China's Ministry of Justice just labeled certain EU Foreign Subsidies Regulation (FSR) practices as "improper extraterritorial jurisdiction." For Chinese companies heading to Europe, this is a sovereign-level pushback — but the regulation itself keeps biting.
A reminder of what FSR (Regulation (EU) 2022/2560) actually does, in force since July 2023:
→ M&A notification: target with EU turnover ≥ €500M + combined foreign financial contributions ≥ €50M over 3 years → mandatory pre-notification to the Commission.
→ Public procurement notification: contract value ≥ €250M + foreign financial contributions ≥ €4M from a single non-EU country over 3 years → mandatory declaration at bidding.
The trap is the term "foreign financial contribution." Per the Commission, it captures far more than subsidies — SOE customer orders, preferential loans, tax breaks, land grants can all fall in. That's where Chinese groups consistently underestimate their exposure.
What the MOJ response signals (my read):
The pushback targets low triggering thresholds, sweeping document requests reaching into purely domestic Chinese business records, the presumptions around SOE conduct, and confidentiality gaps. It does not pause FSR enforcement inside the EU.
Practical playbook I run with cross-border clients:
- Build a 3-year foreign financial contribution inventory before any EU deal — Commission can open ex officio probes regardless of thresholds.
- Layer your group data. Some materials the Commission can lawfully demand sit on top of Chinese DSL / state secret restrictions. Build the channel before the RFI arrives, not after.
- Front-load FSR into deal timing. Phase 1 + Phase 2 review can run up to 25 + 90 working days. Bake it into the SPA conditions precedent, not into a post-signing scramble.
- The MOJ position is now part of your defense record — procedurally, in litigation before EU courts, and in public communications.
FSR isn't designed to lock Chinese companies out. It's a market-protection plus geopolitical tool, enforced strictly, modulated politically. The real capability to build is not "we are compliant therefore safe" — it's "we can see this regime, price it, and respond to it in legal language."
Specific application depends on current EU text and qualified EU counsel.
If your group is structuring an EU acquisition or tendering for a large EU public contract, I'd be glad to compare notes on the FSR layer before it becomes urgent.
#CrossBorderMA #FSR #ChinaEU #InternationalLaw #ComplianceLeadership
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Mike Wu, China-licensed Attorney · Cross-border practice
4 languages (CN/EN/ES/JA)
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