China Points New Regulations Countering Foreign States’ Extraterritorial Restrictive Measures

On April 13, 2026, China’s State Council issued the Regulation of the People’s Republic of China on Countering Foreign States’ Unlawful Extraterritorial Jurisdiction (State Council Decree No. 835, the “Regulation”), efficient instantly. The Regulation is the primary State Council-level administrative regulation to deal with international extraterritorial measures in opposition to Chinese entities or individuals (“Extraterritorial Measures”) and operationalize China’s framework for figuring out and countering what China characterizes as improper Extraterritorial Measures in opposition to China. (See our prior consumer alerts on enforcement of China’s Anti-Foreign Sanctions Law, Enforcement of China’s Anti-Foreign Sanctions Law Strengthens Through Private Cause of Action and New Implementing Rules | Morrison Foerster; and understanding of China’s Anti-Foreign Sanctions Law, China’s New Anti-Foreign Sanctions Law: Understanding Its Scope and Potential Liabilities | Morrison Foerster.)

The Regulation strikes China’s anti-“long-arm jurisdiction” regime from a beforehand fragmented set of instruments towards a extra coordinated enforcement framework. It not solely reiterates that no group or particular person might implement international Extraterritorial Measures recognized by China as improper, but in addition introduces a broader set of mechanisms, together with a “Malicious Entity List,” execution orders to dam international Extraterritorial Measures, investigative powers, civil treatments, administrative penalties, and a possible path to legal legal responsibility.

I. Positioning the Regulation in China’s Legal Framework

The Regulation needs to be considered as a part of a broader evolution in China’s anti-foreign sanctions framework designed to guard what China views as its nationwide pursuits. Historically, a lot of China’s related instruments—together with the 2021 Blocking Rules and the 2020 Unreliable Entity List regime—have been housed in MOFCOM (Ministry of Commerce)-led departmental guidelines or administrative mechanisms. By distinction, the most recent Regulation is a State Council-level administrative regulation with a better authority, which strengthens the premise for inter-agency coordination.

The Regulation additionally capabilities as an essential implementing instrument for the 2021 Anti-Foreign Sanctions Law (“AFSL”). The AFSL established the statutory foundation for reciprocal countermeasures similar to asset freezes and visa restrictions in response to international sanctions in opposition to Chinese entities. Although Chinese authorities had already begun to operationalize this toolkit by way of earlier measures—together with MOFCOM’s 2021 Blocking Rules and the State Council’s March 2025 implementing provisions beneath the AFSL—the most recent Regulation offers extra procedural particulars, translating that high-level authority right into a extra operational regulatory regime.

The Regulation must also be considered alongside adjoining regulatory developments, together with the State Council’s current supply-chain safety guidelines, the Regulation on Industrial, Supply-Chain Security (State Council Decree No. 834, the “Supply-Chain Regulation”), issued on March 31, 2026, that took impact instantly. The Supply-Chain Regulation goals to reply to varied international locations’ current industrial and supply-chain safety measures. The Supply-Chain Regulation authorizes the regulators to take care of “key sector” lists to conduct danger monitoring, reserve supply-chain capacities, and higher reply to pressing disruptions to financial stability or nationwide safety. For multinational firms (“MNCs”) working in China and their enterprise companions, the extra consequential level is that the Supply-Chain Regulation authorizes regulatory investigations into discriminatory measures on Chinese individuals in a fashion that harms China’s industrial and supply-chain safety. Countermeasures licensed beneath the Supply-China Regulation are much like these beneath the most recent Counter Foreign Extraterritorial Measures Regulation. This issues as a result of an MNC’s sanctions, export management, or derisking resolution might now face publicity not solely beneath the normal AFSL/Unverified Entity List (“UEL”) structure, but in addition beneath a parallel industrial and supply-chain safety regime and an anti-foreign extraterritorial jurisdiction regime.

So far, the Regulation solely applies to Mainland China, that’s, it doesn’t apply to the Hong Kong or Macau SARs. This means that the Regulation wouldn’t instantly govern international sanctions or different restrictive measures taken solely in opposition to Hong Kong or Macau individuals. That stated, the place a sanctions-related resolution involving Hong Kong or Macau has results in Mainland China (e.g., Mainland affiliate, personnel, or property), Chinese authorities should view the matter as implicating PRC nationwide pursuits.

II. Principal Features and Key Provisions

At a excessive degree, the Regulation establishes 4 interlocking parts.

• First, it creates an identification mechanism for the Ministry of Justice (“MOJ”) to establish international Extraterritorial Measures. Factors affecting the identification selections embody worldwide legal guidelines and rules; whether or not the international Extraterritorial Measures correctly deal with the underlying conduct that gave rise to such international measures; affect on China’s nationwide pursuits; lawful rights of Chinese individuals; and different elements. These are high-level requirements that depart broad discretion to MOJ to find out whether or not a international measure is “improper,” with restricted visibility into how these elements are assessed.
• Second, the Regulation establishes a prohibition-and-exemption framework. Once a international Extraterritorial Measure is recognized, nobody might implement that measure. Meanwhile, events affected by the Regulation’s prohibitions might apply to adjust to Extraterritorial Measures in particular circumstances. This function is especially related for MNCs dealing with competing authorized obligations in a number of jurisdictions. MOJ also can situation a Prohibition Execution Order in opposition to a selected group or particular person implementing international Extraterritorial Measures. Non-compliance to such an order might lead to penalties, together with proscribing participation in authorities procurement; proscribing import and export of products, applied sciences, and providers; proscribing the receipt or provision of cross‑border information with international events; proscribing exit from or entry to China, or residence in China; and imposing financial fines. Because these measures could also be imposed on each organizations and people, executives of implicated organizations might additionally face direct publicity the place they’re discovered to have facilitated the prohibited measures.
• Third, the Regulation introduces each state-level countermeasures and entity-specific measures. Chinese authorities might take counteractions that have an effect on diplomacy, commerce, funding, and cross-border exchanges. At the entity degree, the Regulation authorizes a “Malicious Entity List” for international entities/individuals that “promote or participate in” the implementation of Extraterritorial Measures, together with, for instance, lobbyists or suppose tanks that promoted the Extraterritorial Measures. Inclusion on the Malicious Entity List might lead to a broad vary of countermeasures, together with entry bans or deportation, restrictions on work or residence in China, seizure or freezing of property inside China, prohibitions on information transfers or business dealings with Chinese events, restrictions on commerce actions, funding bans, and financial fines.
• Fourth, the Regulation establishes a extra developed enforcement-and-remedies framework. Chinese events harmed by Extraterritorial Measures might file civil fits in opposition to the organizations or people that carried out such measures and should search cessation of the infringing conduct in addition to compensation for losses in Chinese courts. Separately, Chinese regulators might examine suspected violations by way of on-site inspections and should order rectification or comparable orders. While the Regulation doesn’t itself set out a standalone legal offense, it makes clear that the place the conduct constitutes a criminal offense beneath relevant PRC regulation, legal legal responsibility could also be pursued. Accordingly, the Regulation contemplates a layered enforcement mannequin beneath which firms and people might face concurrent civil, administrative, and doubtlessly legal publicity.

III. Practical Implications for Multinational Companies

• MNCs with materials operations in China ought to think about figuring out classes of international‑law-driven selections which will have an effect on China-facing enterprise, significantly these involving international sanctions, export controls, or different restrictions (e.g., provide chain limits, cost holds, buyer offboarding, or cross-border information transfers). They must also assess how globally standardized sanctions or export management applications are being utilized into their China operations.
• MNCs’ selections made by headquarters that negatively have an effect on China-facing enterprise—similar to halting transactions, proscribing provide, blocking funds, or transferring information in response to international sanctions, export controls, court docket orders, or subpoenas—might now be examined in China not solely as business selections, but in addition as potential implementation of international extraterritorial measures.
• MNCs ought to think about establishing strong inner escalating channels to establish and elevate potential violations of the Regulation or different associated legal guidelines (e.g., the AFSL). These channels might embody clear decision-making authority for China-related sanctions or export management points, and escalation triggers for issues involving buyer exits, provide suspensions, cost blocks, or data-transfer restrictions.
• The Regulation additionally raises operational danger as a result of Chinese authorities are expressly empowered to intervene on the investigative stage, together with to conduct daybreak raids, get hold of data, and take preliminary corrective actions. In apply, because of this inner compliance processes themselves might turn out to be the topic of scrutiny, and supplies similar to inner escalation data, payment-blocking directions, and resolution memoranda could also be topic to evaluate in a regulatory investigation. MNCs due to this fact ought to think about reviewing their company governance buildings for China-related sanctions and export‑management decision-making, refreshing crisis-management and dawn-raid response plans, updating inner investigation and document-preservation protocols, and offering trainings to related authorized, compliance, IT, and enterprise personnel on how to reply to regulatory inquiries.

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