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Brussels has been gentle with Beijing and has given the Chinese Communist Party enormous freedoms to pump the country’s state-backed companies into a draft EU-China investment pact. The provisions are thin compared to the bloc’s demands in the UK-EU trade and security treaty wrangling of 1,246 pages. As part of the EU-China Comprehensive Investment Program, Brussels has been much more lenient to Beijing than to Great Britain in defining the amount of money that can be turned over to a company before it has to be declared.
The European Commission has set a threshold of 450,000 Special Drawing Rights (£ 473,000) over three years, nothing less will be considered a grant.
By comparison, the EU-UK trade and cooperation agreement sets the subsidy threshold at SDR 325,000, according to the Politico website.
The SDR is an accounting measure used by the International Monetary Fund.
Michel Barnier, the EU’s chief negotiator, has spent months insisting that Britain should align with Brussels state aid laws as the price of any deal.
While the EU has finally watered down its initial proposals, the bloc can still slap Britain with “corrective measures” if it believes a state aid subsidy has created an unfair competitive advantage.
While in the EU-China pact, Brussels does not have the capacity to confront Beijing on subsidy payments because the issue is excluded from the dispute resolution mechanism.
The Commission would have opted for the figure of 450,000 SDR because it is standard in international trade agreements, such as those with Japan and Mexico.
Brussels is said to be planning additional measures that will help the bloc tackle Chinese subsidies outside of the current investment deal.
A Commission source told Politico: “The reasons for such an exclusion are obvious and do not diminish the robustness and enforceability of the detailed transparency rules.”
China is synonymous with state support for its businesses with the aim of expanding its grip on world trade.
An analysis of its 2018 business grants found that Beijing and local governments paid a record £ 16.3 billion to listed companies.
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Responding to reports that the United States will crack down on Chinese products from the Xinjiang region, where China oppresses the Muslin minority, Belgian MEP Guy Verhofstadt called on Brussels to rethink its ties with Beijing.
Mr Verhofstadt said: “Do the right thing, Ursula von der Leyen. Return to the drawing table on the investment agreement with China.
“Otherwise, the European Parliament will do it for you.”
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