BEIJING – Over the past three years, the United States and the European Union have imposed a series of sanctions on Chinese officials and companies. Now China has created a new legal tool to fight back.
Organizations with a foothold in both the US and China could face a difficult choice in the future: By complying with US sanctions against China, they expose themselves to the possibility of severe sanctions in China in the future. as a sanction.
Thursday, Beijing past a sweeping law designed to counter U.S. and European sanctions against Chinese officials and large Chinese companies. Those involved in the design or implementation of US and European sanctions could be denied, or their family members, visas to China. Their property in China can be seized and any business transaction they attempt with a Chinese institution can be blocked.
“The law says that when you have no status or power to rule people, then your law in the United States will get you nowhere in China,” said Wei Jianguo, former vice minister of commerce. “This law is like the ringing of a gong. It is a warning to the United States: you should be concerned. China will not endure this treatment as easily as it used to.”
It is not yet clear how often China will use its new anti-foreign sanctions laws, or to what extent. But this ambiguity has already thrilled the business community, which is required to develop China-specific standards and operations separately from their global operations, as China creates its own legal landscape.
On the surface, the law simply codifies a number of retaliatory measures Beijing has already taken in response to Western sanctions. The law also appears to primarily target foreign politicians who impose sanctions on China in their home countries.
But the anti-foreign sanctions law is worded so broadly that members of the foreign affairs community fear finding themselves in geopolitical crosshairs. Under the new law, decisions to sanction entities – such as companies or their employees – are final. There is no possibility of appeal.
“When you mix law with politics, you are inevitably going to get politics,” says James Zimmerman, partner in the Beijing office of law firm Perkins Coie.
In a Foreign Ministry briefing on Friday, spokesperson Wang Wenbin forbidden the new law, arguing that the measure offers greater legal stability. “China always welcomes and supports foreign companies to conduct business and cooperate in China, and protect their rights and interests in accordance with the law,” Wang said. “China’s door to opening will only keep opening more and more. ”
In the past year, China has already sanctioned more than a dozen European academics and politicians as well as US officials, including former Secretary of State Mike Pompeo, in retaliation for previous sanctions against their Chinese counterparts. But Beijing also sanctioned defense companies Raytheon and Lockheed Martin for arms sales to Taiwan.
“Businesses, regardless of their country of origin, must follow the laws of the host country when operating,” said He Weiwen, a former Chinese trade official who is now senior member of a Beijing-based think tank.
This week, China also past a new law on data security which imposes stricter limits about the data generated in China and how it can be transferred out of the country. Last month, Tesla, under fire for silencing information extracted from the cameras and sensors of its electric cars in China, mentionned it would store this data in China, like Apple already done.
“We don’t want to face a lot of uncertainties and we have to operate in a predictable environment,” Zimmerman says, referring to his US business customers. “But if the legal system is subject to politics, it makes it very, very uncertain.”
Over the past three years, the United States and China have imposed multiple rounds of tariffs in a damaging trade war. Washington also slap sanctions against Chinese officials and companies on human rights violations in the Xinjiang region and Hong Kong.
China has been threatening to take legal action to counter these sanctions for years. Some of these threats have yet to materialize. In 2019, China warned this would create a “list of untrusted entities” blacklist foreign companies that he believes are damaging the country’s interests. More than two years later, Beijing has yet to blacklist any companies.
But as the United States continues to add new sanctions, China is exerting increased pressure to take more concrete action. Last week, the Biden administration announced that he would extend the sanctions to prevent US investments in 59 Chinese companies that allegedly contribute to the Chinese military.
In January, the Chinese Ministry of Commerce issued its first decree of the year – effectively a hotline to report sanctions, tariffs, or other foreign law that prevent a Chinese entity from “normal economic, trade and related activities”.
The Commerce Ministry could then decide to block the entry into force of the measure – preventing the company from following international sanctions – or allow the sanctioned Chinese company or individual to sue a foreign company in a local Chinese court. .
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