China escalated its rhetoric toward the European Union after it imposed a record fine of 550 million euros, equivalent to about $630 million, on AliExpress, the platform owned by Alibaba Group, in the largest penalty imposed so far under the European Digital Services Act.

China's Ministry of Commerce expressed its 'strong dissatisfaction' with the decision and urged Brussels to stop what it described as 'abuse of discretionary power through ambiguous legal provisions.' The Chinese response reveals a shift in the dispute from a regulatory issue concerning product safety to a broader confrontation over how the EU uses its legal tools to monitor foreign e-commerce companies, particularly Chinese ones.

The EU imposed the fine after an investigation that began in March 2024 and concluded that AliExpress had not taken sufficient measures to prevent the sale of illegal or counterfeit products, including toys and cosmetics that do not meet the bloc's approved safety and environmental standards.

The European Commission said some goods that the platform flagged as non-compliant remained listed for weeks before removal, and illegal products reappeared after deletion. Brussels considered that the platform's system for monitoring non-compliant products overestimated its effectiveness and did not prevent some sellers from continuing their activities.

European criticism included the 'brand licensing' system used by the platform to combat counterfeit products, as authorities deemed it insufficiently effective, and a shortage of staff made it easier for some merchants to circumvent it.

Hina Vironen, the EU's technology official, stressed that platforms are required to identify and systematically address risks to consumers, noting that the decision aims to ensure safe online shopping and is not targeting any specific company.

However, AliExpress rejected the fine, calling it 'disproportionate,' and asserted that the decision ignored the risk management framework it relies on and the improvements it has implemented recently. It announced it would appeal the penalty, paving the way for a legal battle that could last a long time.

The Largest in Europe

The case is particularly significant due to the platform's large presence in the European market. AliExpress has about 193 million users in the EU, making it the largest Chinese e-commerce platform within the bloc, ahead of Shein with 156 million users and Temu with about 130 million. The EU also represents AliExpress's largest market, according to a senior European official.

The fine is the largest penalty under the Digital Services Act, which took effect in 2022 and grants the EU broad powers to monitor major platforms. Penalties under it can reach up to 6% of a company's total annual worldwide revenue.

The EU had previously imposed a fine of 120 million euros on X in December last year, and fined Temu 200 million euros in May, reflecting an increasing crackdown on major digital platforms.

A European official said Alibaba's global revenue reached 122 billion euros last year, but the AliExpress fine remained far below the theoretical maximum of 6%.

The platform must pay the fine and submit a plan by October 20 outlining the measures it will take to address the violations. It may face additional periodic fines if it fails to comply with EU requirements, although Brussels confirmed that the company is actively cooperating with the Commission.

Unfair Competition

The case is part of a broader European push to curb what Brussels describes as unfair competition from some Chinese retail platforms. The EU imposed this month a fee of 3 euros on low-value parcels entering its 27 member states, a step targeting the massive flows of cheap goods sold online.

Despite the EU denying that it targets companies based on nationality, Beijing sees the sequence of fines and fees as part of a more stringent regulatory environment toward Chinese firms.

The crisis reveals a growing contradiction in the economic relationship between the two sides. The EU is a key market for Chinese platforms, but at the same time it seeks to protect consumers and local businesses from unsafe and counterfeit goods and intense price competition. China, meanwhile, believes that ambiguity in interpreting the rules gives Brussels broad authority that could turn into a protectionist tool.

Thus, the AliExpress fine transcends its financial value to become a new test for the trade relationship between China and Europe, and for the ability of cross-border platforms to adapt to an era where digital laws have become a fundamental part of international economic competition.