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China’s Retaliation To EU Curbs Blurs Ties Before Summit

Beijing will exclude EU-based companies from Chinese government procurement for certain medical devices, but it will still allow products that are made in China.

<div class="paragraphs"><p>Beijing will exclude EU-based companies from Chinese government procurement for certain medical devices. (Photo: Bloomberg)</p></div>
Beijing will exclude EU-based companies from Chinese government procurement for certain medical devices. (Photo: Bloomberg)

China hit back at the European Union’s restrictions on its medical device makers while maintaining key exceptions, adding uncertainty to ties ahead of a high-stakes summit later this month.

Beijing will exclude EU-based companies from Chinese government procurement for certain medical devices, but it will still allow products that are made in China, according to separate statements on Sunday. The move offers a relief for major European companies such as Siemens Healthineers AG and Royal Philips NV, which have increasingly localized their production.

Philips said 90% of its sales in China originate from local manufacturing, and that it will provide updates on any impact of trade restrictions in its next earnings release at the end of the month. Siemens Healthineers said it doesn’t expect any material impact given its devices are produced locally.

Shares in Philips reversed early declines and rose 0.6% by 11:22 a.m. in Amsterdam, while Siemens Healthineers traded less than 1% lower. Analysts at Jefferies including Julien Dormois said the firms are “minimally affected” due to their “strong local presence.” 

“This looks more like a tit-for-tat move” and a narrow response to the EU’s earlier curbs, said Henry Gao, a professor at Singapore Management University’s Yong Pung How School of Law. 

China’s Retaliation To EU Curbs Blurs Ties Before Summit

The trade measures come days ahead of a meeting between EU and Chinese leaders in Beijing that may touch on thorny issues, including the bloc’s tariffs on Chinese electric vehicles and Beijing’s support for Moscow since it invaded Ukraine.

In response to the EU levies, China began an anti-dumping investigation into some European liquors. On Friday, China imposed duties on European brandy for five years, although it exempted major cognac makers that committed to keeping their prices above minimum levels. 

The exemptions cloud whether the curbs are a symbolic warning shot or an escalation. China’s leader Xi Jinping has sought to repair ties with the EU as US President Donald Trump alienates the bloc over issues from tariffs to defense.

China’s Retaliation To EU Curbs Blurs Ties Before Summit

“It is time for China and the EU to strengthen strategic cooperation,” Chinese Foreign Ministry spokeswoman Mao Ning told reporters at a regular press briefing in Beijing on Monday.

But tensions have grown in recent months, including over China’s tightening grip on rare earths that has caught European businesses in the crossfire. In a sign of strain in relations, the Chinese government intended to shorten the two-day summit with EU leaders to just a day, Bloomberg News reported last week. 

Brussels is also holding back on signing a joint declaration on climate action with China at the meeting, the Financial Times reported Monday, citing EU climate commissioner Wopke Hoekstra.

Oliver Bisazza, chief executive of MedTech Europe, an industry group representing firms including Philips, Bayer AG, and Siemens Healthineers, urged both the EU and China to resolve the current situation. “Measures of this nature risk deepening trade tensions and ultimately deny patients timely access to indispensable medical technologies,” he said in emailed comments. 

The EU has long complained that its companies don’t enjoy a level playing field in China and were regularly denied fair market access. It imposed steep tariffs on Chinese EV imports last year, alleging state subsidies gave the country’s vehicles an unfair advantage. 

China’s Commerce Ministry said in early June that talks with the EU on setting minimum prices for Chinese-made electric vehicles have “entered final stages.” Technical aspects of the talks are largely complete, Yuyuantantian, a social media account affiliated with state broadcaster China Central Television, said in a Friday post, without saying where it got the information

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