China retaliates against EU by limiting procurement of EU medical devices
On 6 July 2025, China’s Finance Ministry published the Notice on Taking Relevant Measures Against Medical Devices Imported from the European Union in Government Procurement Activities in response to the European Commission’s 20 June 2025 decision to exclude Chinese companies from EU public procurements of medical devices exceeding EUR 5 million. For details of the EU decision, please refer to our previous Law-Now article: here.
The Notice, which also went into force on 6 July 2025, has significantly impacted stakeholders in the life science sector. This article outlines the Notice’s implications and strategic considerations.
Overview of the Notice
The Notice represents a measured quid pro quo retaliation, closely mirroring the restrictions imposed by the European Commission.
- Prohibition on participation: EU enterprises, except for their subsidiaries in China, are prohibited from participating in government procurement of imported medical devices with a value equal to or exceeding RMB 45 million (approximately EUR 5 million), which aligns with the European Commission’s procurement threshold.
- Scope of restriction: The restriction applies to a list that covers 50 categories of EU-imported medical devices, ranging from basic medical supplies (e.g. medical rubber products and pharmacy equipment) to high-end medical equipment (e.g. MRI machines and emergency and life-support equipment).
- Subcontracting limitation: In government procurement involving imported medical devices from non-EU enterprises, the proportion of EU manufactured medical devices supplied by such non-EU enterprises must not exceed 50% of the total contract value, reflecting a subcontracting limitation similar to that imposed by the European Commission.
- Exemption: The restriction does not apply to procurement projects where only medical devices imported from the EU can satisfy the procurement requirements, which is similar to the exemption provided by the European Commission.
- Transitional arrangement: For procurement projects subject to these restrictions, where bid-winning or transaction results were announced prior to 6 July 2025, government procurement contracts can still be signed, and the provisions of this Notice will not apply.
Implications for stakeholders
EU-based manufacturers face restricted access to China's public procurement market
Public hospitals in China, which obtain medical devices primarily through government procurement, constitute a significant segment of the imported medical device market in China. Consequently, direct restriction on participation in government procurement will have a considerable impact on EU medical device manufacturers.
This impact is especially pronounced in the high-end medical device sector, where the unit price of devices frequently meets or exceeds the RMB 45 million threshold, making it not feasible to attempt to circumvent these restrictions by subcontracting or splitting a single procurement programme into several smaller procurements.
Even for lower-priced medical devices, it is legally and operationally challenging to negotiate splitting a single procurement programme with public hospitals, since the Chinese government vigilantly scrutinises procurement activities.
Localising medical devices and restructuring supply chains
Since 2015, the State Council of China has worked to increase the localisation rate of medical devices. In response, many local governments have prioritised the procurement of domestic medical devices in local government procurement. The promotion of localising medical devices is already yielding results.
Even though the Notice is a retaliation against the EU restriction, Chinese subsidiaries of EU enterprises can still participate in government procurement. This exemption is consistent with the Chinese government’s ongoing efforts to improve the localisation rate of medical devices. A statement by the Ministry of Commerce on July 6 also confirmed that products manufactured in China by EU-invested enterprises remain unaffected.
EU’s response and perspective
At the time of publication of this article, we are not aware of any official response or steps available from the EU, regarding the Notice issued by China’s Finance Ministry on 6 July 2025. According to recent articles in the press, "The EU delegation office in Beijing did not immediately respond to a request for comment.". The measures imposed by the EU entered into effect on 30 June 2025, and are set for a five-year period, with the possibility of an extension of 5 years.
Strategic actions
The Notice signals both China's assertive trade posture in response to EU restrictions and its continued commitment to localising the production of medical devices. EU medical devices manufacturers should consider the following strategic actions to mitigate the impact imposed by the Notice:
- Localise production: Establish R&D and manufacturing centres in China or authorise qualified third parties to produce medical devices locally.
- Pursue local partnerships: Explore business cooperation with local enterprises, such as forming joint ventures or entering into licensing arrangements.
- Temporary price adjustments: High-end medical device manufacturers may consider temporarily lowering product prices to comply with the procurement restriction.
- Consult counsels: Timely consultation with legal counsel is recommended to interpret the policy and ensure compliance with relevant regulatory requirements.
- Monitoring regulatory developments: Closely follow regulatory changes and trade negotiations to enable prompt and effective responses.
In summary, the Notice introduces significant challenges for EU medical device manufacturers seeking to participate in China’s government procurement market. Stakeholders are urged to pay close attention to the implications of the restriction. Proactive strategic planning and adaptation will be essential to navigate this evolving regulatory landscape.
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