On June 10, 2021, China’s legislator, the Standing Committee of the National People’s Congress (the “SCNPC”), promulgated a new Anti-Foreign Sanctions Law (“Anti-Foreign Sanctions Law” or the “AFSL”). The new law, which came into effect immediately, grants the Chinese government authority to impose counter-sanctions on foreign individuals and entities. Under the AFSL, individuals and organizations who have certain involvement in foreign sanctions imposed on Chinese persons may themselves be subject to Chinese sanctions. The AFSL is another step that China has taken to counter U.S. and EU’s escalating sanctions on Chinese officials and companies, following the Regulations on Unreliable Entity List in 2020 and Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures (the “Blocking Rules”) adopted by the Chinese government earlier this year.
As noted below, contrary to statements in certain media reports, the AFSL is not forcing multinational companies to ignore U.S./EU-imposed sanctions by subjecting them to China’s own sanctions; but neither does it set out general principles with only symbolic value. The law provides an important framework for—and foreshadows—future regulations and enforcement actions in response to foreign sanctions on Chinese companies and individuals, which could have long-lasting impact on multinational companies doing business in China or with Chinese counterparties.
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If you have any questions about the issues addressed in this memorandum, or if you would like a copy of any of the materials mentioned in it, please do not hesitate to reach out to:
Sam Williamson, Chair of Asian White Collar Defense & Investigation Practice
Phone: +1 212-849-7455
Xiao Liu, Chair of China Practice
Phone: +86 21 3401 8766
Dr. Haiyan Tang, Partner in Los Angeles & Shanghai Offices
Phone: +86 21 3401-8668