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Monday
Aug082016

China brushes the EU aside on telecom gear

The deal agreed by EU and China to settle their dispute over Chinese state support for telecom equipment firms seems to have gone nowhere.

Back in 2014, the EU agreed to drop its case over China’s subsidies to Huawei and ZTE in return for China committing to ensuring better access to China’s own markets.

That hasn’t happened. The Wall Street Journal had this story Friday, reporting that the Chinese side doesn't seem to have kept any of its commitments. The nub of it:

Remember, the Europeans offered this deal because the member states didn't share the enthusiasm of the then-trade commissioner Karel De Gucht in prosecuting a case against China. Not even Ericsson and Nokia were for it.

And quite understandably. China might aspire to market economy status under WTO rules, but it has never been shy about tying politics to business by meting out punishments to those that challenge its interests.

China has recognised the EU's weaknesses - even more apparent now than two years ago - and decided the risk of a penalty for not upholding this agreement is extremely slight. The Europeans have signalled they are more desperate to access China's markets than China is Europe's - despite the EU in fact being the world's largest economy.

Additionally, as the Journal reports, the EU and China have other business between them, like steel dumping and the market economy status question.

None of this would surprise foreign businesses in China. Beijing has its thumb firmly on the scale against foreign firms operating in China, ICT firms in particular. 

For these reasons, this deal is all but dead and has little chance of being revived.

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