China blocks firms from aiding EU JD.com subsidy probe

China has formally prohibited its companies and citizens from assisting a European Commission investigation into JD.com, the country's second-largest e-commerce platform, under the bloc's Foreign Subsidies Regulation. The move, announced in a joint statement by the Ministry of Justice and the Ministry of Commerce on 19 August, frames the EU's information demands as an illegitimate exercise of extraterritorial authority and instructs that "no organisation or individual may execute or assist in the execution" of the probe.

The order represents the most direct confrontation yet between Beijing and Brussels over the FSR, a competition tool that entered into force in January 2023 and gives the Commission power to investigate financial contributions from non-EU governments that distort the internal market. Unlike traditional anti-subsidy instruments that target imports at the border, the FSR reaches companies already operating inside the European Union, requiring them to disclose ownership structures, financing arrangements, and decision-making processes on short notice.

The Foreign Subsidies Regulation and its reach

The regulation was designed to close a gap in EU trade defence. Before its adoption, the Commission could counter subsidised imports through countervailing duties, but had no standing to examine subsidies benefiting firms that had already established a presence in Europe, whether through acquisitions, greenfield investments, or winning public procurement contracts. The FSR introduces a mandatory notification regime for large concentrations and public tenders, and a general ex officio investigation power for all other market situations.

Since the rules became operational, the Commission has opened more than a dozen formal inquiries. The majority have concerned Chinese state-owned or state-linked enterprises in sectors the EU considers strategic: solar photovoltaics, wind turbines, railway rolling stock, and medical devices. In July 2024, the first provisional measures were imposed on a Chinese solar module manufacturer, setting a precedent for how the regulation would be enforced.

Beijing's countermeasure and legal framing

China's response to the JD.com investigation goes beyond diplomatic protest. By invoking its own legal apparatus, specifically the Anti-Foreign Sanctions Law of 2021 and the Data Security Law of 2021, Beijing has created a binding domestic prohibition that mirrors the blocking statutes the EU once drafted to counter US secondary sanctions on Iran. The language of "undue extraterritorial jurisdiction measures" is deliberate: it echoes the wording the European Union itself uses when rejecting the application of third-country laws to European entities.

Legal scholars in Beijing argue that the FSR's information-gathering powers, which can require disclosure of internal Communist Party committee minutes, state-bank loan agreements, and strategic planning documents, violate Chinese sovereignty and national security legislation. The European Commission, for its part, maintains that the regulation applies only to economic activity within the single market and that cooperation is a condition of market access.

JD.com and the e-commerce dimension

JD.com, listed in Hong Kong and Nasdaq, operates a logistics network that spans Europe through warehouses in the Netherlands, Germany, France and Poland. The company has been expanding its business-to-business marketplace and supply-chain services for European merchants, positioning itself as a rival to Amazon's fulfilment operations. The Commission has not disclosed the specific subsidies under examination, but previous FSR cases have focused on below-market loans from policy banks, equity injections from state asset managers, and tax preferences tied to strategic sectors.

E-commerce has not previously been a primary target of the FSR. The inclusion of JD.com suggests the Commission is broadening its sectoral scope beyond heavy industry and green technology into digital services and logistics, areas where Chinese firms have accumulated significant European market share. JD.com's European revenue is not broken out in its financial statements, but analysts estimate it at several hundred million euros annually, growing at double-digit rates.

Compliance caught between two systems

For the companies caught in the middle, the contradiction is immediate. The FSR imposes fines of up to 1% of global turnover for failure to supply requested information, and up to 10% for providing incomplete or misleading data. China's Anti-Foreign Sanctions Law allows asset freezes, visa bans, and commercial restrictions against individuals and entities that comply with foreign measures deemed discriminatory. A JD.com executive who authorises document production for Brussels could, in theory, face personal sanctions in China.

This dynamic has already played out in earlier FSR cases. In the solar and wind investigations, Chinese parent companies instructed their European subsidiaries to limit document production, leading the Commission to issue formal requests for information under Article 14 of the regulation. When those requests were partially declined, the EU executive used its power to draw adverse inferences, effectively treating the withheld data as confirming the subsidy allegations.

Previous FSR cases set the pattern

The JD.com probe follows a recognisable sequence. In the medical devices investigation, opened in April 2024, the Commission requested detailed financial flows from Chinese hospital groups operating clinics in Europe. The Chinese side responded by invoking data localisation requirements under the Personal Information Protection Law. In the rail rolling stock case, involving a consortium bidding for a Bulgarian tender, the Chinese partners declined to disclose the terms of state-bank financing, citing commercial secrecy provisions that Chinese courts have upheld against foreign discovery requests.

In each instance, the Commission has proceeded to provisional or final decisions based on the facts available, a procedure explicitly provided for in the FSR. The regulation's Article 20 allows the executive to base its findings on "the facts available" when a party does not cooperate. This mechanism, borrowed from World Trade Organization dispute settlement practice, is intended to prevent non-cooperation from stalling investigations.

What the blockage means for the investigation

Practically, the Chinese order makes it almost certain that JD.com's Chinese headquarters will not transmit the categories of data the Commission considers most probative: internal deliberations on pricing strategy, communications with state shareholders, and the terms of government-guided fund investments. The European subsidiary, JD.com Europe B.V., registered in Eindhoven, remains legally bound to respond to the Commission's questionnaires. But the information it holds is largely operational, sales figures, staffing, warehouse capacity, not the strategic financial data the investigation seeks.

The Commission can, and likely will, proceed to a preliminary finding based on the facts available. If it concludes that foreign subsidies have enabled JD.com to undercut European logistics rivals or acquire market positions it could not have reached on commercial terms, it may impose behavioural remedies, such as divestment of certain assets, capacity reductions, or pricing commitments, or, in extreme cases, prohibit the company from participating in public tenders across the EU.