China is expanding its anti-sanctions toolkit, raising risks for foreign firms, as new regulations emerge from Beijing. In a wave of recent legislative changes, two regulations have been enacted since March 2026, aimed at countering foreign sanctions and export controls. This development comes amid ongoing tensions between Beijing, Washington, and Brussels.
New Regulations Heighten Compliance Challenges
On April 10, 2026, Beijing introduced State Council Decree No. 835, which imposes penalties on firms that enforce sanctions with “improper extraterritorial jurisdiction.” This means that companies could face fines, visa cancellations, and even asset freezes if they comply with Western sanctions that conflict with Chinese laws. According to James Hsiao, a partner at White & Case, firms are worried about navigating these conflicting regulations.
“Some companies have expressed some concern that these measures could affect ordinary commercial transactions, particularly where companies face potentially conflicting legal obligations,” Hsiao stated. In addition, State Council Decree No. 834, passed in March, penalizes companies that disrupt or discriminate against China’s supply chains.
Legal Complexity for Multinational Firms
The implications of these regulations are significant for international businesses operating in China. Hanscom Smith, a senior fellow at Yale Jackson School of Global Affairs, noted that these new measures increase regulatory complexity for foreign companies. “In a ‘rule by law’ system like China’s, regulations are a form of signalling and won’t necessarily be applied uniformly,” Smith explained.
As companies attempt to balance compliance with Western sanctions, they may inadvertently expose themselves to scrutiny under Chinese law. This dual compliance requirement complicates the operational landscape for multinational firms.
Broader Context of China’s Sanctions Strategy
Since the introduction of its “Unreliable Entities List” in 2020, China has developed various countermeasures against foreign sanctions. These actions are a response to sanctions imposed by Western nations over national security concerns and alleged human rights violations. The United States has particularly targeted China with restrictions on advanced technologies, while the EU has sanctioned Chinese entities for human rights abuses.
According to a March report from Trivium China, foreign companies are increasingly caught between conflicting laws from the US and China. “Counter-sanctions measures allow for a much more direct tit-for-tat response, which Beijing prefers,” noted Even Pay, a director at the advisory firm.
- Key penalties under new regulations:
- Fines for non-compliance with Chinese laws
- Visa cancellations for foreign employees
- Asset freezes on company accounts
- Investment restrictions impacting future operations
In summary, the recent expansion of China's anti-sanctions laws presents new challenges for foreign companies, increasing their risk exposure as they navigate complex regulatory environments.
🤖 This article was rewritten by Feed and Figures' editorial AI from a report originally published by Al Jazeera. Facts and quotes are preserved from the original; the rewrite focuses on clarity and structure. For the unedited original, see the source link below.
