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China

China passes law to counter foreign sanctions

Experts say new law is China’s latest and most wide-ranging legal tool to respond to foreign sanctions.

China has passed a law to counter foreign sanctions, as it strives to diffuse pressure from the United States and the European Union over trade, technology, Hong Kong and Xinjiang.

China’s top legislature, the National People’s Congress standing committee (NPC) passed the law on Thursday, according to state television CCTV. But details of its contents have not yet been released.

The new law is China’s latest and most wide-ranging legal tool to respond to foreign sanctions and local experts say it is intended to give Chinese retaliatory measures more legitimacy and predictability.

Foreign companies, however, worry about the dampening effect it might have on foreign investment.

The US and its allies have increasingly sanctioned Chinese officials to express concern about how China treats its Muslim Uighur minority in Xinjiang and pro-democracy activities in Hong Kong. For instance, 14 vice-chairpersons of the NPC’s standing committee are under US sanctions for passing a national security law last year that critics say has crippled political freedoms in Hong Kong.

Washington has also targeted Chinese companies such as Huawei and ZTE for violating US sanctions on Iran or North Korea, an act China called “long-arm jurisdiction”.

China has hit back in recent months, imposing sanctions on senior politicians and officials from the US, EU and the United Kingdom.

The commerce ministry in January also announced mechanisms to assess if foreign restrictions on Chinese trade and business activities were justified, and for Chinese individuals or companies to sue for compensation in a Chinese court.

Thursday’s anti-foreign sanctions law underwent a secret first reading in April and was passed barely two days after the NPC announced that it was doing a second reading of the bill.

The NPC skipped a third reading normally needed for other bills.

The European Union Chamber of Commerce said its members were alarmed at the lack of transparency about the passing of the bill.

“China seems to be in a hurry. Such action is not conducive to attracting foreign investment or reassuring companies that increasingly feel that they will be used as sacrificial pawns in a game of political chess,” Joerg Wuttke, the Chamber’s president, told the Reuters news agency.

Foreign companies looking to do business in China may find themselves up against increasing scrutiny from Chinese regulatory authorities in relation to their operations both locally and abroad, said Shaun Wu, from Paul Hastings, a law firm in Hong Kong

But China experts say Beijing is simply taking a page from the playbooks of the US and EU, which in recent years have passed various laws to serve as a legal basis for their engagement with China.

“China previously has 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 option but the US doesn’t want it. So retaliation, such as with this new law, is the second-best option. Sucking it up is the worst,” he said.

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