What is China’s anti-sanctions law and how does it work?

China has ordered its citizens and companies not to comply with United States sanctions against 5 Chinese refineries accused of handling Iranian oil, deploying a instrumentality intended to counteract “extra-territorial” punitive measures for the archetypal time.

China’s Ministry of Commerce issued the “prohibition order” aft the US Department of the Treasury past period announced sanctions targeting 1 of China’s biggest independently tally “teapot” refineries.

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The determination marks a important escalation successful Beijing’s efforts to antagonistic what it views arsenic the unjustified “long-arm jurisdiction” of US laws and regulations.

Here is what we cognize astir China’s bid and its anti-sanctions regime:

What does China’s bid say?

In its announcement connected Saturday, China’s Ministry of Commerce stipulated that the US sanctions connected Hengli Petrochemical (Dalian) refinery and 4 different refineries antecedently targeted by Washington “shall not beryllium recognised, enforced oregon complied with”.

The ministry said the sanctions “improperly” restricted mean commercialized and concern activities successful usurpation of planetary law, and it issued its bid to safeguard China’s “national sovereignty, security, and improvement interests”, arsenic good arsenic the “lawful rights and interests of Chinese citizens”.

“The Chinese authorities has consistently opposed unilateral sanctions that deficiency authorisation from the United Nations and a ground successful planetary law,” the ministry said successful a statement.

The US Treasury Department imposed the latest sanctions aft accusing Hengli of generating hundreds of millions of dollars successful gross for Iran’s subject via crude lipid purchases, calling the refinery “one of Tehran’s astir valued customers”.

China is Iran’s largest commercialized spouse and by acold the biggest purchaser of Iranian oil.

Chinese buyers received much than 80 percent of Iran’s lipid shipments successful 2025, according to marketplace quality steadfast Kpler.

A Chinese emblem flutters astatine the Chinese Ministry of Commerce gathering successful Beijing, China, connected June 4, 2025 [Florence Lo/Reuters]

How does China’s anti-sanctions instrumentality work?

Under the law, Chinese citizens and organisations restricted from engaging successful concern activities by overseas authorities are required to study their circumstances to the Ministry of Commerce wrong 30 days.

Those who neglect to study their concern to the authorities look imaginable penalties, including warnings and fines.

After determining wrong a 30-day reappraisal play that a concern oregon idiosyncratic has been taxable to an “unjustified extra-territorial application”, the ministry tin contented an bid barring the enactment from complying with the legislation.

Businesses that endure losses owed to parties’ compliance with overseas sanctions tin initiate tribunal proceedings against them for compensation, and successful immoderate cases whitethorn person “necessary support” from the government.

Beijing introduced the instrumentality successful 2021 aft years of tensions with US President Donald Trump’s archetypal medication implicit sanctions targeting Chinese firms and technology, casting the measurement arsenic a antagonistic to “rising unilateralism”.

Naimeh Masumy, a PhD campaigner astatine Maastricht University who has studied China’s anti-sanctions measures, said the instrumentality marked the instauration of a codified strategy for prosecuting its longstanding grievances against the US sanctions regime.

“Before this, China mostly relied connected advertisement hoc diplomatic protests and informal pressures,” Masumy told Al Jazeera.

“By formalising this absorption into statute law, China is sending a wide signal: it views US sanctions arsenic a systemic, semipermanent situation that requires a structural ineligible response, alternatively than conscionable reacting case-by-case.”

How important is China’s latest move?

The bid is noteworthy arsenic this is the archetypal clip that Beijing has invoked its anti-sanctions measures, formally known arsenic the “Rules connected Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures”.

“The determination signals that Beijing is taking a much assertive attack to countering sanctions,” Dominic Chiu, a China expert astatine governmental hazard advisor Eurasia Group, told Al Jazeera.

“They are demonstrating a little threshold for deploying their ineligible and regulatory toolkit to antagonistic US sanctions,” Chiu said, adding that Beijing has been expanding its range of retaliatory instruments since the archetypal Trump administration.

What does this mean for companies navigating tensions betwixt the US and China?

It potentially puts them successful a hard position.

Companies hazard facing the wrath of Washington oregon Beijing, depending connected which measures they comply with.

Maastricht University’s Masumy said firms are apt to attack the competing pressures based connected their respective levels of vulnerability to the US and Chinese markets.

“For astir companies with immoderate important vulnerability to US markets, transactions successful US dollars, oregon relationships with American banks, the determination is comparatively clear,” she said.

“The consequences from the US are usually acold much contiguous and devastating than thing Beijing mightiness impose.”

But the calculation “shifts considerably” for companies heavily focused on China and Chinese state-owned enterprises, Masumy said.

“For these entities, complying with the blocking statute becomes a much realistic anticipation – and the hazard of US punishment becomes the outgo of doing concern wrong China’s regulatory framework,” she said.

Eurasia Group’s Chiu said helium does not expect the bid to person an contiguous worldly interaction arsenic its powerfulness mostly rests connected whether Beijing decides to enforce penalties and the affected refineries take to sue.

But China’s stance means that firms whitethorn progressively look “binary choices betwixt complying with US sanctions and risking Chinese countermeasures, oregon vice versa”, Chiu said.

The US Department of the Treasury gathering successful Washington, DC, the United States, connected December 7, 2024 [Jose Luis Magana/AP]

Chinese authorities media has been anxious to overgarment Beijing’s efforts arsenic instructive to different countries seeking to antagonistic US pressure.

In an unsigned commentary, the state-run Global Times hailed the anti-sanctions bid arsenic a “practical illustration for the planetary assemblage to defy unilateral bullying and reason ‘long-arm jurisdiction'”.

Masumy said the anti-sanctions law’s astir important semipermanent effect could beryllium to animate different powers specified arsenic Russia and the European Union.

“A Chinese exemplary – adjacent an imperfect 1 – of codified counter-sanctions instrumentality gives these states a template and, possibly much importantly, a grade of governmental legitimacy for doing the same,” she said.

Chiu, however, expressed doubt that China’s exemplary would beryllium of overmuch usage to countries already successful Washington’s crosshairs.

“Most adversaries specified arsenic Iran oregon Russia are already chopped disconnected from the US fiscal system,” Chiu said.

“This makes it little compelling for entities operating wrong their countries to comply with US sanctions,” helium said.

“If Russian oregon Iranian firms person already been severed from the dollar-clearing access, past a home blocking bid telling them not to comply adds small applicable value.”