On August 5, 2026, the Ministry of Commerce (“MOFCOM”), pursuant to the Anti-Foreign Sanctions Law, placed seven U.S. entities, including Applied DNA Sciences Inc., on the Countermeasure List, prohibiting any entities or individuals in China from engaging in transactions, cooperation, or other activities with them. This decision demonstrates that China is making increasingly active use of its counter-sanctions legal measures to respond to restrictive measures imposed by foreign countries against Chinese entities. For foreign companies conducting business with Chinese entities, a thorough grasp of China’s counter-sanctions regime—and its attendant legal risks—is of growing strategic importance..
Ⅰ. China’s Counter-Sanctions Regulatory Framework
China’s current counter-sanctions framework is generally divided into two categories of regulatory tools: defensive blocking tools and active countermeasure tools.
Defensive blocking tools are primarily intended to prevent the enforcement and application in China of foreign laws and measures that improperly exercise jurisdiction over, or impose restrictions on, Chinese entities or individuals and their lawful activities. The principal tools include MOFCOM Blocking Orders, Ministry of Justice (“MOJ”) Announcements and Prohibition Orders.
Active countermeasure tools are more directly retaliatory in nature and impose corresponding restrictive measures on foreign entities that adopt restrictive measures against Chinese entities or individuals or engage in related conduct. The principal tools include the Countermeasure List, the Unreliable Entity List, the Malicious Entity List, the Export Control List, and Supply Chain and Industrial Chain Security Investigations.
Ⅱ. Key Regulatory Tools
1. Defensive Blocking Tool
(1) MOFCOM Blocking Orders
MOFCOM Blocking Orders are established under the Measures for Blocking Improper Extraterritorial Application of Foreign Laws and Measures (“Blocking Measures”) and constitute a core tool for addressing foreign secondary sanctions. They primarily apply where foreign laws or measures improperly prohibit or restrict Chinese entities or individuals from engaging in normal business activities with entities or individuals in third countries. Chinese entities or individuals subject to such restrictions must report the relevant circumstances to the MOFCOM within 30 days.
Where a foreign law or measure is determined through the relevant working mechanism led by the MOFCOM to constitute improper extraterritorial application, the MOFCOM may issue a Blocking Order prohibiting its recognition, enforcement, or compliance in China. On May 2, 2026, the MOFCOM issued its first Blocking Order in response to measures adopted by the U.S. that placed five Chinese petrochemical enterprises on the SDN List on the grounds of their alleged involvement in oil transactions involving Iran and imposed asset-freezing and transaction prohibitions against them. The Blocking Order expressly prohibited entities in China from recognizing, enforcing, or complying with such measures.
(2) MOJ Announcement and Prohibition Orders
In addition to the MOFCOM Blocking Orders, which focuses primarily on business and trade matters, the Regulations on Countering Improper Extraterritorial Jurisdiction by Foreign States (“Regulation”) further establish a broader regulatory framework addressing foreign “long-arm jurisdiction” and other improper extraterritorial measures, including cross-border investigations, requests for evidence, and data disclosure. This framework involves two layers of defensive blocking tool, together with the Malicious Entity List as an active countermeasure tool.
The first layer of defensive blocking tools is MOJ Announcements. Where a foreign measure is identified as constituting improper extraterritorial application, the MOJ may issue an announcement specifying that no entity or individual may enforce or assist in the enforcement of such measure. On May 15, 2026, MOJ Announcement No. 5 determined that the cross-border investigative measures taken by the European Union in its investigation of Nuctech through the application of the EU Foreign Subsidies Regulation constituted improper extraterritorial application, marking the first application of this mechanism.
The second layer of defensive blocking tools is Prohibition Orders. Where an entity or individual implements or assists in the enforcement of measures constituting improper extraterritorial application, the MOJ may further issue a Prohibition Order against such entity or individual for the implementations or assistances.
2. Active Countermeasure Tools
(1) The Countermeasure List
The Countermeasure List is established under the Anti-Foreign Sanctions Law and its implementing provisions. It primarily applies where a foreign country, entity, or individual, under various pretexts or pursuant to its domestic laws, adopts discriminatory restrictive measures against Chinese entities or individuals, interferes with China’s internal affairs, or endangers China’s national security.
A prominent feature of the Countermeasure List is the broad scope of individuals and entities that may be subject to countermeasures. In addition to entities and individuals that directly participate in formulating, deciding upon, or implementing foreign discriminatory restrictive measures (including through promoting or initiating litigation that harms China’s sovereignty and security) the relevant authorities, in practice primarily the Ministry of Foreign Affairs (“MOFA”) and the MOFCOM, may also extend the scope of countermeasures to the spouses and immediate family members of listed individuals; entities for which such individuals serve as senior management; entities that they actually control; as well as relevant senior management, actual controllers, and other related parties of listed entities. As of August 7, 2026, a total of 78 individuals, senior management of 9 entities, and 89 entities have been or have previously been placed on the Countermeasure List (including entities in respect of which the relevant measures have been suspended or terminated).
(2) The Unreliable Entity List
The Unreliable Entity List primarily targets foreign entities that endanger China’s national security or, without legitimate justification, interrupt normal transactions with Chinese enterprises, adopt discriminatory measures, or engage in similar conduct. Compared with the Countermeasure List, the Unreliable Entity List is more focused on the economic and commercial sphere.
Following an investigation by the relevant working mechanism of the MOFCOM, the MOFCOM may place entities found to have engaged in the relevant conduct on the Unreliable Entity List. Listed entities may be subject to measures including restricting or prohibiting their engagement in import or export activities related to China, restricting or prohibiting their investment in China, and restricting or prohibiting the entry into China of their relevant personnel and means of transportation. As of August 7, 2026, a total of 81 entities has been or have previously been placed on the Unreliable Entity List (including branches of relevant entities and entities in respect of which the relevant measures have been suspended or terminated).
(3) The Malicious Entity List
As mentioned in Section 1, the Malicious Entity List is an active countermeasure tool established under the Regulation to address foreign “long-arm jurisdiction” and other measures constituting improper extraterritorial application. Foreign entities or individuals that promote or participate in the implementation of foreign measures constituting improper extraterritorial application, or entities established or operated under their control or with their participation, may be placed on the Malicious Entity List by the relevant authority. Listed parties will be subject to measures including entry bans, seizure of property in China, restrictions or prohibitions on transactions or cooperation with Chinese entities, and restrictions on the provision of data and information.
Accordingly, even where a foreign entity or individual does not directly impose restrictive measures against Chinese entities, it may still face the risk of becoming subject to corresponding restrictions if it participates in, assists with, or promotes measures constituting improper extraterritorial application.
(4) The Export Control List
China may also impose targeted import and export restrictions on specific foreign entities pursuant to the Export Control Law and the Regulations on the Export Control of Dual-Use Items. Although the Export Control List is established under China’s export control regime, the measures imposed under the List may also serve as an important countermeasure tool in practice, particularly where foreign laws or measures involve discriminatory export restrictions or sanctions against China. Entities placed on the Export Control List may be subject to export control measures, including restrictions or prohibitions on the export of relevant dual-use items and restrictions on relevant business activities.
On July 24, 2026, the MOFCOM issued an announcement placing 14 EU entities on the Export Control List, in response to the EU’s listing of 14 mainland Chinese and Hong Kong enterprises under its 21st package of sanctions against Russia, marking the latest practical application of this mechanism. The announcement prohibits Chinese companies from exporting dual-use items to the listed entities and further prohibits overseas entities and individuals from transferring or providing China-origin dual-use items to such entities. Compared with other active countermeasure tools, the Export Control List is more narrowly focused on the export and related transfer of dual-use items.
(5) Supply Chain and Industrial Chain Security Investigations
Unlike the foregoing regulatory tools, the Supply Chain and Industrial Chain Security Investigation established under the Regulations on the Provisions on Security of Industrial and Supply Chains and the Measures for Conducting Supply Chain and Industrial Chain Security Investigations places greater emphasis on identifying and preventing risks that may endanger the security of China’s industrial and supply chains and providing a basis for subsequent measures.
Where a foreign country or international organization adopts discriminatory prohibitions, restrictions, or other similar measures against China in relation to industrial or supply chains, or where a foreign entity or individual violates normal market transaction principles, interrupts normal transactions with Chinese entities, and thereby causes or threatens harm to the security of China’s industrial or supply chains, the MOFCOM may organize and conduct a Supply Chain and Industrial Chain Security Investigation to assess the impact of the relevant conduct on the security of China’s industrial and supply chains. Based on the findings of the investigation, the MOFCOM may impose measures against the relevant entities or individuals, including restricting imports or exports, restricting investment in China, and restricting transactions or cooperation. Parties that are found responsible would be placed on the Countermeasure List and become subject to corresponding countermeasures under the Anti-Foreign Sanctions Law.
3. Supporting Mechanisms for the Key Regulatory Tools
(1) Judicial Remedies
In addition to the foregoing administrative regulatory tools, China’s counter-sanction framework also establishes judicial remedies. Where the lawful rights and interests of a Chinese entity or individual are harmed as a result of enforcing or assisting in the enforcement of foreign discriminatory restrictive measures, violating a Blocking Order, or enforcing foreign measures constituting improper extraterritorial application, the injured party may bring an action before a court in accordance with law, seeking cessation of the infringement and compensation for losses. A case heard by the Nanjing Maritime Court between 2024 and 2025, involving a Chinese marine engineering company’s tort claim against a Swiss equipment company, illustrates that the judicial remedy mechanism under China’s counter-sanctions framework has begun to be applied in practice.
(2) Necessary Transaction and Exception Approval Mechanisms
Although China’s counter-sanction framework establishes multiple restrictive measures, it also retains mechanisms for necessary transactions and exemptions in order to balance national security considerations with normal commercial activities. For example, the Provisions on the Unreliable Entity List allow Chinese entities to apply to continue conducting relevant transactions with a foreign entity placed on the list. The Blocking Measures provide that Chinese entities may apply for an exemption from compliance with a relevant Blocking Order. The Anti-Foreign Sanctions Law also permits Chinese entities to apply to conduct transactions with entities subject to countermeasures.
Ⅲ. Conclusion
China’s counter-sanctions framework has gradually developed into a comprehensive regulatory framework centered on defensive blocking tools and active countermeasure tools, supplemented by supporting mechanisms. While each mechanism serves a distinct regulatory function, they operate in a coordinated manner and collectively constitute an important legal framework through which China safeguards its national security and the order of international economic and trade relations. As the international economic and trade environment continues to evolve, foreign enterprises should establish a dual compliance framework that accommodates both overseas sanctions requirements and China’s counter-sanctions framework, and incorporate Chinese law into global sanctions compliance and supply chain risk assessment systems.
This article focuses primarily on China’s counter-sanctions framework and related regulatory measures and is provided for general informational purposes only; it does not constitute legal advice. It is based on laws, regulations and official announcements available as of August 12, 2026 and may not reflect subsequent regulatory developments.
Recent Comments