China’s Sanctions Regime: A Growing Challenge

Key Points

• Unreliable Entity List (UEL): Established by the Ministry of Commerce (MOFCOM) in 2020 to punish foreign entities that act against China’s national interests.
• Anti-Foreign Sanctions Law (AFSL): Adopted in June 2021, providing a legal framework for unilateral targeted sanctions on individuals and organizations involved in discriminatory measures or interference with China’s internal affairs.
• Sanction Targets: Individuals and organizations directly or indirectly involved in formulating, implementing, or assisting with sanctions and those who interfere with China’s internal affairs.
• Measures: Visa refusal, deportation, financial transaction bans, asset seizures, and other measures that can be expanded on a case-by-case basis.
• Family Members: Sanctions may apply to spouses and immediate family members of targeted individuals.
• Financial Sanctions: Limited for now but ongoing policy debates show interest in developing a legal basis.

Characteristics of China’s Sanction Regime

Unpredictability

Beijing aims to create the perception that its punitive measures are difficult to predict, which may deter foreign sanctions and keep foreign companies in China from abiding by potential foreign sanctions.

Flexibility

The AFSL allows Chinese citizens and organizations to sue for damages individuals and organizations who implement or assist in the implementation of discriminatory measures taken by a foreign country.

Limited Transparency

Not all measures are officially announced and/or adopted by the central government, making it challenging to respond to China’s sanctions policy.

Conclusion

Keeping a close eye on China’s future behavior in devising sanctions is needed for adequate responses.