China on Thursday passed a law to counter foreign sanctions as it seeks to spread US and EU pressure on trade, technology, Hong Kong and Xinjiang.
However, foreign companies are concerned about the dampening effect it may have on foreign investment.
China’s supreme legislator, the National People’s Congress standing committee (NPC), passed the law on Thursday, according to state television CCTV. But details about its contents have not yet been released.
All 14 deputy chairmen of the committee are under U.S. sanctions for passing the National Security Act last year, which critics say has paralyzed political freedoms in Hong Kong. Beijing says it was necessary to restore stability in the city. Read more
In November last year, President Xi Jinping called on the ruling Communist Party to use legal means to defend China’s sovereignty, security and interests against foreign parties.
The NPC said in its annual work report in March that it wants to “upgrade our legal toolbox” to tackle the risks of foreign sanctions and interference. Read more
In January, the Ministry of Commerce announced mechanisms to assess whether foreign restrictions on Chinese trade and business activities were justified, and for Chinese individuals or companies to sue in a Chinese court. Read more
The United States and its allies have increasingly sanctioned Chinese officials for expressing concern over how China treats its Muslim Uighur minority in Xinjiang and pro-democracy activities in Hong Kong, triggering China’s counter-sanctions against US and EU police and officials.
Washington has also targeted Chinese companies such as Huawei and ZTE for violating U.S. sanctions against Iran or North Korea, an act China called “long-arm jurisdiction.”
The bill underwent a secret first reading in April and was passed Thursday, barely two days after the NPC announced it was conducting a second reading of the bill. It skipped a third treatment that was usually needed for other bills.
The European Union Chamber of Commerce said its members were concerned about the lack of transparency surrounding the adoption of the bill.
“China seems to be busy. Such an action does not help attract foreign investment or reassure companies that increasingly feel they will be used as sacrificial prayer in a game of political chess,” said Joerg Wuttke, president of the chamber. to Reuters.
Foreign companies wishing to do business in China may face increased scrutiny by Chinese regulators over their activities both locally and abroad, said Shaun Wu of Paul Hastings, a Hong Kong law firm.
Chinese experts say that Beijing is simply taking a page from the playbooks of the United States and the European Union, which in recent years have adopted various actions to serve as a legal basis for their engagement with China.
“China used to have neither the economic power nor the political will to use legal means to retaliate against US sanctions. It now has both,” said Wang Jiangyu, a law professor at City University of Hong Kong.
“Cooperation is the best solution, but the United States does not want it. So retaliation, as with this new law, is the next best option. Sucking it up is the worst,” he said.
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