The European Commission will investigate a Chinese train maker to see if its bid to supply 20 trains to Bulgaria will be unfair owing to subsidies it may have got from the Chinese government.
It’s the commission’s first investigation under the EU’s Foreign Subsidies Regulation, which came into force in July.
It aims to protect European companies bidding for government projects in the EU against foreign competitors who can bid lower because they’re subsidised by their own governments.
The commission is worried about the EU’s trade deficit with China, which stood at $208bn in 2021 but rose to $277bn in 2022.
It will probe CRRC Qingdao Sifang Locomotive, a subsidiary of Chinese state-owned CRRC Corporation, the world’s biggest rolling stock manufacturer.
The company is bidding for the Bulgarian transport ministry’s tender for 20 electric “push-pull” trains and their maintenance over 15 years, a contract the ministry values at €610m.
The new rule requires companies to notify EU tendering authorities if they’re bidding for a government contract in the EU worth more than €250m, and they were granted €4m or more from a third country in the three years before their bid.
CRRC Qingdao Sifang submitted such a notification on 22 January, prompting the commission’s probe.
After reviewing the notification, the commission said it considered it “justified to open an in-depth investigation, since there are sufficient indications that this company has been granted a foreign subsidy that distorts the internal market.”
The commission has 110 working days from the notice, until 2 July 2024, to decide.
If it finds CRRC Qingdao Sifang broke the rule, it could block its bid or accept a promise by the company to “fully and effectively remedy the distortion”.
Trains aren’t the only issue.
The commission is also considering whether to impose tariffs on Chinese electric vehicles (EVs).
Last year, commission president Ursula von der Leyen said their prices were “kept artificially low by huge state subsidies”, a claim the Chinese Chamber of Commerce rejected.
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