China Enacts Anti-Foreign Sanctions Law

On 10 June 2021, China promogulated the Anti-Foreign Sanctions Law ("AFSL"), which came into effect on the same day. Together with earlier-enacted Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures ("Blocking Rules") (see our previous write-up here) as well as the Regulations on the Unreliable Entity List and various other rules and regulations, China has recently implemented a number of legal and regulatory measures to push back against foreign discriminatory restrictive measures.

According to the AFSL, the State Council of China has the right to formulate the Counter Sanction List to include individuals or organisations that directly or indirectly participated in the formulation, decision-making, or implementation of the discriminatory restrictive measures in such Counter Sanction List. Counter measures may also be taken against the individuals and organisations affiliated with the targeted individuals and organisations on the Counter Sanction List as decided by the State Council of China.

The counter measures will mainly include the following measures, which will have a material adverse effect on the business operations and other activities of the targeted individuals or organisations within China:

1. Refusal to issue visas, denial of entry, visa cancellation, and/or deportation;
2. Sealing, seizing, or freezing of movable property, immovable property, and all other types of property within the territory of China;
3. Prohibition or restriction on organisations and individuals within China's territory to carry out relevant transactions, cooperation, and other activities with them; and
4. Other necessary measures.

With the promulgation of the AFSL, there will be a potential conflict of laws between western countries and Chinese legal regimes. Such potential conflict will increase uncertainty for companies doing business in China. Companies should therefore monitor the ongoing China-US conflicts and developments closely and consider a potential action plan as and when it becomes necessary.