China maintains a high degree of flexibility about the target and timing of sanctions, using an array of measures that may well never be communicated. To do this, it relies on its Unreliable Entity List and Anti-Foreign Sanctions Law. The two authorities mainly responsible for imposing sanctions and defining specific measures are the Ministry of Foreign Affairs (MOFA) and Ministry of Foreign Commerce (MOFCOM) – although both parts of the process remain difficult to trace.
The Unreliable Entity List (UEL) includes foreign entities on which China can impose limiting or punitive measures in response to behavior that is contrary to its national interest. As a response to growing number of Chinese companies being added to the US Entity List, China’s Ministry of Commerce announced the establishment of its own blacklist in 2019.
The scope and functioning of the list are described in the Provisions on the Unreliable Entity List published in 2020 by MOFCOM. For example, article 10 sets out a range of measures to punish businesses, which include fines, trade and investments restrictions and prohibitions, as well as restrictions and bans on work, entry, and residence visa. China used the newly adopted UEL for the very first time on February 16, 2023, when it included in the list two US companies: Lockheed Martin and Raytheon.
The Anti-Foreign Sanctions Law (AFLS), was adopted in June 2021 after the legislative process was accelerated in response to the March 2021 imposition of sanctions by the US, EU, UK and Canada against Chinese officials and entities for the violation of human rights in Xinjiang.
The fact that Beijing was already working on the bill before the sanctions of March 2021 signal that Beijing was aware it needed to protect itself against possible foreign sanctions. However, despite the name, the AFSL is more than a policy tool to symmetrically respond to sanctions as shown by the possible targets and measures listed in the legal text. Targets include individuals and organizations directly or indirectly involved in the formulation, decisions about, or implementation of sanctions and in “discriminatory measures against Chinese citizens/interference with China’s internal affairs”.
The wide-ranging and loosely defined nature of the measures shows how China views and approaches sanctions. Any interference in what China views as internal affairs, which includes Hong Kong, Xinjiang and Taiwan, can be met with unilateral sanctions. Such a framing is not only used to justify the asymmetric imposition of sanctions, but also suggests that Beijing views the imposition of sanctions as including both official as well as unofficial sanctions. The adoption of official and unofficial policies makes it particularly difficult for other countries to track and respond to Chinese sanctions.
Sanctions according to China’s vague definitions can not only target individuals in organisations, but even their spouses and immediate family. The inclusion of families is a practice that precedes the AFSL and remains in use in the context of all Chinese sanctions. For example, the measures targeting Nancy Pelosi explicitly include “her immediate family”. In 2020, China announced sanctions on 28 US individuals for their purported interference in its internal affairs – and the sanctions were said to apply to the family members, too.
Article 12 of the AFSL introduces an element of insecurity for foreign businesses in China. It allows Chinese citizens and organizations to sue for damages individuals and organizations who implement or assist in the implementation of the discriminatory measures taken by a foreign country. However, as of April 2023, there are no records of China making use of this provision.
Article 6 of the law lists measures that can be taken: refusal of a visa to enter China, deportation from the country, banning of financial transactions and cooperation with Chinese entities, and seizure of assets. This list of measures can be expanded at any time on a case-by-case basis.
The adoption of such broad and flexible criteria in the law coupled with Beijing’s tendency not to always announce what the sanctions entail in terms of targets and measures create a climate of insecurity and unpredictability. The objective of such unpredictability may very well be to deter foreign sanctions and/or keep foreign companies in China from abiding to potential foreign sanctions.
China has applied the anti-foreign sanctions law a number of times since its adoption. For example, in July 2021, it imposed sanctions on several US individuals (including former US Commerce Secretary Wilbur Ross) and organizations in response to US sanctions on Chinese officials in Hong Kong.
In December 2022, China imposed sanctions against Miles Yu Maochun, principal China policy advisor on the Policy Planning Staff to Secretary of State Mike Pompeo, and Todd Stein, Deputy Staff Director of the Congressional-Executive Commission on China. The measures came in response to US sanctions on human rights issues related to Tibet in 2022. The two officials and close family members were banned from obtaining entry visas, had any assets they had in China frozen, and were barred from having contacts with entities in China.
The AFSL has certainly provided China with a legal framework to impose unilateral targeted sanctions and “mainstreamed” the process to do so. On the other hand, China’s selection of targets and measures has not changed noticeably from the regime before the AFSL existed.