Chinese flags fly on the street before the National Day of China and Mid-autumn Festival in Nanjing city. Photo: AFP

China has passed a new law to forbid companies from implementing foreign sanctions in the mainland unless they have applied for an exemption, Beijing’s latest bid to fight back against the punitive measures leveled against it by the United States.

After a four-day meeting, the Standing Committee of the National People’s Congress (NPC) on Thursday approved the Anti-Foreign Sanctions Law, Xinhua reported.

Tam Yiu-chung, the sole Hong Kong representative in the standing committee, said the law gives the State Council power to launch countermeasures if any Chinese company or person was sanctioned.

Under the law, China can forbid a sanctioned foreigner from entering the country, cancel his or her visa and deport them and seize and freeze the assets of a sanctioned company. Tam said China could also forbid mainland-based people or organizations from trading and cooperating with the sanctioned foreign entity. 

Tam said mainland-based people or organizations could not implement foreign sanctions imposed on any Chinese person or company in mainland China.

In the past, some western countries used sanctions as a tool to reduce the economic power of their enemies in war time, said Su Xiaohui, a deputy director at the Department of International and Strategic Studies at the China Institute of International Studies.

But in current times, Western countries relied more on sanctions than war to achieve their goals, Su said.

Chips bound for Huawei were held up by US sanctions. Photo: AFP / Aleksander Kalka / NurPhoto

Su said the United States was “addicted” to imposing sanctions on other countries such as North Korea, Iran and Russia and that now it was targeting China. She said the newly launched Anti-Foreign Sanctions Law would help China hit back at the West’s unreasonable attacks.

Huawei dispute

On May 16, 2019, the US Department of Commerce put Huawei Technologies on its so-called “entity list.” On the following day, the Zhuhai factory of the Nasdaq-listed Flex refused to deliver raw materials and parts to the Chinese telecommunication product maker.

An influential mainland-based vlogger surnamed Liu said in his video channel that it was illegal for a foreign company to seize the assets of another company in the mainland, but the Chinese government could not intervene as the case was a civil dispute, which usually takes several months to settle between the companies.

Liu said the government would now have a legal foundation to handle similar cases in the future. The Anti-Foreign Sanctions Law would allow the state to use its public power to intervene in local civil disputes related to foreign sanctions.

He said companies that unreasonably implemented foreign sanctions in China would be seized while the people in charge would be arrested.

He added that some companies could be exempted from the new law if they were using US technology and had to comply with the US law. He said, for example, the Shanghai-based Semiconductor Manufacturing International Corporation (SMIC) would not be punished if it stopped supplying chips to Huawei.

On January 9, China’s Ministry of Commerce unveiled the Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures.

These say the government should prohibit the unjustified extra-territorial application of foreign legislation in the mainland, though people and organizations could apply for exemptions.

G7 summit

China’s announcement of the new law was made shortly ahead of the G7 summit in Britain on June 11-13 and the meeting between US President Joe Biden and Russian President Vladimir Putin in Switzerland on June 16.

The Chinese law was agreed before the G7 summit and a meeting between US President Joe Biden and Russian President Vladimir Putin. Photos: AFP / Eric Baradat and Pavel Golovkin

Yang Feng, a pro-Beijing political commentator, said China timed the law’s passage ahead of the G7 summit as it wanted to warn European countries not to join the US’ anti-China crusade.

He added that China’s Anti-Foreign Sanctions Law was not a new thing as the European Union had launched a blocking statute in 1996 to require companies in Europe not to implement sanctions imposed by the US against Cuba, Iran and Libya.

Yang said China was accused of adopting a “wolf warrior diplomacy” strategy in the past as its diplomats had to frequently warn foreign countries about their sanctions.

He said China wouldn’t have to do so anymore as foreign countries could look into the Anti-Foreign Sanctions Law and decide whether they wanted to pay the price of sanctioning China, which is now the world’s second-largest economy.

Read: China to fire back at US sanctions

Read: Flex reportedly grants workers days off on Huawei saga