China's New Counter-Sanctions Rules Raise Legal Risks for Global Businesses
Trade Tensions: Eastern and Western Compliance Rules—Such as Supply Chain Regulations—May Clash More Often, Law Firms Warn
On April 7, 2026, China's State Council issued two new sets of counter-sanctions regulations, which took immediate effect upon publication:
- Regulations on the Security of Industrial and Supply Chains (Order No. 834)
- Regulations on Counteracting Unjustified Foreign Extraterritorial Jurisdiction (Order No. 835)
Law firms such as Advant Beiten and Graf von Westphalen (GvW) have analyzed these new Chinese counter-sanctions measures in recent publications, warning that they heighten the risk of legal conflicts for internationally active companies.
Countering Sanctions with Sanctions
With these regulations, Beijing has created a new tool to respond to what it considers unfair laws, sanctions, embargoes, or export controls imposed by other countries. The rules also impose obligations on organizations and individuals in China that are subject to foreign restrictions.
Under the new framework, China can prohibit compliance with foreign regulations it deems unacceptable and impose penalties for violations. Additional measures may include entry bans, asset freezes, or bans on business operations in China. A critical challenge for companies lies in the fact that decisions—such as supply chain adjustments made under European regulations—could suddenly fall under the scope of Orders 834 and 835, exposing them to legal risks in China.
What Companies Should Do
Supply chain audits, sanctions, and compliance requirements may increasingly clash, raising risks not only for corporations but also for local managers, according to Advant Beiten. Lawyers at GvW advise that companies carefully assess decisions to terminate China-related supply and service contracts, suspend operations, or withdraw support—especially in light of Order 834. They recommend gathering relevant information early, identifying potential regulatory conflicts, and involving legal and compliance teams in the final decision-making process.
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