The AFSL and other recent initiatives follow Xi Jinping’s call that “[i]n the struggle against foreign powers, we must use the law as a weapon and occupy the moral high ground of the rule of law, to say no to the saboteurs and spoilers”. With the Chinese Communist Party (CCP) getting ready to celebrate its 100th anniversary on July 1, it wants to be in a position to wield its new power and show itself capable of dealing with any external challenges to its rule.
Blocking, retaliating and proactive sanctions – a law to do it all
Chinese media and legal experts hailed the law as an important improvement to counter unjust foreign sanctions and a step up from the previous use of administrative measures to impose countersanctions, as was the case in March. But despite frequent comparisons to the EU Blocking Statute and the rhetorical focus on reciprocal, defensive action, the content of the law speaks a different language. Where the EU statute is limited to protecting natural and legal persons in the EU from having to comply with a clear list of restrictive measures imposed by other countries, the AFSL is a blocking statute, retaliatory regime and proactive sanctions legislation rolled into one.
The main purpose of the law is to preserve China’s “national sovereignty, security, and development interests”. Article 12 of the AFSL prohibits organizations and individuals – both Chinese and foreign – from helping enforce foreign discriminatory measures against PRC entities, and further gives those affected by sanctions the right to sue for compensation. This could have prevented HSBC from complying with US requests in the Huawei case, as one commentator noted. It could also affect companies that refuse to do business with the Xinjiang Production and Construction Corps based on recent sanctions by the EU and other countries.
But the law also allows the Chinese government to implement its own countermeasures where it deems that “discriminatory restrictive measures” imposed by foreign states “violate international law and basic norms of international relations to contain or suppress our nation”. According to article 4, those who "directly or indirectly participate in the drafting, decision-making, or implementation” of sanctions or other restrictive measures can be placed on China’s countermeasures – i.e., sanctions – list.
The State Council can further include immediate relatives of sanctioned individuals, as well as individuals who have a management or controlling function in sanctioned organizations, or organizations in which sanctioned entities and persons play a key role. All of those placed on the list may be slapped with a freezing of assets, restrictions on doing business or otherwise associating with organizations and businesses in China, as well as unspecified “other measures”.
Although apparently focused on measures implemented by foreign states, a significant number of those sanctioned by China back in March were individual researchers or research and advocacy organizations. Indeed, article 15 of the new AFSL now explicitly allows for countermeasures against foreign organizations or individuals for “conduct that endangers our nation's sovereignty, security, or development interests”. In this sense, to describe it as a counter-sanctions law is misleading, as a wide range of actions by non-state actors can be deemed a sanctionable offense under the AFSL.