China has been expanding its legal framework to exert influence beyond its borders, introducing a series of laws designed to protect its interests internationally and counteract the impact of foreign sanctions, particularly those imposed by the United States. This legal expansion has far-reaching implications for multinational companies and global governance, heightening tensions amid ongoing geopolitical rivalry.
In recent months, Beijing has implemented at least five significant extraterritorial laws, supplementing more than 50 specialized foreign-related regulations enacted by 2024. These laws address a variety of activities, including adherence to foreign sanctions against China, investigations into Chinese supply chains, and actions perceived as undermining ethnic unity. The measures include severe penalties and exit bans on individuals and companies deemed to have engaged in discriminatory behavior toward Chinese entities.
Among the most notable provisions is a regulation restricting foreign companies from collecting information on Chinese supply chains or performing due diligence on suppliers, with authorities empowered to impose exit bans on violators. Another law targets what China describes as "improper extraterritorial jurisdiction," combating foreign actions that allegedly harm China's sovereignty, security, or development interests. Additional rules govern the overseas investments of Chinese companies, dictating asset transactions and enabling countermeasures against foreign states that discriminate against Chinese investors.
Experts suggest that these legal initiatives are part of President Xi Jinping's broader strategy to reshape the international order to align more closely with China’s interests amid intensifying rivalry with the United States. Frank Pieke, a professor at Leiden University, describes the effort as an attempt to make the global system “much more China-centric.” These developments come as Xi prepares to meet with U.S. President Donald Trump in Washington, reflecting a backdrop of escalating competition over technology and supply chains.
China’s government positions its extraterritorial laws as necessary defenses against what it views as unjust foreign sanctions and restrictions, particularly from the U.S., the European Union, and the United Kingdom. Over the past decade, the U.S. has enacted legislation imposing financial sanctions, export controls on advanced technology, and blacklists targeting companies linked to the Chinese military and forced labor.
Legal and business analysts characterize China's moves as a form of "lawfare," intended to counterbalance U.S. and Western legal measures. Lester Ross, senior counsel at WilmerHale, notes Beijing’s "frustration" with foreign sanctions on Chinese firms overseas and views the laws as tools to safeguard China's commercial interests.
Enforcement actions under these laws have already been recorded. For example, in May, China's commerce ministry used its anti-foreign sanctions law to oppose U.S. sanctions on Chinese refiners purchasing Iranian oil. Additionally, the Shanghai Maritime Court ruled against a Japanese-operated shipping company after it refused delivery of goods linked to a U.S.-blacklisted Chinese surveillance firm, ordering compensation for the Chinese company involved.
The laws also extend into social and political realms. A new ethnic unity law enacted in July allows China to take legal actions against foreign individuals or organizations accused of undermining ethnic cohesion or promoting separatism—steps seen by observers as a response to Western scrutiny of China’s treatment of Tibetans and Uyghurs.
These extraterritorial claims place multinational corporations in a precarious position, as they may face conflicting legal demands from China and other jurisdictions. Kenny Yap, a legal expert in shipping disputes, highlighted growing concern among companies conducting legitimate business about the risks posed by these overlapping regulations.
Most recently, China proposed an anti-cross-border corruption law aimed at foreign anti-corruption measures directed at Chinese companies, further expanding its international legal reach.
Analysts say China's expanding legal power reflects its growing economic influence and the global reliance on its supply chains, especially in advanced technology sectors. As Pieke observed, China now wields a form of legal leverage unavailable a decade ago, tied to its central role in the global economy.