Beijing looks to counter US restrictions on Chinese firms

Beijing has issued new guidelines to counter restrictions imposed by the US government on Chinese firms deemed to have links to the People’s Liberation Army (PLA).

The so-called ‘Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures’ were published by the Ministry of Commerce in Beijing on 9 January.

According to the guidelines, they are intended to safeguard national sovereignty and security and protect the interests of Chinese corporations and organisations.

The guidelines state that any Chinese corporation that is “prohibited or restricted” by foreign legislation from engaging in trade with that country can report it to the Chinese commerce ministry within 30 days.

The ministry will then assess each restriction in line with international law and any related effect on China’s national security. It may also challenge any restriction in court and provide unstated support for a Chinese company affected by the restrictions.

“Where [a Chinese organisation] suffers significant losses resulting from non-compliance with the relevant foreign legislation … relevant government departments may provide necessary support based on specific circumstances,” state the rules.

In late 2020 Washington issued two sets of directives aimed at restricting US engagement with Chinese firms deemed by the United States to be involved in military programmes.

Executive Order 13959 identifies a list of ‘Communist Chinese Military Companies’ that US firms are barred from investing in or from acquiring shares and securities in. This list includes 35 Chinese corporations and their related listed affiliates.

The US also issued a new ‘military end-user’ (MEU) list in December 2020, which identified Chinese firms restricted from acquiring sensitive dual-use technologies.