Clued-in | Don't let 'extraterritorial jurisdiction' undermine China-EU economic and trade cooperation

The European Union recently launched cross-border investigations into Chinese companies under its Foreign Subsidies Regulation (FSR), a move that China's Ministry of Justice has legally identified as "unlawful extraterritorial jurisdiction." Following the EU's Industrial Accelerator Act and the proposed revision of the EU Cybersecurity Act, the latest development has once again drawn public attention to growing China-EU economic and trade frictions.

Since its implementation, the FSR has increasingly served as a unilateral instrument with clear protectionist undertones. Its misuse of extraterritorial jurisdiction is mainly reflected in three aspects.

First, it compels Chinese enterprises and financial institutions to disclose core data held within China across borders, seriously contravening international law and basic norms of international relations.

Second, it broadens the definition of foreign subsidies, sweeping the Chinese government's normal industrial support policies under the label of "market distortions" without sufficient evidence or procedural transparency.

Third, it creates a "double jeopardy" situation where companies that comply risk violating China's Data Security Law, while those that refuse face hefty fines or even exclusion from the EU market.

These actions not only disrupt the normal investment and business operations of Chinese companies in Europe but also harm the EU's own interests. Chinese enterprises in electric vehicles, wind power and photovoltaics have provided the EU with high-quality, cost-effective products and are an important pillar of its green transition. The misuse of FSR investigations will slow both Europe's and the world's green transformation, with the ultimate costs falling on European consumers and businesses.

China and the EU are two of the world's major economies. Maintaining a healthy and stable economic and trade relationship serves the common interests of both sides and contributes to global peace and prosperity. While we must recognize the challenges posed by the misuse of the FSR, we should also acknowledge the strong underlying momentum and broad prospects for China-EU cooperation.

According to China's General Administration of Customs, China's total imports and exports with the EU reached 5.93 trillion yuan ($873.6 billion) in 2025, up 6 percent, accounting for 13 percent of China's total trade and contributing 0.8 percentage point to the country's overall trade growth.

According to EU data, total China-EU trade in the first 10 months of 2025 exceeded $700 billion, accounting for 14.5 percent of the EU's total trade and contributing more than 0.8 percentage point to its trade growth.

As of May 9, the cumulative number of China-Europe freight train runs had exceeded 130,000. This demonstrates that China-EU economic and trade cooperation is complementary and mutually beneficial, with strong resilience against external shocks.

Historically, extraterritorial jurisdiction originated as a tool of hegemonic power and later evolved into a "long-arm" mechanism used to suppress competitors. European manufacturing and financial institutions have themselves been on the receiving end and paid a heavy price.

The EU and its member states have reflected on this experience and undertaken long-term resistance and countermeasures. As the saying goes, "Do not do to others what you would not want done to yourself." We do not wish to see the EU apply to Chinese companies the same practices it once suffered from, nor do we wish to see such practices become a destructive force undermining the foundation of China-EU economic and trade cooperation.

China and the EU are partners, not rivals. Cooperation outweighs competition, and consensus outweighs differences. There are no fundamental conflicts of interest between the two sides, and cooperation remains the defining feature of the relationship.

As long as both sides remain partners and manage economic and trade differences through dialogue and consultation, China-EU cooperation can overcome temporary difficulties and deepen in areas such as the green transition and the digital economy. This would open a new chapter of mutually beneficial outcomes, injecting greater stability and certainty into an increasingly turbulent world.

Yang Chengyu is an associate research fellow at the Center for Promotion of Cultural Development at the Chinese Academy of Social Sciences