Strategies By China For Prevention Of Further US Sanctions On Its Companies

China intensified its campaign towards U.S. sanctions, introducing new regulations to shield its firms from “unjustified” international laws. This also includes authorizing Chinese courts to prosecute global corporations for breaking foreign restrictions.

the Chinese authorities are going to issue the regulations on “counteracting unjustified extra-territorial application” of foreign legislation enable directives. Ministry of Commerce said in a statement Saturday that businesses or individuals in China do not have to comply with the international restrictions.

The steps came into effect instantly. They do not specifically say anything about the U.S., China has long protested through sanctions and trade controls about the extra-territorial implementation of U.S. law. The rules also allow Chinese people or enterprises to sue in Chinese courts for reimbursement if their rights are threatened by the implementation of international laws. This might lead to China’s global business in jeopardy of dealing with U.S. sanctions.

On Saturday, various statements came. “The new order will be enforceable in China primarily through court actions brought by parties who believe they’ve been damaged by someone else’s compliance with a foreign sanction.” These are the statements of a lawyer at Steptoe & Johnson LLP, Nicholas Turner, in Hong Kong who specializes in economic sanctions.

“Companies with significant business interests in China may need to tread carefully to avoid being subject to claims by counterparties in China under prohibition orders issued pursuant to this new framework,” he added.

Still, it is interesting to find whether it “gets effective at discouraging companies from complying with U.S. sanctions in the region or elsewhere.”

More On Actions Taken By China:

The recent actions by China come as the outgoing United States in his final days in office, President Donald Trump is widening his fight against Chinese businesses. This is further straining relations between the world’s two biggest economies.

“The release of new regulations ahead of the inauguration of the Biden administration served the purpose of drawing China’s red line in protecting Chinese companies’ interests and rights,” Tommy Xie, an economist at Oversea Chinese Banking Corp. in Singapore, wrote in a note Monday.

Earlier this month, the U.S. started a campaign to compel the selling of TikTok by ByteDance Ltd. Along with this, the U.S. also banned payments with Chinese apps. Ant Group Co.’s Alipay and Tencent Holdings Ltd.’s digital wallets are some of them. Also interested was the New York Stock Exchange, heeding demands from the Trump administration to de-list several Chinese businesses.