Article 7 of the regulations allows the administration to openly seize intellectual property of foreign companies, former Chinese rights lawyer Wu Xiaoping said.
News Analysis
The Chinese Communist Party (CCP) has announced new regulations in response to US sanctions that could accelerate foreign asylum, according to Chinese experts.
On March 24, the Chinese State Council issued an order entitled “Regulations for the implementation of the Republic of China’s conflict sanctions law,” which provides specific enforcement measures for the law announced in June 2021.
Wu Shaoping, a US-based rights lawyer from China, said the so-called foreign sanctions law and its restrictions by the Chinese communist regime are primarily intended to counter the various sanctions imposed by the United States.
“Currently, on a global scale, only the United States has the capacity and power to influence human rights violations, violations of international rules, or violations of US and international law. The United States can use its associated law to influence, thereby maintaining the normal world order,” he told the Epoch Times. “Only the US can impose international sanctions right now. Even the European Union is weak.”
“The CCP itself is famous for its widely known serious misconduct. It is affected by US law due to violations of international law, including domestic human rights abuse. In my opinion, the enactment of this law is primarily aimed at the US.”
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David Hwan, a US-based economic researcher and commentator, believes the new regulations are CCP’s response to external pressures and challenges.
“This reflects Beijing’s attempt to use an internationally recognized approach to maintain the interests of political and national sovereignty in the face of external sanctions pressure,” he told the Epoch Times.
“This accelerated (introduced) the ‘regulations to implement anti-foreign sanctions laws’,” he said.
“China has chosen to enhance its legal tools to address potential challenges in light of the increasing risks of future international geopolitics,” Huang said.
Seizing foreign intellectual property
Analysts for the new regulations, which consist of a total of 22 articles, pay particular attention to Section 7, which addresses Section 6 of the “anti-foreign sanctions law.”
“Article 6, Item 2 of the Anti-Foreign Sanctions Act states that “seizures, detention, freeze” measures shall be implemented by relevant departments of the State Affairs Committee, including public safety, financial, natural resources, transportation, customs, market oversight, financial regulations, intellectual property and other relevant authorities.”
“Item 2 of Article 6 also includes other types of property, such as cash, negotiable goods, bank deposits, securities, fund stocks, stocks, intellectual property, accounts receivable, other assets and property rights.”
Wu said that the article believes that CCPs can openly seize intellectual property of foreign companies.
“Many foreign companies in China will bring in patents registered in the US or internationally with Communist China. According to this sanction, I can openly seize your intellectual property. Your intellectual property is no longer yours,” he said.
Huang shares the same view and believes Article 7 is a devastating blow to foreign investment companies that do not have physical investments in China.
“Many foreign investors, foreign companies, or foreign political groups may not be investing much in China that can be frozen,” he said.
“However, if sanctions are imposed, these products can be prohibited from being sold in China by freezing intellectual property such as windows and other software, as well as trademarks and branded intellectual property. Their advertising may be banned.
Wu believes this poses a great risk to foreign companies and makes it difficult for them to operate in China.
“Undoubtedly, their risk levels will increase even further for foreign companies. Many foreign companies rely on research and development and intellectual property to gain market share.
“Now that such regulations have been implemented, they may no longer be able to protect their intellectual property. Life and death, and the power to grasp everything, rest in CCP. For foreign companies, how do they relax in countries and markets with such enormous risk? That’s impossible for them.”
Foreign Capital Exodus
Wu further noted that if the CCP truly implements “regulations to implement anti-foreign sanctions laws,” foreign companies will be accelerated by increased risk.
“For foreign companies, risk is increasing exponentially. As China’s relationship with the international community continues to deteriorate, friction and conflict will only grow. This means that the risks for foreign companies will also rise.
Meanwhile, Wu believes between US sanctions and retaliation for Chinese sanctions, many foreign companies believe they will flee China simply because they don’t stand up to the US.
“If the US decides to implement and enforce sanctions, the company cannot withstand it,” he said.
“I think these foreign investment companies will definitely adhere to US laws and the consequences will continue to run away from a large number of Chinese foreign companies, rather than face the US. They will find the risk of staying there is too much.
US National Security Advisor Jake Sullivan has been welcomed by the Foreign Ministry of Foreign Affairs, Yang Tao, China’s Ambassador Nicholas Burns (c) and US Ambassador (c) and US Ambassador Director of Oceania when he arrived at China’s Beijing Capital International Airport on August 27, 2024. Ng Han Guan/Pool/AFP via Getty Images
Huang is taking a more careful stance.
“The response of foreign investment companies will vary depending on the industry, size and level of dependence on China,” he said.
“Some companies may even reassess their investments at the risk of China and consider adjusting their investment strategies. For industries with deep Chinese roots, they may choose to continue operating in China due to their heavy dependence on the Chinese market, but they can be much more careful about policy changes.”
Decreasing legal effectiveness for propaganda purposes
Wu pointed out that the CCP has now issued regulations rather than laws to implement the 2021 “Anti-Foreign Sanctions Act.”
The former Chinese lawyer said regulations have less legal power than law and can be replaced at any time. Instead, regulations seem to serve as propaganda tools aimed at domestic audiences.
“(CCP) has an internal propaganda purpose. We have not issued any formal laws in the past few years. Now we are issuing a downgraded version of regulations. This shows that the CCP itself knows that this law is very difficult to implement if it really faces challenges.
“This is merely internal propaganda (movement), indicating that CCPs (ISs) can counter foreign behavior and expand their reach through long-armed jurisdictions.”
Huang said the CCP is seeking a new balance between maintaining the political system and opening up to foreign investment.
“Beijing is still actively attracting foreign capital, but it is also stepping up its measures,” he said. “It seeks a new balance and seeks to find a new balance between maintaining the interests of the country’s political sovereignty and remaining open to the outside world.”
