China’s new anti-sanction regulations: What foreign companies need to know

Beijing’s anti-sanction toolkit just got two powerful new additions.

Earlier this month, within a single week, the State Council released two regulations that sharply expand how Chinese authorities can push back against foreign sanctions, export controls, and extraterritorial enforcement:

• Regulations on Industrial and Supply Chain Security (RISCS), released on April 7
• Regulations on Countering Improper Foreign Extraterritorial Jurisdiction (RCIFEJ), released on April 13

Don’t mistake the back-to-back rollout for a knee-jerk reaction to external events. These are the latest moves in a multi-year effort to harden China’s anti-sanction architecture.

• Both regulations were approved at a State Council executive meeting in March, and drafting almost certainly began in 2025.
• They come from Beijing’s sober, long-term assessment of just how exposed China’s industrial economy is to Western pressure.

The new regulations target two pain points Beijing has long struggled to address cleanly: How to prevent foreign governments from reaching Chinese companies under their own domestic laws, and how to prevent foreign actors from severing key links in China’s supply chains.

• Taken together, they represent multiple new tripwires for foreign companies.

RISCS is China’s first dedicated supply chain security regulation, giving the state legal cover to penalize foreign actors for disrupting Chinese supply chains – with potential countermeasures spanning immigration, trade, investment, international cooperation, and foreign aid.

• It also tightens scrutiny of research into Chinese supply chains, complicating MNCs’ efforts to map and manage their sourcing and third-party risk.
• What’s more, it grants the state emergency powers to compel businesses – including multinationals operating in China – to produce goods deemed critical to “economic, social, and national security.”

The language is deliberately vague – covering foreign actions that “violate normal market principles, interrupt normal transactions, or impose discriminatory measures causing substantial harm to Chinese supply chain security.”

• That’s broad enough to catch foreign companies that exit Chinese supply chains in ways that harm domestic producers, or withhold key components under home-country export controls – and even companies in control of global transport nodes that act in ways deemed to disadvantage Chinese industry.

RCIFEJ empowers the Ministry of Justice to designate specific foreign laws or enforcement actions that Beijing wants to block.

• Once designated, all entities and individuals in China are prohibited from complying.
• The Malicious Entity List adds visa bans, asset freezes, and trade restrictions for foreign businesses tied to formulating or enforcing those measures.

The regs mostly target government actors – but the lobbying clause is the kicker.

• A new Malicious Entity List creates a mechanism for visa bans, asset freezes, and trade restrictions against foreign businesses involved in formulating or enforcing the listed measures.

So what’s next?

Beijing’s best-case scenario is that the regs’ existence alone will serve as a compelling deterrent.

• By putting foreign businesses on the hook in China and threatening foreign governments with trade and investment countermeasures, Beijing hopes to dampen the appetite for new anti-China sanctions and export controls.

That said, Beijing will likely take some action to show it means business – but not so much that it hands China hawks new ammunition to push for faster decoupling.

So we expect early tests of both regulations – but carefully calibrated ones.

• Beijing’s likely opening move will be to launch investigations against a handful of government actors as early warning shots, without imposing formal penalties.
• Companies are likely safe for now, given the collateral damage to foreign investment and China’s business environment that hitting them would entail.

Get smart: Regardless of whether Beijing ever follows through, the risks to foreign companies just went up a notch.

• Companies should map their exposure now – sourcing decisions, relocation plans, and even lobbying efforts could all fall into Beijing’s crosshairs.

The bigger picture: Beijing is going on the front foot to protect its industrial base – and the work here’s far from done.

• Get in touch if you need help with wargaming your China exposure.

Ether Yin, Partner and Head of Policy Research, Trivium China