New Chinese Decrees Create Cross-Border Compliance Conflicts for Multinationals
In-house counsel for multinationals with China-linked operations, suppliers, or customer relationships must act because two new binding Chinese State Council decrees create direct legal conflict between standard global sanctions and supply chain compliance policies and PRC law, exposing parent companies to enforcement risk.
China has issued two binding State Council decrees that formalize and operationalize its previously intermittent counter-sanctions and anti-extraterritoriality framework, elevating rules beyond prior MOFCOM-level guidance. Decree No. 834 establishes a whole-of-government mechanism to monitor and respond to risks to Chinese industrial and supply chains, while Decree No. 835 creates a formal process to identify and block foreign extraterritorial measures China deems unjustifiable, including a new Malicious Entity List for entities that comply with such measures. For multinationals, this creates direct conflict between standard global sanctions, export control, and supply chain diligence policies and PRC law. Legal teams must conduct dedicated conflict-of-laws analysis for all China-facing compliance activities, tighten controls over China-based data collection and cross-border information sharing, and update escalation protocols to account for PRC enforcement risk when executing global compliance decisions involving Chinese parties.