China issued new regulations to the Trump administration on Saturday that will punish global companies for complying with Washington’s strict restrictions on Chinese companies doing business.
The Ministry of Commerce of China stated that the regulations will take effect immediately and are aimed at cracking down on foreign laws that “unjustly prohibit or restrict” persons or companies in China from engaging in normal business. It said its measures are necessary to safeguard China’s national sovereignty and security and protect the rights of Chinese citizens and entities.
As President Trump’s trade war with China intensified, the Trump administration banned the sale of American technology to Huawei, the Chinese telecom giant and other companies. It also issued rules to punish companies for their relationship with the Chinese military and their involvement in Beijing’s surveillance and suppression of the majority of Muslim minorities in the Xinjiang region of northwestern China.
The new regulations issued on Saturday will enable Chinese officials and companies to fight back against those who comply with US regulations. China’s measures allow government officials to issue orders that companies do not have to comply with certain foreign restrictions.
According to the notice from the Ministry of Commerce, a Chinese company that has suffered losses due to the other party’s compliance with these laws can file a lawsuit in a Chinese court for compensation. Such a case may result in the Chinese plaintiff winning the case, because the Chinese court will ultimately be responsible to the Communist Party.
Gao Weiye, a law professor at Singapore Management University who specializes in international trade, said: “This basically puts many large companies in trouble because they must either decide to comply with US sanctions or comply with Chinese rules.” “Either way, they Will lose one of their biggest markets.”
Business and economy
It is not clear whether multinational companies will eventually be punished in China for complying with US sanctions. Under the rules issued on Saturday, companies can seek exemptions from the Department of Commerce to comply with US restrictions. They also require Chinese officials to establish an inter-agency body to determine which foreign laws fall within their jurisdiction.
In addition, most of the language of the order issued on Saturday is ambiguous, which gives the Chinese government and companies room to comply. Nevertheless, this threat may still prompt large American companies with operations in China to urge Biden to ease restrictions on Chinese companies. Biden did not disclose whether he intends to continue with Trump’s punitive measures, which have resulted in the most harmful relationship between China and the United States in decades.
Professor Gao said: “China wants to prevent the new government from acting like Trump.”
Under the leadership of Mr. Trump, Chinese companies have found that access to the US market is becoming increasingly limited. The US government has banned companies around the world from using US software or machines to manufacture Huawei-designed chips. It has imposed sanctions on systematic human rights violations against Uighurs and other Muslim minorities in Xinjiang and blacklisted Chinese companies.
Earlier this week, under pressure from the Trump administration and members of Congress, the New York Stock Exchange removed China’s three state-owned telecommunications companies from the exchange in order to comply with the An executive order for the company to invest. Chinese military.
A few days ago, Secretary of State Mike Pompeo threatened to impose further sanctions on individuals or entities that recently participated in the round up of dozens of democrats in Hong Kong. It is not clear to what extent the new rules may apply to restrictions related to Hong Kong. China is Hong Kong and Hong Kong is governed by its own set of laws, but where Beijing has taken more and more powerful actions.
China has taken its own actions to deal with US tariffs and sanctions, but its actions are not one-to-one. The United States buys more goods from China than it sells to China, so Beijing has fewer options for taxing American goods.
It also relies heavily on American products, including chips and software, and its economy depends in part on factories that produce goods on behalf of large American companies such as Apple and General Motors.
Beijing has hardly fulfilled its promise in 2019 to create an “unreliable entity list” of foreign companies and personnel, which may lead to further business restrictions.