China expands anti-sanctions arsenal, raising risks for foreign companies | Stories of Trade Wars

China is expanding its arsenal against foreign sanctions and controls, putting multinational companies on the hotline as Beijing, Washington and Brussels exchange punitive measures.

Since March, Beijing has issued two new laws that expand its ability to retaliate against foreign organizations deemed to have threatened its national security or impose sanctions imposed by “improper foreign jurisdictions”.

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A third law, which is still in place, would allow Chinese prosecutors to bring charges against foreign organizations and individuals whose “unlawful acts harm national interests or public interests”, according to state media.

The move, which is part of efforts to strengthen China’s criminal justice system, was announced in June.

James Hsiao, a Hong Kong-based partner at international law firm White & Case, said companies are concerned about how to comply with antitrust laws and regulations.

“Some companies have said they are worried that this could affect the general market, especially when companies are facing counter-attacks,” Hsiao told Al Jazeera.

“A company may be required under US or EU law to refrain from doing business with its partners, while they also need to consider whether doing so could pose a risk to (China’s) countermeasures,” he said.

Companies may face fines, visa revocation, suspension of goods, embargoes and restrictions on the import or export of goods from China if they follow procedures with “improper foreign authorities” under State Council Decree No. 835, which was issued in April.

Under State Council Decree No. 834, which was passed in March, companies can face sanctions if they “interfere with, interfere with or discriminate against Chinese industries or suppliers”.

These changes are supposed to undermine the efforts of companies to comply with Western sanctions and to assess the risks of sales processes, exposing them to “increased scrutiny where business decisions or compliance measures may be seen as complying with foreign discrimination or other restrictions”, according to the US legal organization Paul Hastings.

Hanscom Smith, a senior fellow at the Yale Jackson School of Global Affairs, said the expanded rules should be seen as a sign of things to come.

“In a ‘rule of law’ system like China’s, law is an expression and cannot be applied uniformly,” Smith told Al Jazeera.

“Regardless, these new measures will increase the challenges for foreign companies doing business in China.”

China’s embassy in Washington and its mission in Brussels did not immediately respond to Al Jazeera’s request for comment.

The Ministry of Commerce has previously said that its anti-sanctions rules protect China’s “national sovereignty, security and development”, as well as “protect the rights and interests of Chinese citizens, legal entities and other organizations.”

Beijing-based consulting firm Trivium China said in a March survey that foreign companies will be “caught between the American rock and China’s rough environment”.

Since they launched the “Unreliable Entities List” in 2020, China has implemented its own measures to deal with foreign sanctions and external controls, imposed by major Western powers in response to threats to national security and human rights abuses in places like Hong Kong and Xinjiang.

The U.S. sought to block China’s access to advanced technologies, including advanced semiconductors used to power AI, and bar American companies from doing business with entities linked to China’s military.

Although it did not take offense at the “taunting” from China, the EU has sanctioned Chinese institutions for violating human rights in Xinjiang and supporting Russia’s war in Ukraine.

The bloc has also launched a number of investigations into Chinese companies on unfair trade practices.

“Prior to 2020, Beijing had not established a list of sanctions or prohibitions, meaning that the retaliatory measures at their disposal were verbal abuse and various trade disruptions,” Even Pay, director at Trivium China, told Al Jazeera.

“Restrictions allow for a more direct response, which Beijing prefers.”

In May, Beijing for the first time proposed a 2021 “restriction order” to prevent Chinese nationals and companies from complying with US sanctions imposed on Chinese “teapot” oil refineries for buying Iranian oil.

That same month, the Ministry of Justice requested Directive 835 to determine that the EU’s investigation into Nuctech, a Chinese defense equipment company with subsidiaries in Europe, was a “foreign illegal territory”.

According to the decision, no organization or person can help in the EU’s investigation, said the spokesperson of the ministry.