The European Commission has recently intensified investigations targeting Chinese companies under the Foreign Subsidies Regulation (FSR), displaying clear bias and discriminatory practices. These actions significantly raise compliance costs and legal risks for Chinese enterprises operating in Europe, undermining normal economic, trade, and investment exchanges between the two major economies.
Implemented in 2023, the FSR is ostensibly designed to examine the impact of foreign subsidies on fair competition within the EU market. Initially, the European Commission claimed the regulation would apply uniformly to all countries and companies without discrimination. However, in practice, FSR investigations have disproportionately focused on Chinese firms, deviating sharply from the stated principles of non-discrimination and transparency.
In January this year, China’s Ministry of Commerce concluded that the European Commission’s FSR investigations constitute trade and investment barriers, citing insufficient evidence, excessive enforcement, reversed burden of proof, and opaque procedures. Regrettably, these issues have not been rectified but have instead worsened in recent investigations, reflecting a troubling trend toward radicalized enforcement.
The European Commission’s problematic approach manifests in multiple ways. For instance, its definition of "foreign subsidies" is overly broad and vague, even classifying Chinese companies’ tax rebates as subsidies—a stance inconsistent with WTO rules and beyond reasonable international norms. Procedurally, the EU’s actions also raise concerns. In one case, a Chinese company was given just three days to submit extensive subsidy-related information, violating reasonable investigation timelines. Another involved unannounced raids on Chinese offices without prior notice or formal case initiation.
The ripple effects of FSR investigations are already disrupting Chinese businesses in Europe. A survey by the China Chamber of Commerce to the EU, covering 205 Chinese enterprises and institutions, found that 63% reported operational impacts from the FSR, while 51% cited indirect damage to their commercial reputation and market image. To mitigate risks, many Chinese firms are reassessing EU investment strategies, suspending, reducing, or delaying projects in member states.
Some EU leaders recently argued that EU investment in China exceeds Chinese investment in Europe, calling for "greater balance." However, China remains committed to openness and actively promotes mutually beneficial investment cooperation with the EU. The disparity in investment volumes stems not from China’s reluctance but largely from the EU’s failure to provide a fair, transparent, non-discriminatory, and predictable business environment for Chinese enterprises.
Mutual respect and trust are prerequisites for stable China-EU economic relations. We urge the EU to uphold the consensus reached during high-level meetings, reject protectionism, adhere to market openness, and ensure stable, predictable policies for businesses—jointly elevating bilateral investment and trade to new heights.
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