EU Parliament Passes New Measures Targeting China’s State-Owned Companies

March 14, 2019 Updated: March 14, 2019

BRUSSELS—European parliamentarians have voted through tough new defensive measures targeting China’s state-owned technology companies and airlines as part of a continent-wide shift in attitudes toward Beijing.

Lawmakers sitting in Strasbourg, France, approved the two packages after the European Union’s executive arm branded China a “systemic rival” for the first time in a sign of significantly cooling relations.

On March 14, they agreed on a new “protection instrument” designed to end what Brussels sees as “predatory competition” by Chinese airlines that operate both within and outside the European market.

The new law will give the European Commission the power to fine airlines or, in extreme circumstances, restrict their ground handling rights, which would prevent their aircraft from being serviced at airports within the EU.

“Europe will no longer accept predatory competition at the expense of its airlines,” said Markus Pieper, a member of the European Parliament from German Chancellor Angela Merkel’s Christian Democratic Union party.

The measures on airlines followed a vote on March 12 when members of the European Parliament (MEPs) overwhelmingly backed a new act which will mean technological products, processes, and services sold in Europe have to meet new EU-wide cybersecurity standards.

In a sign of how troubled Brussels has become by recent developments, the parliamentarians also adopted a separate non-binding resolution expressing “deep concern” over allegations that Chinese telecom giant Huawei uses 5G mobile technology for mass surveillance.

A man walks past a Huawei customer service center
A man walks past a Huawei customer service center in Berlin, Germany on March 12, 2019. (Sean Gallup/Getty Images)

After the vote, the EU Parliament issued a statement that called on the Commission and member states to “provide guidance on how to tackle cyber threats and vulnerabilities when procuring 5G equipment” in order to “counter the IT threat from China.”

It stated: “MEPs express deep concern about recent allegations that 5G equipment may have embedded backdoors that would allow Chinese manufacturers and authorities to have unauthorized access to private and personal data and telecommunications in the EU.”

The votes came after the Commission published a 10-point plan on how it will approach future EU–China relations, ahead of a historic summit between the two superpowers on April 9.

In the blueprint, officials in Brussels also offered veiled criticism of 13 European countries that have signed memorandums of understanding with Beijing for its Belt and Road infrastructure initiative. G7 member Italy is also in talks with China, sounding alarm bells across Europe.

The commission plan calls for a “more balanced and reciprocal economic relationship” that “promotes reciprocity and opens up procurement opportunities in China” and vows that new legislation will address the “distortive effects of foreign state ownership and state financing” in the European market.

“We recall that we must stay united in the EU and that all the member states, and also the Belt and Road operators, must comply with our regulations and rules which we have when it comes to competition and transparency,” said Commission Vice President Jyrki Katainen.

“What we want is to avoid to end up in a situation where we are forced to compete with public subsidies. We believe in social market economy, and we are not in favor of subsidized economy,” he added.

President of the European Commission Jean-Claude Juncker
President of the European Commission Jean-Claude Juncker is greeted by Chinese leader Xi Jinping in Hangzhou, China, on Sept. 4, 2016. (Greg Baker/FP/Getty Images)

Wolfgang Munchau, a foreign policy expert who wrote the Euro Intelligence briefing note, said the EU’s splintered approach to China poses a greater threat to the bloc than Britain’s decision to leave it.

“The most dangerous way to undermine the EU is not Brexit, but the way Italy does it: through an extensive strategic partnership with China,” Muchau said.