China’s new rules could send a message to Biden

Ministry of Commerce says policies meant to counter foreign laws that restrict trade

China fired back at the Trump administration on Saturday with new rules that would punish global companies for complying with Washington’s tightening restrictions on doing business with Chinese companies.

China’s Ministry of Commerce said that the rules, which went into effect immediately, were intended to counter foreign laws that “unjustly prohibit or restrict” people or companies in China from doing normal business. It said its measures were necessary to safeguard China’s national sovereignty and security and to protect the rights of Chinese citizens and entities.

Although Chinese officials did not mention any specific country, the new rules could potentially put global companies in the middle of the economic battles being waged between Washington and Beijing. They could also send a signal to the incoming administration of President-elect Joe Biden, who must ultimately decide whether to preserve Trump-era restrictions against Chinese businesses or rethink them entirely.

As President Donald Trump’s trade war against Chinese companies intensified, the Trump administration prohibited the sale of American technology to Huawei, the Chinese telecommunications giant, and other firms. It also issued rules that punish companies for their ties to the Chinese military and their involvement in Beijing’s suppression of mostly Muslim ethnic minorities in the region of Xinjiang.

The new rules released Saturday would allow Chinese officials and companies to strike back at those who comply with the U.S. limits. The Chinese measures allow government officials to issue orders saying that companies do not have to comply with certain foreign restrictions.

Chinese companies that incur losses because of another party’s compliance with those laws can sue for damages in Chinese courts, according to the Commerce Ministry’s notice. Such a case would be likely to result in a victory for a Chinese plaintiff, since China’s courts are answerable to the Communist Party.

“This basically puts many big companies between a rock and a hard place, because they either have to decide to comply with U.S. sanctions or with the Chinese rules,” said Henry Gao, a law professor from Singapore Management University who specializes in international trade. “And either way, they are going to lose one of their biggest markets.”