EU Trade Commissioner Karel De Gucht will win the support of EU executives on Wednesday, issuing a warning to China that the EU firmly opposes the Chinese government's attitude of subsidizing Huawei and ZTE.
According to people familiar with the matter, Degut wanted to send a warning letter to China that if those manufacturers did not change their behavior, the EU would impose sanctions on them. People familiar with the matter added that Degut received full support from the European Commission President Jose Manuel Barroso.
China is the EU's second largest trading partner. The EU believes that the actions of Huawei and ZTE are a kind of dumping with the support of the Chinese government. The decision of the European Union shows its determination to resist dumping. EU officials said that the European Commission will levy billions of dollars in heavy taxes on Chinese solar panel products from June.
Ten years ago, Huawei was a notorious telecommunications equipment company, but now it and ZTE have won nearly a quarter of the European market.
The European Commission believes that this may bring security risks, because many European industries such as healthcare and public water are increasingly dependent on Chinese wireless technology.
The EU issued an internal report last year, recommending 27 member states to take action against Chinese telecommunications equipment manufacturers, because those manufacturers are gradually becoming the backbone of the mobile network market, and that may pose a threat to the EU ’s security, but also Conducive to the development of EU local companies.
A Huawei Brussels spokesperson declined to comment, but the company denied that it provided illegal subsidies. Huawei said its competitive advantage stems from lower manufacturing costs, and the company's products are safe. ZTE is also reluctant to comment on this, and it also denied having received illegal subsidies.
Degut once said in February that China's strength in the mobile telecommunications network market is getting stronger and stronger, and its business is getting wider and wider, which has caused serious concerns in the European Union. He pointed out that the interests of the United States and Australia have effectively blocked Huawei from their markets.
EU officials claim that they now have evidence of illegal subsidies for Huawei and ZTE.
A Huawei spokesperson pointed out that the company has tried several times to communicate with the European Commission, but they have been rejected. The European Commission's attitude seems to be: "We have the evidence we need, we don't need to investigate anymore."
A Huawei spokesperson said: "We are willing to communicate with various stakeholders because they have now brought charges against the company, and there is a misunderstanding in the middle, so we always want to sit down and talk with various stakeholders."
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