China has moved aggressively to counter a European Union investigation into Chinese security equipment maker Nuctech, marking the first use of Beijing’s newly introduced legal framework designed to resist what it considers “improper” foreign jurisdiction over Chinese firms. The move highlights a rapidly intensifying legal and economic confrontation between China and the European Union as global trade tensions deepen.
The dispute centers on an EU investigation into Nuctech, a partly state-owned Chinese manufacturer known for producing airport baggage scanners and other security equipment. European regulators are examining whether Chinese state subsidies gave the company an unfair advantage in European markets under the bloc’s Foreign Subsidies Regulation. The investigation previously included raids on Nuctech offices in the Netherlands and Poland in 2024, actions that Beijing strongly criticized.
On May 15, Chinese authorities ordered that no organization or individual assist the EU’s cross-border investigation, arguing that the probe involved excessive demands for data and information stored within China. The order was issued under new regulations introduced in April 2026 aimed at countering foreign “extraterritorial jurisdiction,” a concept describing attempts by governments or courts to enforce authority beyond their own borders.
Legal analysts say the decision represents a major escalation in China’s efforts to shield domestic companies from mounting foreign pressure. Kenneth Zhou, a partner at Chinese law firm JunHe, said the move sends a direct signal that Beijing is now prepared to actively enforce a growing legal arsenal against foreign governments and regulators. He warned that multinational corporations now face increasingly difficult choices when confronted with conflicting legal obligations from different jurisdictions.
The latest action follows another significant enforcement step taken earlier in May, when Beijing ordered Chinese firms not to comply with United States sanctions targeting five Chinese refineries accused of purchasing Iranian oil. That order marked the first use of separate “blocking rules” originally introduced in 2021 to neutralize the impact of foreign sanctions inside China.
China’s legal countermeasures have steadily expanded since the trade war initiated during the US President Donald Trump’s first administration. Over recent years, Beijing has introduced a broad range of defensive economic laws, including export control regulations, an “unreliable entity list” targeting foreign firms seen as harming Chinese interests, and an anti-foreign sanctions law. In March, new rules aimed at protecting supply chains from foreign diversification efforts also came into force.
Experts say the April 2026 regulations used against the EU are particularly significant because of their broader reach. Yu Zhiguo, a partner at Zhong Lun Law Firm and former Chinese Commerce Ministry official, noted that unlike the older blocking rules focused primarily on entities operating within China, the newer framework can also apply to foreign companies and advisers based overseas if their actions are deemed harmful to Chinese interests.
The rules further assert China’s own right to exercise extraterritorial jurisdiction over activities with what authorities describe as a “sufficient nexus” to China. Analysts interpret this as a declaration that Beijing is prepared to extend its legal reach internationally in defense of Chinese companies and strategic interests.
Observers say China is now transitioning from merely building legal frameworks to actively enforcing them. Todd Liao, a partner at Morgan Lewis in Shanghai, said Beijing’s response in the Nuctech case was triggered by EU demands for direct access to IT systems and executive emails hosted in Beijing. He described the situation as creating a “structural compliance dilemma” for international companies, banks, auditors, and advisory firms operating across multiple jurisdictions.
The growing legal confrontation leaves multinational businesses increasingly trapped between competing global powers. Companies operating in both China and Western markets now face the risk of violating one country’s laws while attempting to comply with another’s demands. Analysts believe Beijing’s latest actions are designed not only to defend Chinese companies but also to deter future foreign investigations by demonstrating China’s willingness to retaliate forcefully when challenged.
