China Criticizes EU Over Extraterritorial Reach in JD.com Probe

China criticized the European Union’s use of its Foreign Subsidies Regulation to probe JD.com Inc.’s planned €2.2 billion takeover of German electronics retailer Ceconomy, calling it an “improper extraterritorial jurisdiction” and prohibiting compliance with the measures.

Beijing said the bloc had improperly demanded broad and unnecessary information located within China during its probe of the Chinese e-commerce firm, state broadcaster China Central Television reported on Wednesday, citing the Ministry of Justice. The demands “seriously undermine the international rule of law,” the ministry said.

The Ministry of Justice said it had determined, together with the Commerce Ministry and other agencies, that the EU’s actions constituted improper extraterritorial jurisdiction under China’s anti-foreign sanctions regulations. It also stated that no organization or individual may comply with or assist in carrying out the measures.

“We urge the EU to immediately correct its wrong practices, stop abusing the foreign subsidy investigation tool, and provide a fair, impartial and predictable market environment for companies investing and operating in Europe,” the ministry said, warning that China would respond with countermeasures if the bloc continued to overstep.

The EU opened an in-depth review of JD.com’s proposed acquisition in May, making it the first Chinese corporate takeover to be targeted under the bloc’s foreign subsidies law. EU regulators have said the company may have benefited from Chinese state support including preferential financing, tax incentives and grants that could distort competition. The EU has until Oct. 2 to clear the deal, impose conditions or block it.

JD.com’s €2.2 Billion Ceconomy Deal Hit by EU Subsidy Probe

The dispute marks the latest flareup of tensions between China and Europe. In late July, China slapped export controls on 14 European companies, including German defense giant Rheinmetall AG, in retaliation against the EU’s sanctions on mainland and Hong Kong entities. Brussels has accused China of trade practices that it says harm the bloc’s economy by generating huge imbalances in trade and hollowing out local industry.

China Hits Back EU With Export Curbs on Rheinmetall, Others