Reuters | February 4, 2011
* EU Commission plans to end telecom subsidy investigations
* Rules out own-initiative investigation against China
* Commission cites “massive” Chinese financing for Huawei
* Commission says ZTE received $25 bln state credit in 2009
(Adds Huawei statement)
BRUSSELS, Feb 4 (Reuters) – The European Union will drop its inquiry into whether China is giving illegal aid to two of its leading telecom firms, even as the EU’s executive cites evidence of massive subsidies, according to EU Commission documents.
The Commission will propose ending two investigations into illegal export pricing by and state aid to Chinese wireless modem producers after the withdrawal of the complaint by Europe’s main producer, Belgium’s Option (OPIN.BR), late last year, according to a confidential document seen by Reuters.
The proposal is expected to be approved by European Union governments later this month, ending a case industry players had expected to be a litmus test of the EU’s willingness to challenge Chinese state subsidies.
“It would be disproportionate to continue with the investigation and impose measures following the withdrawal of the complaint,” the Commission said in its document, which was distributed on Tuesday to interested parties in the case.
But in a separate document also dated Tuesday and distributed to EU governments, the commission cites evidence — gathered since last summer — that China’s main telecom producers Huawei [HWT.UL] and ZTE (000063.SZ) are state-controlled and receive cheap state loans that give them an unfair advantage over their European rivals.
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