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 has consistently opposed the EU’s abuse of unilateral tools such as the Foreign Subsidies Regulation (FSR) to suppress Chinese companies,” a spokesperson for China’s Ministry of Commerce told reporters on Thursday. 

“I would like to emphasize that China and the EU have established a Trade and Investment Consultation (TIC) mechanism and reached a consensus on managing differences through dialogue and consultation,” the spokesperson added.

“We hope the EU will work with China to promptly correct its erroneous practices in the FSR investigation and strengthen communication through intergovernmental dialogue. 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.”

No discrimination

The Commission maintains that the FSR does not discriminate against companies on the basis of where they’re headquartered. 

“The FSR is completely, fully compliant with WTO rules as it applies to all companies irrespective of their nationality, and its objective is to ensure that all companies doing business in the EU, including Chinese ones, are treated equally and compete on an equal footing,” spokesperson Ricardo Cardoso told reporters in Brussels on Thursday. 

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.

“In the JD.com case, the EU has again arbitrarily and unreasonably demanded a wide range of information from relevant Chinese banks that is irrelevant to the investigation,” the Ministry of Commerce spokesperson said.

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.

“They’re being taken hostage by a political process,” he said, calling Beijing’s move “a unilateral escalation.” 

Camille Gijs contributed reporting. This article has been updated.

BRUSSELS — EU countries will be able to fund small local media without asking Brussels for permission, according to a draft of the bloc’s revised state aid rulebook obtained by POLITICO.

Government subsidies to businesses are strictly disciplined by Brussels under state aid rules, but there are exceptions. These are spelled out in frameworks, with the master one, the General Block Exemption Regulation (GBER), up for revision at the end of the year. 

The European Commission put out an initial draft for public consultation in February with a view to finalizing it by year’s end. The updated, 200-page draft gives a leg-up to local and independent journalism by allowing governments to fund small- and medium-sized outlets without formal vetting by Brussels.

“SMEs active in the press sector play an essential role in safeguarding media pluralism, cultural and linguistic diversity, democratic participation and citizens’ access to reliable information, particularly at local and regional level,” the Commission writes, highlighting structural challenges arising from the digital transformation of media markets.

To qualify for assistance, beneficiaries would need to fulfil at least one item in a Commission checklist that includes preserving media pluralism and diversity of opinion, transitioning to digital content while also preserving print editions. 

“The exemption covers aid pursuing cultural objectives — including linguistic diversity, the digitalization of press publications or the promotion of printed publications,” said Carole Maczkovics, of Counsel at Covington & Burling, of the press measures. 

Many European media outlets are struggling to stay viable, with print readership declining and publishers complaining that online platforms, such as search giant Google, are reducing referral traffic to their websites.

Broad scope

The GBER covers most sectors of the economy, from agriculture to transport, and is the target of intense lobbying from EU capitals, traditionally torn between big government spenders led by Germany and smaller member states, including the pro-free-trade Nordics, which complain that national subsidies distort the EU single market.

Countering the stereotype, Denmark was a leading advocate to extend GBER exemptions to the media. In a consultation response last year, the Danes said the state aid framework should be broadened to include private and public media providers “to promote harmonisation and simplify the general management of state aid in the media sector.”

The latest GBER draft focuses strongly on SMEs and innovation, as well as on the social dimension of state aid — as it expands on conditions for money that governments can put in training programs and the inclusion of disadvantaged workers. 

But it may not necessarily make things easier.

“Although the revision aims to simplify the State aid framework, it may ultimately make it more detailed and prescriptive,” warned Maczkovics. She added that the Commission’s gradual shift from broad aid categories to narrowly defined exemptions may sway EU countries to design measures that don’t quite fit the real needs of companies — for the sake of avoiding a notification.

Industry, for its part, is keeping a close eye on state aid exemptions, with airport lobby ACI Europe quick to react to the latest leak. 

“The revised GBER remains too restrictive for Europe’s smaller regional airports,” said Philippe Sacré, the association’s secretary general. He was referring to aid exemptions that would be restricted to airports handling over 500,000 passengers a year, according to the Commission’s draft. 

The Commission’s latest State aid Scoreboard shows that EU countries spent €168.2 billion in state aid in 2024, with Germany, France and Italy the top spenders. Capitals are increasingly taking advantage of block exemptions, with GBER representing close to 70 percent of all active exemption measures.

Tommaso Lecca contributed reporting.