With the United States imposing increasingly more tariffs on Chinese goods, China decided to undertake serious steps. One of the most important actions in this regard is promulgating new legal act, which focuses on developing the competences of Chinese government authorities which manage the anti-foreign sanction policies and system.
The act was named “Implementing regulations for Anti-Foreign Sanctions Law” (实施《中华人民共和国反外国制裁法》的规定) and went into force on March 23rd 2025. Its main objective is to simultaneously specify and widen the scope of the provisions included in Anti-Foreign Sanctions Law (中华人民共和国反外国制裁法), which entered into force on 6th June 2021. The Law has a rather general character, as it divides the most important competences between different authorities, as well as introduces fundamental aspects of foreign sanctions countermeasures system, for example by listing the entities and assets which can be affected by them.
Who should be aware of those regulations?
Apart from the countries which impose sanctions on China, those regulations can be applied towards both natural persons, as well as legal persons and organizations lacking legal personality. Art. 4 of Anti-Foreign Sanctions Law says that both natural persons and organizations (which seems to be general term for all of the entities which are not natural persons) could become a target of so-called “countermeasures”, if they directly or indirectly participate in preparing, implementing or deciding on measures which discriminate China.
As “discriminating measures” the Law (namely its 3rd article) describes the measures, which “are acting against China, Chinese citizens and organizations or limit them”, as well as those which intend on intervening in Chinese internal affairs. As we can see, this is a very wide spectrum. It can even include situations like stating in the contract with Chinese producer that he is prohibited from manufacturing the products that we ordered in the factories that have been included on EU sanctions list. Additionally, the list of the entities who need to be cautious of those measures is not only limited to those, who (according to the Law) are harmful towards China. Their spouses, immediate family (in case of natural persons), as well as higher level executives or people in direct control (in case of legal persons) can also be found responsible.
Changes in current regulations
One of the most important changes which is included in new implementing regulations, is the expansion of the catalogue of the assets which can be confiscated, seized or frozen as a countermeasure against sanctions targeting Chinese interests and values. This change is stated in article 7 section 2 of the regulations and intends to add new assets to the “all assets of any type” („其他各类财产”) category which is included in article 6 section 2 of Anti-Foreign Sanction Law. This category was hitherto an otherwise unspecified spectrum, which existed next to the movable and immovable property. Due to the fact that it was too general, it would include, or, on the other hand, exclude, a lot of different types of assets. Currently, this category explicitly includes: cash, negotiable instruments, bank deposits, negotiable securities, fund shares, stocks, accounts receivable, intellectual property rights, real estate and property rights in general. It is also important to point out, that it affects only the assets which are located in China.
This change does not pose a significant danger to polish entrepreneurs due to the fact that they rarely invest in Chinese stocks, financial instruments or open bank accounts in China. However, it is important to remember that, as a person who manages the company which has been included on Chinese anti-foreign sanction list, we can also be affected by it. Therefore, it can lead to the situation during which a person will want to come to China as a natural person in private manner and be prohibited from e.g. opening an account in Chinese bank.
Another catalogue was also expanded – this time the one found in article 6 section 3 of Anti-Foreign Sanctions Law. This catalogue defines what activities involving Chinese entities and entities subject to countermeasures measures may be prohibited or restricted by Chinese authorities. Hitherto, it included commercial action, cooperation and “other activities” (等活动). Currently, it also includes any activity connected to education, technology, legal services, culture, environment protection, and even sanitation aspects. As we can see, this is also a very wide spectrum, which means even vaster freedom of decision for Chinese authorities.
For foreign entrepreneurs cooperating with China this means that, if they will be condemned as “discriminating” by the Chinese authorities, their access and contact with Chinese citizens/companies will be either significantly limited or even blocked. This happens due to the fact, that the list of fields and types of activities contains the terms with both broad meaning, as well as high level of importance in contact with Chinese entities – such as commerce, cooperation or technology. The situation gets even more complicated as soon as we realize that this catalogue has not been closed – it was expanded. In practice, this can result in the situation, in which even the entrepreneur that somehow engages in the activities not included in this catalogue can also be restricted from interacting with Chinese entities, if the authorities will decide so.
One of the most important changes in new regulations is the broadening of the countermeasures list itself. It is included in article 6 section 4 of the Anti-Foreign Sanction Law, and was changed through article 9 of the regulations. Till now, the list included e.g. aforementioned assets confiscation or restriction of conducting business with Chinese entities, as well as revocation of visa or deportation. Since the new regulations entered into force, the authorities can also implement following countermeasures: restriction or prohibition of activity with China in regards to import and export, investments in China, export of goods from China to targeted entities, restriction or prohibition of passage of personal data to them, revocation or limiting of work permits of people involved with them, as well as imposition of financial penalty. It is undoubtedly a significant change, which makes the consequences of cooperation with targeted entities much more severe than before.
The amplification of aforementioned list can lead to the situation, in which the attempt to secure our interests in the contract with Chinese producer can paradoxically worsen our contractual position. Using the example from above parts of this article, it can be showcased in a following way: the entrepreneur wants to state in the contract, that the products cannot be produced by the entities which are included on EU sanction list. Instead of securing his interests, in the eyes of Chinese authorities he will be recognized as an entity which supports measures discriminating China and subjected to countermeasures, which, as we know, include prohibition of import and export with China. This type of contractual clause can result in such action and therefore be a reason of inability to cooperate with Chinese producer, causing the whole contract to be pointless.
New regulations
The legal act that is described here does not only amend the regulations that already exist, but also introduces new provisions, which aim to further develop the Chinese anti-foreign sanction system. One of the examples in this regard is article 13. This regulation introduces penalties for non-compliance with countermeasures. The said non-compliance means e.g. attempt to establish a commercial cooperation with Chinese company despite the decision which prohibits such activity, as well as staying in China despite revocation of visa or residence permit – in this regard it is, again, important to remember, that in case of companies the countermeasures can also affect people who manage or control it. According to article 13, relevant authorities (usually the ones which are directly subordinate to the State Council, such as ministries) can request those entities to cease the violations, prohibit or limit their ability to participate in tenders and public procurement, to import or export technology, to transfer personal information or to reside/leave China.
Beside the regulations which aims to limit the activities of entities which have been subjected to the countermeasures, they have been provided with a chance to improve their situation and minimalize the negative impact of their conduct. In article 14 of implementing regulations we can find the provision, that those entities, after the decision to apply countermeasures against them was already announced, can submit the application to amend, suspend or cancel it to relevant authorities. However, the application needs to include corrective measures and actions to eliminate the activity which caused the decision in the first place, as well as present the facts and reasons relevant to the case. Additionally, article 15 of the same legal act contains the provision which lets the relevant authorities organize inspections to check if the entity is compliant to the countermeasures. If the circumstances will be favorable, the control can result in suspension, amendment or cancellation of said countermeasures.
A novelty which is completely surprising in the face of growing restrictions is the article 16, which enables the conduct of prohibited or limited activities with entities which have been subjected to the countermeasures, albeit on condition that the factual circumstances and reasons for this state of affairs are presented to the relevant authorities. This situation, however, can only happen in case of “extraordinary circumstances” (特殊情况), which is a very broad term, subject to the interpretation.
Due to the fact that the permission included in article 16 is a complete novelty in Chinese anti-foreign sanction system, it is hard to tell which circumstances will the authorities qualify as “extraordinary”. Although that, it can be said that considering the restrictive nature of other provisions regarding both the entities and activities they undertake, the possibility to gain this permission is relatively low.
Protection of Chinese entrepreneurs
Both the Anti-Foreign Sanction Law and implementing regulations contain provisions which stipulate, that Chinese citizens and institutions can issue an official demand to cease the violation of anti-foreign sanction regulations against any entity that performs or assists in performing discriminatory actions against China. They also have the right to sue those entities and claim damages from them. Therefore, an entity which doesn’t comply with anti-foreign sanctions regulation is subject to both administrative and civil liability.
Those provisions were probably implemented to discourage foreign entities from putting both China (as a country) and Chinese entrepreneurs in an unfavorable, unequal position. Although that, it is true that those regulations will require the foreign companies to approach their activity and connections with even greater degree of caution, as the non-compliance can result in harsher consequences than before.
Conclusion
The described regulations intend to further amplify the competences of authorities which issue decisions regarding anti-foreign sanctions cases, specifically by providing them with more possibilities on deciding about countermeasures, their scope, as well as penalties for violations of them. The comprehensive nature of the changes, as well as clarification of certain concepts undoubtedly leads us to the conclusion, that China intends to create a well-organized, effective and (most importantly) far-reaching anti-foreign sanctions system. As it was said in the beginning of the article, we can assume that those regulations can be interpreted as China’s answer to American tariffs. In the face of growing geopolitical tensions, we can expect that even more regulations like those described above will come into force, in order to further develop the anti-foreign sanctions system. This tendency can be suspected also due to the fact, that even the provisions presented in this article contain a fair amount of general concepts, which can give rise to controversial issues in the future.
