Wall Street Journal | Februry 2, 2011 | Matthew Dalton
BRUSSELS—The European Commission believes Huawei Technologies Co. and ZTE Corp., China’s largest telecommunications equipment makers, likely benefit from significant Chinese government support, including “massive” credit lines from Chinese state-owned banks, according to a confidential commission document obtained by Dow Jones Newswires.
The findings are likely to fuel further debate regarding the treatment of the large subsidies that—according to western governments and companies—Chinese businesses receive from the Chinese government. Western trade experts say that Huawei, which has rapidly grown to become the world’s No.2 telecommunications-equipment maker, is a compelling example of a Chinese company that has been nurtured to global dominance using such subsidies.
The commission document, circulated to European Union national governments this week, lays out the preliminary results of commission investigations into unfair Chinese trade practises alleged by Option NV, a small Belgian maker of wireless modems. The commission in the document proposes to close the investigations without finishing them, because Option withdrew its complaints in October.
“Nevertheless, several important issues have come to light which remain unanswered by the major exporting producers of this product,” the document concludes.
The major European producers of telecommunications equipment—Telefon AB L.M. Ericsson, Nokia Siemens Networks and Alcatel-Lucent—have seen their margins squeezed by stiff competition from Huawei and ZTE. Their rapid growth has prompted discussion among western firms that they are probably benefiting from extensive Chinese government support.