European Union officials have conducted unannounced inspections at the offices of Chinese security equipment maker Nuctech as part of an investigation into potential state subsidies. The European Commission suspects that the company may have received foreign subsidies that could distort the EU's internal market.
Nuctech, known for producing baggage security scanners for airports, confirmed that its offices in Poland and the Netherlands were inspected. In 2020, the US government imposed stricter license requirements on Nuctech due to activities contrary to national security interests.
The China Chamber of Commerce to the EU expressed dissatisfaction with the raids, alleging they were conducted without solid evidence. However, the European Commission defended its actions, stating that inspections are based on substantiated indications of distortive foreign subsidies.
The raids mark the first instances of the EU exercising its new powers against excessive foreign subsidies. The Foreign Subsidies Regulation, in effect since July, aims to address market distortions caused by foreign government subsidies.
EU President Ursula von der Leyen highlighted concerns about structural overproduction and subsidies during a G7 meeting. Tensions between China and major trading partners like the EU and the US have been escalating due to oversupply of cheap Chinese goods in foreign markets.
US officials, including Treasury Secretary Janet Yellen and Secretary of State Antony Blinken, have raised alarms about China's trade policies and overproduction practices. G7 foreign ministers also expressed worries about harmful overcapacity resulting from China's non-market policies.
China views exports as crucial for its economic revival and is focusing on higher-value exports in strategic industries. The issue of overproduction and subsidies is expected to be a key topic at the upcoming G7 leaders summit in Italy.
