China is preparing a new legal and regulatory framework aimed at shielding its companies and financial system from the impact of U.S. sanctions.
The proposal would strengthen Beijing’s ability to block the domestic impact of foreign sanctions and provide legal protections for Chinese firms caught between conflicting regulatory regimes in China and the United States.
The initiative is expected to build on China’s existing anti-sanctions law and related regulations that allow authorities to impose countermeasures on foreign entities deemed to be acting against Chinese interests. The new framework would go further by creating clearer legal mechanisms for firms to resist compliance with overseas sanctions when such measures conflict with Chinese law.
Chinese policymakers have grown increasingly concerned about what they describe as “long-arm jurisdiction” from Washington, particularly as the U.S. expands sanctions targeting Chinese companies involved in sectors such as technology, shipping, finance and energy.
Recent rounds of U.S. sanctions have included Chinese and Hong Kong-based entities accused of facilitating trade with Iran and other restricted jurisdictions, raising the risk of secondary sanctions on banks, logistics providers and insurers that interact with them.
Beijing has argued that such measures distort global commerce and force companies into legal contradictions, where compliance with U.S. rules can potentially violate Chinese regulations.
The proposed “legal shield” is intended to address that dilemma by giving Chinese courts and regulators clearer authority to support firms facing foreign enforcement actions. It could also expand compensation mechanisms for companies that suffer losses as a result of complying with overseas sanctions.
The move reflects a broader shift in China’s approach to economic statecraft, with policymakers increasingly using legal tools to counter external pressure rather than relying solely on diplomatic protest or retaliatory trade measures.
It also underscores the growing fragmentation of the global financial system, where competing regulatory regimes are creating compliance risks for multinational companies operating across multiple jurisdictions.
Analysts say the framework could increase uncertainty for global banks, insurers and exporters that deal with Chinese counterparties, particularly if Beijing begins actively enforcing restrictions on compliance with certain foreign sanctions.
At the same time, Chinese authorities are expected to maintain flexibility to avoid disrupting critical access to global markets, suggesting the measures may be applied selectively depending on the severity of external pressure.
The proposal highlights the increasingly complex intersection of law, finance and geopolitics, as both Washington and Beijing expand legal instruments to assert influence over global economic activity.
If implemented, the framework would mark another step in China’s effort to insulate its economy from external coercion while reinforcing its ability to challenge the reach of U.S. financial power in global markets.
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Emmanuel Abara Benson is a business journalist and editor covering artificial intelligence, global markets, and emerging technology.
He has previously worked with Business Insider Africa and Nairametrics, reporting on finance, startups, and innovation.
His work focuses on AI, digital economy, and global tech trends.
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