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China’s Retaliation to EU Curbs Clouds Ties Before Summit

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In an effort to maintain important exceptions to the European Union's limitations on its medical device manufacturers, China retaliated, causing tensions to rise ahead of a crucial conference later this month.

Separate announcements on Sunday said Beijing will not allow EU-based companies to purchase medical gadgets from the Chinese government but it will permit Chinese-made products.

For large European corporations who have been localizing their production more and more, like Siemens Healthineers AG and Royal Philips NV, the decision is a relief.

By 11:22 a.m. in Amsterdam, Philips shares had recovered from their early losses and were up 0.6 percent, while Siemens Healthineers shares were down less than one percent.

Julien Dormois and other Jefferies analysts stated that because of the companies' "strong local presence," they are "minimally affected."

Henry Gao, a professor at the Yong Pung How School of Law at Singapore Management University, said, "This looks more like a tit-for-tat move" and a limited reaction to the EU's previous restrictions.

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The trade actions take place just days before the EU and Chinese leaders meet in Beijing, where they may discuss contentious topics including Beijing's backing of Moscow since its invasion of Ukraine and the bloc's levies on Chinese electric vehicles.

China launched an anti-dumping probe into a few European liquors in reaction to the EU taxes.

 

China placed five-year taxes on European brandy on Friday, although it did not apply to large cognac producers who pledged to maintain prices above the minimum.

Whether the curbs represent an escalation or a symbolic warning shot is unclear due to the exemptions. As US President Donald Trump sour relations with the EU over everything from defense to tariffs, China's leader Xi Jinping has attempted to mend fences with the bloc.

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However, in recent months, tensions have increased, particularly due to China's increasing control over rare earths, which has put European companies at risk. The Chinese government planned to cut the two-day conference with EU leaders to only one day, indicating strained relations.

The CEO of MedTech Europe, a trade association that represents companies including Siemens Healthineers, Bayer AG, and Philips, Oliver Bisazza, called on the EU and China to find a solution to the current crisis. In written remarks, he stated, "Measures of this nature risk deepening trade tensions and ultimately deny patients timely access to indispensable medical technologies."

The European Union has long lamented that its businesses are frequently denied fair market access in China and do not enjoy an even playing field. Last year, it placed high taxes on Chinese EV imports, claiming that the nation's cars unfairly benefited from state subsidies.

Early in June, China's Commerce Ministry declared that negotiations with the EU to establish minimum prices for electric vehicles built in China had "entered final stages." In a Friday post, Yuyuantantian, a social media account connected to China Central Television, a state broadcaster, stated that the technical parts of the discussions are essentially over. However, it did not specify the source of the information.


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