The European Union will increase the number of investigations into foreign subsidies received by non-EU companies operating within the bloc, as part of its strategy to counter what it perceives as growing market distortion.
The move was confirmed by Teresa Ribera, Executive Vice-President of the European Commission and Commissioner for Competition Policy overseeing the green transition, during a visit to Beijing.
Speaking to the Financial Times, Ribera said further use of the EU’s Foreign Subsidies Regulation (FSR) is expected, with scrutiny likely to intensify across key sectors such as chemicals, pharmaceuticals, automotive manufacturing, and battery production. “Of course,” she said when asked if more probes were forthcoming. “There is a broad spectrum of those sectors where there is interest to invest in Europe.”
The FSR, which came into force in mid-2023, empowers the European Commission to investigate and block mergers, acquisitions, public procurement bids, and other commercial operations involving foreign companies that have received state subsidies which could distort competition within the single market.
While the regulation is country-neutral in its wording, recent investigations under its provisions have focused heavily on Chinese firms. Among those targeted are electric vehicle manufacturer BYD, a state-owned train company, a solar panel producer, and a security scanner manufacturer. The Commission has also opened cases on Chinese wind turbine sales.
These developments come amid rising concern within the EU that Chinese industrial policy is fuelling oversupply in global markets, thereby threatening the viability of European manufacturers. Brussels officials argue that heavily subsidised Chinese goods and services are undercutting prices, crowding out local production, and stifling innovation.
Ribera’s visit to China coincides with the Sixth EU-China High Level Environment and Climate Dialogue, co-chaired with Chinese Vice-Premier Ding Xuexiang. The talks are intended to advance bilateral cooperation on climate action, even as broader EU-China relations are strained by issues including trade imbalances, industrial subsidies, and Beijing’s continued political support for Russia.
A summit between European Commission President Ursula von der Leyen and Chinese President Xi Jinping is scheduled for later in July, marking the 50th anniversary of diplomatic relations between the EU and the People’s Republic of China. However, expectations remain low for significant breakthroughs amid calls from European policymakers for Beijing to commit more meaningfully to emissions reductions and market reforms.
In her remarks, Ribera drew parallels between EU policy goals and China’s past requirements for foreign companies operating within its borders. She noted that Beijing historically encouraged joint ventures involving technology transfer, which contributed to domestic innovation capacity. The EU, she suggested, may consider encouraging similar joint venture structures — though with safeguards to ensure that such arrangements genuinely support the European innovation ecosystem.
The objective, she said, was not merely to attract investment, but to ensure that any new entrants into the European market contribute to the bloc’s long-term competitiveness, technological development, and employment.
“There’s room to develop these types of joint ventures also in Europe,” she noted, “but without risking getting trapped in a context where innovation and knowledge may be absent and we could only get products to the markets.”
In parallel, the European Commission is also expanding “Buy European” provisions in its legislative frameworks. These provisions aim to reinforce domestic supply chains, particularly in strategic sectors, and reduce reliance on external providers whose pricing or production advantages may be rooted in non-market mechanisms.
On climate cooperation, Ribera acknowledged that progress with China remained possible despite other frictions. In the absence of stronger US leadership on climate multilateralism — especially following Washington’s withdrawal from the Paris Agreement — she said it was critical for the EU and other major economies to reaffirm their commitment to global climate targets.
She added that Chinese officials continue to regard the Paris climate accord as part of their international legacy, a sentiment which may help preserve momentum for constructive dialogue on environmental issues. Nonetheless, she cautioned that agreement would not be possible on every front. “It keeps the door open to explore… how much we can achieve in that context,” Ribera said.
EU officials have recently pushed back against a Chinese proposal for a joint climate declaration at the upcoming summit, arguing that such a gesture would require Beijing to make clearer and more ambitious commitments on greenhouse gas reductions.
As the EU intensifies its use of the FSR and introduces parallel policy tools to defend internal markets, its broader strategy appears aimed at recalibrating its relationship with China — balancing economic engagement with tighter regulatory control.
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