n-tv TV: New Chinese regulations put the gun to the chest of foreign companies

For months, the U.S. and China have been making the economic framework of world trade trickier by punishing each other with measures, German television station n-tv reports. A new anti-sanctions law from Beijing is engineering a scenario that could leave European and other foreign companies in the lurch. The new legislation puts a gun to the chest of foreign companies.

Foreign companies in China may be reluctantly forced to make the seminal decision in their future strategy that they must choose their market: either China or their U.S. and European allies. The reason behind this lies in the anti-sanctions law that Beijing passed in early June.

Bernhard Bartsch of the Mercator Center for China Studies in Berlin said, “China basically reserves the right to let companies choose whether they are willing to comply with possible sanctions against China or not.” Anti-sanctions laws provide the government with tools to evade sanctions and a means to exert pressure on foreign companies. The Mercator China Research Center has already been sanctioned by China.

The impact of anti-sanctions laws on companies will be far-reaching, said Angela Zhang, a legal expert at the University of Hong Kong. Companies will certainly encounter major problems in China if they enforce the sanctions. “The new law now gives Beijing the means to impose painful penalties. Affected companies could lose access to the entire Chinese market.” If they do not enforce the sanctions against China, as China’s new law requires, they will have to suffer the consequences in the U.S. and possibly in the European market as well.

Zhang does not believe that the Chinese government will immediately use its sharpest weapon. But the jurist says there will come a point in the spiral of mutual punitive measures when Beijing will use its weapons. Such a response will catch on and will have an impact not only on retail sales but also on the entire product value chain, with implications for the research and development sector as well.

The new regulations cast a shadow over the future of German companies in China. But n-tv TV points out that many German companies have already proved in the past that they are capable of weathering the crisis and drawing new strength from it. Companies are therefore mostly not complaining for a long time, but are now working on solutions and looking for new opportunities.