EU Warns China Against Using Security Issues To Protect Industries

The European Union's competition commissioner Wednesday warned China against using national security concerns as an excuse to protect its companies and industries.

But Neelie Kroes said it was too early to say whether China would abuse the national security clause in its new anti-monopoly law, which takes effect next year. "We will defend a very restricted implementation and interpretation of that point on national security," Kroes told a news conference. "We will discuss the consequences if you are not quite consistent and straightforward" in using the national security protections. Kroes said she had raised her concerns in talks in Beijing with Chinese officials, adding that her commission is keen to know what kind of penalties will be levied against violators of the new law. She also praised China for adopting the antimonopoly law last week, calling it a historic piece of legislation that would benefit the country's economy and people. The law by passed by China's legislature as a way to break up its industries dominated by state-owned monopolies or semi-monopolies, but it also requires purchases of Chinese companies by foreign firms to go through a national security check. The law, first proposed 13 years ago, comes into effect next Aug. 1. Progress on the law had been stalled by controversy over how to carry out enforcement, given the prevalence of the state-owned monopolies. Beijing officials have said the legislation would not discriminate between domestic and foreign companies. But specific industries subject to security reviews weren't named and many sectors remain off-limits altogether to foreign buyers. The government last year released a list of strategic sectors in which state monopolies would continue to be permitted. They include military-related manufacturing, power production and grids, petroleum, gas and petrochemicals, telecom manufacturing, coal, and civil aviation. The three-day visit to China was Kroes' first since being named commissioner. She had met State Administration of Industry and Commerce Minister Zhou Bohua, Vice Commerce Minister Ma Xiuhong and other Chinese officials as well as a number of European business people and diplomats, she said.