EU declares war on Chinese telecom makers

The European Union is about to give China’s biggest telecom equipment makers a good kicking claiming that they have benefited from illegal government subsidies.

According to the Financial Times, the EU told member states it had been gathering evidence for an anti-dumping case against Huawei and ZTE, saying that they had obtained illegal government subsidies and sold products in the EU below cost.

Once the EU have determined that China acted illegally, Huawei and ZTE could be subject to a stiff fine and EU taxes.

ZTE and Huawei are not saying anything about the news.

Huawei and ZTE compete globally in the telecom equipment business with European vendors such as Ericsson, Alcatel-Lucent and SiemensNokia.

We had been predicting that ZTE would one day rule the world, but this is a bit of a setback.

In May, the EU’s Trade Commissioner Karel De Gucht said the EU was planning new trade defences to counter subsidies and dumping by trading partners, such as China.

However they have to be careful about going too far. China is the European Union’s second biggest trading partner after the United States and the bloc is China’s biggest trade partner.

If the EU miffs China too much then the country could stop trading here and given that almost everything is made in China that could be a bit tricky. It is also not certain how much true home grown industry there is worth protecting, as most tech companies rely on Chinese parts.