China invokes blocking rules vs U.S. sanctions

China’s Commerce Ministry on May 2 ordered Chinese entities not to recognize, enforce or comply with U.S. sanctions imposed on five Chinese companies over alleged Iran oil dealings, using Beijing’s “blocking rules” for the first time. The move came days before Iranian Foreign Minister Abbas Araghchi met Chinese Foreign Minister Wang Yi in Beijing on May 6, as Washington and Tehran remained at odds over Iran policy. China’s statement framed the U.S. measures as an improper extraterritorial application of foreign law. The order applies to sanctions that put the five companies on the U.S. Specially Designated Nationals list and froze assets or barred transactions, according to the ministry notice. ### Which Chinese companies did Beijing name in the order? Commerce Ministry notice No. 21, published on May 2, named Hengli Petrochemical (Dalian) Refining & Chemical Co., Shandong Shouguang Luqing Petrochemical Co., Shandong Jincheng Petrochemical Group Co., Hebei Xinhai Chemical Group Co. and Shandong Shengxing Chemical Co. The ministry said the U.S. sanctions targeted those companies for participating in Iran oil trade. (mofcom.gov.cn) The May 2 order said Chinese parties must not recognize, execute or observe the U.S. measures taken under Executive Orders 13902 and 13846 and related authorities. The ministry said the prohibition took effect on the day of publication. ### What exactly are China’s “blocking rules” telling firms to do? China’s 2021 rules on countering the unjustified extraterritorial application of foreign laws allow Beijing to issue orders barring compliance with certain overseas measures. (mofcom.gov.cn) In the May 2 notice, the ministry said its working mechanism had assessed the U.S. sanctions and found an “improper extraterritorial application” of foreign measures. A ministry spokesperson said the action was taken under China’s national security law, foreign relations law, anti-foreign sanctions law and the blocking-rules framework. The spokesperson said the order was meant to protect the lawful rights of Chinese citizens, companies and other organizations, while adding that it would not affect China’s performance of international obligations or lawful protection of foreign-invested enterprises. (mofcom.gov.cn) ### How did Chinese officials describe the legal basis for the move? The Commerce Ministry spokesperson said on May 2 that Washington had used sanctions authorities against other countries to restrict normal trade and related activity between Chinese companies and third countries or regions. The spokesperson said that violated international law and “the basic norms of international relations.” Foreign Ministry spokesperson Lin Jian referred questions on May 6 to the competent authorities after U.S. (mofcom.gov.cn) Secretary of State Marco Rubio warned that parties not complying with sanctions could face secondary sanctions. Lin repeated that China opposed unilateral sanctions lacking U.N. authorization or a basis in international law. ### Why did the announcement surface alongside talks with Iran? On May 6, Wang Yi held talks in Beijing with Iranian Foreign Minister Abbas Araghchi, according to China’s Foreign Ministry. (mofcom.gov.cn) The ministry said Wang told Araghchi that China opposed “power politics and bullying acts” and supported Iran in safeguarding its legitimate rights and interests. The blocking order itself was issued four days earlier, on May 2, and Chinese officials did not say in the notice that it was a direct product of the May 6 meeting. (fmprc.gov.cn) The timing nonetheless placed the sanctions dispute in the middle of high-level China-Iran diplomacy in Beijing. That link is a matter of chronology, not a stated causal claim by Chinese officials. ### What did Washington say after China acted? (fmprc.gov.cn) On May 6, Lin Jian cited remarks from Marco Rubio that parties failing to comply with sanctions could face secondary sanctions. China’s Foreign Ministry did not say Washington had changed the underlying sanctions, and the U.S. warning as quoted by Lin indicated the dispute remained active. Reuters, in a report carried by MSN, described the step as China’s first use of its 2021 blocking rules against U.S. oil sanctions. (mofcom.gov.cn) Channel NewsAsia, citing the same development, said companies could now face conflicting legal demands from the two governments. ### Where can readers track the next formal step? The Commerce Ministry said on May 2 that it would continue to monitor improper extraterritorial application of foreign laws and measures and would handle future cases according to the blocking-rules framework if relevant circumstances arise. (fmprc.gov.cn) The ministry’s 2026 announcement index lists notice No. 21 and subsequent measures. (mofcom.gov.cn) (msn.com)