Amidst the continuous efforts by Washington to kick prominent Chinese companies operating in the United States out, over fears that they are harvesting data for the Chinese Military, Beijing has drawn up reciprocity laws to counter the moves and protect Chinese companies.
China’s Ministry of Commerce on Saturday published new rules for countering “unjustified” laws and restrictions imposed by foreign countries on Chinese companies and citizens.
The rule which were published on the Ministry’s website established a “working mechanism” to assess the legal implications of such incidents, enabling the Chinese government to determine if it would enact retaliatory law.
Tekedia Mini-MBA edition 14 (June 3 – Sept 2, 2024) begins registrations; get massive discounts with early registration here.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
The rule says a Chinese person or organization that is restricted by foreign legislation from “engaging in normal economic, trade and related activity with a third State or citizens,” may report it to the commerce department within 30 days.
The Ministry of Commerce will then assess a case for its potential violation of international law, impact on China’s sovereignty and national security, and impact on Chinese citizens.
“When a citizen or other organization suffers significant losses from non-compliance with foreign legislation, relevant government departments may provide necessary support,” the notice says, adding that the Chinese government might also enact “necessary counter-measures” in response.
Last year, Chinese companies faced heavy backlash from other countries following the US sentiment. China’s telecom giant Huawei, which was leading the global 5G roll out suffered a huge setback after it was banned by the US, the UK and several other countries in Europe and North America.
To cap Huawei’s woes, Washington extended the ban to microchips, restricting semiconductor companies with access to US technology from supplying the telecom vendor with chips. The decision is thus threatening to cripple Huawei as lack of chips limit its smartphone production.
The lingering trade conflict between the world’s leading economies also affected app-based businesses of Chinese origin. TikTok and Wechat got caught on the web last year when President Donald Trump signed an executive order giving the short-video app 90-day ultimatum to sell to a US company or get banned.
It took the court’s ruling to restrain the order and keep the duo in business in the United States, but Trump’s administration said it would appeal the ruling.
The recent move by Washington to delist China’s telecom companies, China Mobile, China Unicorn and China Telecom from the New York Stock Exchange appears to have spurred Beijing to enact the impromptu law.
In November, Trump issued an order to bar 31 companies that Washington believed to be owned and controlled by the Chinese military.
The November order prohibits American companies and individuals from owning shares – outright or through investment funds – in companies the administration says help the advancement of the People’s Liberation Army.
The US Commerce Department added a list of Chinese companies to a trade blacklist in December, over allegations that Beijing is using them to harness civilian technologies for military purposes.
The list includes large state-run aerospace and construction companies, as well as technology and communication companies such as Inspur Group, Huawei and China Telecommunications Corp.
Moreover, the Trump administration is also considering adding tech giants Alibaba and Tencent to the blacklist already containing other Chinese companies. The news caused the companies’ shares to slump 4% on Thursday.
China’s commerce ministry has condemned US actions, saying it violates market rules and it will take action to protect its firms.
“This kind of abuse of national security and state power to suppress Chinese firms does not comply with market rules and violates market magic,” the ministry said in a statement.
“It not only harms the legal rights of Chinese companies but also damages the interests of investors in other countries, including the United States,” it added.
The new rule appears to be the action Beijing promised to take to “protect its firms,” the same step it took to prevent the United States from singlehandedly determining the future of TikTok.