China’s new anti-sanctions law could spell trouble for foreign businessmen

China’s new anti-foreign sanctions law came into force on Thursday (Representational)

Beijing:

A new Chinese law against foreign sanctions is designed to boost Beijing’s power against international pressure, but could lead to compliance dilemmas for foreign businesses operating in the world’s second-largest economy. It comes just a week after US President Joe Biden expanded a blacklist of Chinese companies in which Americans are not allowed to invest.

Here’s what we know about the law so far:

What is this?

The Foreign Sanctions Act came into force on Thursday. It aims to protect Chinese individuals or organizations in the event a country “uses various excuses or its laws” to take “discriminatory” actions against them.

No country is specifically named. But Beijing has accused Western countries of “suppressing” China’s development, especially the United States. It has lashed out at “illegal and unfair” restrictions on human rights and flagged the urgent need to fight back.

What could it do?

Countermeasures listed in the law include visas, deportation, or confiscation of their assets against Chinese businesses or officials preparing or adhering to sanctions.

It rules that officers are able to target not only individuals and groups, but their family members as well.

The law is comprehensive and “significantly increases the punitive power of China’s anti-sanctions measures”, said Angela Zhang, associate professor at the University of Hong Kong.

“The wide scope of this framework means that many people, such as scholars, pundits, think tanks, could be sanctioned for supporting sanctions on China,” warned Julian Kuo, an expert in international law at Hofstra University.

How can this affect the business?

Senior executives of entities on a countermeasure list can also come under pressure, with potential implications for a large number of people and businesses.

“Affected businesses may lose full access to the Chinese market, and Chinese citizens and institutions will need to cut ties with affected NGOs and think tanks,” Zhang said. AFP.

The law can also create serious compliance issues for multinational companies.

Part of the law prohibits those in China from visiting with specified foreign restrictions. It acts similar to a European blockade statute “that eliminated the effect of US Iran sanctions within the EU”, Kuo said.

It obliges foreign businesses if they cannot legally comply with both US sanctions and Chinese sanctions.

Why now?

The law builds on earlier measures that bar companies and individuals from complying with foreign sanctions targeted to China.

In a lecture on the website of the National People’s Congress, one official said the law was passed in a short time because “there was an urgent need to counter the supremacism and power politics of some Western countries”.

The official said the law would help “prevent and counter repression” facing China.

Beijing has long complained of US sanctions and trade sanctions affecting Chinese companies. But in recent months Biden has intensified US criticism over intellectual property theft and alleged human rights abuses in Hong Kong and the northwestern Xinjiang region.

How much is the danger?

Koo warned that the law had “some fair parts and some troubling parts”.

He said the clause allowing counter-sanctions is “unprecedented compared to sanctions regimes in other countries”.

Foreign companies are regularly caught in the crosshairs of tensions between China and Western countries, including recent nationalist attacks on fashion brand H&M for expressing concern about claims of forced labor in Xinjiang.

Zhang said he believed Chinese officials would not immediately exercise the new powers, noting that concerns among foreign businesses could lead to more disruption.

“If, however, foreign governments continue to pressurize with aggressive sanctions, I believe that China will start enforcing those anti-sanctions laws to demonstrate its tremendous power.”

(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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