What Does China’s Lack of Response to U.S. Entity List Sanctions Mean for its Counter Foreign Sanctions Law?

On June 24th, 2021 and July 12th, 2021, the Biden administration added a series of new entities onto the Department of Commerce’s Bureau of Industry and Security’s Entity List due to their connection to human rights abuses in Xinjiang. These new sanctions took place after China passed its new Counter Foreign Sanctions Law (CFSL) on June 10th, 2021. However, China has not responded with retaliatory sanctions under the newly-enacted CFSL. China’s lack of response after this new round of Entity List sanctions in combination with China’s response to recent Hong Kong sanctions points towards the country’s new anti-sanctions law as a mere codification of former Chinese practices, and not an indication of more radical responses to foreign sanctions against China.

Solar panels. Photo: Wikimedia Commons.

BY: Elina chen, STAFFER

The Entity List

The Department of Commerce’s Bureau of Industry and Security’s Entity List serves as a sanction mechanism that may be used by the United States whenever it wishes to deter foreign countries or companies from conducting a specific type of behavior.  Generally speaking, new entities are added to the list when they 1) have participated in activities that could result in an increased risk of providing items to weapons of mass destruction programs, 2) are engaging in activities sanctioned by the State Department, or 3) are engaging in activities that are “contrary to U.S. national security and/or foreign policy interests.”  

New Entity List Sanctions

On June 24th, 2021, the Biden administration added five Chinese solar companies (Hoshine Silicon Industry (Shanshan), Xinjiang Daqo New Energy, Xinjiang East Hope Nonferrous Metals, Xinjiang GCL New Energy Material Technology, and XPCC) to the Entity List.  

On July 12th, 2021, the administration added fourteen more Chinese entities to the Entity List.  These are technology companies connected with China’s surveillance of Uyghurs and other Muslim minority groups in Xinjiang.  These newly sanctioned Chinese companies were added to the list because the conduct they are allegedly involved in—forced labor in Xinjiang—goes against the Biden administration's foreign policy interests.  

When a company is added to the Entity List, they are then subject to “specific license requirements for the export, re-export and/or transfer (in-country) of specific items.”  In the case at hand, the Biden administration’s Entity List additions serve two purposes:  1) to deter Chinese companies from engaging in forced labor practices in Xinjiang, and 2) to level the playing field between U.S. companies and Chinese companies because the forced labor gives Chinese firms an advantage over U.S. firms “by exploiting workers and artificially suppressing wages.” 

These recent sanctions are a part of a series of sanctions by the United States against China in response to China’s actions in Xinjiang:

  • On October 9th, 2019, twenty-eight entities were added to the Entity List including twenty Chinese government entities, and eight Chinese companies.  

  • On June 5th, 2020, nine entities were added to the Entity List.

  • On July 22nd, 2020, eleven entities were added to the Entity List.  

China’s Counter Foreign Sanctions Law

In response to an increasingly frigid relationship between China and the western world, on June 10th, 2021, China passed its Counter Foreign Sanctions Law (CFSL).  The CFSL is the latest of a series of measures taken by China in response to increased pressure on China in the form of sanctions, prohibitions, and export control mechanisms.  The CFSL is set to be triggered by sanctions that “discriminate” against China.  It provides a series of countermeasures that the Chinese government may use in response.  This includes actions such as:

  1. Refusal to issue a visa, denial of entry into China, cancellation of a visa or deportation;

  2. Seizure or freezing of property located within China;

  3. Ban or restriction on any transaction or cooperation with any organization or individual that is located within China; and

  4. Any other necessary measures.

China’s Response to the Two Rounds of Entity List Sanctions 

Even though these two recent Entity List sanctions affect Chinese companies in relation to Xinjiang, China’s Ministry of Foreign Affairs has not announced any new sanctions in response. 

But with regard to sanctions issued by means other than the Entity List, China has issued its own CFSL sanctions.  For example, on July 23rd, 2021, in response to U.S. sanctions against seven Hong Kong officials, China issued its tit-for-tat sanctions against seven U.S. individuals and entities under the CFSL, including Wilbur Ross (former U.S. Commerce Secretary), Sophie Richardson (Human Rights Watch’s China Director), Carolyn Bartholomew (chair of U.S.-China Economic and Security Review Commission), and Adam King (International Republican Institute).  However, the details of such sanctions are unclear, as the Ministry of Foreign Affairs did not specify the scope or depth of the sanctions.

Prior to the passage of the CFSL, China has also issued its own retaliatory sanctions in response to Western sanctions against China for Xinjiang issues.  In March 2021, China issued an array of sanctions against the west in response to sanctions against China on Xinjiang issues:

The sanctions in these cases have consisted of the following:  1) restricting the sanctioned entities from entering into China; 2) restricting the immediate families of the sanctioned individuals from entering into China; 3) freezing the sanctioned entities’ Chinese assets; and 4) banning any transactions between Chinese corporations and the sanctioned entities (and any corporations related to them).  These previously enacted sanctions largely follow the same countermeasures that are outlined in the CFSL.

Implications for China’s Counter Foreign Sanctions Law

China’s CFSL appears to merely be a codification of previously enacted retaliatory sanctions.  The current record suggests that the CFSL has kicked in only when Western sanctions have specifically sanctioned individuals in relation to Hong Kong.  In the case of Entity List sanctions related to Xinjiang, China has not responded with retaliatory sanctions as listed in the CFSL.  This points to some hope for the future of U.S.-China relations.  At the very least, when responding to lower-level economic sanctions such as Entity List sanctions, China has responded rather proportionately.  China has not been using the CFSL to escalate the conflict by responding with harsher sanctions on individuals. 

Elina Chen is a second-year student at Columbia Law School and a Staff member of the Columbia Journal of Transnational Law. She graduated from New York University in 2020. She has various experiences working on issues relating to U.S.-China relations and Chinese influence on international organizations.

 
Miranda Katz