CCCEU Statement on China Declaring EU's FSR Practices Towards Chinese Companies as Trade and Investment Barriers

Brussels, January 9, 2025

On 9 January 2025, the Chinese Ministry of Commerce (MOFCOM) concluded that the European Union's (EU) practices in investigating Chinese enterprises under the Foreign Subsidies Regulation (FSR) and its Implementing Rules constitute trade and investment barriers, as defined in Article 3 of China's Investigation Rules of Foreign Trade Barriers. The China Chamber of Commerce to the EU (CCCEU) fully supports MOFCOM's findings and urges the European side to promptly rectify its improper measures under the FSR, ensuring a fair, just, and non-discriminatory business environment for Chinese enterprises operating in the EU.

The CCCEU and its members were actively engaged in the Ministry of Commerce's investigation into trade barriers. We believe that the EU's FSR practices have significantly undermined the level playing field for foreign firms in the bloc. We are particularly concerned about violations of key WTO principles, including non-discrimination, and specific issues such as the reversal of the burden of proof, opaque procedures, unreasonable timelines, and a lack of procedural fairness. These practices, in our view, erode confidence in the EU's commitment to maintaining a fair and level playing field for competition.

We also believe that the EU's FSR investigations have created substantial barriers to the entry of Chinese enterprises' products, services, and investments into the EU market. Furthermore, these actions have undermined the EU's efforts toward green and digital transformations while negatively impacting the public interest of consumers across the bloc.

The Chamber reiterates that the EU's actions under the FSR have introduced significant and destabilizing uncertainty for Chinese businesses operating in Europe. We regret that the FSR investigations have resulted in both direct and indirect economic losses for these companies. The value of abandoned bidding projects is approximately RMB 7.6 billion (around €1 billion), with other affected projects surpassing RMB 8 billion (roughly €1.1 billion). Moreover, in order to avoid further scrutiny under the FSR, Chinese enterprises are reassessing their investment strategies in the EU, leading to the suspension, scaling back, or delay of involvement in EU investment projects. In some cases, companies have been forced to adjust their supply chain strategies.

Amid sluggish global investment and trade growth, the EU's FSR, alongside antitrust reviews and foreign direct investment (FDI) screening mechanism, has significantly raised the risk of "decoupling" between China and the EU, particularly in the digital, green, and high-tech sectors. Together, these three regulatory frameworks form formidable "three mountains" for Chinese companies seeking to invest and expand in Europe. This regulatory burden substantially increases compliance costs and legal risks, complicating the ability of Chinese businesses to operate smoothly in the EU. As a result, these measures hinder the potential for stronger economic, trade, and investment ties between China and the EU.

The Chamber expresses growing concern over the developments surrounding the EU's FSR and is deeply disappointed by the European Commission's lack of cooperation and failure to respond to the Chinese side's questionnaires during the trade barrier investigation. The Chamber calls on the European side to promptly rectify the measures imposed on Chinese enterprises under the FSR. We urge the EU to address the business community's concerns with concrete actions and to take immediate steps to restore a fair and competitive environment within the EU market.