China: Towards a confrontation with Europe? The “thermometer” rises even more – Economic Postman

Europe and China are increasingly on a collision course for the economy, with Brussels constantly hardening its stance on issues of competition and protection of European businesses.

The Commission has now launched an investigation into how medical equipment is procured in China in public tenders to see if European companies operating there face unfair competition due to subsidies or other practices by Beijing. This is a move that raises a clear issue of competitiveness for the pie of the medical equipment market in China, which has a turnover of 135 billion euros a year.

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The new conflict comes as at the beginning of May the President of China Xi Jinping has planned to make an official visit to Europe and especially based on the data so far in France, Serbia and Hungary.

Chinese medical equipment companies are coming under the Commission’s microscope just days after another EU probe into Beijing’s alleged illegal subsidies to Chinese producers of wind turbines and solar panels, amid fears the EU industry could be hit hard by cheap imports. There had been another investigation into possible irregular subsidies concerning the importation of electric vehicles from China into Europe.

It is no coincidence that in his -very recent- visit to China, German Chancellor Olaf Scholz asked Beijing to promote free trade and equal business opportunities, citing the need for a level playing field. It was a diplomatic way for Germany’s leader to show the discontent that exists in the country and not just about Chinese trade practices.

Medical and technological machines

The investigation by the European Commission is into Chinese public procurement of medical devices to determine whether there is unfair competition. The investigation – criticized by Beijing soon after its announcement – ​​aims to determine whether European suppliers of such machinery have fair access to China. If the EU concludes that there is no fair competition, the Commission could decide to place restrictions on Chinese medical technology companies bidding in EU public tenders.

China’s medical technology market is the second largest after the US, worth around 135 billion euros in 2022, according to a report by think tank MERICS released in 2023.

The survey is the first under the EU’s so-called International Procurement Instrument, which aims to promote free access to international public procurement markets. This tool was created after years of complaints from European companies and governments about difficulties accessing the Chinese market. The investigation began just a day after EU authorities raided offices of a Chinese security equipment company in the Netherlands and Poland.

Essentially, this development adds concerns about discriminatory treatment of “Made in China” products from China in public tenders to the issue of Chinese overcapacity in key industries such as electric vehicles, solar panels and photovoltaics. These issues are constantly raised by the West, not only from Europe but also from the USA.

Before Scholtz’s visit, US Treasury Secretary Janet Yellen, who had visited China to raise these issues, had warned that “China is now too big for the rest of the world to absorb this enormous production capacity” (…) “when the global market is flooded with artificially cheap Chinese products, the viability of American and other foreign companies is called into question,” he had said.