CCCEU Statement on the European Commission's First In-depth Investigation under the Foreign Subsidies Regulation Targeting CRRC Qingdao Sifang Locomotive

Brussels, February 16, 2024

The Press Release of the European Commission of February 16, 2024 announces that it launches on the same day its first in-depth investigation into the foreign subsidies received by CRRC Qingdao Sifang Locomotive relating to its bidding in a public procurement procedure held by Bulgaria's Ministry of Transport and Communications, concerning the provision of 20 electric "push-pull" trains as well as related maintenance and staff training services, with an estimated value of the contract of around €610 million. China Chamber of Commerce to the EU (CCCEU) expresses its great disappointment and deep concerns with this investigation.

The Bulgarian public procurement project at issue that CRRC Qingdao Sifang Locomotive has participated in meets the threshold of mandatory notification under the Foreign Subsides Regulations. According to the Press Release of the European Commission, CRRC Qingdao Sifang Locomotive filed a complete notification on January 22, 2024. Following its preliminary review of this notification, the European Commission considered it justified to open an in-depth investigation, since there are allegedly sufficient indications that this company has been granted a foreign subsidy that distorts the internal market. This investigation is necessary to determine if such foreign subsidy allows the company to submit an unduly advantageous tender. This is the "first in-depth investigation" into foreign subsidies in public procurement sector since the promulgation of the Foreign Subsidies Regulation. It is also the first of such investigations into a Chinese enterprise.

The CCCEU consistently advocates for EU institutions to adhere to the principles of market openness and fair competition when adopting or applying any policy tools. They should avoid having a discriminatory impact towards foreign companies, or leading to new distortions by offering privileges to the EU local owned companies, for instance in acquisition transactions or public procurement processes.

Throughout the EU legislative process of the Foreign Subsidies Regulation and its Implementing Regulation, the CCCEU actively participated in public consultations on the draft legislation and the draft implementation rules for multiple times. CCCEU provided feedback to the European Commission and the EU legislative bodies in several forms, and expressed its member companies’ multi-folded worries and concerns about the EU's ability to maintain an open, fair, competitive market environment and about the unreasonable reporting obligations and costs imposed on the economic operators after the application of the Foreign Subsidies Regulation.

The CCCEU represents a large number of Chinese owned member enterprises that have been deeply involved in European economy for a long time and have made great contributions to the economic growth of the EU. The CCCEU hopes that the European market will remain open, competitive and fair for all business operators, irrespective of their ownership or origin.

The initiation of an in-depth investigation into CRRC Qingdao Sifang Locomotive by the European Commission has sent a discouraging message to Chinese investors intending to cultivate and operate in the EU market. It has struck their enthusiasm and confidence in continuing to expand their business and carry out in-depth cooperation in Europe. The CCCEU expresses deep concern over the increasing protectionist tendencies and abusive use of policy instruments, including the initiation of the anti-subsidy investigation targeting Chinese battery electric vehicles since the last quarter of 2023, as well as over the growing politicization of the EU’s business environment.

The CCCEU will closely monitor the development of the investigation in question and expects the European Commission to ensure fairness, the right of defense of the subject Chinese enterprise, and a fair, non-discriminatory, and predictable market environment.