US and China Accelerate Competing Sanctions and Regulations

The United States and China are issuing competing sanctions, rules and regulations at an accelerating pace as both governments seek leverage in their trade, technology and security disputes. Global businesses are caught between the two sets of requirements, often finding that meeting the demands of one country would breach the rules of the other.

A recent example occurred in early May when Beijing invoked its Blocking Rules for the first time. The measure, adopted in 2021, was used to order companies not to comply with U.S. sanctions against five Chinese oil refiners. That action followed several steps taken by Chinese authorities in April, including unwinding the Meta-Manus deal, issuing new security rules aimed at protecting supply chains from foreign threats, and introducing tougher regulations to counter the unjustified extraterritorial use of foreign laws.

Meanwhile, U.S. authorities have imposed sanctions on multiple Chinese entities accused of maintaining trade links with Iran. The sanctioned parties include the same five oil refiners that Beijing moved to protect.

Background on the Legal Measures Both governments have expanded their use of legal tools in recent months. Washington has focused on sanctions targeting entities linked to Iran, while Beijing has responded with blocking statutes and supply-chain security regulations.

The Blocking Rules allow Chinese authorities to prohibit compliance with certain foreign legal actions deemed improper. Their first use against U.S. sanctions on oil refiners marks a new stage in the regulatory standoff. Companies now face the practical challenge of navigating overlapping and contradictory mandates.