BRUSSELS — China has dragged the EU’s foreign subsidies rules into its wider trade dispute with Brussels, just as the two sides enter a crucial stretch of negotiations. Beijing’s Ministry of Justice has ordered Chinese companies not to hand over information to EU officials in investigations under the FSR — the bloc’s tool to ensure that players in the single market don’t receive unfair support from abroad. The notice explicitly mentioned the European Commission’s in-depth probe into JD.com, the Chinese e-commerce giant that is trying to acquire Germany’s Ceconomy, the parent company of consumer electronics retailer MediaMarkt, in a €2 billion deal.
The move appears aimed at adding pressure on Brussels midway through a renewed trade dialogue between the EU and China, with negotiators engaged in intense closed-door discussions over how to narrow the EU’s €1 billion-a-day trade deficit in goods with China. The Commission is expected to hold a videoconference with the Chinese Ministry of Commerce in September that would pave the way for a trip by trade chief Maroš Šefčovič to Beijing in early October. The Commission will debrief EU leaders at a summit a few days later.
That could be a make-or-break moment for the bloc to decide whether constructive engagement is enough to rebalance the trading relationship — or whether Brussels needs to defend Europe’s trade interests more forcefully. China will closely monitor the EU’s actions and will take necessary measures to resolutely safeguard national security and the legitimate rights and interests of enterprises.” The Commission maintains that the FSR does not discriminate against companies on the basis of where they’re headquartered. According to Beijing, the EU is requesting too much information as it investigates whether JD.com’s deal is unfairly backed by Chinese state support.
The Commission worries that JD.com may be benefiting from unfair advantages in the form of preferential financing, tax incentives and grants provided by the Chinese government that could give it a competitive edge in the EU market once the transaction is finalized. JD.com offered remedies this week to address the Commission’s concerns, in what is typically a sign that talks are at an advanced stage. The company declined to comment.
Beijing’s intervention could even jeopardize the acquisition, according to Dirk Gotink, a center-right Dutch MEP and a member of the European Parliament’s International Trade Committee who is closely following the case. This article has been updated.
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