BRUSSELS — The European Commission is cracking down on two Chinese companies, airport scanner maker Nuctech and e-commerce giant Temu, that are suspected of unfairly penetrating the EU market with the help of state subsidies. The EU executive opened an in-depth probe into Nuctech under its Foreign Subsidies Regulation on Thursday, a year and a half after initial inspections at the company’s premises in Poland and the Netherlands. “The Commission has preliminary concerns that Nuctech may have been granted foreign subsidies that could distort the EU internal market,” the EU executive said in a press release.  Nuctech is a provider of threat detection systems including security and inspection scanners for airports, ports, or customs points in railways or roads located at borders, as well as the provision of related services.  EU officials worry that Nuctech may have received unfair support from China in tender contracts, prices and conditions that can’t be reasonably matched by other market players in the EU.  “We want a level playing field on the market for such [threat detection] systems, keeping fair opportunities for competitors, customers such as border authorities,” Executive Vice President Teresa Ribera said in a statement, noting that this is the first in-depth investigation launched by the Commission on its own initiative under the FSR regime.  Nuctech may need to offer commitments to address the Commission’s concerns at the end of the in-depth probe, which can also end in “redressive measures” or with a non-objection decision.   The FSR is aimed at making sure that companies operating in the EU market do so without receiving unfair support from foreign governments. In its first two years of enforcement, it has come under criticism for being cumbersome on companies and not delivering fast results.  In a statement, Nuctech acknowledged the Commission’s decision to open an in-depth investigation. “We respect the Commission’s role in ensuring fair and transparent market conditions within the European Union,” the company said. It said it would cooperate with the investigation: “We trust in the integrity and impartiality of the process and hope our actions will be evaluated on their merits.” TEMU RAIDED In a separate FSR probe, the Commission also made an unannounced inspection of Chinese e-commerce platform Temu.  “We can confirm that the Commission has carried out an unannounced inspection at the premises of a company active in the e-commerce sector in the EU, under the Foreign Subsidies Regulation,” an EU executive spokesperson said in an emailed statement on Thursday.   Temu’s Europe headquarters in Ireland were dawn-raided last week, a person familiar with Chinese business told POLITICO. Mlex first reported on the raids on Wednesday.  The platform has faced increased scrutiny in Brussels and across the EU. Most recently, it was accused of breaching the EU’s Digital Services Act by selling unsafe products, such as toys. The platform has also faced scrutiny around how it protects minors and uses age verification.  Temu did not respond to a request for comment.

BRUSSELS — Donald Trump trashing United States climate efforts will empower rivals to control the industries of tomorrow, Europe’s top competition and climate official said Thursday. “It is not good news that a big player such as the United States decides to go in a different direction,” Teresa Ribera said in an interview in her office in Brussels. “It is not good news for anyone. But … whenever there is a big player that decides to abandon a room, there will be other players entering.” Ribera is in her third week as a European Commission executive vice president, one of just six helping run the European Union’s executive branch. Her portfolio only makes her more powerful.  A veteran climate official, Ribera is in charge of delivering a “clean, just and competitive transition” away from the EU’s fossil fuel economy. She is also steering the EU’s mighty division that controls state aid and antitrust policy. On paper, that makes Ribera one of the most influential EU executives ever to sit in the Berlaymont. With the high-profile role comes a momentous task: Crafting a response to China and America’s subsidy-fueled clean tech advances, which risk leaving Europe in the dust. Ribera and her boss, Commission President Ursula von der Leyen, say the clean economy is Europe’s best chance to avoid permanent industrial decline. Trump’s vision for America is the opposite. He has pledged to unleash fossil fuel production to lower energy costs and to walk away from President Joe Biden’s clean energy subsidy regime, which was designed to stimulate a clean industrial boom.  Ribera warned that Europe should not go down the same route, pointing to lessons from the recent past where delaying the auto sector’s green transition allowed Chinese carmakers to swoop in and dominate the electric vehicle market. “[For] a very long time, we heard the Western car industry thinking that they were so good in the internal combustion engine that they were always to be at the front row,” she said. “There were others that understood things differently. So we missed the train. And I think that this is what we need to avoid.” Ribera welcomed competition from foreign companies who were providing cheap, clean goods and services — so long as there was a “level playing field.” “I have no problems at all with great companies succeeding — wherever they come from — in producing things that help to decarbonize. I think that it is great. We need that to happen everywhere,” she said. “Even if there are others that have performed better than us.” But the EU is already targeting what it views as unfair subsidies for Chinese electric cars and seeking to tax high-carbon imports from countries that do not price their greenhouse gas pollution. Teresa Ribera welcomed competition from foreign companies who were providing cheap, clean goods and services — so long as there was a “level playing field.” | Olivier Matthys/EPA-EFE Ribera also has a powerful new weapon to protect European companies: the Foreign Subsidies Regulation. The mechanism enables Ribera to block mergers or bar foreign companies from European public contracts — if the EU decides an overseas government is providing unfair help.  Thus far, the EU has used the regulation to go after Gulf companies and Chinese firms.  “In principle,” the regulation is a “great thing,” Ribera said, but it faces “practical difficulties” — primarily finding “sound evidence” that subsidies are actually market-distorting.  Ribera wants to share intelligence with competition authorities in the U.S. and the United Kingdom to ensure that EU action is hitting the right targets. Ribera only recently moved into her new office and met POLITICO in a room with a green midcentury sofa and chairs. Above the seats was a 1977 photograph of Margaret Thatcher, then Britain’s conservative opposition leader, sitting on those exact chairs.  Entering the room, Ribera sat opposite the seat Thatcher took almost a half-century ago. Ideologically, Ribera, a Spanish socialist, also sits opposite the free market-espousing, government-slashing Thatcher. Her last role was managing Spain’s clean energy transition for Prime Minister Pedro Sánchez, where she brokered a deal with unions and companies to shut down Spain’s coal mining industry.  Teresa Ribera’s last role was managing Spain’s clean energy transition for Prime Minister Pedro Sánchez, where she brokered a deal with unions and companies to shut down Spain’s coal mining industry. | Khaled Elfiqi/EPA-EFE Ribera said she was acutely aware of the social upheaval linked to the EU’s climate strategy. The EU must ensure Europeans are on board with the “speed of change” and “do not feel this is a threat,” she insisted. “How we can provide the means that they can come along with this change is going to be very, very important,” Ribera said. “And I think that is one of the aspects that was not sufficiently taken into consideration in the past and that we need to reinforce.”  Asked how she’d respond to EU politicians using Trump’s climate policy reversal as an excuse to slow down the green transition at home, Ribera argued that sticking with settled targets is in the European economy’s best interest.  “Our businesses need stability,” she said. “I don’t think it is going to be appealing for anyone willing to invest their money if one day we say ‘yes,’ the other day we say ‘no,’ that we change the time frames or parameters … That doesn’t work for anyone.”  That also involves setting a new, EU-wide 2040 climate goal so companies have certainty, she added. The Commission plans to propose legislation targeting a 90 percent cut in planet-warming emissions by that year.  “If we understand that in order to create and update a new golden age for the industry in Europe, there are two main drivers, which are the green revolution and the digital revolution, we need to create the conditions for these revolutions to happen,” Ribera said. “This means identifying where we want to be.”  The Commission plans to propose legislation targeting a 90 percent cut in planet-warming emissions by 2040. | Nikolay Doychinov/AFP via Getty Images That target, however, will come too late for the EU to meet the United Nations’ February deadline for submitting a new climate plan under the Paris Agreement, Ribera acknowledged — the first time a Commission official confirmed POLITICO’s reporting that the bloc would file its plan late. Last month, White House officials told POLITICO that the U.S. would likely release its plan before Trump takes office. The EU needs to show it’s “complying with our own duties” by filing a plan, which will include a 2035 target, by the next global climate summit in November, Ribera said, but added that the bloc’s “complicated governance structure” stands in the way of a February submission.  “I’m optimistic on the possibility to come up with this in due time,” she said, “even if it is not February.” As for the Thatcher photo, she quipped that now that the U.K. Labour Party was renationalizing the railways that the Conservatives once privatized, perhaps she would also hang a photo of the current British prime minister. “We’ll get Keir Starmer over there,” she said.

BRUSSELS — Convincing European Union lawmakers to back her as the bloc’s new climate and competition chief will be the easy part for Spain’s Teresa Ribera.  If confirmed in her post, though, climate expert Ribera will quickly discover that the competition leg of her vast portfolio is a major head-scratcher, in a world where the EU is trying to boost its productivity and relevance in the face of an increasingly tense geopolitical scene.  As the chief enforcer of state aid rules, Ribera will have the last word on how EU countries subsidize companies to ensure large, deep-pocketed nations don’t outspend their smaller neighbors. At the same time, she’ll oversee the Clean Industrial Deal, a major legislative initiative to seed the climate-friendly sectors of the future while helping existing companies cut carbon emissions and compete. Competition is a weak spot for the Spanish socialist, whose entire career has revolved around energy and environmental issues. It is also the policy area the EU is betting on to help unleash economic growth and subsidize the right investments. “It’s not clear to us how she’ll do it. There is a risk that there won’t be this independent watchdog, that the combination of competition with other policy issues jeopardizes the watchdog component of that role,” said an EU government official granted anonymity to speak freely.  Vincent Hurkens of the E3G think tank said she faces a “very complex” task to enable government aid as the economy emerges from the shocks of the pandemic and the Ukraine war while dealing with concerns that some countries can outspend others. “She has, on the one hand, to answer how she can guarantee that level playing field, but at the same time provide sufficient investment in a time where there doesn’t seem to be that much of an appetite to go for very ambitious new plans to secure additional public funding in the EU,” he said. “So that’s really for her to provide a vision on — how will you square that circle,” he said.  Damian Boeselager, a German Volt lawmaker, worries that the current European Commission emphasis on spending is wrong-headed. He said the EU should “start focusing on startups and scale-ups — and not [on] large state aid to large players in large EU member states such as Germany.” BIG TECH TENSIONS Donald Trump’s reelection as president of the United States has turned up the temperature for EU efforts to police (largely U.S.-based) Big Tech and multinational corporations’ megadeals. Trump vowed last month not to let the EU “take advantage of our companies,” saying Apple CEO Tim Cook had called him to complain about an EU antitrust fine and back-tax order. Apple may now be set to get the EU’s first fine for not complying with digital competition rules, Bloomberg reported. The European Commission has also raised the prospect of forcing Google to divest part of its advertising service as part of a probe likely to finish next year. “The victory of Donald Trump is closely linked to the support of Elon Musk and other Tech tycoons who explicitly said they want to avoid any kind of regulation,” German Green lawmaker Alexandra Geese told POLITICO in an email. This puts pressure on the Commission “to stand tall by our rules,” she said. It isn’t clear how Ribera will handle potential U.S. retaliation over decisions she might have to take to enforce EU rules against U.S. tech firms. Tech doesn’t seem to be a top priority for her, at least not the way it was for her predecessor, Margrethe Vestager. Geese and others previously highlighted how Ribera’s marching orders didn’t target how digital power has concentrated in the hands of a few companies, mostly from the U.S. This marks a stark contrast from 10 years of high-powered antitrust enforcement by Vestager, who made Silicon Valley take notice of Brussels bureaucrats with hefty fines, back-tax bills and deal vetos. “We are coming out of two mandates with Margrethe Vestager, who was really a driving force,” French Renew lawmaker Stéphanie Yon-Courtin told POLITICO. “And now I’m afraid it’s going to be an empty shell,” she said of the competition portfolio, pointing to the low prominence given so far to antitrust in what Ribera has been told to do and what she herself is committing to. POLICING DEALS AND FOREIGN GOVERNMENT AID Mergers feature prominently in the instructions Ribera got. She will be under pressure to reform how the EU checks and blocks deals, with Germany and France calling for rules to allow bigger airlines and telecom companies. Two high-level reports recently backed more telecom consolidation and scaled-up firms to make the European economy more efficient and resilient. But changing merger rules is easier said than done. Allowing bigger national champions could come to the detriment of smaller companies and consumers. “With a big push coming from telecom incumbents and major airlines to get bigger in European markets, can creating ‘European champions’ not end up in fact reducing innovation in the European market and therefore harming consumers?” asked Agustín Reyna of the consumer advocacy group BEUC. A specific call to police “killer acquisitions,” where big companies snap up innovative potential rivals, could also lead to friction with U.S. tech or pharma companies, which have attracted most recent EU enforcement efforts. Ribera could end up having to defend against accusations that the EU is taking a harsher line with U.S. deals to protect its own industry. Another legal weapon, the Foreign Subsidies Regulation, could also put her on a collision course with U.S. businesses. Although the tool was largely aimed at creating more checks for Chinese state subsidies, its broad scope has also netted many firms from friendly states. “U.S. companies and financial investors are required to go through a complex process to notify acquisitions, and this could get drawn into transatlantic trade spats,” warned Philippe Radinger, a consultant at FGS Global.  A crosscutting challenge for Ribera will be managing her time among so many priorities. “I’m just wondering when she’s supposed to sleep. It’s not clear to me yet how she’ll do it,” said German Green lawmaker Jutta Paulus. Aude van den Hove contributed reporting.

BORITI, Georgia — Two neighbors, Murman and Natela, sit together sipping coffee as the early autumn sun sets over the village of Boriti, in Georgia. Just a few kilometers away, the newly built East-West Highway roars with traffic. The question — whether the new highway is European or Chinese — is met with confusion. “The road is built by those who pay, so it’s European,” argues Murman, 47, who has been working on the construction of the road since day one. “But it’s built by the Chinese, so it’s Chinese,” replies Natela, 52. The debate may be a local one, but it has international implications.  As Brussels gears up to challenge Beijing in the funding and construction of global infrastructure, it’s running up against an uncomfortable truth: Not only do its efforts sometimes overlap with its rival’s; many of the projects it is funding are being built by Chinese state-owned companies. Since the beginning of 2019, Chinese companies have been awarded more than €1 billion worth of contracts for EIB-funded projects in countries outside the EU, such as Georgia, Senegal, and Tunisia. This represents roughly 13.1 percent of the total value of third-country contracts attributed to the EIB on the EU’s Tenders Electronic Daily (TED) portal. By comparison, companies from the EU have won 15.7 percent of the total value of contracts, including tenders won by consortiums that involve EU companies.  In some years, such as 2019 and 2024, Chinese firms won a greater share of EIB-funded contract value than EU companies. Chinese firms win around a third as many contracts as EU companies, but these contracts are typically high-value. Take the road outside Boriti, part of the E60 European Transit Road which links Europe with Asia. The stretch near the village, known as the Rikoti Road, navigates steep, mountainous terrain and is one of the most challenging sections of the highway.  Funding for its construction came from the Asian Development Bank, the World Bank and the EIB, which contributed €399 million. But the contracts went to five construction firms — all of them Chinese state-owned enterprises. In 2018, for example, the China Road and Bridge Corporation (CRBC) signed a €300 million contract to build the Ubisa-Shorapani section near Boriti, which is almost entirely funded by an EIB loan. The numbers above do not reflect the full scope of EIB-funded contracts. For instance, a €154 million contract secured by CRBC earlier this year for an EIB-funded rail bypass in Serbia is listed on the TED portal, but not included in TED’s aggregated data for EIB-funded contracts.  “There’s a tension between the rhetoric that this is a European offer and the fact that Chinese companies are building some of these projects,” said Chloe Teevan, the head of digital economy and governance at the European Centre for Development Policy Management, a think tank. The CRBC did not respond to a request for comment. GLOBAL GATEWAY VS. BELT AND ROAD INITIATIVE When European Commission President Ursula von der Leyen unveiled Global Gateway in September 2021, it was a direct response to China’s international infrastructure ambitions. Beijing’s effort, the Belt and Road Initiative, had set off alarm bells in the West, where it was seen as locking in Chinese strategic interests and creating debt dependence in the countries where the infrastructure was being built. “We want to create links and not dependencies!” von der Leyen announced during her 2021 State of the Union address. “We are good at financing roads,” she added. “But it does not make sense for Europe to build a perfect road between a Chinese-owned copper mine and a Chinese-owned harbor.” Today, the bigger challenge is that it’s very often Chinese firms that are building the roads the EU is paying for. In addition to the EIB, the EU funds infrastructure through the bloc’s national governments, as well as the European Bank for Reconstruction and Development (EBRD). While the EBRD isn’t technically a part of the EU, 54 percent of its shares are held by the EU, the EIB and EU national governments. The rest is divided among 44 other countries. The U.S., the U.K., Japan, and Switzerland combined hold 33 percent. Russia holds 4 percent, and China less than 0.1 percent. Over the last five years, however, Chinese firms have won 13 percent of the total value of public-sector projects funded by the EBRD. EU contractors were awarded 35 percent of total value across the 38 countries in which the EBRD operates, 13 of which are EU member states.  In addition to this, Chinese firms have been awarded contracts for private-sector development projects funded by the EBRD.  In Uzbekistan, for example, the EBRD is providing at least €500 million in financing for seven wind and solar projects being developed by Saudi ACWA Power or Emirati firm Masdar, but which have been contracted to Chinese state-owned enterprises. Though the majority of EBRD’s operations are geared toward the private sector, the development bank does not publish the results for these tenders. “The EBRD permits participants from all countries to provide on equal terms goods, works, services or consultancy services for an EBRD-financed public sector project regardless of whether such country is a member,” the EBRD’s Balkan office said in a statement to POLITICO.  UNLEVEL PLAYING FIELD  China’s involvement in EU-funded projects hasn’t gone unnoticed by the European construction industry.  In 2020, the European Chamber of Commerce in China highlighted a “profound lack of European involvement” in Chinese-financed Belt and Road projects, which are often contracted to Chinese firms without tender. The EIB, on the other hand, requires its promoters to award contracts through a competitive procurement process.  “We are not afraid of competition on a level playing field,” said Frank Kehlenbach, director of European International Contractors, an industry group. “But we will never be able to compete with these huge state-owned enterprises that work under the control and with the funds of the Chinese Communist government.” In a statement, the EIB said “all companies, irrespective of their geography and without discrimination, are eligible and free to participate in EIB-led tender processes, which award contracts on the basis of a number of criteria, such as price offer and quality for end users.” The EU has developed several instruments to address unfair competition in procurement. One of these is the Foreign Subsidies Regulation (FSR), which empowers the European Commission to investigate public procurement bids by foreign companies suspected of benefiting from state aid. Since the regulation entered into force at the beginning of 2023, it has been used four times, all but one targeting Chinese companies. One of the major catalysts for the development of the FSR was the awarding of a contract in 2018 to CRBC for the construction of the EU-funded Pelješac bridge in Croatia. “The Pelješac Bridge scenario was one of the key moments for evolving the EU’s thinking about its competitiveness and economic security vis-à-vis China,” says Matej Šimalčík, executive director of the Central European Institute of Asian Studies. The Austrian firm Strabag, which also bid for the contract, accused CRBC of price dumping and filed a complaint, but courts found no proof of illegal subsidies.  However, experts argue that state-owned firms like CRBC benefit from indirect state subsidies. CRBC, for example, has established a large portfolio of projects in Europe that are tied to loans from the Export-Import Bank of China. The introduction of the FSR makes a repeat of the Pelješac case unlikely within the EU, but the regulation does not extend to EU-funded projects outside of the EU, including those that might be built as part of the Global Gateway. A Commission spokesperson said there was a recognition of the issue. “The EU is a firm supporter of equal opportunities and open competition,” the spokesperson said in a statement. “However there is a need to ensure a level playing field.” “The European Commission is discussing these issues with the EIB and is working actively — also in the context of the Global Gateway initiative — to increase the engagement of European companies,” the spokesperson said. They added that the Commission was “exploring” options that would “ensure best price/quality ratio instead of a lowest price as an award criterion.” However, Teevan cautioned that simply raising the bar may not be enough to deter Chinese companies. “There’s an effort to make it more complicated for Chinese companies to comply, but Chinese companies are getting better and they are investing a lot in ESG,” she said.  Meanwhile, said Teevan, the visible involvement of Chinese companies in the construction of its infrastructure project is undermining the bloc’s ability to take credit for the project it funds. The Pelješac Bridge is once again a good example. While Brussels saw the bridge as an EU-driven development, Beijing advertised it as a “key strategic project” of the Belt and Road Initiative.  Chinese Premier Li Keqiang, attended the project’s opening ceremony virtually to describe it as “a new bridge to promote friendship between [China and Croatia].” The confusion, as to whether the bridge was built thanks to Brussels or Beijing, would be instantly recognizable to villagers of Boriti in Georgia.  “How is this road European?” asks Omar, 67, who is being paid €11 per day to control traffic on the soon-to-be-finished East-West highway.  “Everything here is Chinese,” he adds. “The Europeans are paying, but the Chinese are building it.” Reporting for this article was supported by a grant from Investigative Journalism for Europe (IJ4EU).