30 March 2021 • 4 minute read
China’s Expanding Economic Sanctions Regime
On March 22, 2021, the European Union (EU) and the governments of the US, Canada, and the UK concurrently imposed sanctions on individual Chinese officials and a Chinese entity based on findings of human rights violations in Xinjiang.1 In response, China’s Ministry of Foreign Affairs of China (MOFA) announced new sanctions: against ten EU individuals and four EU entities on March 22, 2021; against nine UK individuals and four UK entities on March 26, 2021; and against two US individuals, one Canadian individual, and one Canadian entity on March 27, 2021.The official English-language notices explained that the sanctioned persons and entities were deemed to have “severely harmed China’s sovereignty and interests, and maliciously spread lies and disinformation.”
These announcements highlight the Chinese government’s willingness to impose economic sanctions against both public-sector and private-sector entities and individuals in response to foreign conduct. The new measures also raise questions about the internal mechanics of China’s evolving sanctions regime.
Chinese governmental entities, companies, and individuals have increasingly been subject to sanctions, export controls, and other restrictions on commercial activity enacted by the US and other jurisdictions for national security, foreign policy, and law enforcement grounds. In response, the Chinese government overhauled its own framework for imposing sanctions and export controls.
First, the Ministry of Commerce (MOFCOM) established formal mechanisms for sanctioning foreign entities and individuals designated as “unreliable” through the Provisions on the Unreliable Entity List in September 2020. 2 See our summary here.
Second, China established its first comprehensive export control framework with the passage of the Export Control Law (ECL) in October 2020.3 See our summary here.
Third, MOFCOM created a framework for “blocking” foreign sanctions and export controls against Chinese interests through the Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures in January 2021.4 See our summary here.
These rules all envision the MOFCOM playing a central role in the coordination and implementation of Chinese sanctions and export control policy. Although some export control measures have been revised pursuant to the new ECL, no formal designations pursuant to the Provisions on the Unreliable Entity List have been issued as of March 28, 2021.
Instead, recent Chinese sanctions measures have been announced by the MOFA, which has primary authority over foreign affairs, rather than the MOFCOM. Published sanctions announcements to date have not specified the legislative basis for the MOFA action, and generally have not provided details on the actual restrictions. The following table summarizes the MOFA’s sanctions announcements during the last twelve months:
It is possible that these initial announcements by the MOFA may later be expanded through more detailed measures to be adopted and implemented by the MOFCOM and other ministries. As the central government expands its use of sanctions against foreign companies, government entities, and individuals for offshore conduct inimical to Chinese government policies, the regulatory framework for publicizing and enforcing restrictions on travel, investment, and commercial activities of sanctioned persons in China is likely to evolve.
1 For details of US, UK, EU, and Canadian sanctions measures, see:
Treasury Sanctions Chinese Government Officials in Connection with Serious Human Rights Abuse in Xinjiang
Global Affairs Canada: China sanctions
UK sanctions perpetrators of gross human rights violations in Xinjiang, alongside EU, Canada and US
Official Journal of the European Union, vol. 65
2 Bukekao Shiti Qingdan Guiding (《不可靠实体清单规定》) [Provisions on the Unreliable Entity List] (promulgated by the Ministry of Commerce on September 19, 2020 with immediate effect), [hereinafter UEL Provisions]. Please find Chinese version here and the official English translation here.
3 Zhonghua Renmin Gongheguo Chukou Guanzhi Fa (《中华人民共和国出口管制法》) Export Control Law of the People’s Republic of China (promulgated by the Standing Committee of the National People’s Congress, Oct. 17, 2020, effective Dec. 1, 2020), (Ch.).
4 Zǔ Duàn WàiGuó Fǎlǜ Yǔ Cuòshī Bùdāng Yùwài Shìyòng Bànfǎ, (Shāngwù bù lìng 2021 nián dì 1 hào) (《阻断外国法律与措施不当域外适用办法》（商务部令2021年第1号) [Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures, MOFCOM’s order No.1 in 2021] (promulgated by the Ministry of Commerce on January 9, 2021 with immediate effect). To access the Chinese version, click here. The official English translation can be found here.
These announcements highlight the Chinese government’s willingness to impose economic sanctions against both public-sector and private-sector entities and individuals in response to foreign conduct. The new measures also raise questions about the internal mechanics of China’s evolving sanctions regime.
Chinese governmental entities, companies, and individuals have increasingly been subject to sanctions, export controls, and other restrictions on commercial activity enacted by the US and other jurisdictions for national security, foreign policy, and law enforcement grounds. In response, the Chinese government overhauled its own framework for imposing sanctions and export controls.
First, the Ministry of Commerce (MOFCOM) established formal mechanisms for sanctioning foreign entities and individuals designated as “unreliable” through the Provisions on the Unreliable Entity List in September 2020. 2 See our summary here.
Second, China established its first comprehensive export control framework with the passage of the Export Control Law (ECL) in October 2020.3 See our summary here.
Third, MOFCOM created a framework for “blocking” foreign sanctions and export controls against Chinese interests through the Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures in January 2021.4 See our summary here.
These rules all envision the MOFCOM playing a central role in the coordination and implementation of Chinese sanctions and export control policy. Although some export control measures have been revised pursuant to the new ECL, no formal designations pursuant to the Provisions on the Unreliable Entity List have been issued as of March 28, 2021.
Instead, recent Chinese sanctions measures have been announced by the MOFA, which has primary authority over foreign affairs, rather than the MOFCOM. Published sanctions announcements to date have not specified the legislative basis for the MOFA action, and generally have not provided details on the actual restrictions. The following table summarizes the MOFA’s sanctions announcements during the last twelve months:
It is possible that these initial announcements by the MOFA may later be expanded through more detailed measures to be adopted and implemented by the MOFCOM and other ministries. As the central government expands its use of sanctions against foreign companies, government entities, and individuals for offshore conduct inimical to Chinese government policies, the regulatory framework for publicizing and enforcing restrictions on travel, investment, and commercial activities of sanctioned persons in China is likely to evolve.
1 For details of US, UK, EU, and Canadian sanctions measures, see:
Treasury Sanctions Chinese Government Officials in Connection with Serious Human Rights Abuse in Xinjiang
Global Affairs Canada: China sanctions
UK sanctions perpetrators of gross human rights violations in Xinjiang, alongside EU, Canada and US
Official Journal of the European Union, vol. 65
2 Bukekao Shiti Qingdan Guiding (《不可靠实体清单规定》) [Provisions on the Unreliable Entity List] (promulgated by the Ministry of Commerce on September 19, 2020 with immediate effect), [hereinafter UEL Provisions]. Please find Chinese version here and the official English translation here.
3 Zhonghua Renmin Gongheguo Chukou Guanzhi Fa (《中华人民共和国出口管制法》) Export Control Law of the People’s Republic of China (promulgated by the Standing Committee of the National People’s Congress, Oct. 17, 2020, effective Dec. 1, 2020), (Ch.).
4 Zǔ Duàn WàiGuó Fǎlǜ Yǔ Cuòshī Bùdāng Yùwài Shìyòng Bànfǎ, (Shāngwù bù lìng 2021 nián dì 1 hào) (《阻断外国法律与措施不当域外适用办法》（商务部令2021年第1号) [Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures, MOFCOM’s order No.1 in 2021] (promulgated by the Ministry of Commerce on January 9, 2021 with immediate effect). To access the Chinese version, click here. The official English translation can be found here.
