China Forces Companies to Pick: US Sanctions or China Market?

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China Defies US Sanctions on <a href="https://bbg-news.com/brent">Oil</a> Refiners With Sweeping Non-Compliance Order

China’s Ministry of Commerce (MOFCOM) has invoked a law requiring companies operating within China to ignore sanctions against five Chinese oil companies. These sanctions were imposed due to their connections with Iranian oil deals, and MOFCOM considers them an illegal overreach of foreign laws.

Key Takeaways:

  • On May 2, China’s MOFCOM invoked the Blocking Statute against U.S. OFAC sanctions on 5 local oil refiners.
  • SMU’s Henry Gao notes this 1st use of the statute since 2021 forces global companies to pick between markets.
  • Next, Chinese firms can sue for losses from these sanctions, as Beijing might prepare countermeasures.

China’s Government Invokes Blocking Statute On Five Local Oil Refiners

China is taking steps to protect its businesses during the ongoing trade dispute with the United States, including imposing penalties on certain Chinese companies.

On May 2nd, China’s Ministry of Commerce (MOFCOM) announced it would use a set of existing laws—known as the Blocking Statute—to fight back against U.S. sanctions targeting five Chinese oil companies.

According to the Office of Foreign Assets Control (OFAC), Hengli Petrochemical (Dalian) Refining & Chemical, Shandong Shouguang Luqing Petrochemical, Shandong Jincheng Petrochemical Group, Hebei Xinhai Chemical Group, and Shandong Shengxing Chemical provide “a vital source of revenue to the Iranian regime and its armed forces” by acquiring the majority of Iran’s oil.

However, after reviewing the situation, China’s Ministry of Commerce (MOFCOM) concluded that these sanctions wrongly apply foreign laws and regulations outside of their proper jurisdiction.

The organization urged people to disregard these labels in order to protect China’s independence, safety, progress, and the rights of its citizens.

China’s Ministry of Commerce (MOFCOM) announced that no one is allowed to acknowledge, carry out, or follow any sanctions. Experts say this is the first time this law has been used since it was originally created in 2020.

The application of these measures might put companies operating in both countries “between a rock and a hard place,” according to Henry Gao, Professor at SMU Yong Pung How School of Law, as they will have to comply with U.S. or Chinese regulations and lose one of these large markets.

This law allows Chinese companies to seek financial compensation if they experience losses because of these sanctions. The Chinese government also has the right to respond with its own measures against these foreign sanctions.

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2026-05-04 07:32