In response to growing foreign sanctions against China, the ruling Chinese Communist Party has recently rushed through a new anti-sanctions law. Under this new law, any foreign individuals or entities involved in making or implementing ‘discriminatory’ measures against Chinese citizens of entities could find themselves in China’s anti-sanctions list.
Being on the list can result in an entry ban into China, a seizure of all assets within the country and a general restriction on the ability to do business in the country.
The law was passed on Thursday by the National People’s Congress standing committee in a manner that has been described as ‘rushed’. While passing a law at the NPC usually involves around three readings, this one was passed with two ‘quick’ readings.
Now sanctions and counter-sanctions are not of the greatest concerns when they are targeted at diplomats and political leaders. Such sanctions are normally more symbolic than anything meaningful.
The problem here is that this law does not restrict itself to such symbolic targets. The real pressure from the new anti-sanctions law would likely be felt by private corporations operating in China.
First, foreign companies could now find their actions, both in China and abroad under increased scrutiny by Chinese regulators. But more importantly, this new law could create a compliance dilemma for companies operating in China.
If, for instance, a business is legally compelled to comply with the recent American sanctions expanding the blacklist of Chinese companies that Americans are not allowed to invest in, then their compliance could clash with China’s new prohibitions.
This could lead the affected businesses to lose the entirety of their access to the Chinese market as a result of the dilemma.
But arm-twisting business groups to indirectly pressure the sanctioning nations may well be the point. China is currently being sanctioned by multiple countries on a variety of issues ranging from trade malpractices to the treatment of Uyghurs in Xinjiang.
This could be an attempt by China to give back as good as it gets. But whether this helps ‘counteract the containment and suppression’ that China faces is an entirely separate matter.
Though Beijing has labelled the law as a reasonable response, there is no doubt that it can also have a suppressive effect on the enthusiasm of companies to do business in China.
Already many companies are worried by signs that they are becoming political pawns in a larger game of chess between China and the West. Reinforcing this image is not exactly helpful for China.
China’s actions in Hong Kong or its recent aggressive nationalistic campaign to shut out brands like H&M have already marred its ease of doing business image.
This is why many say that China is unlikely to immediately weaponise this new law and will instead use its implementation as a threat. Question is, how will this affect the hope of the EU and China ever reconciling?
While China and the US are much past taking economically damaging actions against each other, China’s tiff with the EU is more recent and much smaller in relative scale. Escalating tensions with this new bill could see more aggressive actions from both sides in the future.
It also remains to be seen as to how this new law would affect the limited presence of Indian companies in China.
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