China fired back at the Trump administration on Saturday with new rules that would punish global companies for complying with Washington's tighter restrictions on doing business with Chinese companies.
The Chinese Ministry of Commerce said that the rules, which came into force immediately, were intended to counteract foreign laws that "unlawfully prohibit or restrict" people or companies in China from conducting normal business. They said the measures were necessary to protect China's national sovereignty and security and to protect the rights of Chinese citizens and entities.
As President Trump's trade war with the Chinese intensified, the Trump administration banned the sale of American technology to Huawei, the Chinese telecommunications giant, and other companies. It also provided rules punishing companies for their ties to the Chinese military and for their involvement in Beijing's surveillance and repression of mostly Muslim ethnic minorities in China's northwestern region of Xinjiang.
The new rules released on Saturday allow Chinese officials and companies to crack down on those who adhere to these US borders. The Chinese measures make it possible for government officials to issue orders stating that companies do not have to comply with certain foreign restrictions.
Chinese companies that incur losses due to another party's compliance with these laws may, according to the commercial case, claim compensation from Chinese courts. The Ministry's notice. Such a case is likely to result in a victory for a Chinese plaintiff, since China's courts are ultimately accountable to the Communist Party.
"This basically puts many large companies between a rock and a hard place, because they either have to decide whether to comply with US sanctions or with Chinese rules," said Henry Gao, a law professor from Singapore Management University who specializes in on international trade. "And anyway, they're going to lose one of their biggest markets."
Business & Economy
It is unclear whether global companies will end up being punished in China for complying with US sanctions. Under the rules given on Saturday, companies could apply for a waiver from the Department of Commerce to comply with U.S. restrictions. They also demand that Chinese officials set up an intergovernmental body to determine which foreign laws fall within its remit.
In addition, much of the language in the order issued on Saturday was vague, giving the Chinese government and companies wiggle room for compliance. . Nevertheless, the threat could cause large US companies operating in China to pressure Mr. Biden to ease restrictions on Chinese companies. Mr. Biden has not said whether he intends to proceed with Trump's sanctions, which have contributed to the most toxic relationship between China and the United States for decades.
"China will deter the new administration from behaving like Trump," said Professor Gao.
Under Mr. Trump, Chinese companies found access to the US market increasingly restricted. The administration has banned companies throughout the world to use US software or machines to make chips designed by Huawei, which has imposed sanctions and blacklisted Chinese companies on systematic human rights violations against Uighurs and other Muslim ethnic minorities in Xinjiang.
from the Trump administration and members of Congress, formerly China's three major state-owned telecommunications companies from the stock exchange to comply with an executive order aimed at stopping US investment in companies linked to the Chinese military.
The new rules come just days after Secretary of State Mike Pompeo threatened further sanctions against men happens. or entities involved in the recent gathering of dozens of more democracy figures. It is not clear to what extent the new rules may apply to restrictions related to Hong Kong, the Chinese city governed by its own set of laws, but where Beijing has taken an increasingly stronger hand.
China has responded to US tariffs and sanctions with its own measures, but its actions have not been one-on-one. The United States buys much more from China than it sells to China, so Beijing has fewer opportunities to tax American goods.
It is also heavily dependent on US products, including chips and software, and its economy depends in part on factories that make goods on behalf of large US companies such as Apple and General Motors.
Beijing has said little about the 2019 promise to create an "unreliable unit list" of foreign companies and people that could lead to further business restrictions.