Chinese Companies Banned from Complying with US Sanctions

The Chinese government is beginning to employ a new legal instrument to counter foreign sanctions. This step signals an escalation in regulatory conflict with the United States.

China’s Ministry of Commerce on Saturday ordered domestic companies not to comply with US sanctions against five oil refineries. One of them is Hengli Petrochemical.

The order refers to a law that grants Beijing the authority to take retaliatory actions against foreign sanctions deemed unlawful.

This measure comes after the US added several Chinese companies to its blacklist. The sanctions are related to allegations of oil trade from Iran and Russia.

The policy was issued less than two weeks before US President Donald Trump is scheduled to visit Beijing. The meeting agenda is expected to cover trade and energy issues.

A White House official responded with a warning.

“Any company considering evading US sanctions should think twice,” the official told Reuters.

The rules provide scope for the government to impose trade restrictions, investments, and mobility limitations on individuals or companies.

Legal analysts view this policy as creating a dilemma for global companies. Companies risk breaking Chinese law if they follow US sanctions. The risk of sanctions from the West also arises if those rules are ignored.