distortions brought about by foreign subsidies in order to increase economic security and competitiveness.
With contracts in over 110 countries and territories, including US cities, Latin America, and India, CRRC has a broad worldwide reach. Notably, it purchased the German rail infrastructure firm Vossloh’s locomotive division in 2019.
Source: AFP
