Chinese train maker targeted by EU subsidy probe

China's state-owned train manufacturer CRRC is the target of the European Commission's first probe into unfair foreign state subsidies.

The European Union executive said it is probing CRRC unit Qingdao Sifang Locomotive over its bid for a €610 million Bulgarian public procurement contract to provide electric trains along with maintenance and staff training.

"There are sufficient indications that this company has been granted a foreign subsidy that distorts the internal market," the Commission said. The CRRC may have made "an unduly advantageous offer" that "could cause other companies participating in the public procurement procedure to potentially lose sales opportunities."

The EU has until July 2 to wrap up its probe.

It's the Commission's first time opening an in-depth investigation under strict new rules designed to crack down on companies receiving huge subsidies from non-European Union governments.

Companies have to notify their contracts with EU governments when their value rises above €250 million and when they get at least €4 million in foreign contributions for three years. CRRC notified its deal with Bulgaria's transport ministry on January 22.

The investigation will be a first test for the Commission to prove it can effectively enforce the rules while officials are overwhelmed with more notifications than they previously expected.