Tariff wars: EU may investigate Chinese modem exports

Brussels: With its high-tech industry under increasing threat from low cost Chinese products, which are now swamping the market, the European Union said it may investigate whether China is unfairly subsidising makers of wireless modems.

The European Commission, which is the EU's executive arm, has informed member states it would like to investigate the sector. It has until mid-September to launch a full investigation.

Should the Commission conclude that the products indeed receive subsidy from the Chinese government then they could invite countervailing duties from the EU for a period of five years.

The Commission's move follows a complaint by Belgian group Option, which is Europe's sole producer of wireless Internet devices and supplies telecoms giants such as Vodafone and Telefonica.

According to reports, Option has alleged that China's modem producers receive direct government grants, cheap loans and state-backed R&D.

Analysts say China is now focussed on making a transition from being a mass producer of low-tech items to becoming a top player in global telecoms.