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Explainer: An eye for an eye? China’s new anti-foreign sanctions law

FILE PHOTO: General view shows the traffic during the evening rush hour in Beijing

BEIJING (Reuters) – China passed a wide-ranging law to counter foreign sanctions on Thursday, in an apparent move to legalise its tit-for-tat retaliation against punitive actions taken by foreign countries over issues from human rights to Hong Kong.

The law, effective immediately, builds upon previous administrative counter-measures against foreign sanctions issued by the Chinese foreign and commerce ministries. It also lays out the scope of China’s counter-sanctions.

WHO’S THE TARGET?

Individuals or entities involved in the making or implementation of discriminatory measures against Chinese citizens, or interfering with China’s internal affairs could be put onto a blacklist, according to the full text of the law published on Thursday.

Blacklisted individuals could find their relatives, and the organisations of which they are senior managers or have control over placed on the list.

“Relevant departments” in the Chinese government can decide who to put on or remove from the blacklist.

WHAT HAPPENS TO THOSE BLACKLISTED?

Those blacklisted could be denied entry into China or deported from China. Their assets within China can be sealed, seized or frozen.

Entities within China could be restricted from engaging in all forms of transactions or cooperation or other activities, potentially limiting the investment activities of blacklisted entities in China.

Chinese citizens or organisations can sue in Chinese courts those who enforce foreign measures that discriminate against them.

HOW IS THIS DIFFERENT FROM THE PAST?

While the foreign ministry has previously announced sanctions mainly against individuals including Western politicians and scholars, it had not cited a specific law as the legal basis.

It was also not always clear what those sanctions entailed.

Although the commerce ministry has announced mechanisms targeted at foreign entities such as a so-called “unreliable entity list”, there have been no known instances of companies being put on the list.

The new law combines many features of these administrative orders by the foreign and commerce ministries, such as allowing Chinese companies to sue for compensation and denying entry to blacklisted persons.

Beijing analysts say the new law makes China’s sanctions appear less random, as it spells out who can be blacklisted and what the sanctions would entail.

WHAT DO SUPPORTERS SAY?

State media and experts in China said the new law was a long overdue “legal weapon” needed to deter the West from interfering in China’s internal affairs.

All 14 vice-chairpersons of China’s legislature who passed the law have been under U.S. sanctions for passing the National Security Law last year that critics say has crippled political freedoms in Hong Kong.

In other measures, the United States issued a ban on cotton and tomato imports from China’s western Xinjiang region in January, citing human rights violations and the use of forced labour in the region.

Wang Jiangyu, a law professor at City University of Hong Kong, said the European Union has a law – the “blocking statute” – to counter U.S. sanctions, so China should not be faulted for having a similar law.

“The new law is the stick part of the carrot and stick diplomacy. But it is defensive in nature, not offensive, and will only be used when other countries apply sanctions on us first,” said Cheng Xiaohe, an associate professor of international studies at the Renmin University of China.

WHAT DO CRITICS SAY?

Foreign companies increasingly fear they will be used as sacrificial pawns in a game of political chess, said Joerg Wuttke, president of European Union Chamber of Commerce.

Chinese experts say the law could dampen the climate for foreign investment, but that the Chinese government would have calculated this is a price worth paying to safeguard the country’s interests.

(Reporting by Yew Lun Tian; Editing by Frances Kerry)

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