China Trade Monitor Database of Chinese Government Sanctions

Huan Zhu -

The China Sanctions Database is now available on China Trade Monitor.

The database will cover all sanctions announced by the Ministry of Foreign Affairs (MFA) under the Anti-Foreign Sanctions Law and by the Ministry of Commerce (MOFCOM) under the Export Control Law and the Provisions on the List of Unreliable Entities.

As of September 9, 2024, there are 22 sanction measures related to 95 entries, involving 86 entities (there are some duplicates in sanctioned entities).

As shown in the database, 19 sanction measures on 79 entities (including 43 individuals) have been announced by the MFA since the adoption of the Anti-Foreign Sanctions Law in 2021; MOFCOM has added five companies and six individuals to the unreliable entity list in three measures; and so far there have been no entities added to the Export Control list of importers and end-users.

The system is expected to develop further. The recently concluded third plenum of the 20th Party Congress adopted a resolution calling for improving the anti-sanctions mechanism and the risk control and prevention mechanism, and refining the export control framework. We could see more aggressive sanctions in the near future. 

AFSL sanctions

China's Anti-Foreign Sanctions Law (AFSL) is the statutory basis of MFA sanctions. The law authorizes countermeasures against foreign sanctions and against activities that "endanger China's sovereignty, security, or development interests."

Priorities

Data on Chinese sanctions indicates that sovereignty and territorial integrity have been a priority of the use of sanctions. 42% of sanction measures (8) were designed as a response to U.S. arms sales to Taiwan. And nearly a third of sanctions (6) refer to foreign interference in China’s internal affairs, including official visits to Taiwan.

Separately, countermeasures are another integral part of the Chinese sanctions system. Nearly 40% of sanction measures (7) were retaliation against U.S. sanctions. (Note: Some sanctions refer to more than one basis).

In terms of target countries, the vast majority of sanctioned entities are U.S. citizens, organizations, or companies, indicating that this legal tool has mainly been used in the context of U.S.-China relations.

Format

Among the 19 sanction measures announced by the MFA, nine of them were published in the form of a public order. All of them come with specific sanction measures.

The remaining ten sanctions take the form of press announcements. Half of them do not come with specific measures. This indicates that this type of sanction measure has a looser and more casual form.

Removal

In the past, MFA officials have indicated the possibility of removing sanctioned entities. So far, one entity, ViaSat, has been removed from the sanction list.

ViaSat reportedly sold the Multifunctional Information Distribution System (MIDS) that collects intelligence on the battlefield to Taiwan, which could have initially led to its inclusion on the sanctions list.

The reason for the removal has not been disclosed. ViaSat has been a long-term partner of Chinese aerospace companies and has a strong footing in the Chinese market. It has obtained Validations of Supplemental Type Certificate (VSTC) from the Civil Aviation Administration of China (CAAC) to install its satellite connectivity system on the Boeing 737 aircraft series and the A320 series. The company has also partnered with Xichuan Airlines since 2022, and collaborated with China Satellite Communications, Co. Ltd. to provide its services.

Additional notes

Five individuals have appeared twice in MFA sanction announcements: The first time with no specific sanction measures, and the second time with specific measures. Both are retaliation against two separate U.S. sanction announcements (here and here) on the same group of Chinese government officials, indicating a tit-for-tat approach when it comes to sanctions against Chinese officials. In contrast, countermeasures against sanctions on Chinese firms are much less likely to be reciprocal.

Unreliable entities

The 2020 Provisions on the List of Unreliable Entities (PLUE) was published by MOFCOM pursuant to the Foreign Trade Law and National Security Law. Through the Provisions, China established a new legal framework for sanctioning entities that are considered to be engaging in activities that endanger national sovereignty, security, and development interests, or violate market principles and terminate normal trade activities with Chinese entities, or take discriminatory measures against Chinese entities that seriously injure Chinese entities' legal rights.

So far MOFCOM has added five companies and six individuals to the unreliable entity list in three different measures.

Investigations

So far MOFCOM has launched two investigations under the Provisions. The first one was on Caplugs. It stated that "there is evidence that the American company Caplugs circumvented the 'Unreliable Entity List Regulations' and other relevant regulations and transferred goods purchased from China to companies on the Unreliable Entity List."

The second investigation was initiated against U.S PVH Corp, which is an American clothing company that owns Tommy Hilfiger and Calvin Klein. The investigation will review whether PVH violated normal market transaction principles when trading Xinjiang-related products, disrupted normal transactions with Chinese firms and entities, and discriminated against certain goods.

Shifting purposes

In the beginning, the PLUE was designed to deter the extra-territorial application of foreign laws, including sanctions. In particular, it would punish companies that cannot guarantee stable supply chains to Chinese buyers due to foreign government actions, including foreign sanctions. But that has not been the case in implementation. So far, 100% of the entities have been sanctioned for arms sales to Taiwan. Speculation that other U.S. companies such as Qualcomm, Cisco, and Apple may be potential targets has never materialized.

This shifted purpose may result from a deliberate calculation related to the Chinese domestic economy and external relations, as the nation is trying to restore market confidence and attract more foreign investment.

However, the PVH investigation indicates that China may be ready to adjust the use of this legal tool for its intended purposes, which is to punish firms that disrupt or hinder trade with China.

Fines

MOFCOM also imposed fines on three companies. It is unclear whether the fines have been collected.

Additional notes

Four companies have been sanctioned by both MOFCOM and MFA. They are General Atomics Aeronautical System, General Dynamics Land Systems, Lockheed Martin, and Raytheon Technologies Corporation. The reasons are the same in both the MOFCOM and MFA sanctions, raising a question about the overlapping use of the sanctions tools.

That said, the sanction measures are different, largely due to the different legal basis and sanction authorities of the two agencies. This may explain the double sanctions.