On May 2, 2026, the Ministry of Commerce of the People’s Republic of China (hereinafter “MOFCOM”) issued a ban on the implementation of certain U.S. sanctions (hereinafter the “Blocking Order”), and on August 5, 2026, it adopted Countermeasure Orders No. 2 and No. 3 (hereinafter referred to as the “Countermeasure Orders”). These acts were adopted as part of the mechanism for countering foreign sanctions established by the PRC Law on Countering Foreign Sanctions and the subordinate regulations adopted to implement it.
Content of the adopted acts:
- Blocking Prohibition. U.S. sanctions imposed pursuant to U.S. Presidential Executive Orders No. 13902 and No. 13846 against five Chinese petrochemical companies in connection with transactions involving Iranian oil shall not be recognized, enforced, or complied with within the territory of China. No entity may, by citing these sanctions, refuse to fulfill obligations to the specified companies, suspend orders, terminate contracts, or freeze assets.
- Orders on Countermeasures. Organizations and individuals within China are prohibited from cooperating or otherwise interacting with seven U.S. entities that, according to MOFCOM’s assessment, have facilitated the application of U.S. restrictive measures against China. The wording of the ban is general in nature, so it is expected to be interpreted broadly: in addition to the supply of goods and services, the ban may also cover financing, the provision of guarantees, the transfer of data and technology, as well as intermediary and consulting services.
- Scope of Application. The requirements apply to all persons within the territory of the PRC, including Chinese subsidiaries, branches, and representative offices of foreign companies.
- Consequences of Violation. MOFCOM has the authority to issue a warning, order the rectification of the violation, and impose a fine. In addition, a Chinese entity that has suffered losses because another party implemented U.S. sanctions in violation of the Blocking Prohibition or facilitated their implementation is entitled to seek compensation for such losses through the courts. Chinese courts also have the authority to refuse to recognize and enforce foreign judicial decisions based on these sanctions.
The adopted measures have a strictly defined scope of application: the Blocking Order protects five named Chinese companies from specific U.S. sanctions, while the Countermeasures Orders concern interactions with seven listed U.S. entities. These measures do not establish a general mechanism exempting parties from complying with foreign sanctions. We recommend proceeding on the assumption that sanctions clauses in contracts with Chinese counterparties remain relevant in practice.
