China mounted a legal challenge to the ongoing European Union probe into Nuctech, barring domestic entities or individuals from complying with Brussels’ cross-border investigative demands while condemning its “abuse of unilateral tools” to suppress Chinese enterprises.

The Ministry of Justice designated the EU’s actions under its Foreign Subsidies Regulation (FSR) during the probe as an “unjustified extraterritorial jurisdiction measure”, and banned any entity or individual from assisting the investigation, invoking China’s anti-extraterritorial jurisdiction regulations in a notice late Friday.

On Saturday, the Ministry of Commerce followed with its own rebuke. Backing the legal blockade, a commerce ministry spokesperson condemned Brussels for escalating the probe, accusing the bloc of coercing Chinese banking institutions to cooperate and unreasonably demanding sweeping, irrelevant domestic information under its FSR.

Many Chinese companies and banking institutions operating and investing in Europe had been “severely adversely affected”, according to a statement published on the commerce ministry’s official website.

The standoff centres on the Chinese security equipment firm Nuctech, which was the subject of raids by the European Commission in April 2024 under its FSR to investigate alleged market-distorting state subsidies.

The FSR was introduced by Brussels in 2023 and has since been frequently used against Chinese companies in sectors such as railway rolling stock, solar energy and security scanning.

“China has consistently opposed the EU’s abuse of unilateral tools such as the Foreign Subsidies Regulation to suppress Chinese enterprises,” said the commerce ministry spokesperson, reaffirming a January 2025 finding that the FSR constitutes a trade and investment barrier.