China extends the reach of its national legislation to foreign jurisdictions, aiming to influence the operations of foreign companies and citizens. This is reported by The Economist.
The publication notes that Beijing, which previously criticized Washington for applying sanctions and export controls, is now actively using extraterritorial legal norms itself.
In 2018, Chinese President Xi Jinping urged party officials to “take up the legal weapon” that “corresponds to China’s status as a great power.”
The first law prohibiting companies from complying with foreign sanctions was adopted in 2021. Subsequently, extraterritorial provisions were included in several other legal acts.
In particular, rules adopted at the end of 2024 require foreign organizations using Chinese components to adhere to China’s export legislation.
In April, amendments were made to the laws countering foreign sanctions, developed based on the European Union’s “blocking regulation.” The updated provisions prohibit foreign companies from complying with restrictions that discriminate against Chinese organizations. According to these norms, two major American banks, JPMorgan Chase and Citigroup, have become defendants in Chinese courts in lawsuits totaling $44 million. The lawsuits are related to the freezing of assets of a Chinese oil trading company, which was carried out at the request of the U.S. Department of the Treasury.
The new norms put foreign companies in a position to choose which country’s legislation to follow. In May, courts in London and Chongqing issued opposing rulings in a dispute between Samsung and Chinese ZTE. The British court ordered Samsung to pay ZTE about $392 million, while the Chinese court ruled that ZTE should pay nearly double that amount.
China is also discussing bills that would hold individuals accountable for certain actions taken abroad, including actions that “undermine national unity.”
According to The Economist, China is consistently expanding measures to counteract restrictions imposed by the U.S. and European states. Beijing is implementing export controls, prohibiting compliance with foreign sanctions, and limiting cooperation with companies that, in its view, contribute to the imposition of restrictions against Chinese businesses.
In April, China included seven EU aerospace companies in the list of organizations subject to export control. They are prohibited from receiving dual-use goods from China due to military cooperation with Taiwan.
In May, China’s Ministry of Commerce banned the recognition and application of U.S. sanctions against five Chinese oil companies. The agency described the American restrictions as “illegal extraterritorial application” and stated the need to protect national sovereignty, security, and developmental interests. The U.S. sanctions were imposed due to the purchase of Iranian oil by Chinese companies.
In August, Beijing tightened export controls on U.S. drones, their key components, and related technologies. Additionally, China imposed sanctions on seven American companies, accusing them of aiding U.S. restrictions against Chinese companies.
