Chinese CRRC Corporation Withdraws From €610 Million Bulgarian Train Tender Amid EU Investigation

In a significant development, a Chinese train manufacturer has opted out of a €610 million ($660 million) Bulgarian railway tender following the launch of an investigation by the European Union (EU) into a bid alleged to undercut local firms.

The probe, initiated last month, marked a landmark use of a foreign subsidies regulation aimed at preventing state aid from distorting the EU's single market. CRRC Qingdao Sifang Locomotive Co, a subsidiary of state-owned rolling stock manufacturer CRRC Corporation, had tendered to provide 20 electric push-pull trains and their maintenance.

However, its bid, reported to be nearly half that of its Spanish competitor, raised concerns regarding alleged state subsidies amounting to almost US$2 billion.

The European Commission announced that CRRC had withdrawn its bid. Commissioner Thierry Breton highlighted the swift action of the investigation, emphasising the EU's commitment to fair competition and economic security.

The EU contended that CRRC failed to disclose the state subsidies in its bid, resulting in unfair competition against Talgo, a privately owned Spanish rail company, which was the sole other bidder.

This move by Brussels underscores its determination to counter what it perceives as unfair trade practices from China. It forms part of a broader strategy to safeguard Europe's economic interests, with further measures anticipated, including investigations into other Chinese industries such as medical devices, according to South China Morning Post report.

The issue of overcapacity in the Chinese economy remains a key concern, prompting the EU to bolster its trade defences. Efforts to tackle forced labour and other malign business practices through new legislation are underway, further indicating a tougher stance towards China.

While China has criticised these measures as "double standards", the EU remains steadfast in its resolve to ensure fair competition and protect its industries.

The withdrawal of CRRC from the Bulgarian tender adds another layer to the ongoing debate surrounding foreign investment and competition in the EU, raising questions about the regulation's impact on international business relations.