Western Companies “Shocked” After China Rushes Through Anti-Sanctions Law

There should be little doubt that the timing is intentional: China on Thursday passed its sweeping new law to ‘safeguard’ Chinese businesses and entities from Western and especially US sanctions, just hours ahead of President Joe Biden sitting down with G-7 leaders in Cornwall to argue for a common stance on curtailing China’s influence. AFP observes: “China’s quick rollout of a law against foreign sanctions has left European and American companies shocked and facing ‘irreconcilable’ compliance issues, two top business groups said Friday, despite Beijing saying the move would unlikely impact investment.”

The Anti-Foreign Sanctions Law, as we described earlier, is designed shield Chinese entities and institutions from “the unilateral and discriminatory measures imposed by foreign countries” and ultimately the “long arm jurisdiction” of the United States.  

It effectively enables the Chinese government to sanction all who comply with US/EU sanctions by drawing a bright red line, forcing entities to choose whether to comply to Washington’s side or Beijing’s side. Upon its introduction early this week in the National People’s Congress there were few details given, other than vowing that “if Chinese entities are hit with unjustified sanctions, the proposed law is supposed to crystallize actionable countermeasures against the foreign governments and institutions…expecting the legal effort to make up for losses that Chinese entities would suffer.”

With the law’s passage, details have been revealed as follows:

Countermeasures in the Chinese law include “refusal to issue visas, denial of entry, deportation… and sealing, seizing, and freezing property of individuals or businesses that adhere to foreign sanctions against Chinese businesses or officials,” according to the text published by the standing committee of the National People’s Congress, China’s top legislature.

Thus it “answers” current US tactics in a serious escalation: whereas Washington currently often seeks to punish third party entities or countries for direct or even indirect dealings with a sanctioned regime (the cases of Venezuela and Iran are clear examples, or even European companies which worked on the Russia-to-Germany Nord Stream 2 pipeline), Beijing has now given itself the ‘legal authority’ to do the same. 

The foreign ministry announced upon the law’s passage: “The law aims to firmly safeguard the sovereign dignity and core interests of the country and oppose Western hegemony and power politics,” according to state media. And a Global Times op-ed asserted: “It will act as a powerful deterrent against countries imposing sanctions,” and further: “We will not hesitate to fight back against forces that arrogantly challenge us and will continue to enrich our legal toolbox.”

China’s quick rollout of a law against foreign sanctions has left European and American companies shocked and facing “irreconcilable” compliance issues, two top business groups said Friday, despite Beijing saying the move would unlikely impact investmenthttps://t.co/7fYXW5Giwh

— AFP News Agency (@AFP) June 11, 2021

And here’s more on how it will coerce companies into “choosing” to conform to US or Chinese law, which could have devastating fallout down the line for Western companies operating in China:

The restrictions can apply to family members of individuals who fall foul of Beijing.

The law also allows the country’s courts to punish companies that comply with foreign laws, and says that businesses or people in China do not need to comply with foreign restrictions.

This could potentially cover the legislators, government officials, law enforcement officers, or even banks or companies who implement foreign sanctions.

— Henry Gao (@henrysgao) June 10, 2021

Meanwhile, as the G-7 continues in the UK, Beijing officials blasted what they called “small circle diplomacy”. 

The Chinese Communist Party’s chief diplomat Yang Jiechi told Antony Blinken in a phone call ahead of the summit that “genuine multilateralism is not pseudo-multilateralism based on the interests of small circles” in denunciation of what’s being seen as an “anti-China” meeting.