Sanctions 2025

Last Updated August 14, 2025

China

Law and Practice

Author

Xing Nan (Nancy)

AnJie Broad Law Firm is a full-service law firm with a wide range of practice areas and has offices in Beijing, Shanghai, Shenzhen, Guangzhou, Haikou, Nanjing, Xiamen and Hong Kong. AnJie Broad was founded by senior attorneys from different practice areas, and all of its key partners are graduates of the most prestigious law schools, with abundant work experience from leading international law firms. AnJie Broad’s international trade team is equipped with profound expertise in areas including international sanctions, international sales of goods, shipping and insurance, international settlement, cross-border transactions of intellectual property, international service trade, and trade remedies. The team provides all-round services to clients at home and around the globe, and has gained clients’ recognition especially for its expertise in dispute resolution. Some team members were once front-line professionals in the industry of international trade before starting their legal careers, and they possess in-depth knowledge and experience in various segments of the industry.

In 2024 and 2025, China promulgated and revised several pieces of sanctions-related legislation, including the Provisions for the Implementation of the Law of the People’s Republic of China on Countering Foreign Sanctions (effective on 23 March 2025), the Anti-Money Laundering Law of the People’s Republic of China (revised in 2024 and effective on 1 January 2025), the Regulations of the People’s Republic of China on Export Control of Dual-Use Items (effective on 1 December 2024), and the Dual-Use Export Control List of the People’s Republic of China, and adjusted the controlled items several times. At the same time, anti-sanctions law enforcement activities are also quite active. The Ministry of Foreign Affairs and the Ministry of Commerce have repeatedly taken countermeasures and punitive measures to restrict the relevant activities of foreign entities that endanger China’s national interests and undermine the legitimate rights and interests of Chinese companies and individuals. According to statistics, in 2024, the number of foreign companies, individuals and institutions included in the countermeasures list increased from seven in 2023 to 100, and the number of foreign companies, individuals and institutions included in the unreliable entity list increased from two in 2023 to four, and two were investigated.

China has been continuously improving its anti-sanction legislation and strengthening the implementation of its anti-sanction system in law enforcement and judicial aspects. In the Report on the Work of the Supreme People’s Court of the People’s Republic of China, which came into effect on 8 March 2025, it was mentioned that the rule of law in foreign-related matters should be strengthened and the effectiveness of foreign-related judicial affairs should be improved. The report also called for countering illegal sanctions and so-called long-arm jurisdiction in accordance with the law, with a firm commitment to safeguarding national sovereignty, security, and developmental interests. At the same time, China has been actively strengthening its export control system. This includes formulating and enforcing strict regulations to regulate the transfer of sensitive technologies and dual-use items.

Judging by the export control list released by the Ministry of Commerce, the announcement on the launch of the investigation of the unreliable entity list by the working mechanism of the unreliable entity list, and the decision on taking countermeasures released by the Ministry of Foreign Affairs, the manufacturing industry has been most affected, mainly in the fields of aviation, aerospace, the military industry, artificial intelligence, and drones.

The types of sanctions implemented in China include:

  • visa restrictions;
  • asset seizure and restrictions;
  • trade and transactions restrictions;
  • fines; and
  • other necessary measures as deemed necessary by relevant Chinese authorities.

China’s sanctions law does not explicitly state that it has extra-territorial effect. However, according to the relevant provisions of the Law of the People’s Republic of China on Countering Foreign Sanctions, organisations and individuals in China must comply with the anti-sanction measures prescribed by the relevant departments of the General Office of the State Council of the People’s Republic of China. The organisations and individuals here do not exclude foreign entities and individuals, that is, foreign enterprises, organisations and individuals. Therefore, it can be understood that any organisation and individual in China must comply with the relevant sanctions regulations. As a result, China’s sanctions law may be considered to have extra-territorial effect.

China’s sanctions are imposed at a domestic level, empowered by domestic legislation. For example, the Law of the People’s Republic of China on Countering Foreign Sanctions stipulates that China can take countermeasures against discriminatory restrictive measures imposed by foreign countries.

On the other hand, China also implements those sanctions mandated by the UN Security Council. The Law on Foreign Relations of the People’s Republic of China also provides a legal basis for the implementation and compliance of United Nations Security Council sanctions and related measures within China. Article 35 clearly stipulates that the state shall take measures to implement binding sanctions resolutions and related measures made by the United Nations Security Council under Chapter VII of the United Nations Charter.

The Ministry of Commerce and the Ministry of Foreign Affairs are the primary regulators for sanctions in China. The Ministry of Commerce is responsible for import and export controls and trade-related sanctions. The Ministry of Foreign Affairs is responsible for the country’s foreign policy, including sanctions against foreign entities and individuals. Depending on the nature of the sanctions, other state departments, such as the public security department, may also be involved in the implementation of sanctions.

In China, the enforcement of sanctions is primarily the responsibility of various state-level authorities, which work in co-ordination to implement and oversee sanctions-related activities. Primarily, the Ministry of Commerce is responsible for the supervision of foreign trade and economic co-operation, including the development and implementation of export controls and unreliable entity lists related to sanctions. The Ministry of Foreign Affairs is responsible for announcing and interpreting China’s sanctions decisions, and conducting diplomatic negotiations with other countries.

In addition, according to the Law of the People’s Republic of China on Countering Foreign Sanctions, the relevant departments of the State Council may decide to include individuals or organisations who directly or indirectly participate in the formulation, decision-making, and implementation of discriminatory restrictive measures as stipulated in this law in the list of countermeasures. The determination, suspension, modification or cancellation of the list of countermeasures, and countermeasures themselves shall be announced by an order issued by the Ministry of Foreign Affairs or other relevant departments of the State Council. According to Article 10 of the Law of the People’s Republic of China on Countering Foreign Sanctions, China establishes a co-ordination mechanism for the countering of foreign sanctions, which shall be responsible for the overall planning and co-ordination of relevant work. The relevant departments of the State Council shall strengthen co-ordination and information sharing and implement relevant countermeasures according to their respective duties and assignments.

According to the Provisions on the Unreliable Entity List, China has established a working mechanism with the participation of relevant departments of central state organs, responsible for organising and implementing the unreliable entity list system. The Office of the Working Mechanism is located in the competent commerce department of the State Council.

The Criminal Law of the People’s Republic of China, the Civil Code of the People’s Republic of China, the Law of the People’s Republic of China on Countering Foreign Sanctions and other sanctions legal systems stipulate corresponding criminal liability, civil liability and other legal liabilities. The Law of the People’s Republic of China on Countering Foreign Sanctions stipulates that any organisation or individual who fails to implement or co-operate in the implementation of countermeasures shall be held accountable in accordance with the law. In China, the people’s courts are responsible for the execution of civil judgments, administrative judgments, and the property-related parts of criminal cases. Criminal cases are generally executed by public security organs, prisons or other enforcement agencies.

According to the Law of the People’s Republic of China on Countering Foreign Sanctions, any organisation or individual that fails to implement or co-operate in implementing the countermeasures will be subject to legal liability in accordance with the law, which does not exclude criminal liability. For example, if the perpetrator violates sanctions measures, endangers national security or discloses state secrets, he or she may be held criminally liable under the Criminal Law of the People’s Republic of China. Persons as well as organisations that have committed the following acts may be subject to criminal sanctions:

  • betraying the state, financing criminal activities endangering national security, espionage, stealing, spying on, buying, and illegally providing state secrets and intelligence for foreign countries prohibited by Chapter 1 of the Criminal Law;
  • crimes endangering national security;
  • leaking state secrets prohibited by the Criminal Law;
  • acts stipulated in the Criminal Law;
  • infringing on commercial secrets;
  • stealing, spying on, buying, and illegally providing commercial secrets for foreign countries; and
  • infringing on citizens’ personal information.

Pursuant to the Law of the People’s Republic of China on Countering Foreign Sanctions, organisations and individuals within China are obligated to follow the countermeasures determined by the relevant state departments. Failure to comply with these measures can lead to administrative liabilities, including orders to cease the activities, fines, and potential restrictions or prohibitions on related activities.

In October 2024, a Chinese court accepted the first anti-foreign sanctions infringement lawsuit filed by a Chinese company under the Law of the People’s Republic of China on Countering Foreign Sanctions. The case was eventually settled through mediation. In 2023, a Chinese marine engineering company (hereinafter referred to as the “Chinese company”) signed a contract with a foreign equipment company (hereinafter referred to as “Company S”) to build a ship equipment module, with a settlement amount of approximately USD19.45 million (approximately RMB140 million). After the final assembly was completed on 7 June 2024, due to the “long-arm jurisdiction” sanctions imposed by a third country on the Chinese company, Company S suspended payment of the final payment of USD11.86 million and closed the dialogue channel with the Chinese company. In order to safeguard its own rights and interests, on 18 September 2024, the Chinese company applied to the Nanjing Maritime Court for pre-trial arrest of the ship involved and was approved. On 11 October, it filed a lawsuit in accordance with Article 12 of the Law of the People’s Republic of China on Countering Foreign Sanctions, claiming RMB86 million from Company S. After the Nanjing Maritime Court accepted the case, Company S applied for payment permission from a third country and paid a counter-guarantee of RMB99.743 million to the court account to release the ship from arrest. During the reply period, the court explained to Company S the legal consequences of assisting foreign sanctions, and after several rounds of mediation, an agreement was finally reached within 39 days, stipulating that any disputes that may arise from the mediation agreement will be under the jurisdiction of the court and subject to Chinese law. The Chinese court accepted the case in accordance with the law, clarified its negative position on the “domestic effect of foreign sanctions measures”, and strengthened the effect of legal countermeasures.

The United Nations economic sanctions implemented by the Chinese government through administrative notices do not provide for criminal penalties for violations, but the corresponding violations may still constitute criminal offences under the Criminal Law of the People’s Republic of China. For example:

  • The act of conducting financial transactions with sanctioned individuals or entities may constitute the crime of money laundering under the Criminal Law, and the financial institutions and directly responsible supervisors and other directly responsible persons may be subject to criminal penalties including confiscation of the proceeds of the crime and the proceeds generated, and a maximum of ten years’ imprisonment and a fine.
  • In the trade of goods, the act of importing or exporting goods to sanctioned individuals or entities may constitute the crime of smuggling other goods and articles prohibited from import and export by the state under the Criminal Law. In serious cases, the offender may be sentenced to more than five years’ imprisonment and a fine.

Criminal enforcement activities include but are not limited to cases such as letting the offender promote terrorism. Ren Fang was convicted of the crime of advocating terrorism and sentenced to one year and two months in prison (the sentence is calculated from the date of confirmation of the judgment; if he is detained before the execution of the judgment, one day of detention will be deducted from the sentence, that is, from 1 February 2023 to 30 March 2024), and fined RMB2,000. The illegal gains of RMB400 will be recovered according to the law. Because Ren Fang failed to perform the obligations determined by the effective legal documents, the First Criminal Trial Chamber of the Court transferred the fine and the illegal gains of RMB400 to be recovered according to the law for execution.

China’s sanctions law does not explicitly stipulate any mitigating steps which can be taken to avoid or lessen penalties imposed as a result of a breach of sanctions.

If a Chinese entity is subject to administrative penalties for violating sanctions laws, according to the Administrative Penalty Law of the People’s Republic of China, if the illegal act is minor and corrected in a timely manner without causing harmful consequences, no administrative penalty shall be imposed. Those who violate the law for the first time with minor consequences and make timely corrections may not be subject to administrative penalties. If the Chinese entity has sufficient evidence to prove that there is no subjective fault, no administrative penalty shall be imposed. Those who actively eliminate or reduce the harmful consequences of illegal acts, voluntarily confess to illegal acts that the administrative organ has not yet uncovered, or who have contributed significantly to investigations shall be given lighter or reduced administrative penalties.

If a Chinese entity is criminally punished for violating sanctions laws and committing a crime, according to the Criminal Law of the People’s Republic of China, if the Chinese entity voluntarily ceases its criminal conduct or effectively prevents harmful consequences during the commission of the crime, those who have not caused damage shall be exempt from punishment; if damage is caused, the punishment shall be reduced. Criminals who have mitigating circumstances as stipulated by law shall be sentenced to a punishment below the statutory penalty. Those who voluntarily surrender after committing a crime and truthfully confess their crimes are considered to have surrendered themselves. For criminals who surrender themselves, the punishment may be lighter or reduced; those who commit minor crimes may be exempt from punishment. Criminals who have exposed the criminal behaviour of others, which has been verified to be true through investigation, or who have provided important clues that have enabled investigators to solve other cases, etc, may be given lighter or reduced punishment; those who have made significant contributions may have their punishment reduced or waived.

According to the Law of the People’s Republic of China on Countering Foreign Sanctions, if foreign countries violate international law and basic norms of international relations, use various pretexts or, based on their own laws to contain and suppress China, take discriminatory restrictive measures against Chinese citizens and organisations, and interfere in China’s internal affairs, China has the right to take corresponding countermeasures.

The unreliable entity list mechanism under the Provisions on the List of Unreliable Entities targets foreign entities engaged in harming China’s national sovereignty, security, and development interests, or violating normal market trading principles, interrupting normal transactions with Chinese entities, or taking discriminatory measures against Chinese entities, seriously damaging the legitimate rights and interests of Chinese entities. The working mechanism will make a decision on whether to include the relevant foreign entities in the list of unreliable entities considering the degree of harm to China’s national sovereignty, security, and development interests, the degree of damage to the legitimate rights and interests of Chinese entities and whether it complies with international trade and economic rules.

In short, whether the foreign entities conduct the above behaviours out of intent or negligence is not considered by the authorities according to the above-mentioned provisions.

There is no licence permitting derogation from sanctions currently under sanctions law in China. The sanctions decisions made according to the Law of the People’s Republic of China on Countering Foreign Sanctions are final.

However, according to the Provisions on the List of Unreliable Entities, a correction deadline can be set for foreign entities included in the list of unreliable entities, during which no sanction measures will be taken. Foreign entities could be removed from the list of unreliable entities if they correct their behaviours and take measures to eliminate the consequences within the correction period.

There is no general licence for the provision of legal services to designated persons currently under sanctions law in China. However, according to the Provisions on the List of Unreliable Entities, during the investigation conducted by the working mechanism, foreign entities may make statements and defend themselves.

At present, there are no explicit reporting obligations with regards to sanctions violations under sanctions law in China. However, citizens and organisations shall report activities endangering China’s national sovereignty, security, and development interests stipulated in the Provisions on the List of Unreliable Entities since they have the obligation to report clues in a timely manner that endanger national security activities to the state security organisation according to the National Security Law of the People’s Republic of China.

According to the Provisions on the List of Unreliable Entities, the working mechanism shall decide whether or not to investigate the acts of relevant foreign entities according to its functions and powers or the suggestions or reports from relevant parties.

The Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures issued by the Ministry of Commerce of China require Chinese entities to truthfully report to the competent commerce department of the State Council within 30 days when encountering situations where foreign laws and measures prohibit or restrict their normal economic and trade activities with third countries (regions) and their citizens, legal persons, or other organisations.

On 10 June 2021, the Law of the People’s Republic of China on Countering Foreign Sanctions officially came into effect, specifying the situations in which China has the right to take countermeasures, including:

  • foreign countries violating international law and basic norms of international relations, using various excuses or, based on their own laws to contain and suppress China, adopting discriminatory restrictive measures against Chinese citizens and organisations, and interfering in China’s internal affairs; or
  • foreign countries, organisations, or individuals committing, assisting, or supporting actions that endanger China’s sovereignty, security, and development interests.

On 1 July 2023, the Law on Foreign Relations of the People’s Republic of China began to be implemented officially. According to Article 33, the People’s Republic of China has the right to take, where appropriate, measures to counter or take restrictive measures against acts that endanger its sovereignty, national security and development interests in violation of international law or fundamental norms governing international relations.

On 1 January 2024, the new Civil Procedure Law of the People’s Republic of China came into effect. Article 300 stipulates that if a court determines that an effective judgment made by a foreign court violates the basic principles of the laws of the People’s Republic of China or national sovereignty, security, or social public interests, it shall rule not to recognise and enforce it.

On 8 November 2024, the Anti-Money Laundering Law of the People’s Republic of China was revised and passed, and was implemented on 1 January 2025.

On 21 March 2025, Provisions for the Implementation of the Law of the People’s Republic of China on Countering Foreign Sanctions were passed and were implemented on 23 March 2025.

China has been active in refining its export control laws and implementing anti-sanctions measures to protect its national interests and the legitimate rights and interests of its companies. The introduction of the Unreliable Entity List is a strategic move to counteract measures that harm Chinese companies. China will continue to formulate necessary administrative regulations and departmental rules, establish corresponding work systems and mechanisms, strengthen departmental co-ordination, and determine and implement relevant countermeasures and restrictive measures against actions that endanger China’s sovereignty, security, and development interests.

Clients looking to do business in China should closely monitor these trends and work with legal and trade compliance experts to navigate the complex landscape of international sanctions and trade controls. It is also important to engage in proactive risk management and to be prepared for the potential impacts of sanctions on business operations.

According to the Provisions on the List of Unreliable Entities, a correction deadline can be set for foreign entities included in the list of unreliable entities, during which no sanction measures will be taken. Foreign entities could be removed from the list of unreliable entities if they correct their behaviours and take measures to eliminate the consequences within the correction period. During the investigation conducted by the working mechanism, foreign entities may make statements and defend themselves.

If a foreign entity is restricted or prohibited from engaging in import and export activities related to China, and Chinese enterprises, other organisations or individuals need to conduct transactions with the foreign entity under special circumstances, they can apply to the Office of the Working Mechanism, and with its consent, they can conduct corresponding transactions with the foreign entities.

The working mechanism under the Provisions on the List of Unreliable Entities can decide to suspend or terminate the investigation based on the actual situation; if there is a significant change in the facts on which the decision to suspend the investigation is based, the investigation may be resumed.

The working mechanism may decide to remove the relevant foreign entities from the list of unreliable entities based on the actual situation. If a foreign entity corrects its behaviour and takes measures to eliminate the consequences of its behaviour within the specified correction period in the announcement, the working mechanism shall make a decision to remove it from the list of unreliable entities. Foreign entities can apply to be removed from the list of unreliable entities, and the working mechanism will decide whether to remove them based on the actual situation.

The Provisions on the List of Unreliable Entities do not specify a time limit to obtain delisting. However, the decision to remove foreign entities from the list of unreliable entities should be announced. From the date of announcement, the sanctions measures taken in accordance with the Provisions on the List of Unreliable Entities shall cease to be implemented.

China’s export and import control regimes are currently not country-specific. The Ministry of Commerce regularly issues the Catalogue of Technologies Prohibited or Restricted from Exporting in China and the Catalogue of Technologies Prohibited or Restricted from Importing in China.

The Ministry of Commerce, the Ministry of Industry and Information Technology, the General Administration of Customs, and the State Cryptography Administration published the Dual-Use Export Control List of the People’s Republic of China.

China implements sanctions mandated by the UN Security Council towards the Islamic State and Al-Qaeda, Yemen, Iraq, the Democratic Republic of Congo, South Sudan, Libya, Mali, Haitian gangs, Central Africa, and Al-Shabaab in Somalia.

China’s export and import control regimes are currently not country-specific. The Ministry of Commerce, the General Administration of Customs, and the Ministry of Ecology and Environment, in accordance with relevant laws and regulations, regularly issue the Catalogue of Prohibited Import Goods and the Catalogue of Prohibited Export Goods.

The Ministry of Commerce, the Ministry of Industry and Information Technology, the General Administration of Customs, and the State Cryptography Administration published the Dual-Use Export Control List of the People's Republic of China.

China implements sanctions mandated by the UN Security Council towards the Islamic State and Al-Qaeda, Yemen, Iraq, the Democratic Republic of Congo, South Sudan, Libya, Mali, Haitian gangs, Central Africa, and Al-Shabaab in Somalia.

In judicial practice, PRC courts tend to evaluate whether sanctions constitute force majeure. That is to say, courts tend to evaluate whether the obstacles cannot be reasonably foreseen at the time of contract formation and the consequences of obstacles cannot be reasonably avoided or overcome by the affected parties. If they do not constitute force majeure, the judgment should be executed accordingly. If the judgment or ruling is not voluntarily complied with, the court may take measures to enforce its decision.

If the property of the person subject to enforcement within China has been pre-sealed, seized, or frozen by relevant Chinese departments in accordance with sanctions laws, and no property available for enforcement has been found through property investigation, the enforcement procedure may be terminated after the applicant for enforcement signs confirmation or the enforcement court forms a collegial panel to review and verify, and is approved by the President. After the termination of enforcement, if the applicant for enforcement discovers that the enforcee has property available for enforcement, they may apply for enforcement again.

Case 1

In a case regarding a sales contract dispute, the seller, Company A, signed a procurement contract with the buyer, Company B, and Company A promised in Annex 3 that the goods did not come from Iran. Afterwards, Company B refused to make payment since Company A was unable to provide proof, while Company A filed a lawsuit claiming that Annex 3 violated the Law of the People’s Republic of China on Countering Foreign Sanctions and the Rules on Counteracting Unjustified Extra-Territorial Application of Foreign Legislation and Other Measures, violated mandatory provisions of laws and administrative regulations, and should be deemed invalid.

The court found that the statement was a unilateral commitment issued by Company A to Company B which should be considered as a true expression of Company A’s intention. Secondly, the main content of this document was that Company A promised that the goods did not come from Iran, and therefore did not fall within the scope of the Law of the People’s Republic of China on Countering Foreign Sanctions and the Rules on Counteracting Unjustified Extra-Territorial Application of Foreign Legislation and Other Measures. Therefore, Company A’s inability to provide relevant supporting documents to prove to Company B the source of the goods involved in the case constituted a breach of contract.

Case 2

In a case regarding an application for the recognition and enforcement of foreign arbitral awards, Company C applied to the court for recognition and enforcement of an arbitration award made by the Singapore International Arbitration Centre Arbitration Tribunal. The respondent, Company D, requested that the court not recognise and enforce the arbitration award because the law firm to which the chief arbitrator belonged had been sanctioned by the Chinese government, resulting in the arbitration award being unfair.

Regarding the issue of whether the sanctions imposed by the Chinese government on the law firm to which the arbitrator belonged would affect the hearing of this case, the court believed that the sanctions were aimed at the law firm to which the chief arbitrator belonged and not at its arbitrator’s identity. This sanction was not within the scope of non-recognition as stipulated in the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, was not related to the trial of this case, and there was no improper procedure. The issue of whether the recognition and enforcement of arbitration awards complied with the Rules on Counteracting Unjustified Extra-Territorial Application of Foreign Legislation and Other Measures was also not related to this case, and the choice of arbitration was the result of the autonomy of the parties in this case.

The court ultimately held that the award made by the Singapore International Arbitration Centre in question did not fall under the circumstances of non-recognition and enforcement under Article 5 of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and should be recognised and enforced.

Summary

In conclusion, PRC courts tend to respect the autonomy of the contracting parties regarding the agreement of sanctions or export control terms on the condition that sanctions or export control terms do not fall within the jurisdiction of the PRC sanctions laws, including but not limited to the Law of the People’s Republic of China on Countering Foreign Sanctions, the Rules on Counteracting Unjustified Extra-Territorial Application of Foreign Legislation and Other Measures, and the Export Control Law of the People’s Republic of China.

According to the Provisions on the List of Unreliable Entities, China has established a working mechanism with the participation of relevant departments of central state organs, responsible for organising and implementing the unreliable entity list system. The Office of the Working Mechanism is located in the competent commerce department of the State Council.

According to the Law of the People’s Republic of China on Countering Foreign Sanctions, the relevant departments of the State Council may decide to include individuals or organisations who directly or indirectly participate in the formulation, decision-making, and implementation of discriminatory restrictive measures as stipulated by this law in the list of countermeasures. The determination, suspension, modification or cancellation of the list of countermeasures, as well as countermeasures themselves, shall be announced by an order issued by the Ministry of Foreign Affairs or other relevant departments of the State Council.

There are similar provisions in China specifying the indirect designation of persons as a result of them being “owned or controlled” by a directly designated person. According to the Law of the People’s Republic of China on Countering Foreign Sanctions, the relevant departments of the State Council may decide to take countermeasures against the following individuals and organisations:

  • spouses and immediate family members of individuals included in the list of countermeasures;
  • senior management personnel or actual controllers of organisations included in the list of countermeasures;
  • organisations where individuals listed on the countermeasures list serve as senior management personnel;
  • organisations that are actually controlled, or were established and operated by, individuals and organisations included in the countermeasures list; and
  • organisations that the individuals or organisations included in the countermeasures list actually control or participate in their establishment and operation.

The Company Law of the People’s Republic of China (Revised in 2023) stipulates that a controlling shareholder refers to a shareholder whose capital contribution accounts for more than 50% of the total capital of a limited liability company or whose shares account for more than 50% of the total share capital of a joint stock company. Additionally, a shareholder with less than 50% ownership may still be considered controlling if their voting rights, based on capital contribution or shareholding, are sufficient to exert a significant influence over the resolutions of the shareholders’ meeting. An actual controller refers to a person who can actually control the company’s behaviour through investment relations, agreements or other arrangements. These provisions help to analyse ownership and control.

According to the Law of the People’s Republic of China on Countering Foreign Sanctions, organisations and individuals within China shall implement countermeasures taken by relevant departments of the State Council, and otherwise they shall be dealt with by relevant departments of the State Council in accordance with the law, and their activities shall be restricted or prohibited.

Any organisation or individual that fails to implement or co-operate in implementing countermeasures shall be held legally responsible in accordance with the law.

If the circumvention of sanctions endangers national security or involves the disclosure of state secrets, the offender could be subject to criminal liabilities of life imprisonment or imprisonment for more than ten years under the Criminal Law of the People’s Republic of China.

According to the Law of the People’s Republic of China on Countering Foreign Sanctions, no organisation or individual shall enforce or assist in enforcing discriminatory restrictive measures taken by foreign countries against Chinese citizens and organisations. If an organisation or individual conducts those behaviours and infringes upon the legitimate rights and interests of Chinese citizens or organisations, Chinese citizens or organisations may file a lawsuit with the People’s Court, demanding that they stop the infringement and compensate for the losses. Those who have the ability to execute judgments or rulings of the people’s court but refuse to do so, and the circumstances are deemed serious, shall be sentenced to fixed-term imprisonment of not more than three years, criminal detention, or a fine. If the circumstances are particularly serious, the organisation or individual shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined.

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Trends and Developments


Author

Xing Nan (Nancy)

AnJie Broad Law Firm is a full-service law firm with a wide range of practice areas and has offices in Beijing, Shanghai, Shenzhen, Guangzhou, Haikou, Nanjing, Xiamen and Hong Kong. AnJie Broad was founded by senior attorneys from different practice areas, and all of its key partners are graduates of the most prestigious law schools, with abundant work experience from leading international law firms. AnJie Broad’s international trade team is equipped with profound expertise in areas including international sanctions, international sales of goods, shipping and insurance, international settlement, cross-border transactions of intellectual property, international service trade, and trade remedies. The team provides all-round services to clients at home and around the globe, and has gained clients’ recognition especially for its expertise in dispute resolution. Some team members were once front-line professionals in the industry of international trade before starting their legal careers, and they possess in-depth knowledge and experience in various segments of the industry.

China Sanctions Regime: An Introduction

In China, the main sanctions-related legislation includes but is not limited to:

  • the Law on Foreign Relations of the People’s Republic of China;
  • the Law of the People’s Republic of China on Countering Foreign Sanctions;
  • the Counter-terrorism Law of the People’s Republic of China;
  • the Anti-Money Laundering Law of the People’s Republic of China;
  • the National Security Law of the People’s Republic of China;
  • the Cybersecurity Law of the People’s Republic of China;
  • the Foreign Trade Law of the People’s Republic of China;
  • the Export Control Law of the People’s Republic of China;
  • the Civil Procedure Law of the People’s Republic of China;
  • the Provisions for the Implementation of the Law of the People’s Republic of China on Countering Foreign Sanctions; and
  • the Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures.

Law of the People’s Republic of China on Countering Foreign Sanctions

Background and main purpose of the promulgation of the Law of the People’s Republic of China on Countering Foreign Sanctions

The Chinese government believes that the Declaration on Principles of International Law concerning Friendly Relations and Cooperation among States in accordance with the Charter of the United Nations adopted by the United Nations General Assembly in 1970 clearly states: “[n]o State or group of States has the right to intervene directly or indirectly, for any reason, in the internal or external affairs of any other State.” “Every State has the inalienable right to choose its political, economic, social and cultural systems, without interference in any form whatsoever.” In recent years, certain countries have imposed sanctions on relevant Chinese state organs, organisations and state personnel in accordance with their own laws.

According to the Chinese government, the purpose of the Law of the People’s Republic of China on Countering Foreign Sanctions is to fight back against the hegemonism and power politics of certain countries, safeguard national sovereignty, security, and development interests, co-ordinate the promotion of domestic rule of law and foreign-related rule of law, effectively enhance our country’s rule of law capabilities to deal with external risks and challenges, and accelerate the formation of a systematic and complete foreign-related legal system.

Main contents of the Law of the People’s Republic of China on Countering Foreign Sanctions

Circumstances for taking countermeasures and the applicable objects of countermeasures

The circumstances for taking countermeasures are when the Chinese government takes the position that a foreign country violates international law and basic norms of international relations, contains and suppresses China under various pretexts or based on its own laws, takes discriminatory restrictive measures against Chinese citizens and organisations, and interferes in China’s internal affairs. In such cases, according to the Chinese government, China has the right to take corresponding countermeasures.

Individuals and organisations that can be subject to countermeasures

First, the relevant departments of the State Council of the People’s Republic of China may decide to include individuals and organisations that directly or indirectly participate in the formulation, decision, and implementation of the above-mentioned discriminatory restrictive measures in the countermeasures list. Second, in addition to the individuals and organisations included in the countermeasures list, the relevant departments of the State Council of the People’s Republic of China may also decide to take countermeasures against the following individuals and organisations:

  • spouses and immediate family members of individuals included in the countermeasures list;
  • senior managers or actual controllers of organisations included in the countermeasures list;
  • organisations where individuals included in the countermeasures list serve as senior managers; and
  • organisations that the individuals or organisations included in the countermeasures list actually control or participate in their establishment and operation.

Individuals and organisations that fall within the above criteria may be made subject to countermeasures.

Countermeasures

There are three types of countermeasures:

  • first, not issuing visas, denying entry, cancelling visas or deporting;
  • second, sealing, seizing and freezing movables, immovables and other types of property within the territory of China;
  • third, prohibiting or restricting organisations and individuals within the territory of China from engaging in relevant transactions, co-operation and other activities with them.

At the same time, a catch-all provision is also made, namely “other necessary measures”. For the specific application of the above countermeasures, the relevant departments of the State Council of the People’s Republic of China may, in accordance with their respective responsibilities and division of tasks, decide to take one or more of these measures against the relevant individuals and organisations based on the actual situation.

If the circumstances on which the countermeasures are taken change, the relevant departments of the State Council may suspend, change or cancel the relevant countermeasures. The determination, suspension, change or cancellation of the countermeasure list and the countermeasures themselves shall be announced by the Ministry of Foreign Affairs of the People’s Republic of China or other relevant departments of the State Council. The decision made by the relevant departments of the State Council shall be final.

Countermeasures working mechanism

The state shall establish a co-ordination mechanism for countering foreign sanctions, which shall be responsible for co-ordinating relevant work. Relevant departments of the State Council shall strengthen co-ordination and information sharing, and determine and implement relevant countermeasures in accordance with their respective responsibilities and division of tasks.

Obligations of relevant organisations and individuals

First, organisations and individuals within China shall implement the countermeasures taken by the relevant departments of the State Council. If relevant organisations and individuals violate the regulations, the relevant departments of the State Council shall deal with them in accordance with the law and restrict or prohibit them from engaging in relevant activities.

Second, no organisation or individual may implement or assist in the implementation of measures, deemed to be discriminatory and restrictive, taken by foreign countries against Chinese citizens and organisations. If relevant organisations and individuals are deemed to have violated the regulations and infringed upon the legitimate rights and interests of Chinese citizens and organisations, Chinese citizens and organisations may file a lawsuit with the people’s court in accordance with the law, requiring them to stop the infringement and compensate for the losses.

Third, any organisation or individual who fails to implement or co-operate in the implementation of countermeasures shall be held accountable in accordance with the law.

Other Chinese laws and regulations stipulating countermeasures

Some of China’s current laws have already made provisions for similar countermeasures. For example, Article 48 of the Export Control Law of the People’s Republic of China, adopted by the National People’s Congress Standing Committee in October 2020, stipulates, “[i]f any country or region abuses export control measures to endanger the national security and interests of the People’s Republic of China, the People’s Republic of China may take reciprocal measures against that country or region based on actual circumstances.” For another example, in September 2020 and January 2021, with the approval of the State Council, the Ministry of Commerce successively issued the “Provisions on the Unreliable Entity List” and the “Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures”. Taking into account the above situation and reserving legal space for similar situations in the future, the Law of the People’s Republic of China on Countering Foreign Sanctions specifically makes a coherent and compatible provision, namely, Article 13 stipulates, “[i]n case of any act endangering China’s national sovereignty, security and development interests, other necessary measures may be taken as stipulated by relevant laws, administrative regulations and departmental rules, in addition to this Law.”

Export Control Law of the People’s Republic of China

Extra-territorial effect of the Export Control Law of the People’s Republic of China

The Export Control Law of the People’s Republic of China has an extra-territorial effect. The Export Control Law of the People’s Republic of China stipulates that organisations and individuals outside the territory of the People’s Republic of China that violate relevant export control regulations, endanger the national security and interests of the People’s Republic of China, and impede the fulfilment of international obligations such as non-proliferation shall be dealt with in accordance with the law and held accountable for their legal responsibilities.

Controlled items

China implements export controls on dual-use items, military products, nuclear products, and other goods, technologies, services and other items related to maintaining national security and interests and fulfilling international obligations such as non-proliferation. Controlled items include data such as technical information related to the items. Dual-use items refer to goods, technologies and services that have both civilian and military uses or help enhance military potential, especially those that can be used to design, develop, produce or use weapons of mass destruction and their delivery vehicles. Military products refer to equipment, special production equipment and other related goods, technologies and services used for military purposes. Nuclear refers to nuclear materials, nuclear equipment, non-nuclear materials for reactors, and related technologies and services.

Export control

Export control refers to China’s adoption of prohibitive or restrictive measures on the transfer of controlled items from within the territory of the People’s Republic of China to outside the country, and on the provision of controlled items by citizens, legal persons and unincorporated organisations of the People’s Republic of China to foreign organisations and individuals.

Export permit

China implements a unified export control system and manages it through the formulation of control lists, directories or catalogues, and the implementation of export licences.

China implements a licensing system for the export of controlled items. For controlled items listed in the export control list or temporarily controlled items, export operators must apply for a licence from the state export control authorities.

Management department

The departments of the State Council and the Central Military Commission of the People’s Republic of China are responsible for export control work in accordance with their respective duties. Other relevant departments of the State Council and the Central Military Commission are responsible for export control-related work in accordance with their respective duties. The state has established an export control co-ordination mechanism to co-ordinate major export control matters.

Export control internal compliance system

If an export operator has established an internal compliance system for export control and it operates well, the state export control authorities may grant it general licences and other convenient measures for the export of relevant controlled items.

Penalties

Violations may be punished with warnings, orders to stop illegal activities, confiscation of illegal gains, fines, and even orders to suspend business for rectification, until the revocation of the export qualification of related controlled items. In addition, two specific types of conduct – namely, “exporting controlled items prohibited from export” and “exporting controlled items without permission” – may also result in criminal liability. Under applicable legal provisions, such acts may constitute crimes such as “the crime of smuggling goods and articles prohibited from being imported and exported by the state” and “illegal business operations”, and may be punished accordingly.

Recent Developments in China’s Sanctions Regime

Provisions for the implementation of the Law of the People’s Republic of China on Countering Foreign Sanctions

Effective Date

The “Provisions for the Implementation of the Law of the People’s Republic of China on Countering Foreign Sanctions” were adopted at the State Council Standing Committee meeting and came into effect on 23 March 2025.

Departments implementing countermeasures

The refusal to issue a visa, entry denial, visa cancellation or deportation, per Article 6, Paragraph 1 of the Law of the People’s Republic of China on Countering Foreign Sanctions, shall be implemented by the relevant departments of the State Council, such as the Ministry of Foreign Affairs and the National Immigration Administration, in accordance with their duties and powers.

The sealing, seizure and freezing, per Article 6, Paragraph 2 of the Law of the People’s Republic of China on Countering Foreign Sanctions, shall be implemented by the relevant departments of the State Council, such as the Ministry of Public Security, the Ministry of Finance, the Ministry of Natural Resources, the Ministry of Transport, the Administration of Customs, the Administration of Market Regulation, the Administration of Financial Management, and the Administration of Intellectual Property, in accordance with their duties and powers.

The other types of property, per Article 6, Paragraph 2 of the Law of the People’s Republic of China on Countering Foreign Sanctions, include cash, bills, bank deposits, securities, fund shares, equity, intellectual property rights, accounts receivable and other property and property rights.

The prohibition or restriction of organisations and individuals within the territory of China from engaging in relevant transactions, co-operation and other activities with them, per Article 6, Paragraph 3 of the Law of the People’s Republic of China on Countering Foreign Sanctions, including but not limited to activities in the fields of education, science and technology, legal services, environmental protection, economy and trade, culture, tourism, health and sports, shall be implemented by the relevant departments of the State Council, such as education, science and technology, judicial administration, ecological environment, commerce, culture and tourism, health and sports administration, in accordance with their duties and powers.

Other necessary measures, per Article 6, Paragraph 4 of the Law of the People’s Republic of China on Countering Foreign Sanctions, include, but are not limited to, prohibiting or restricting import and export activities related to our country, prohibiting or restricting investment in our country, prohibiting the export of relevant items to them, prohibiting or restricting the provision of data and personal information to them, cancelling or restricting the work permits, stay or residency qualifications of their relevant personnel in our country, and imposing fines.

Risk of being sued for enforcing or assisting in enforcing “foreign discriminatory restrictive” measures

If any organisation or individual implements or assists in the implementation of measures, by foreign countries against Chinese citizens or organisations, deemed to be discriminatory, restrictive, and infringing upon the legitimate rights and interests of Chinese citizens or organisations, Chinese citizens and organisations have the right to file a lawsuit in the people’s court in accordance with the law, demanding that the infringement be stopped and compensation for the losses be paid.

Risk of countermeasures against foreign countries, organisations or individuals that “endanger China’s sovereignty, security and development interests”

If a foreign country, organisation or individual is deemed, by the Chinese state, to endanger China’s sovereignty, security or development interests by promoting or implementing litigation, the relevant departments of the State Council shall have the right to decide to include the above-mentioned entities and related organisations and individuals involved in litigation and judgment enforcement activities in the countermeasures list, and take countermeasures such as restricting entry, sealing, seizing or freezing property in China, prohibiting or restricting relevant transactions and co-operation with them, and reserve the right to carry out compulsory enforcement against property and other more severe countermeasures. No organisation or individual may execute or assist in the execution of the judgment resulting from the litigation promoted or implemented by a foreign country, organisation or individual in the preceding paragraph.

Revision of the Anti-Money Laundering Law of the People’s Republic of China

Effective date

The Anti-Money Laundering Law of the People’s Republic of China was revised and passed on 8 November 2024, and came into effect on 1 January 2025.

Major amendments related to sanctions

The revised law introduces several significant changes. It expands the scope to include the prevention and combating of terrorist financing activities. It also introduces the principle of universal jurisdiction, enabling China to take action against money laundering and terrorist financing activities conducted abroad if they are deemed to endanger China’s sovereignty and security, infringe upon the legitimate rights and interests of Chinese citizens, legal persons, or other organisations, or disrupt China’s financial order. The law also introduces special anti-money laundering preventive measures for entities and individuals designated on specific sanctions-related lists. Additionally, it establishes an anti-money laundering monitoring agency with the aim of proactively managing and mitigating risks.

Law Enforcement

In 2024, China carried out 12 anti-sanction enforcement actions in accordance with the Law of the People’s Republic of China on Countering Foreign Sanctions, and included 118 sanctioned targets (including 56 natural persons and 62 entities) in the countermeasures list. In the first two months of 2025, the Ministry of Commerce of the People’s Republic of China issued four consecutive announcements, listing 23 foreign entities in the Unreliable Entity List. On 2 January 2025, China included 28 US entities in the export control list. On 4 March 2025, the Ministry of Commerce issued a number of consecutive export control and countermeasure-related announcements, listing ten companies in the Unreliable Entity List and 15 US entities in the Export Control List.

In addition, China also implements the UN Security Council resolutions on sanctions.

Future Trends

It is anticipated that China will continue to introduce more systems, regulations and rules that align with the Law of the People’s Republic of China on Countering Foreign Sanctions and the Export Control Law of the People’s Republic of China, further improve the relevant legislation on countering foreign sanctions and export controls, and ensure that various legal provisions are effectively implemented.

At the law enforcement level, China will continue to safeguard the interests of the state, organisations and citizens through countermeasures and export controls in accordance with legal provisions. The courts will also conduct more relevant practices. Companies in China will also pay more attention to sanctions and China’s laws on countering foreign sanctions, establish corresponding internal control and compliance systems, and effectively safeguard corporate interests and development.

AnJie Broad Law Firm

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Law and Practice

Author

Xing Nan (Nancy)

AnJie Broad Law Firm is a full-service law firm with a wide range of practice areas and has offices in Beijing, Shanghai, Shenzhen, Guangzhou, Haikou, Nanjing, Xiamen and Hong Kong. AnJie Broad was founded by senior attorneys from different practice areas, and all of its key partners are graduates of the most prestigious law schools, with abundant work experience from leading international law firms. AnJie Broad’s international trade team is equipped with profound expertise in areas including international sanctions, international sales of goods, shipping and insurance, international settlement, cross-border transactions of intellectual property, international service trade, and trade remedies. The team provides all-round services to clients at home and around the globe, and has gained clients’ recognition especially for its expertise in dispute resolution. Some team members were once front-line professionals in the industry of international trade before starting their legal careers, and they possess in-depth knowledge and experience in various segments of the industry.

Trends and Developments

Author

Xing Nan (Nancy)

AnJie Broad Law Firm is a full-service law firm with a wide range of practice areas and has offices in Beijing, Shanghai, Shenzhen, Guangzhou, Haikou, Nanjing, Xiamen and Hong Kong. AnJie Broad was founded by senior attorneys from different practice areas, and all of its key partners are graduates of the most prestigious law schools, with abundant work experience from leading international law firms. AnJie Broad’s international trade team is equipped with profound expertise in areas including international sanctions, international sales of goods, shipping and insurance, international settlement, cross-border transactions of intellectual property, international service trade, and trade remedies. The team provides all-round services to clients at home and around the globe, and has gained clients’ recognition especially for its expertise in dispute resolution. Some team members were once front-line professionals in the industry of international trade before starting their legal careers, and they possess in-depth knowledge and experience in various segments of the industry.

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