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EU trade probe against Huawei, ZTE to strain China ties

Chinese official says China will take "firm measures" to protect its interest should European Union trade chief Karel De Gucht insist on investigating alleged unfair trade practices by the Chinese companies.
Written by Kevin Kwang, Contributor

China is bristling at the news that European trade chief Karel De Gucht has decided "in principle" to launch an anti-dumping and anti-subsidy investigation on Wednesday, saying such actions would hurt China-European Union (EU) trade relations.

Xinhua reported Thursday the interests of both China and EU members will be hurt should the investigations lead to unilateral trade measures against Chinese telecom gear makers Huawei Technologies and ZTE.

China's Ministry of Commerce spokesperson Shen Danyang said in the report: "Many EU member states disagree with the probe, and the EU's industry circle also opposes it. So we hope the EU stops doing things that do no good to each other."

Shen added European companies in the wireless communications sector take a bigger market share in China than Chinese companies do in Europe.

EU trade chief Karel De Gucht's decision to initiate an investigation against China's telecom gear makers may spark off a trade row.

He said if the EU insists on investigating, China will take "firm measures" to protect its interest in line with World Trade Organization rules and China's laws. The side that stirred up trade friction should bear the consequences, the official warned.

The Chinese government official's comments come after De Gucht revealed his plans to initiate a trade probe against the Chinese companies.

The Register reported Wednesday the European Commission (EC) had made the decision "in principle" to investigate, but any such action will be held off until it had spoken to China.

De Gucht said in the report: "The European Commission has taken a decision in principle to open an ex officio anti-dumping and an anti-subsidy investigation concerning imports of mobile telecommunications networks and their essential elements from China. This decision will not be activated for the time being to allow for negotiations toward an amicable solution with the Chinese authorities."

However, European companies and even EC member states are not supporting this unilateral investigation.  The Register said ordinarily, the EC would wait for companies to file a complaint before initiating inquiries but such a complaint has not been forthcoming.

Swedish manufacturer Ericsson had earlier gone on record to state its opposition against the trade probe. Ulf Pehrsson, head of government and industry relations at Ericsson, said the company does not believe in this type of unilateral measure. EThe EU faces the risk of initiating a negative spiral by targeting individual firms, he said.

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