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Chinese security firm Nuctech sues Commission over alleging distortive state aid

In April, the Commission for the first time deployed new powers under the so-called Foreign Subsidies Regulation (FSR)
In April, the Commission for the first time deployed new powers under the so-called Foreign Subsidies Regulation (FSR) Copyright Virginia Mayo/AP
Copyright Virginia Mayo/AP
By Paula Soler
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China-EU trade relations are fractious: following some warnings, the Asian giant is beginning to challenge the bloc to safeguard its interests.

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Chinese security equipment manufacturer Nuctech is suing the European Commission over raids on its offices in the Netherlands and Poland at the end of April, claiming there is no proof that the company has received foreign subsidies that distort competition in the single market.   

"Nuctech has appealed to the General Court of the EU against the European Commission's decision to inspect Nuctech's offices on suspicion of breaching the EU's Foreign Subsidies Regulation," the partly state-owned company said in a statement on Tuesday (4 June).  

"Nuctech has also requested the General Court of the EU to suspend the inspection to avoid potential harm to Nuctech," the Chinese security equipment manufacturer added.   

The EU executive has taken note of the appeal, a spokesperson told Euronews, adding that "the Commission respects companies' right to appeal and will defend its decisions in court" - although a court ruling could take several years.  

In April, the Commission for the first time deployed new powers under the so-called Foreign Subsidies Regulation (FSR), which aims to ensure a level playing field for all companies operating in the single market.   

The rules apply from July 2023, but previously have only been used to launch several investigations, including into Chinese solar panel makers and wind turbine manufacturers, but not to carry out unannounced raids.   

"We will take all measures to safeguard the legitimate rights and interests of Chinese enterprises," warned Chinese commerce minister Wang Wentao during a recent visit to Barcelona with business representatives.   

Wentao has been touring Spain and Portugal ahead of the European Commission's announcement of provisional tariffs on Chinese electric vehicles (EVs), expected after the EU elections (6-9 June).   

“This dense concentration of trade protectionist measures has significantly increased the likelihood of China-EU trade frictions growing ‘out of control’ to a dangerous degree, causing widespread worry,” China’s Chamber of Commerce said in a statement last Sunday. 

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