China expands anti-sanctions toolkit, raising risks for foreign firms

China is expanding its toolkit to antagonistic overseas sanctions and export controls, placing multinational companies successful the enactment of occurrence arsenic Beijing, Washington and Brussels speech tit-for-tat punitive measures.

Since March, Beijing has passed 2 caller regulations that grow its quality to retaliate against overseas entities deemed to person threatened its proviso concatenation information oregon enforced sanctions imposed with “improper extraterritorial jurisdiction”.

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A 3rd law, inactive successful draught form, would let Chinese prosecutors to bring cases against overseas organisations and individuals whose “unlawful acts harm the country’s nationalist interests oregon societal nationalist interest”, according to authorities media.

The move, portion of a broader effort to fortify China’s nationalist involvement litigation law, was announced successful June.

James Hsiao, a Hong Kong spouse with the multinational instrumentality steadfast White & Case, said that firms are acrophobic astir however to comply with opposing rules and regulations.

“Some companies person expressed immoderate interest that these measures could impact mean commercialized transactions, peculiarly wherever companies look perchance conflicting ineligible obligations,” Hsiao told Al Jazeera.

“A institution whitethorn beryllium required nether US oregon EU sanctions rules to restrict dealings with a counterparty, portion besides needing to see whether taking that enactment could make hazard nether [Chinese] countermeasures,” helium said.

Firms could look fines, visa cancellations, plus freezes, concern restrictions and curbs connected the import oregon export of goods from China if they instrumentality measures with “improper extraterritorial jurisdiction” nether State Council Decree No. 835, which was passed successful April.

Under State Council Decree No. 834, passed successful March, companies tin look penalties if they “disrupt, undermine oregon discriminate against China’s concern oregon proviso chains”.

These changes are apt to complicate firms’ efforts to adhere to Western sanctions and measure proviso concatenation risks, exposing them to “increased scrutiny wherever concern decisions oregon compliance measures could beryllium perceived arsenic implementing overseas discriminatory oregon different restrictive measures”, according to the US multinational instrumentality steadfast Paul Hastings.

Hanscom Smith, a elder chap astatine Yale Jackson School of Global Affairs, said the expanded regulations should beryllium seen arsenic a motion of things to come.

People locomotion past the Novo Nordisk booth astatine the 8th China International Import Expo (CIIE) successful Shanghai, China connected November 6, 2025 [Andrew Silver/Reuters]

“In a ‘rule by law’ strategy similar China’s, regulations are a signifier of signalling and won’t needfully beryllium applied uniformly,” Smith told Al Jazeera.

“Regardless, the caller measures summation the regulatory complexity for overseas companies doing concern successful China.”

China’s embassy successful Washington and its ngo successful Brussels did not instantly respond to Al Jazeera’s requests for comment.

The Ministry of Commerce has antecedently said its anti-sanctions laws safeguard China’s “national sovereignty, information and improvement interests”, and “protect the morganatic rights and interests of Chinese citizens, ineligible persons and different organisations.”

 Beijing-based advisory steadfast Trivium China said successful a March probe enactment that overseas companies volition beryllium “increasingly caught betwixt an American stone and a Chinese hard place”.

Since introducing its “Unreliable Entities List” successful 2020, China has built up its arsenal of measures to antagonistic overseas sanctions and export controls, which Western capitals person imposed successful effect to claimed nationalist information threats and alleged quality rights abuses successful places specified arsenic Hong Kong and Xinjiang.

The US has sought to artifact China from accessing precocious technologies, including high-end semiconductors utilized to powerfulness AI, and restricted American companies from doing concern with entities linked to the Chinese military.

While little assertive successful its attack to “derisking” from China, the EU has sanctioned Chinese entities for allegedly committing quality rights violations successful Xinjiang and supporting Russia’s warfare successful Ukraine.

The bloc has besides launched galore probes into Chinese companies for unfair commercialized practices.

“Before 2020, Beijing didn’t person established sanctions lists oregon blocking statutes, meaning the lone retaliatory measures astatine their fingertips were harshly worded statements and assorted commercialized disruptions,” Even Pay, a manager astatine Trivium China, told Al Jazeera.

“Counter-sanctions measures let for a overmuch much nonstop tit-for-tat response, which Beijing prefers.”

In May, Beijing for the archetypal clip invoked its 2021 “blocking law” to barroom Chinese citizens and companies from complying with US sanctions imposed connected Chinese “teapot” lipid refineries for buying Iranian oil.

That aforesaid month, the Ministry of Justice invoked Decree No. 835 to find that an EU probe into Nuctech, a Chinese information instrumentality institution with subsidiaries successful Europe, was a lawsuit of “improper extraterritorial jurisdiction”.

In enactment with the decision, nary organisation oregon idiosyncratic whitethorn assistance successful the EU  probe, a ministry spokesperson said.