Brussels has long accused Beijing of employing distorting and discriminatory practices that make it all but impossible for European companies to win public contracts in China in the valuable sector of medical devices, where the bloc still retains a competitive edge.
These practices include slow certification processes and opaque approval systems for foreign manufacturers, as well as policies to beef up the national economy. In addition, the EU's medical device industry has repeatedly reported that Chinese public tenders previously open to imports now specifically request China-made products.
Germany, the Netherlands, Ireland, France and Belgium are among the world's leading exporters of medical appliances, some of them with high technological added value such as X-ray machines or pacemakers, some of more common use like contact lenses and sticking plasters.
The probe, announced on Wednesday morning in the Official Journal of the European Union, will build on the feedback provided by member states and businesses and dialogue with Chinese officials, and will last nine months, with a possible extension of five.
It was initiated at the Commission's behest, rather than as a result of a complaint.
If the investigation confirms the existence of the suspected practices, the Commission will be entitled to slap retaliatory measures on China to level the competition on both sides. This could see Chinese companies completely cut off from public procurement across the EU, an open market worth over €2 trillion. Alternatively, the Commission may limit the prohibition to tenders that exceed a certain value.
The procedure could end if Beijing agrees to remedy the situation and guarantee fairness for European suppliers.
"For some time now, the procurement market in China has been challenging, especially in view of the implementation of China's centralised state procurement policies, as well as the implementation of buy China policies, which have impacted the Chinese medical devices market," a spokesperson of Medtech Europe, the trade association representing Europe's medical technology industries, told Euronews.
According to the trade association, China is one of the major trading partners for medical equipment in Europe, making up 11% of the market's export destinations in 2022.
Tough on China
The latest move is the first of its kind under the International Procurement Instrument (IPI), one of the legislative tools that the bloc has introduced in recent years to combat the unfair competition it faces from countries around the world – most particularly China.
With its heavily centralised economy, the Chinese Communist Party employs a vast range of tools, such as subsidies, cheap loans, tax breaks, preferential treatment and regulatory requirements, to favour domestic companies to the detriment of foreign rivals.
This has caused huge friction with Western allies, who have teamed up to defend themselves against Beijing's heavy-handed tactics, "de-risk" from vulnerable dependencies and prevent a flood of cheap Chinese exports.
The latest probe on medical devices comes almost at the same time as the Commission carried out unannounced inspections at the offices of a Chinese company in Poland and the Netherlands, the first to be done under the Foreign Subsidies Regulation.
Both follow two separate EU investigations into Chinese producers of wind turbines and solar panels, which are suspected of benefitting from generous state subsidies to win contracts in the bloc.
Meanwhile, Brussels is in the final stages of an inquiry into China-made electric vehicles, equally believed to be artificially low-cost thanks to massive government support. This probe has been described as one of the most consequential in recent years and could lead to an increase in tariffs to offset the competitive advantage caused by the subsidies.
"China is for us simultaneously a partner, an economic competitor, and a systemic rival. And the last two dimensions are increasingly converging," Margrethe Vestager, the European Commission's executive vice-president, said earlier this month.
Although most European capitals have welcomed these initiatives as necessary to protect the integrity of the single market and prevent the obliteration of domestic companies, Beijing has struck a defiant note, attacking Brussels for "protectionism."
