Successive US administrations have embraced economic sanctions, especially financial sanctions, to punish bad actors in Iran, North Korea, Russia, and other hostile countries. Often, US officials leverage the economic pressure on their targets by forcing individuals and companies outside the United States to stop transacting with those on the US sanctions list or face severe penalties. European governments have instituted blocking regulations to prohibit compliance with such extraterritorial US sanctions against their nationals, but with limited success.

Most companies forsake business in countries targeted by US sanctions rather than risk losing access to the US market.

China is now borrowing a page from the European anti-sanctions playbook, adopting new Rules on Counteracting Unjustified Extraterritorial Application of Foreign Legislation and Other Measures issued by the Ministry of Commerce (MOFCOM) on January 9, 2021, and then reinforcing those administrative measures with a new Anti-Foreign Sanctions Law promulgated by the National People’s Congress on June 10.1 The aim is to nullify the effect of foreign sanctions or other measures “unjustifiably applied” against Chinese nationals.

The rules allow government officials to issue orders prohibiting companies from complying with them.