A year after the US-China chips war started in earnest and less than two months after G7 countries’ May 7 decision to de-risk from China, Beijing has hit back with a new law.
Hastily enacted legislation, effective Saturday, authorizes authorities to punish any organization or individual for committing “acts that are detrimental to China’s national interests.”
The Foreign Relations Law is aimed at issuing a warning to Western countries that promote “decoupling” from China and disrupt international order, according to Chinese officials and legal experts.
Some commentators say the vagueness of the law’s language defining the crime may fuel China-based foreign firms’ concerns about deteriorating Sino-United States relations. They note that relocating to Singapore or Dubai can be a way to minimize geopolitical risks.
“The law improves the relevant systems of our country’s foreign relations, and shows the world the image of our nation as a responsible major country that promotes peace, development, cooperation and mutual success through the rule of law,” an unnamed official of the National People’s Congress Standing Committee (NPCSC)’s Legal Affairs Commission, said Thursday in an official announcement.
The official stressed that the passage of this law is not aimed at setting up long-arm jurisdiction; China has already implemented the Unreliable Entity List in 2020 and the Anti-Foreign Sanctions Law and the Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures in 2021.
The newly-passed Foreign Relations Law is considered an enhanced version of the Anti-Foreign-Sanctions Law, which was passed by the NPCSC on June 10, 2021.
On April 26 this year, Beijing also amended its Anti-Espionage Law by expanding the coverage of spying charges from stealing “state secrets” to the theft of “all data and items related to national security.” That amended law also is set to take effect on Saturday.
The US Chamber of Commerce said in a statement on April 28 that the amendment of China’s anti-spy law is “a matter of serious concern for the investor community and likely is as well for their local business partners in China.”
‘Attitude on the table’
The NPCSC passed the Foreign Relations Law on Wednesday. The Global Times, a Chinese Communist Party’s mouthpiece, says in an editorial published Friday that the new law is aiming at “putting China’s attitude on the table.”
“As China increasingly moves closer to the center stage of the world, it has become more necessary to establish comprehensive legislation in the field of foreign relations,” it says. “China advocates for the peaceful resolution of international disputes, opposes the use or threat of force in international relations and rejects hegemonism and power politics.”
“Some hegemonic countries in the West pursue unilateralism and zero-sum game thinking, and frequently use their domestic laws as a basis to impose unilateral sanctions and long-arm jurisdiction to the outside world,” Huo Zhengxin, a professor at the Faculty of International Law, the China University of Political Science and Law said on Chinese Central Television.
“They used some so-called legal means to exert extreme pressure, build walls and barriers and promote decoupling, seriously endangering the sovereignty and interests of other countries and threatening the international order and global development,” Huo said.
Top Chinese diplomat Wang Yi writes in an article published by the People’s Daily that by formulating the Foreign Relations Law, China highlighted its opposition against all hegemonism and power politics, as well as unilateralism, protectionism and bullying behavior. He says the law clearly defines China’s counteract and restrictive measures to establish deterrence.
Vague definition
According to Article 8 of the Foreign Relations Law, “any organization or individual who commits acts that are detrimental to China’s national interests” will be penalized.
Article 32 says that the State shall take law enforcement, judicial or other measures in accordance with the law to safeguard its sovereignty, national security and development interests and protect the lawful rights and interests of Chinese citizens and organizations.
Article 33 says China has the right to take counteractive or restrictive measures against acts that endanger its sovereignty, national security and development interests in violation of international law or fundamental norms governing international relations.
Some experts say the law negatively impacts foreign investors’ sentiment because its broad language lacks clear definitions of offenses and prescriptions of penalties.
“The new law does not seem to be a legal provision but more like a political statement to the world,” Dennis Weng, an associate professor in the Department of Political Science at Sam Houston State University, said in an interview with Taiwan’s TVBS. “Some people may feel that it’s a written expression of China’s ‘wolf-warrior’ diplomacy.”
Weng said the law may squeeze Taiwan’s diplomatic space as some countries may have to think twice about whether they want to form stronger ties with Taiwan and risk facing Beijing’s sanctions.
Chris Devonshire-Ellis, chairman of Dezan Shira & Associates and an advisor to foreign investors in China, says in a research note that the new law does not contain any aspects that are detrimental to foreign firms and foreigners in China.
However, he adds that businesses investing from the West (a reference to G7 countries) should assess the political risk inherent within their own governments’ attitudes towards China. He says some companies may try to maintain their presence in the Chinese markets by relocating to Singapore or Dubai, which are highly unlikely to impose sanctions on China.
On June 15, Siemens AG said it will build a new factory in Singapore for €200 million (US$218 million). Media reports said Siemens Chief Executive Roland Busch had originally favored China as a location for the new factory but he faced resistance from Siemens’s supervisory board, which had concerns over the growing geopolitical tensions.
Official explanation
The unnamed NPCSC official quoted in the announcement said the new law, by clearly stating China’s diplomatic policy direction, allows the world to better understand and trust China and encourages international cooperation – and said it implemented Party General Secretary Xi Jinping’s “Thought on Socialism with Chinese Characteristics for a New Era.”
The official said that China as of the end of June has on its books 297 sets of laws, 52 of which specifically target foreign issues and 150 of which contain foreign-related clauses.
“Our foreign-related legal system still has some shortcomings, especially in the areas of safeguarding sovereignty, national security and development interests,” the official said, adding that the NPCSC had spent less than one year drafting and passing the Foreign Relations Law.
That timeline suggests that the new law was seen initially as a response to the US government, whose Commerce Department around a year ago started sanctioning Chinese chipmakers and persuading allies such as Japan and the Netherlands to restrict their exports of chip-making equipment to China.
Read: Tech giants ‘de-risk’ from China, but selectively
Read: US envoy worries about China anti-spy law overreach
Follow Jeff Pao on Twitter at @jeffpao3