China Asserts Broad Power to Seize Assets in Anti-Sanctions Law
(Bloomberg) -- China asserted sweeping powers to seize assets and block business transactions in a new law intended to allow President Xi Jinping to hit back against sanctions by the U.S. and its allies.
The “anti-foreign-sanctions law” was approved by the National People’s Congress Standing Committee after the top legislative body skipped the usual procedures to pass it without public consultation. The broadly worded legislation provides “legal support for countering hegemonism and power politics, and safeguarding the interests of the country and the people,” NPC Chairman Li Zhanshu told the body’s closing meeting, according to the official Xinhua News Agency.
While the specifics -- and details on how China intended to overcome American dominance of the global financial system that makes U.S. sanctions effective -- remained unclear, the legislation appeared likely to put greater pressure on multinationals seeking to avoid getting caught in the tussle between the world’s two largest economies.
“This new law presents potentially irreconcilable compliance problems for foreign companies with respect to a conflict of law between foreign jurisdictions and China,” AmCham China Chairman Greg Gilligan said.
“For the NPC to rush a new law with major implications for foreign investors through the legislative process after only two readings and without an opportunity for public comment severely jeopardizes foreign investor confidence in China’s legal system,” he added.
The measure takes effect immediately and targets “any individual or organization that is directly or indirectly involved in the formulation, decision or implementation” of foreign sanctions. It also permits the State Council, the nation’s cabinet, to extend measures to affected individuals’ relatives and senior managers at organizations.
|The law gives China the power to:|
China is seeking to find new ways to fire back at the U.S. and other Western countries amid tensions over a range of issues. Li said in a March report that the nation would “upgrade our legal toolkit for meeting challenges and guarding against risks in order to oppose foreign sanctions, interference and long-arm jurisdiction.”
China’s effort to level the playing field -- or get ahead -- could put multinational corporations in a bind. In January, the Ministry of Commerce issued rules that would allow Chinese courts to punish global firms for complying with foreign sanctions, although it gave few details.
The new law shouldn’t impact foreign investment in China, Foreign Ministry Spokesman Wang Wenbin said Friday at a regular press briefing in Beijing.
“If anything, this will law will only provide a transparent and predictable legal environment and a stable business environment for foreign enterprises in China,” he said. “The door of China will only open wider.”
The Trump administration sanctioned dozens of Chinese officials, including NPC members, for their roles in helping Beijing tighten its political grip on Hong Kong and in setting policies for Xinjiang, where the U.S. and Western lawmakers say China is carrying out genocide on ethic minorities. China rejects the claims, saying it is providing vocational training that will ensure continued prosperity in the region.
The Chinese government retaliated with measures of its own, including sanctions on Senators Marco Rubio of Florida and Ted Cruz of Texas, but those lacked bite given the dollar’s dominance in international finance.
“The purpose of formulating the law is to counter, fight and oppose unilateral sanctions on China imposed by foreign countries, safeguard its national sovereignty, security and development interests as well as to protect the legitimate rights and interests of Chinese citizens and organizations,” Xinhua said Thursday, citing an official with the NPC’s Legislative Affairs Commission.
©2021 Bloomberg L.P.
With assistance from Bloomberg