The Chinese Anti Foreign Sanctions Law translated into English .
It is quite a long read but one very interesting analysis explaining the law and the effect on the US community in their boycott against China by US companies operating in China .
The subtleties embedded in the
“Anti-Foreign Sanctions Law”
Source: Media Finance
Contributor: The Vision of Brother Cat
1) This bill was first introduced to make up for a short coming in China’s legal system.
In 2019, in the incident of Flextronics detaining Huawei's materials and equipment, the short comings of China’s relevant laws were exposed.
On May 15, 2019, the U.S. Department of Commerce announced that Huawei and its subsidiaries would be included in the "Entity List", prohibiting Huawei and its subsidiaries from purchasing U.S. technologies, products and services without permission.
Flextronics immediately stopped its cooperation with Huawei.
On May 17, Huawei sent dozens of trucks to Flextronics' Zhuhai factory to retrieve all material and equipment worth about RMB 400 million that belonged to Huawei.
However, Flextronics’ Zhuhai plant suddenly received an order from its company’s top management claiming that, in accordance with relevant U.S. export control laws and regulations, Flextronics cannot release the equipment and materials that Huawei has property rights to.
This move stunned all Huawei personnel present on the spot.
On the evening of May 29, Zhuhai Flextronics resumed Huawei's mobile phone production business but then there were unwanted ups n downs resulting in a final complete cessation of production.
It wasn't until mid-to-late June that Flextronics agreed to return Huawei's materials and equipment one after another with a condition
the transfers of these materials and equipment were to a third party that was not part of Huawei and its 68 affiliated companies that were in the US "Entity List", with all costs incurred in the process borne by Huawei.
As such, one can see that a company registered and operates in China could unilaterally terminate the contract due to an American law and refused to return materials and equipment that belonged to Huawei and yet China at the time did not have any corresponding law to effect any counter actions.
This is simply outrageous!
Soon after this incident, the Ministry of Commerce issued the "Regulations on the List of Unreliable Entities" which stipulates that all foreign entities engaged in undermining the integrity of China's national sovereignty, endangering China's national security and development interests, or disrupting the order of the Chinese market, China will impose sanctions in accordance with this regulation.
To be honest, the "Regulations on the List of Unreliable Entities" of the Ministry of Commerce are somewhat of a temporary emergency provision.
In the context of China's expansion of reform and opening up and the advocacy of the rule of law, the rash application of the "Regulations on the List of Unreliable Entities" for reporting, copying and arbitration is easy to give the impression that this list does not have a corresponding legal foundation.
Now more problems had surfaced. Two years ago, the Chinese government realized that in order to counter this long-arm jurisdictional hegemony of the United State China lacked the corresponding legal means to fight back.
As a result of all these problems encountered, this “Anti-Foreign Sanctions Law” finally come into being on June 10, 2021 after much delay.
And the reason for such a delay is actually quite simple.
In the past Sino-US game, China's basic strategy was to manage the conflict between the two and not to expand or lose control of any issue in question.
So why is this powerful law is now being erected?
It is because the United State has been too much recently, it has seriously challenged China’s bottom lines!
Let me sort out the context of the recent Sino-US game.
There were 2 Released signals:
Before May, US White House executives, including Trade Representative Dai Qi and Treasury Secretary Yellen, were still in a high-pitched arrogant posture.
The subtext is that after China cannot withstand the tremendous pressure exerted by the United States, China will naturally beg to come and talk to the United States.
However, it did not happen and while they were waiting, major problems had suddenly emerged with its own economy.
On the 12 of May the U.S. announced price index CPI for April exceeded expectations at 4.2%.
So this high-ranking official of the White House could not sit still any longer.
Starting in mid-May, Dai Qi first, then Yellen, took the initiative to call Liu He with the hope that China would continue to buy its products and treasury bonds on a large scale.
Obviously, the Chinese side categorically rejected the US’s second request.
As a result, the Biden administration frantically increased its attacks on China including blocking 59 Chinese companies, instructing its intelligence department to provide a report on the Covid 19 issue within 90 days. The subtext is to give China a 90-day ultimatum.
On June 6, three U.S. senators landed on Taiwan with a U.S. military transport plane!
This incident has not only severely trampled on the Country’s red line, but the time taken is also very excessive.
For China, it is the occasion of celebrating the centenary of the founding of the party, and it is the first 100 years of our two vital centuries.
The United States has stepped on the red lines on the most sensitive Taiwan issue at this time!
It is utterly intolerable and as such the Chinese had resolved to make a big counter move!
This big stick is the "Anti-Foreign Sanctions Act."
Many people have a relatively shallow understanding of this law. In my opinion, the strength of the signal sent by this Chinese law has far exceeded that of Director Yang's famous saying that the United States is not qualified to speak to China from a position of strength.
So what signals has this law released?
First, China has changed tack and is ready to ignore the previous “conflict control and containment strategy.”
Secondly, China is ready to advance to a combative strategy!
It is no exaggeration to say that once this "Anti-Foreign Sanctions Law" is implemented, it will start a war without bullets and gunpowder with America!
Let me explain:
Let me first explain the meaning of the key terms one by one, and then explain their systematic meaning as a whole.
Article 4:
Relevant departments of the State Council may decide to include individuals and organizations that directly or indirectly participate in the formulation, decision, and implementation of any discriminatory restrictive measures stipulated in Article 3 of this law on the counter-control list.
Article 5:
In addition to the individuals and organizations listed in the countermeasure list in accordance with Article 4 of this Law, the relevant departments of the State Council may also decide to take countermeasures against the following individuals and organizations:
(1) The spouses and immediate family members of individuals included in the counter-control list;
(2) Senior managers or actual controllers of organizations included in the counter-control list;
(3)Organizations where individuals included in the counter-control list who serve as senior management personnel.
(4)Organizations that are actually controlled or participated in the establishment and operation of individuals and organizations included in the counter-control list.
This is an unambiguous expansion of the scope of the anti-sanction law! In addition to people and organizations that "directly" formulate sanctions against China, people and organizations that "indirectly" formulate sanctions against China are also included.
Not only individuals listed on the list will be sanctioned, members of the person’s immediate family, spouse, and even investment companies, and all related business entities are also within the scope of sanctions.
In short, if one person is sanctioned, not only the whole direct family will suffer, but also the company under his name and the company he works for are included. There is no more ambiguity.
Some foreign politicians always like to use the banner of anti-China to obtain political capital. Now their Anti-China actions will result in their whole direct families bearing the thunder and blow from China!
China may not be as good as the United States in its overall strength, but China will use its state apparatus to fight against anti-China politicians nevertheless.
Who can resist the crush of the Chinese state apparatus??
These 2 clauses clearly express China's determination to go all out irregardless.
Article 6:
Relevant departments of the State Council may, in accordance with their respective responsibilities and tasks, decide to take one or more of the following measures for individuals and organizations specified in Articles 4 and 5 of this Law based on actual conditions:
(1) Refusal to issue visas, deny entry, visa cancellation or deportation;
(2) Sealing up, seizing, and freezing movable properties, immovable properties and other types of properties within the territories of China.
(3) Prohibit or restrict relevant transactions, cooperation and other activities with organizations and individuals within the territories of the country
(4) Other necessary measures.
This article, especially the second clause "seal, seize, and freeze movable, immovable and other properties within the country” must be ferocious!
Let me explain a basic concept:
After World War II, apart from Iran's seizure and freezing of US assets after the coup in the 1980s, no country has dared to do so!
The reason is very simple. The United States is the world's number one power. The sealing up and freezing of US assets basically means that it declares a state of hostility with the United States. In the past, no country had dared to confront the United States.
Iran was the first country to eat crabs, and the price it paid was being isolated by the international community for a long time. The country that was once rich in the Middle East suffered and its economy plummeted and became one of the poorer countries in the Middle East.
From the standpoint of the United States, it may feel very powerful. It has seized and frozen the assets of other countries in the past, but they were all small countries, such as Iran and North Korea.
Sino-US relations have deteriorated sharply in the past two years, and the United States has not dared to use this method to deal with corresponding Chinese companies yet including Huawei, which the United States hates.
This "Anti-Foreign Sanctions Law”by China now openly lists its counter attack options in black and white, and clearly conveys to the United States that China will actively upgrade its methods of attack on the United States!
This upgraded method perhaps is one of the most ruthless methods.
Let me add some basic information here.
As of 2020, the United State’s Boeing had sold aircrafts and equipment to China to the tune of approximately US$70 billion, Entities/individuals owning stocks of US$330 billion, direct investment of US$1.5 trillion, venture capital and hot money approximately US$350 billion, for a total of US$2.25 trillion.
However, there are no accurate data on China's assets in the United States, and it is estimated that it should be significantly lower than the level of 2.25 trillion US dollars.
Think about it. If China applies this law to seize and freeze a large amount of US assets in China what will be the expected outcome?
Knowing much about American polities, one can expect the Biden administration to involuntarily adopt more extreme countermeasures.
By that time, China and the United States may come to a big collision.
The key point is since China has introduced such a law, it must have resolved to prepared for the worst. Is the Biden administration prepared for the worst too?
Therefore, it is a most terrible thing for a rational person to start a fire.
Biden stepped on China’s red lines in the Taiwan issue to provoke China on the occasion of its 100th anniversary of the founding of the party.
China can also use countermeasures to seize U.S. assets to force the game to dare it!
Of course, China's introduction of this clause has deeper added intentions.
This added intention is:
For American capital invested in China, they must now mobilize to exert influence on their government.
We have always said in the past that Sino-US economic and trade relations are the ballast stone of Sino-US relations.
From the standpoint of the United States, this ballast stone is divided into two aspects:
One is that the U.S. exports 130 billion U.S. dollars to China each year, and the other is that the annual sales of U.S. assets in China exceed 500 billion U.S. dollars and the profit exceeds 300 billion U.S. dollars.
In the past Sino-US trade war, China increased taxes on the United States, but it only moved the cake of 130 billion U.S. dollars in US exports to China each year.
In consideration of managing the intensity of the conflict, China has never touched the biggest piece of cake and that is that part where the US has sold more than 500 billion U.S. dollars in China each year and has a profit of more than 300 billion U.S. dollars.
But in the past year or two, Sino-U.S. relations have deteriorated sharply. These U.S. capital, which has made a lot of money in China, has been sitting on the sidelines most of the time, and has not played its proper role as a "ballast stone"!
On the one hand, it is making money in China, but on the other hand, it has not actively helped to alleviate the deteriorating anti-China political climate in the United States.
How can there be such a good thing in life?
Therefore, the introduction of the second paragraph of this article is a serious blow to this American capital invested in China. They must now realize that should the Sino-US relations continue to deteriorate, they must be mindful
Of their coming bad luck!
Article 7:
The decision made by the relevant departments of the State Council in accordance with the provisions of Articles 4 to 6 of this Law shall be final.
Article 8:
If the circumstances on which countermeasures are taken, changed, the relevant departments of the State Council may suspend, change or cancel the countermeasures levied.
These two articles are clean and tidy, and cut off all illusions of participants.
The counter decision made by the State Council is the "final decision"!
It's useless for anyone to file any lawsuit in any Chinese court!
Article 10:
The state establishes a coordination mechanism for anti-foreign sanctions work and is responsible for overall planning and coordination of related work.
This article is very important. Once the country introduces countermeasures, it will immediately establish a sanctions coordination mechanism, such as setting up relevant working groups, and coordinating various ministries and commissions at the level of the State Council, including Customs, China Banking Regulatory Commission, Land, Taxation, etc., to implement Sanctions.
In a nutshell, the state apparatus is turned on and ruthlessly strikes at the targets of sanctions.
Article 12:
No organization or individual may implement or assist in the implementation of discriminatory restrictive measures taken by foreign countries against Chinese citizens and organizations.
Where organizations and individuals violate the provisions of the preceding paragraph and infringe upon the lawful rights and interests of Chinese citizens and organizations, Chinese citizens and organizations may file a lawsuit with the people’s court in accordance with the law, requesting them to stop the infringement and compensate for all losses incurred.
Article 14:
Any organization or individual who fails to implement or cooperate with the implementation of countermeasures shall be investigated for legal responsibility in accordance with the law.
And this "Any organization and individual" includes not only organizations and individuals within China, but also organizations and individuals outside China.
Of course, there is no problem for organizations and individuals in China to enforce the laws of the Chinese government. For organizations and individuals who are not in China, this clause forces them to choose sides. They have to choose whether to
implement the decision of the United States or the decision of the Chinese government.
If foreign organizations and individuals choose to implement the decisions of the U.S. government, they will face a blow from the Chinese government.
The worst case is to become a member of the counte sanction check list, affecting the whole immediate family and the company and business entities related to the person.
China is not only the world's largest consumer market, it is also the world's largest manufacturing country. Who can guarantee that his immediate family and companies he worked for will never have contact with China?
Consequences of implementing the Anti-Foreign Sanctions.
Through the analysis of the above clauses, we can see that China has erected this "Anti-Foreign Sanctions Law" well prepared to engage in a war without bullet and gunpowder with the United States knowing that it will spread to the rest of the world.
Let us now deduce what will happen once China implements the Anti-Foreign Sanctions Law:
1) manufacturing case
As we all know, because of the US ban, basically the world’s chip manufacturing industry cannot supply Huawei including SMIC which is a Chinese company in China!
Now that we have this "Anti-Foreign Sanctions Law", Huawei can now apply for SMIC to be its supplier.
According to Article 12 of the Anti-Foreign Sanctions Act, SMIC can on compilation and as such SMIC may face retaliation from the United States, such as escalating sanctions on SMIC and cutting off supply of corresponding equipment to SMIC.
Then SMIC can file a lawsuit in the court to require the relevant US-funded companies to continue to implement the equipment supply contract. If the US-funded companies do not implement the Chinese court's decision, they will be included in the counter-control list by the State Council. The consequences will be absolutely disastrous.
So it is up to the those U.S. capital to go to resolve issues with their U.S. government,
or face the fate of losing the Chinese market or even going bankrupt (because of the seizure of assets in China).
2) financial case
Last year, the United States imposed sanctions on Hong Kong SAR government officials because of the Hong Kong issue. The most notable sanctions are those imposed on the Chief Executive Carrie Lam.
Unexpectedly, no bank dared to carry out financial business with or for her. As such, Lam could only receive cash in HK dollars even for her salary and buy things with cash only.
With this "Anti-Foreign Sanctions Law", first, Chinese banks can carry out financial business with/for her. If these Chinese banks face retaliatory sanctions from the United States, the most serious situation is that the United States kicks Chinese banks out of the SWIFT system so that Chinese banks lose all overseas business.
If the United States dares to do this, China can also include U.S.-funded banks on the countermeasure list, and then seize, and freeze the assets of these U.S.-funded banks in China.
At this point, China and the United States are almost at the stage of breaking up the table!
Through the deductions of these two cases, we can see that once China implements the Anti-Foreign Sanctions Law, the United State will have to decide whether to amend its ways or otherwise.
The final result of the development may be one huge collision!
Therefore, in order to avoid a world wide disaster there must be a compromise.
Note that at the dawn of the Counterattack
On June 9, after the second-instance draft of the Anti-Foreign Sanctions Law was passed and reviewed, Biden suddenly signed an order to lift the bans on WeChat and TIKTOK, which was an obvious initiative to cool down.
On June 10, on the day the Anti-Foreign Sanctions Act was passed, the Secretary of Commerce of the United States called our Secretary of Commerce again.
On June 11, US Secretary of State Blinken took the initiative to call Director Yang.
Per the press release of Blinken’s call with Director Yang, In addition to Director Yang’s upright reiteration of China’s position, Brinken’s statement is very important. He reiterated that the United States will continue to pursue the one-China policy and abide by the three Sino-US joint communiqués.
Brinken’s statement is actually a disguised commitment to China that the US will not step on the red lines on the Taiwan issue for some time to come.
As we can see，In less than a month, senior U.S. officials made four consecutive calls to their Chinese counterparts . From the trade representative, the secretary of the treasury, the secretary of commerce to the secretary of state, they made one call in turn.
As the domestic economic situation in the United States is getting worse (the CPI continued to exceed expectations by 5% in May), the United States is not only impatient, but also messy.
First, the trade representative and the Treasury secretary approached Liu He for talks, but got nothing from him and then Biden came to exert more pressure. As a result, after XJP signed the "Anti-Foreign Sanctions Act," into law, the US position had obviously softened. A typical paper tiger!
The Anti-Foreign Sanctions Law is not only a powerful weapon in the Sino-US game, but it is also destined to have a profound impact on the future of Sino-US contest.
Its introduction demonstrates China's strong will to go head on with the United States, but also has a huge deterrent effect on other countries. It will pierce Biden's illusion of a coalition of allies to exert pressure on China.
As said, if you seek peace through struggle, you will survive, and if you seek peace through compromise, you will die( 以鬥爭得和平則和平存.以妥協得和平則和平亡)
This year's Alaska talks was a huge turning point in the Sino-US game. Since Director Yang uttered the famous saying "The United States is not qualified to speak to China from a position of strength," the Chinese side has gradually shown to the US a strong will and determination to give things a go.
The Chinese leadership has liken this serious Sino-US game to the battle of Shangganling(上干岭戰役).. the battle where the PLA assisted the North Koreans to fight back the Americans in the Korean War against serious odds.
And this “Anti-Foreign Sanctions Law” may signify the dawning of a counterattack in a different battle with the Americans.
I have found the time and made the effort to translate this fairly long Chinese article by an analyst on the subject of “THE CHINESE ANTI-FOREIGN SANCTIONS LAW”. This long article may be useful for interested readers. Also readers may post/re text at will.
