The Ministry of Commerce of the People’s Republic of China announced the conclusion of an unfair trading practices investigation into the European Union’s Foreign Subsidies Regulation (FSR), concluding that the regulation unreasonably restricts the entry of Chinese companies’ products, services and investments into the EU market, damaging the competitiveness of Chinese companies and their products.

The report produced by the Ministry of Commerce noted that the FSR was unequally enforced against Chinese companies creating administrative burdens and increasingly compliance costs for Chinese companies compared to EU firms. The Ministry of Commerce claims that this contravenes WTO rules, to which both parties are bound. WTO rules include prohibitions against discrimination, with the investigation finding that the regulations produced arbitrary judgements against Chinese firms, especially in regards to areas in which Chinese companies hold significant global competitiveness, such as renewable energy, infrastructure, and transportation equipment. According to feedback provided by Chinese firms, the FSR caused losses worth at least 15bn yuan ($2bn).

According to the Ministry of Commerce, the People’s Republic of China is considering countermeasures against the EU through WTO arbitration. It is also considering counteraction through “other proper measures” as according to the “Investigation Rules of Foreign Trade Barrier“. In the past this has resulted in investigations into EU exports such as dairy and alcohol, some of which has led to increased tariffs.

The investigation was requested by the China Chamber of Commerce for Import and Export of Machinery and Electronic Products in July 2024. Spokesperson He Yadong said that China notified the European Commission of its concerns and the Commission failed to submit a response on behalf of the bloc.