China approves rules to counter ‘unjustified’ foreign trade and business restrictions
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China approves rules to counter ‘unjustified’ foreign trade and business restrictions

The State Council of the People’s Republic of China has approved rules established by the Chinese Ministry of Commerce (MOFCOM) to help Chinese companies and citizens uphold their legal trade rights in a foreign land. The rules will apply whenever a Chinese entity is prevented from exercising its trade or economic activities in a foreign land.

The rules allow MOFCOM to act as an independent third party to investigate any “unjustified extra-territorial application of foreign legislation” claims. They establish a working mechanism consisting of several government departments with jurisdiction to preside over such trade matters. Article 6 of the rules list several factors that the body of the working mechanism will take into account, including legal factors such as “if any basic international law or principle has been violated”; or political factors such as “the potential impact of Chinese rights, as well as security or development interests.”

If an entity’s rights are found to be unjustifiably violated, MOFCOM can essentially deem the prohibition on the entity to be null and void. The entity will then receive an exemption from complying with the prohibition order.

The rules follow the delisting of three Chinese telecom companies from the New York Stock Exchange after US President Donald Trump issued an executive order banning American investors from financing companies involved with the Chinese military. A press release from MOFCOM states that the delisting “violates market logic” and would practically harm American investors’ interests.

Trade and economic relationships between Washington and Beijing have worsened due to the introduction of tariffs on Chinese imports throughout the Trump presidency. Trump banned several major Chinese digital wallet apps this month. The president has also considered the idea of banning Tencent and Alibaba, two of Asia’s most valuable companies.