The European Union is more likely to postpone the investigation into the issue on whether China’s Huawei and ZTE benefited from unfair state aid until after a major Chinese telecoms tender is awarded.

The commissioner of EU, Karel De Gucht who is widely known to be very careful in following up the case now looks as though he no longer wants to deal with the case further, but only if European vendors are awarded a sizable chunk of Chinese LTE infrastructure contracts.

The EU had stated that they had found evidence that two Chinese companies benefited from state-aid, which is illegal in Europe, there has been serious concerns raised that European vendors could suffer if the Chinese government retaliated against EU sanctions.

Half of mobile network infrastructure sales (an estimate) this year could be awarded by China’s big three mobile networks.

Earlier reports had recommended that Karel De Gucht would lay off the case if European suppliers were granted around a third of the Chinese infrastructure contracts.

Both Huawei and ZTE have denied receiving any state support, although it has been noted that funding from state-owned banks is unusually generous for companies of their size.

An EU report from early 2011 noted that ZTE’s lines of credit now amount to USD25 billion, which is exceptionally high for a company with annual sales of just USD8 billion. The commission believes Huawei also benefited from large credit lines, including a USD 30 billion facility from China Development Bank.