China-EU Trade Dispute: Beijing’s Ban on European Medical Bids

China has made a bold move in its ongoing trade dispute with the European Union. Beijing has announced a ban on European companies. This ban prevents them from bidding on large medical equipment contracts in China.

China’s Response to EU Measures

This action comes after the EU’s recent decision. The EU restricted Chinese firms from participating in government medical device procurements over €5 million. The EU cited China’s long-standing exclusion of European products from its public tenders.

What the Ban Includes

• EU-based firms, except those with established European capital operating within China, are barred.
• The ban applies to Chinese public procurement orders exceeding 45 million yuan ($6.3 million).
• It covers a wide range of products, including surgical instruments, medical machinery, and prosthetics.
• For tenders involving non-European firms, the proportion of EU-origin products cannot exceed 50%.

Growing Trade Tensions

This is the latest in a series of trade tensions between China and the EU. Despite diplomatic visits by Chinese foreign minister Wang Yi to ease frictions, longstanding issues persist. Notably, there is a significant trade deficit of $357.1 billion between the EU and China.

EU’s Reasoning

The European Commission explained its restrictions on Chinese firms. It described Beijing’s measures as “exclusionary and discriminatory.” Brussels claimed that nearly 90% of medical procurement contracts in China systematically excluded EU products.

China’s Stance

China criticized the EU’s move as showing “double standards.” Beijing insisted it had expressed willingness to resolve disputes through dialogue. The Chinese commerce ministry stated, “China has repeatedly expressed, through bilateral dialogue, its willingness to resolve these disputes appropriately.”

Recent Trade Issues

This escalation follows recent frictions over electric vehicles and alcohol imports. On Saturday, Beijing began enforcing anti-dumping tariffs of up to 34.9% on European brandy. This mostly affects French cognac makers, citing unfair pricing practices.

Effect on French Businesses

Companies like Jas Hennessy, Remy Martin, and Martell face steep levies. These levies will apply unless they adhere to agreed minimum price levels. French President Emmanuel Macron described China’s partial exemption of some firms as a “positive step.” However, French foreign minister Jean-Noel Barrot warned that “several major issues remain unresolved.”

Larger Conflict

The disputes over EVs, medical devices, and brandy highlight a broader conflict. This conflict revolves around industrial subsidies and market access. China maintains that its actions are a legitimate response to EU protectionism. Beijing has lodged complaints with the World Trade Organisation.

Upcoming Summit

With a China-EU summit scheduled for later this month, hopes for resolution remain. The summit will mark 50 years of diplomatic relations. However, Beijing may cancel the second day of the summit, as per Bloomberg.