JD deal showcases stakes of a China-EU cold war

China said on August 19 that a European Union investigation into e-commerce firm JD.com constituted "improper extraterritorial jurisdiction" and ordered entities not to implement or assist with the probe.

JD.com risks becoming collateral damage in the deteriorating trade relationship between the EU and Beijing. Chinese officials have waded into a Brussels-led probe of the $41 billion retailer's takeover bid for Germany's Ceconomy. A deal would help JD expand overseas while channelling fresh investment into the bloc. But if geopolitics torpedo it, the fallout may be costly for both sides.

The $2.5 billion deal has been stuck in regulatory limbo for nearly a year, largely thanks to the European Commission's Foreign Subsidies Regulation (FSR) aimed at acquirers that may have received unfair state aid. Last week, JD.com offered undisclosed remedies to address those concerns, signalling a breakthrough. That now looks unlikely after China's Ministry of Justice promptly ordered domestic entities not to implement or assist with the investigation, blasting it as "improper extraterritorial jurisdiction".