The European Union is set to launch a trade case against Huawei and ZTE, claiming the two firms were given illegal state subsidies by the Chinese government.
The revelation came in a report from the Financial Times, which said the EU told member states of its intentions in closed meetings on Thursday.
The EU claimed these subsidies allowed the two Chinese telcos to sell their products below cost price – otherwise known as "dumping" – and that it had “very solid evidence” to prove its case.
If the case comes to fruition, it will be the largest against China the EU has ever launched and the first involving high-level technology products, rather than smaller scale manufacturing. It will also be the first time it has launched such a case off its own back, rather than by following up a complaint.
ZTE, which ranks as the world’s fifth largest telecoms manufacturer, told Computer Weekly it was not issuing a formal statement at this time. We also contacted Huawei, which beats ZTE by three places as the second largest, but it had not returned our request at the time of publication.
Both firms have been making a big imprint in the UK business market, especially Huawei which employs 800 staff in its UK headquarters and recently announced a deal with O2 to manage its mobile network infrastructure.
However, despite strong denials of government involvement from both firms, they have come under scrutiny before, with the US House Intelligence Committee examining whether its deployments across the Atlantic allowed the Chinese government to hijack US infrastructure and conduct economic espionage.
Computer Weekly asked the EU for confirmation of the case, but it has yet to respond to our request.