China Restricts EU Medical Device Procurement as Trade Dispute Reaches Hospitals

China sets a 45 million yuan threshold for EU medical devices

China has restricted European Union participation in government purchases of medical devices worth more than 45 million yuan, about $6.3 million, opening another front in a trade dispute that now reaches equipment used to diagnose and treat patients. The measures were announced on July 6, 2025, and took effect immediately.

The restrictions largely exclude EU suppliers from those contracts while preserving access for EU enterprises operating and manufacturing within China. They also limit the value of medical devices imported from the EU that other suppliers can include in a covered contract. An exception allows purchases when only equipment imported from the EU can meet the requirements.

Beijing acted after the European Commission restricted Chinese companies from competing for EU public medical device contracts exceeding €5 million, about $5.7 million, in June. Each side describes its action as a response to unfair treatment by the other.

The dispute between the world's second and third largest economies brings questions about industrial policy and access to government contracts into hospitals and healthcare supply chains. Surgical instruments, magnetic resonance equipment and orthopedic implant components are among the products covered by China's action.

As of July 7, attention is turning to a China-EU summit scheduled for later in July 2025. The meeting, marking 50 years of diplomatic relations, offers an opportunity to discuss medical devices alongside disputes over electric vehicles, alcohol and agricultural products. For manufacturers, the immediate practical question is whether their products and production arrangements qualify for public contracts on either side.

Why the EU restricted Chinese suppliers

The European Commission introduced its restrictions after an investigation lasting several months into Chinese government procurement practices. It concluded that Chinese policies limited access for European medical device producers in an "unfair and discriminatory way." Government procurement means purchases made by public authorities, including equipment bought for public hospitals.

The Commission pointed to the Made in China 2025 initiative and policies directing domestic hospitals toward equipment from local manufacturers. According to the Commission, those policies set targets for domestic content in advanced medical devices of 70% by 2025 and 95% by 2030.

The difference between those targets is 25 percentage points over five years. For foreign manufacturers, a growing share reserved for domestic products would leave less room to compete for hospital purchases. The EU argued that these targets, together with substantial state support for Chinese firms, gave domestic suppliers an advantage and effectively shut foreign competitors out.

The EU used its International Procurement Instrument, known as the IPI, to impose the restrictions. This mechanism allows the bloc to limit access to its public contracts when another country does not provide fair access to its own procurement market. The June action was the instrument's first major use and reflected a tougher European position on reciprocal access.

What China's response covers

China's Ministry of Finance and Ministry of Commerce announced that EU companies would be excluded from government procurement projects with medical device budgets exceeding 45 million yuan, except for qualifying enterprises with operations and manufacturing in China. The threshold makes the value of a procurement project central to whether the restrictions apply.

The products covered span several areas of hospital care and treatment:

• Surgical instruments.
• Medical magnetic resonance equipment.
• Blood based pharmaceutical preparations.
• Orthopedic implant components.
• Medical laser devices.

Suppliers from outside the EU also face a limit. Medical devices imported from the EU must account for no more than 50% of the total value of a covered contract. A company therefore needs to consider where the equipment it supplies comes from, as well as where the company itself is based.

China allows an exception when only devices imported from the EU can meet the procurement requirements. That provision preserves a route for purchases needed to meet particular medical requirements, even when the usual restrictions would apply. For hospitals, the exception matters when a required device cannot be replaced by another qualifying product.

Local production gives European manufacturers some protection

EU investment and production within China provide an important exemption from Beijing's measures. European enterprises operating and manufacturing there can continue supplying relevant products, offering some protection to companies that have already built substantial Chinese operations.

Siemens Healthineers and Royal Philips are among the major European medical device businesses with significant local production. Company statements and industry assessments described them as "minimally affected" because of that presence. Philips said 90% of its sales in China originate from local manufacturing.

That figure helps explain why the same procurement restriction can affect European manufacturers differently. A company supplying Chinese hospitals from factories in China has a different exposure from one relying on devices shipped from Europe. Philips' local manufacturing accounts for nine tenths of its China sales, making the exemption especially relevant to its business.

China's approach also gives manufacturers another reason to examine where they make their products. Production location now affects access to these public contracts, alongside the price and medical suitability of the equipment.

Why companies want clearer rules

The European Chamber of Commerce in China has warned that uncertainty over the rules could complicate bidding even for companies with substantial Chinese operations. Its concern centers on the lack of precise criteria for deciding which EU invested enterprises and locally supplied products qualify.

Local authorities will have to apply the restrictions to individual procurement projects. The chamber warned that strict interpretations could exclude manufacturers that have already invested heavily in local production. The detailed criteria for qualifying as a locally operating enterprise remain unclear.

The EU's rules also require monitoring of contract thresholds and component limits. Companies and public purchasers on both sides must check whether a tender falls within the restrictions and whether the proposed supply meets the relevant conditions.

For a manufacturer, those checks can affect whether preparing a bid is worthwhile. For a hospital, they can affect which suppliers are eligible. Complex requirements could disrupt supply chains or penalize companies with established local factories if procurement officials apply them too broadly.

Beijing describes its action as reciprocal

A spokesperson for China's Ministry of Commerce said Beijing had acted because the EU proceeded with restrictions despite Chinese efforts to resolve the disagreement. The spokesperson presented the Chinese measures as a response to European protectionism:

Regrettably, the EU has ignored China's goodwill and sincerity, and proceeded with restrictive measures that create new protectionist barriers. Therefore, China has no choice but to adopt reciprocal restrictive measures.

Chinese trade specialists have argued that Beijing's response is more measured because it leaves room for EU invested businesses operating inside China. Zhou Mi, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation, explained that position:

In fact, the measure China has taken differs from the EU's approach. The EU's action excluded Chinese companies outright, whereas we have not excluded EU enterprises operating in China from supplying the relevant products. We continue to adhere to relevant Chinese regulations and aim to ensure fair treatment for products that are manufactured and supplied within China.

The European position starts from a different complaint: its manufacturers face barriers in China while Chinese suppliers have access to European public contracts. Both governments are using procurement restrictions to press for changes in the other's treatment of foreign businesses.

How the dispute developed

The medical device measures have unfolded alongside other trade actions in the weeks before the July summit. The sequence shows how decisions about hospital purchases became part of a wider negotiation over industrial competition and market access.

• January to May 2025: Foreign direct investment in China's technology industries reached 109.04 billion yuan, while investment in medical instrument and equipment manufacturing rose 20% from a year earlier.
• June 2025: The European Commission restricted Chinese participation in EU public medical device contracts exceeding €5 million, following its investigation into Chinese procurement practices.
• June 2025: The EU imposed tariffs of up to 45% on electric vehicles made in China, citing state subsidies and unfair competition.
• July 6, 2025: China announced its medical device procurement restrictions, which took effect immediately.
• Later in July 2025: China and the EU are scheduled to hold a summit marking the 50th anniversary of diplomatic relations.

Both sides have expressed willingness to use dialogue to resolve the medical device dispute. The summit provides the next scheduled diplomatic opportunity to address it together with industrial subsidies and broader barriers facing businesses.

Electric vehicles, brandy and agriculture add pressure

The medical device confrontation sits alongside disputes involving electric vehicles, brandy, pork and dairy products. Each involves a different product and set of rules, but together they have increased pressure on the economic relationship.

The EU cited state subsidies and unfair competition when imposing tariffs of up to 45% on electric vehicles made in China in June 2025. China responded through investigations into alleged dumping of European liquors and agricultural products. Dumping refers to selling goods abroad at prices considered unfairly low under trade rules.

China also imposed duties of up to 34.9% on European brandy. Major producers, including Pernod Ricard, LVMH and Remy Cointreau, were spared those duties if they agreed to minimum pricing requirements. That arrangement makes the price at which a product is sold part of the conditions for avoiding the tariff.

European officials have long complained about legal and administrative barriers confronting their companies in China. Chinese officials argue that European restrictions discriminate against Chinese businesses and undermine free trade. Medical equipment has become another sector in which those competing positions now shape commercial decisions.

Hospitals and patients face the practical consequences

MedTech Europe, the European medical devices industry association, has warned that restrictions on procurement could affect access to equipment needed for diagnosis, treatment and patient care. Its chief executive, Oliver Bisazza, described the patient access risk:

Measures of this nature risk deepening trade tensions and ultimately deny patients timely access to indispensable medical technologies.

Hospitals depend on medical devices for tasks ranging from examining the body to carrying out surgery and replacing damaged joints. Restrictions on eligible suppliers can narrow the equipment available through a public tender. Procurement officials must balance those purchasing rules with the clinical requirements of the hospital.

China's exception for devices that alone can meet procurement requirements is therefore a central part of its response. The exemption for locally manufacturing European firms provides another route through which hospitals can continue purchasing relevant products.

Industry concerns extend to costs, supply chains and innovation. If manufacturers face smaller accessible markets or more complicated supply arrangements, the commercial conditions for developing and distributing advanced technologies can become more difficult. The immediate warning from businesses is that escalating restrictions could slow patient access and raise costs.

Investment shows why the Chinese market matters

China's demand for advanced medical technologies has drawn investment from manufacturers based in Europe, the United States and Japan. For these businesses, access to the Chinese market supports both sales and decisions about where to build production capacity.

China's Ministry of Commerce reported that foreign direct investment in the country's technology industries reached 109.04 billion yuan between January and May 2025. Within that period, investment in medical instrument and equipment manufacturing increased 20% compared with a year earlier. Foreign direct investment means money committed by overseas businesses to operations in another country, such as factories.

The growth in medical equipment investment helps explain why local manufacturing is so important to the current dispute. Companies have committed resources to serving Chinese demand, and Beijing's exemption gives qualifying production inside China continued access to the affected public purchases.

Manufacturers must now weigh those existing investments against uncertainty about eligibility, enforcement and future market access. The same supply chains that connect European technology with Chinese production and hospitals also make restrictive procurement rules complicated to administer.

A summit shaped by trade, technology and trust

Chinese leader Xi Jinping has called for stronger strategic cooperation with the EU even as disagreements have grown over subjects ranging from rare earths to climate policy. The medical device dispute adds another concrete issue to the July summit's agenda.

Competition between the United States and China over advanced technology forms part of the wider setting. The EU is trying to maintain economic engagement while pursuing strategic autonomy, meaning greater ability to make and carry out its own choices without excessive dependence on others.

The summit is expected to address market access, industrial subsidies, economic cooperation and the wider rules governing trade. Medical devices bring those debates into a sector where purchasing decisions also affect healthcare delivery.

China and the EU have both left open the possibility of negotiation. Their immediate challenge is to reconcile demands for fair competition with the needs of manufacturers that operate across borders and hospitals that rely on their products. The July talks offer a chance to address those specific problems alongside the wider question of trust between the two trading partners.

Key Points

• China's restrictions took effect on July 6, 2025, covering government medical device procurement projects worth more than 45 million yuan, about $6.3 million.
• The measures followed EU restrictions on Chinese participation in public medical device contracts exceeding €5 million, about $5.7 million.
• Qualifying EU enterprises operating and manufacturing in China are exempt from the Chinese restrictions.
• Other suppliers face a 50% limit on the value of devices imported from the EU in covered contracts, with an exception when only EU imports meet the requirements.
• Philips said 90% of its China sales originate from local manufacturing, helping explain its limited exposure.
• Industry groups warn of higher costs, supply disruption and delays in patient access to medical technologies.
• A China-EU summit later in July 2025 will provide an opportunity to discuss the dispute alongside wider trade tensions.