China has escalated a growing regulatory dispute with the European Union by ordering companies and individuals not to cooperate with a Brussels investigation into JD.com’s proposed $2.5 billion acquisition of German electronics retailer Ceconomy, accusing the EU of exercising “improper extraterritorial jurisdiction.”

The directive, issued by China’s Ministry of Justice on Wednesday, marks the second time Beijing has used regulations introduced in April to counter what it considers unlawful foreign jurisdiction. The move raises the prospect of a broader confrontation between Beijing and Brussels over how far European regulators can reach into the operations and financing of Chinese companies.

China said the EU investigation had sought “extensive and unnecessary” information from within China and described the requests as a “serious violation of the international rule of law.”

“If the EU persists in its unilateral actions, China will resolutely retaliate in accordance with the law,” the ministry said.

The dispute centers on JD.com’s proposed takeover of Ceconomy, the German retail group behind MediaMarkt and Saturn. The transaction would give JD.com a major physical retail footprint across Europe and represent one of the most significant attempts by a Chinese e-commerce company to expand its consumer business into the European market.

The European Commission opened an in-depth investigation in May under its Foreign Subsidies Regulation, or FSR, after raising preliminary concerns that JD.com may have benefited from foreign subsidies capable of distorting competition in the EU internal market. The Commission identified potential preferential financing, tax incentives and grants provided by entities possibly attributable to the Chinese government.

JD.com has rejected the subsidy concerns. The company said the Ceconomy acquisition would not be financed by subsidies from China or any other non-EU government, but through external private bank debt and cash generated through its ordinary business operations.

The EU investigation has nevertheless advanced. In July, the Commission formally notified JD.com of its objections, a significant step that indicates the regulator has moved beyond an initial information-gathering exercise and is actively assessing whether the proposed transaction could distort competition.

The latest intervention from Beijing could now make that process substantially more difficult.

The Foreign Subsidies Regulation gives Brussels powers to examine financial contributions from non-EU governments when they may have given companies an unfair advantage in the European market. The rules are intended to address a gap in traditional competition policy, which generally focuses on the behavior of companies within the EU rather than the influence of state support received outside the bloc.

That is why the JD.com case matters. Brussels is attempting to establish whether state-backed advantages enjoyed by a foreign company before it enters the European market could affect competition after an acquisition. Beijing, by contrast, is challenging the EU’s ability to demand information from Chinese entities located outside the bloc.

The clash therefore extends beyond a single takeover. It tests the practical reach of one of the EU’s newest economic-security tools at a time when European authorities are increasingly examining Chinese companies over subsidies, market access and competitive practices.

A Bigger China-EU Regulatory Confrontation

The JD.com dispute comes as Brussels has intensified scrutiny of Chinese companies operating or expanding in Europe.

China issued a similar order in May concerning an EU investigation into Nuctech, a Chinese security equipment company. The repeated use of Beijing’s extraterritorial-jurisdiction rules indicates that the government is developing a formal mechanism to resist foreign regulatory demands rather than treating individual investigations as isolated disputes.

The confrontation also follows increased European scrutiny of Chinese e-commerce platforms. In July, the European Commission accused Temu of failing to cooperate with an investigation under the same Foreign Subsidies Regulation.

For Brussels, the underlying concern is about whether Chinese companies competing in Europe benefit from forms of state support that European companies cannot access on equivalent terms. But aggressive use of such rules risks becoming another barrier to Chinese companies seeking overseas growth.

That tension could become a major concern for JD.com as it expands beyond its domestic market. The Ceconomy acquisition would provide access to more than 1,000 stores across Europe through the MediaMarkt and Saturn networks, giving JD.com a substantial physical distribution platform alongside its e-commerce capabilities.

The proposed transaction therefore has an industrial dimension as well as a competition dimension. It would give one of China’s largest technology and retail groups greater access to European consumers, logistics networks and established retail infrastructure.

Beijing’s Warning Raises Uncertainty Over The Deal

The immediate question is whether Chinese restrictions on cooperation will impede the Commission’s ability to complete its investigation.

The European regulator can impose remedies or potentially block a transaction if it determines that foreign subsidies have distorted the internal market and that the problem cannot be adequately addressed through commitments. The investigation is therefore capable of affecting both the timing and final structure of the Ceconomy transaction.

The German authorities have already approved the deal, but the EU-level review remains a separate and potentially decisive hurdle.

Beijing’s warning also introduces a new legal risk for companies caught between two regulatory systems. Chinese entities could face pressure from Beijing not to provide information demanded by European authorities, while failure to cooperate with Brussels could expose them to consequences under EU rules. That creates the possibility of a regulatory standoff in which compliance with one jurisdiction could conflict with compliance with the other.

More broadly, the case shows that trade and investment disputes between China and Europe are increasingly shifting from tariffs and market-access restrictions toward questions of subsidies, corporate ownership, data and regulatory jurisdiction.

The JD.com investigation has inadvertently become an opportunity for the EU to establish whether the Foreign Subsidies Regulation can effectively scrutinize state support behind major foreign acquisitions. For Beijing, the case is a test of whether its new countermeasures can prevent European regulators from extending their investigations deep into China’s domestic financial and corporate systems.