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China rushes to pass bill tightening ban on Western sanctions


The Chinese parliament hastily passed a new law on Thursday intended to counter sanctions imposed by foreign governments on Chinese officials and companies, stepping up its legal battles with the United States and the EU.

The law was passed in secret by the National People’s Congress standing committee after two readings instead of the usual three, and builds on earlier measures unveiled by China’s Commerce Ministry in January. The January “blocking statutes” prohibited Chinese businesses and individuals from complying with foreign government sanctions against China.

“These measures signal a further escalation of the legal war between China and the United States,” said Angela Zhang, director of the Center for Chinese Law at the University of Hong Kong.

Last week, President Joe Biden updated the Trump administration’s rules prohibiting Americans from investing in dozens of Chinese companies. Biden is now in the UK for a G7 summit, where he hopes to rally US allies against challenges posed by China and Russia.

“The fact that the law was pushed back after last week’s judgment [Biden administration] the announcement of amendments to the securities ban is in line with the recent trend in China to make announcements of reciprocal sanctions in response to foreign measures, ”said Nick Turner, attorney at Steptoe & Johnson in Hong Kong.

The Trump administration had also threatened to impose sanctions on companies providing financial services to Chinese officials who it said were responsible for Beijing’s crackdown on the Hong Kong pro-democracy movement and Muslim Uyghurs in the region. from northwestern Xinjiang in China. Subsequently, Carrie Lam, managing director of Hong Kong, complained that the territory’s banks would not deal with her, leaving her stuck with “piles of money” in her government residence.

According to a draft new law, which was released only after its passage, Beijing may target individuals and organizations involved in the implementation of foreign sanctions with countermeasures, including asset seizures, putting potentially the operations of foreign investors in China in a difficult position.

“Yes [the commerce ministry] issues a restraining order under that law, then it would be illegal in China for a subsidiary of a US bank or any company to comply with US sanctions, ”Turner said.

Beijing has yet to target any foreign investors as part of the Commerce Ministry’s countermeasures announced in January. He also did not designate multinational companies as “unreliable entities” – which he threatened to do for the first time two years ago if they did something that would harm China’s national interests. , like selling military equipment to Taiwan.

“These regulatory tools were adopted for the primary purpose of deterring the US government rather than actually penalizing foreign companies,” Zhang said. “It would be costly for China to adopt these countermeasures because they are. . . would lead to more decoupling [from the US], which is not in China’s interest.

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