China’s Ministry of Commerce (MOFCOM) issued an official order on Saturday prohibiting any domestic entities or individuals from recognising, enforcing, or complying with recent U.S. sanctions.
The move comes after the United States imposed restrictive measures on five Chinese companies, alleging their involvement in the shipping and transaction of Iranian petroleum. Beijing has slammed the move as “long-arm jurisdiction” and a violation of international law.
The Ministry’s directive invokes China’s Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation, a legal framework designed to shield Chinese firms from foreign sanctions that Beijing deems illegitimate.
Under the new order Chinese courts and agencies are prohibited from recognizing the legal validity of the U.S. sanctions. Chinese banks, shipping firms, and trade entities are forbidden from adhering to the U.S. restrictions when dealing with the five named companies. Affected Chinese companies now have the right to sue for damages in domestic courts if they suffer losses due to third parties (such as banks or partners) complying with the U.S. sanctions.
China has consistently maintained that its energy trade with Iran is legitimate, transparent, and conducted within the bounds of international norms.
“The U.S. side has repeatedly used its domestic law to suppress Chinese enterprises engaged in normal international trade,” a MOFCOM spokesperson said. “These actions seriously interfere with the legitimate rights and interests of Chinese companies and disrupt the stability of the global energy supply chain.”
The Ministry emphasised that the petroleum transactions in question are part of a broader, lawful bilateral cooperation between China and Iran that does not violate any United Nations Security Council resolutions.
This “blocking statute” is one of the strongest tools in Beijing’s legal arsenal. By forcing a choice between U.S. compliance and Chinese law, Beijing is putting multinational corporations—especially global banks and logistics firms—in a precarious “Catch-22” situation:
The timing of the ban reflects a hardening stance in Beijing against what it views as “economic coercion.” As the U.S. continues to use financial sanctions as a primary tool of foreign policy, China is increasingly building a parallel legal and financial architecture to protect its strategic interests.
Analysts suggest this move is not just about the five specific companies but serves as a broader warning to Washington that Beijing is prepared to legally retaliate against any future attempts to interfere with its global trade networks or energy security.
