EU investigators are looking into the government of China’s purchases of medical equipment

To investigate potential tit-for-tat tactics and determine if China gives preferential treatment to local businesses in medical equipment bids, the European Commission has initiated an investigation.

In the lucrative field of medical equipment, where the union still has a competitive advantage, Brussels has long accused Beijing of using biased and discriminatory tactics that practically prevent European businesses from winning public contracts in China.

Policies aimed at bolstering the national economy and sluggish certification procedures are examples of such tactics. So are opaque approval systems for foreign producers. Furthermore, the medical device business in the European Union has consistently heard rumors that some Chinese government bids, which were previously open to imports, now want items created in China.

Germany, the Netherlands, Ireland, France, and Belgium are top exporters of medical devices, including X-ray machines, pacemakers, and more commonplace items like contact lenses and sticking plasters, as well as those with significant technical added value.

The nine-month investigation, which was published on Wednesday morning in the EU Official Journal, will draw on comments made by member states and companies as well as discussions with Chinese authorities; it has the potential for a five-month extension.

It was not a complaint that prompted it; rather, it was the Commission’s request.

The Commission has the authority to impose punitive measures on China in order to level the playing field if the inquiry verifies the existence of the alleged practices. This has the potential to shut down the €2 trillion open market in public procurement inside the European Union, thus cutting out Chinese enterprises from the market. Another option is for the Commission to cap the restriction at a certain amount for bids.

If Beijing admits fault and promises European suppliers equitable treatment, the process may conclude.

“The procurement market in China has been challenging for some time now, especially in view of the implementation of China’s centralised state procurement policies as well as the buy China policies, which have impacted the Chinese medical devices market,” said a spokesperson for Medtech Europe, the trade association representing Europe’s medical technology industries, in an interview with Euronews.

China accounts for 11% of the market’s export destinations in 2022 for medical equipment, making it one of Europe’s biggest trading partners, according to the trade group.

Rigid towards China
This new action is the first of its kind under the International Procurement Instrument (IPI), a legal mechanism that the EU has used to fight unfair competition from nations all over the globe, especially China, in recent years.

In its highly centralised economy, the Chinese Communist Party uses a wide variety of instruments to benefit local businesses at the expense of their international competitors. These include subsidies, low-interest loans, tax rebates, special treatment, and regulatory mandates.

Because of this, relations with Western allies have deteriorated significantly. These countries have banded together to counter Beijing’s authoritarian policies, “de-risk” weak relationships, and stop an influx of low-priced Chinese goods.

At around the same time as the most recent investigation into medical equipment, the Commission conducted the first ever unannounced inspections of Chinese companies’ offices in Poland and the Netherlands in accordance with the Foreign Subsidies Regulation.

Both are a result of separate investigations launched by the European Union into allegations that Chinese wind turbine and solar panel manufacturers benefited from large-scale government subsidies in order to get contracts inside the EU.

On the other hand, an investigation into electric cars manufactured in China is nearing completion in Brussels. These vehicles are also thought to be sold at unrealistically cheap prices due to substantial government subsidies. To counteract the subsidized competitive advantage, this investigation—which has been dubbed one of the most crucial in recent years—may result in higher tariffs.

We see China as an economic opponent, a structural rival, and a partner all at once. Margrethe Vestager, executive vice president of the European Commission, made the comment earlier this month that the last two dimensions are becoming more and more unified.

Despite widespread support in European capitals for these measures—which they see as vital to preserving the single market and avoiding the collapse of local businesses—Beijing has taken a stand, accusing Brussels of “protectionism.”