EC denies delay in telecoms probes

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By Li Jiabao and Shen Jingting (China Daily) 10:22, August 07, 2013

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Media reports said the European Union will probably not launch its planned anti-subsidy probe into Chinese telecoms equipment makers, including Huawei Technologies Co and ZTE Corp. [Photo / Xinhua]

The European Commission on Tuesday denied a media report that the European Union might delay launching investigations into Chinese telecoms companies' practices.

It also denied there was any link between the telecoms issue and whether European companies win a satisfactory share in China Mobile Ltd's huge contract to build a next-generation wireless network.

On Tuesday, the Financial Times quoted unidentified officials as saying the EU will defer making a decision on whether to launch anti-dumping and anti-subsidy investigations against Chinese telecoms companies, including Huawei Technologies Co Ltd and ZTE Corp, until after China Mobile selects winners for the contracts.

"The media reports are entirely based on sources and do not refer to the views of Commissioner (Karel) De Gucht," Helene Banner, media representative for EU trade policy in the office of EU Trade Commissioner Karel De Gucht, told China Daily in an e-mail.

"Commissioner De Gucht has repeated his position last week: The European Commission is ready to launch an anti-dumping and an anti-subsidy investigation concerning imports of mobile telecommunications networks from China, but seeks a negotiated solution in this case.

"However, so far, the European Commission has not yet been in negotiations on the telecoms case with the Chinese authorities. Consequently, a link between the tender mentioned in the news articles and the solution to the telecoms case has never been discussed with the Chinese authorities," Banner said.

China's Ministry of Commerce did not comment on the Financial Times report, and Huawei and ZTE couldn't be reached for comment on Tuesday.

The telecoms issue moved to the front burner in trade ties after a recent bilateral solar dispute settlement that averted a trade war.

The EC in May took a decision in principle to open investigations concerning imports of mobile telecommunications networks and their essential elements from China.

The decision was not activated to allow for negotiations toward an amicable solution with the Chinese authorities.

A source from the China side in Brussels said that although it is clear Brussels is keen to gain more market access in China, "I don't think the suspension of the investigation is related to obtaining 4G market (contracts). If De Gucht linked the two things, it is ridiculous".

De Gucht has previously said he had "solid evidence" China illegally subsidized Huawei and ZTE. He won backing, "in principle", from fellow commissioners in May to formally open the investigations.

"The telecoms case, as well as the solar panel dispute, is part of the EU's restructuring of its global industrial chains since 2009.

"Its final goal is protecting its own market in the bloc while opening external markets," said Cui Hongjian, director of European Studies at the China Institute of International Studies.

China's telecoms sector is set to boom because the government has pledged to speed up issuing of licenses for the fourth-generation mobile network this year and accelerate development of broadband Internet access.

Foreign companies have complained that they were being disadvantaged in the business compared with their Chinese counterparts.

"We are not satisfied with the results Ericsson achieved in China Mobile's first-round 4G bidding last year," said Mats H. Olsson, senior vice-president of Ericsson Asia-Pacific, during the 2013 Mobile World Congress held in Spain in February.

Alcatel-Lucent had the largest share, or 14.5 percent, among foreign telecoms gear makers during China Mobile's first round of 4G tenders last year, according to research firm IHS iSuppli.

Ericsson won 8.1 percent of the contracts and Nokia Siemens Networks managed to get 7 percent.

Huawei won a 23.8 percent share and ZTE was awarded 22.1 percent in first-round bidding, IHS iSuppli said.

Chen Peng, analyst with China Merchants Securities Co Ltd, said he expected Huawei and ZTE to gain more than half of the work in China Mobile's 4G tenders.

Cui added the telecoms case may be a signal that China-EU trade friction is moving from industries with low value-added to high-tech sectors.