China’s Sanctions Enforcement Efforts Intensify Amid Escalating Trade Tensions

Beijing has been stepping up its sanctions enforcement efforts in recent years, adapting its patchwork of laws and regulations to address escalating trade tensions with major trading partners like the United States.

Unreliable Entities List and Anti-Foreign Sanctions Law

One significant development is the establishment of the Unreliable Entities List, which restricts business activities in China by foreign entities that threaten national security or interests. The list has already been used to designate two US companies, Lockheed Martin Corporation and Raytheon Missiles & Defense, as unreliable entities.

Another key legislation is the Anti-Foreign Sanctions Law, enacted in 2021, aimed at countering sanctions imposed by foreign states on China’s government officials. The law provides for the creation of an anti-foreign sanctions Counter List, allowing the Chinese government to impose countermeasures on individuals and organizations included on the list.

Export Control Law

China’s Export Control Law, effective since December 2020, aims to bring the country’s export control rules in line with international standards. The law introduces four categories of controlled items and requires exporters to obtain licenses for certain goods and technologies.

Enforcement of the Export Control Law has been ongoing, with several cases involving fines imposed on Chinese exporters who failed to comply with licensing requirements.

Blocking Statute

In January 2021, China’s Ministry of Commerce issued a Blocking Statute, aimed at countering unjustified extraterritorial application of foreign laws and measures. The law requires Chinese nationals and organizations to report instances where they face restrictions from engaging in normal commercial activities with foreign entities. A prohibition order may be issued if the extraterritorial application is deemed unjustifiable.

Cooperation with Other Countries

While China does not typically cooperate with other countries on sanctions enforcement, there have been instances of joint efforts to counter sanctions imposed by third parties.

Outlook

China’s sanctions enforcement efforts are likely to continue evolving in response to the country’s changing trade landscape. As tensions between China and major trading partners remain high, Beijing may increase its use of sanctions as a tool to protect its economic interests.

In the meantime, Chinese businesses must be aware of the increasing complexity of international trade regulations and ensure compliance with relevant laws and regulations to avoid potential penalties.