State Council bolsters anti-sanctions law
On Monday, the State Council issued 22 new regulations to beef up China’s Anti-Foreign Sanctions Law (AFSL).
ICYDK: China passed the AFSL in 2021 as part of a larger effort to build a legal framework to strike back against foreign (read: American) economic coercion.
The regs strengthen enforceability of China’s existing counter-sanctions toolkit by clarifying the law's scope and prohibited activities.
- Specifically, the regs stipulate that any “foreign country, organization, or individual that implements, assists, or supports acts that endanger [China’s] sovereignty, security, and development interests” is liable to sanctions.
Potential sanctions include:
- Having assets – including cash, intellectual property rights, or natural resources – seized or frozen
- Being banned from conducting “relevant transactions” with Chinese entities
- Having import and export activities restricted
- Having work permits or visas canceled or being banned from entering the country
The State Council regulations also empower Chinese entities to file lawsuits if they believe their rights have been infringed.
- The regs also specify a clearer division of labor for departments overseeing the law’s enforcement.
Get smart: Issuing these regulations indicates that Beijing is getting ready to use the law in earnest.
Get smarter: The regs are also a stark warning to MNCs that compliance with foreign sanctions carries substantial risk in the China market.
- MNCs will be increasingly caught between an American rock and a Chinese hard place.