EU Initiates Investigation into Chinese Public Procurement Practices

Overview of the Investigation

The European Union announced on the 24th that it has started an investigation into the procurement practices of medical equipment and other goods in China. This move comes amid concerns that China is unfairly favoring domestic companies, potentially blocking EU businesses from entering the Chinese market.

Details of the EU's Concerns

The EU suspects that China is providing preferential treatment to its own companies, particularly in sectors involving medical equipment like radiation devices, ventilators, and basic medical supplies such as bandages and gauze. The investigation was triggered by the significant increase in Chinese exports of these goods to Europe from 2015 to 2023, coupled with what the EU perceives as the closing off of the Chinese market to European companies.

Potential Consequences for Chinese Companies

Depending on the outcome of this investigation, there could be restrictions placed on Chinese companies participating in public procurement within the EU. This investigation follows other inquiries into Chinese exports to the EU, including electric vehicles and wind turbines, suggesting a broader scrutiny of Chinese competitive practices in the European market.

China's Response

At a press conference, Chinese Foreign Ministry Spokesperson Wang Wenbin criticized the EU's actions, accusing it of suppressing Chinese companies under various pretexts and demanding an end to such restrictions. He labeled the EU's measures as protectionist and damaging to the EU's reputation.

Regulatory Background and Investigation Process

This is the first investigation under the International Public Procurement Instrument (IMPI) regulation enacted in June 2022, which allows the EU to investigate and consult with third countries suspected of obstructing market access. The investigation is expected to last at least nine months and will include a review of alleged discriminatory practices such as the "buy from China" policy and restrictive conditions in centralized medical device acquisitions.

Possible Outcomes and Broader Implications

The investigation could lead to penalties for Chinese companies in European procurement processes. This development occurs amidst ongoing trade tensions, highlighted by China's recent anti-dumping probe into European wine spirits, signaling a potential escalation in trade disputes between the two economies.