China brings in new law to fight Trump's sanctions

By Justin Harper
Business reporter, BBC News

China is pushing back against a flurry of US sanctions.Image source, Getty Images

China is pushing back against a flurry of US sanctions with new rules that protect its firms from "unjustified" foreign laws.

Changes announced over the weekend allow Chinese courts to punish companies that comply with such restrictions.

US President Donald Trump has continued to target Chinese companies he believes are a threat to US national security.

Measures include punishing companies that supply parts to blacklisted firms.

On Monday, three large Chinese telecoms firms listed on the New York Stock Exchange (NYSE) are expected to see their shares delisted based on alleged ties with its military.

The NYSE is removing China Mobile, China Telecom and China Unicom Hong Kong, based on an executive order signed by Mr Trump in November.

The delistings follow a raft of actions against Chinese firms in recent months including TikTok, Huawei and microchip maker Semiconductor Manufacturing International Corporation (SMIC).

Last week, Mr Trump signed an executive order banning transactions with eight Chinese apps including popular payments platform Alipay, as well as WeChat Pay.

The US president claims such tech companies share data with the Chinese government - allegations they have denied.

In a statement on Saturday, China's Ministry of Commerce introduced the new rules on "counteracting unjustified extra-territorial application" of foreign laws.

"Legal persons that are hurt by the application of foreign legislation can issue legal proceedings in court and claim compensation for the damage done," said Bert Hofman, director of the East Asian Institute at the National University of Singapore. "The government can also take other countermeasures."

Hitting back

The measures, which came into effect immediately, do not mention the US directly, although China has long complained about US sanctions and restrictions on trade.

But legal experts say it is unclear how the new law will be implemented.

"One point that remains to be clarified is whether the order is intended to target sanctions against China specifically or sanctions targeting a third country, such as Iran or Russia, which has a detrimental impact on Chinese companies," Nicholas Turner, a lawyer at Steptoe & Johnson in Hong Kong, told the BBC.

"Companies with significant business interests in China may need to tread carefully."

Angela Zhang, a Chinese law professor at the University of Hong Kong, added: "Consider a scenario that a European bank freezes the assets of a Chinese official that was sanctioned by the United States, the Chinese statute will allow the official to sue the European bank to recover his loss."

Mr Turner believes China is also protecting itself against future sanctions that Mr Trump may bring in before he leaves the White House later this month.

"I am expecting more actions to be taken before the 20th [January] based on statements from the US state department, although it remains to be seen whether they can push any new ones out in time, given the situation," he added.

You may also be interested in:

Media caption,
Chip wars: The US v China