Manmeet Lotay
Plenitude Insights
Sanctions
Advisory and TransformationChina is no stranger to economic sanctions. In fact, the US has maintained sanctions against China from the inception of the People’s Republic of China in 1949 until 1972. Sanctions were reimposed on China by the US and the European Union following the Tiananmen Square student riots in 1989, which are still maintained today. The Donald Trump Administration in August 2018 signed the National Defence Authorisations Act for the fiscal year of 2019 (NDAA 2019), which banned Huawei and ZTE equipment from being used in the US. This was seen as the ‘first blow’, in the latest series of sanctions programmes that would be imposed on China by Western Governments and would ultimately push China into creating their own ‘Anti-Foreign Sanctions Law’ and to reform their old alliance with Russia and other countries that have been adversely affected by Western sanction programmes like Iran and Turkey.
Conclusion
With the introduction of this new radical Chinese legislation to counteract Western sanctions, it will undoubtedly change the way global financial institutions interact with China. However, as China is still keen to attract foreign investment and business, this may influence the Authorised Regulator of China to choose a more conservative approach in the implementation of the AFSL.
Further, it should be anticipated that in implementing countermeasures under Article 3 and 6(2), that the Authorised Regulator will evaluate “territory” in a manner consistent with the State Council’s interpretation. As written, by referring to the territory of the People’s Republic of China without qualification, the geographical scope of the AFSL would include Hong Kong and Macao which are generally subject to their own legislation.
