China warns EU over rising trade tension

Escalating trade tension between Europe and China will seriously undermine Sino-European economic and trade relations, and will be more detrimental to the European side than to China, the Ministry of Commerce (MOC) said Thursday.

If the EU is determined to initiate anti-dumping and countervailing investigations against China's telecom equipment makers Huawei Technologies and ZTE Corp, "China will take necessary measures to protect its legal interests under the framework of Chinese laws and WTO rules," Shen Danyang, spokesman for MOC, said at a press conference.

The consequences will hurt the EU more than China, according to Shen, as EU telecom equipment makers have a larger share of the market in China than Chinese firms have in the EU.

Shen's remarks came in response to a statement released Wednesday by the EU Trade Commissioner.

"The European Commission has today taken a decision in principle to open an ex officio anti-dumping and an anti-subsidy investigation concerning imports of mobile telecommunications networks and their essential elements from China," EU Trade Commissioner Karel De Gucht said in the statement.

The EU is targeting Huawei and its smaller rival ZTE, both of which have developed rapidly in recent years, grabbing European market share by offering cost advantages and new technologies, said Zhai Peng, a telecom sector analyst at consultancy Frost & Sullivan.

European telecom equipment providers such as Ericsson and Alcatel-Lucent currently account for about 40 percent of China's mobile telecom equipment market, while Huawei and ZTE together have a 20 percent share of the European market, Zhai told the Global Times Thursday.

"Huawei is disappointed that the European Commission has taken the unprecedented step … to open the first ever ex officio dumping and subsidy investigation (into China's telecom equipment sector)," Huawei said in a statement e-mailed to the Global Times Thursday.

In Europe, Huawei currently has more than 7,500 employees and has indirectly created an additional 6,000 jobs.

With an open market involving numerous global firms, European consumers are enjoying a better and cheaper broadband experience than US consumers, the statement said.

As well as the telecom probe, the EU is reportedly planning to impose tariffs of up to 67.9 percent on solar panels sold in the EU by Chinese firms.

In November 2012, at the request of Chinese solar panel firms, MOC launched an anti-dumping and anti-subsidy investigation against EU firms exporting polysilicon, a material for manufacturing solar panels.

The preliminary result is expected to be unveiled in early June, Shen said.

The evidence shows these firms have received government subsidies, but China has been cautious and restrained in order to avoid trade protectionism by both sides, he noted.