Mark Schiefelbein / AP
BEIJING – Over the past three years, the United States and the European Union have imposed a series of sanctions on Chinese officials and companies. Now China has created a new legal tool to fight back.
Organizations with a foothold in both the United States and China could face a difficult choice in the future: by complying with U.S. sanctions against China, they expose themselves to the possibility of severe sanctions in China in the future. as a sanction.
Beijing on Thursday passed sweeping new law designed to counter numerous U.S. and European sanctions against Chinese officials and large Chinese companies. Those involved in the design or implementation of US and European sanctions could be denied, or their family members, visas to China. Their property in China can be seized and any business transaction they attempt with a Chinese institution can be blocked.
“The law points out that when you have no status or power to lead people, then your law in the United States will not get you anywhere in China,” said Wei Jianguo, former vice minister of commerce. “This law is like the ringing of a gong. It is a warning to the United States: you should be concerned. China will not endure this treatment as easily as before.”
It is not yet clear how often China will use its new anti-foreign sanctions laws, or to what extent. But this ambiguity has already thrilled the business community, which is required to develop China-specific standards and operations separately from their global operations, as China creates its own legal landscape.
On the surface, the law simply codifies a number of retaliatory measures Beijing has already taken in response to Western sanctions. The law also appears to primarily target foreign politicians who impose sanctions on China in their home countries.
But the anti-foreign sanctions law is worded so broadly that members of the foreign affairs community fear finding themselves in the geopolitical crosshairs. Under the new law, decisions to sanction entities – such as companies or their employees – are final. There is no possibility of appealing.
“When you mix law with politics, you are inevitably going to get politics,” says James Zimmerman, partner in the Beijing office of law firm Perkins Coie.
During a Foreign Ministry briefing on Friday, spokesman Wang Wenbin defended the new law, saying the measure offers greater legal stability. “China always welcomes and supports foreign companies to conduct business and cooperate in China, and protect their rights and interests in accordance with the law,” Wang said. “China’s door to opening will only open wider and wider.”
In the past year, China has already sanctioned more than a dozen European academics and politicians, as well as US officials, including former Secretary of State Mike Pompeo, in retaliation for previous sanctions against their Chinese counterparts. But Beijing has also sanctioned defense companies Raytheon and Lockheed Martin for arms sales to Taiwan.
“Businesses, regardless of their country of origin, must comply with the laws of the host country when operating,” said He Weiwen, a former Chinese trade official who is now a senior member of the Beijing-based think tank. .
This week, China also passed a new data security law that places stricter limits on data generated in China and how it can be transferred out of the country. Last month, Tesla, criticized for the way it silos information extracted from the cameras and sensors of its electric cars in China, said it would store that data in China, as Apple already does.
“We don’t want to face a lot of uncertainties and we have to operate in a predictable environment,” Zimmerman says, referring to his US business customers. “But if the legal system is subject to politics, it makes it very, very uncertain.”
Over the past three years, the United States and China have imposed multiple rounds of tariffs in a damaging trade war. Washington has also imposed sanctions on Chinese officials and companies for human rights violations in the Xinjiang region and Hong Kong.
China has been threatening to take legal action to counter these sanctions for years. Some of these threats have yet to materialize. In 2019, China warned that it would create an “untrusted entity list” to blacklist foreign companies it said would harm the country’s interests. More than two years later, Beijing has yet to blacklist any companies.
But as the United States continues to add new sanctions, China is exerting increased pressure to take more concrete action. Last week, the Biden administration announced it would expand sanctions to prevent U.S. investments in 59 Chinese companies that allegedly contribute to the Chinese military.
In January, China’s Ministry of Commerce issued its first decree of the year – making it a hotline to report sanctions, tariffs, or other foreign legislation that prevents a Chinese entity from “normal economic, trade, and related activities.” .
The Commerce Ministry could then decide to block the entry into force of the measure – preventing the company from following international sanctions – or allow the sanctioned Chinese company or individual to sue a foreign company in a local Chinese court. .