China-Related Sanctions: Trends and Responses


Nearly two years after Russia’s invasion of Ukraine, G7 countries continue to ratchet up economic sanctions on Russia, increasingly against third-country entities and sanctions evasion networks. As regulators continue to look to blocking sanctions and export controls as a means to further foreign policy goals, there is an increasing concern among policymakers, civil society, and the business community as to whether and how such tools could be used against the People’s Republic of China (“China”) in the future given the increasingly complex global geopolitical environment—and, in turn, the potential consequences for the global economy. China has meanwhile created its own regimes to respond to Western sanctions.

Below, we consider the interplay among the major G7 sanctions regimes as well as China’s sanctions regime. These trends will be important to watch in the future as domestic politics and international events might have the potential to accelerate their development.

United Kingdom

Limited change in UK positioning

Following the sanctions imposed against a number of Chinese officials in 2021 in connection with alleged human rights violations in the Xinjiang-Uyghur Autonomous Region of China, the UK’s sanctions position vis-à-vis China has seen limited change. This is despite the UK Government in early 2023 considering that China “poses an epoch-defining and systemic challenge with implications for almost every area of government policy and the everyday lives of British people. 

In its Integrated Review Refresh, which it published in March 2023, the UK Government pledged that it would be updating its China policy to respond to two overarching factors which had continued to evolve since 2021: China’s size and significance on global issues and the UK’s growing concerns about the actions and stated intent of the Chinese Communist Party (the “CCP”). The UK Government noted that moving forwards, its policy towards China would be anchored in the UK’s “core national interests” and “higher interest in an open and stable international order.” 

Notably, the UK Government makes no explicit reference to the possibility of sanctions or additional strategic trade controls being imposed against China in achieving these aims. In James Cleverley’s 2023 Mansion House speech, the then-Foreign Secretary advanced his position that Britain would best be served by continuing to engage with China, rather than by seeking to isolate it. This approach has been broadly welcomed by commentators, though commentators within and outside government have pressed for more robust action and for designation of China as a “state of concern” for the purposes of the Foreign Influence Registration Scheme implemented by the National Security Act 2023.

Recent reforms

In July 2023, the Intelligence and Security Committee published its report on China, which noted Chinese interference in academia in the UK, its prevalence in the tech and data sectors, Chinese investment in the UK and China’s involvement in UK energy and infrastructure. The Government response was that the passage of the National Security Act 2023, which makes “the United Kingdom a harder target for those seeking to overtly or covertly interfere in its democracy and society” had addressed many of the Committee’s concerns. 

Whilst the imposition of sanctions or export controls in relation to China is likely to be event driven, in the UK a number of financial institutions are reported to be implementing contingency planning in case of implementation of financial sanctions against China. This has been in part due to the mounting concerns over potential conflicts involving China, and reflecting lessons learned following the rapid implementation of Russian sanctions in 2022. 

It is worth noting the range of policy responses that China will have available to it, discussed in further detail below. 

United States

Domestic politics

As U.S. regulators continue to refine and expand the bulwark of sanctions imposed against Russia in response to the invasion of Ukraine, China has become the focus of elected officials in the United States Congress and candidates for the 2024 presidential election. The U.S. House of Representatives Select Committee on Strategic Competition between the United States and the CCP, established in Congress at the start of this year, has recently pressured the U.S. executive branch to impose additional sanctions on Chinese officials under the Uyghur Human Rights Policy Act. The Committee has also hosted meetings with major U.S. companies in the defense, financial, and technology sectors to play out different future scenarios involving China, including the potential imposition of additional trade and investment restrictions. Policy positions among candidates for the presidency have also suggested that a Republican victory in 2024 would bring a more confrontational China policy.

In the immediate term, the United States continues to use existing regulatory tools to address concerns vis-à-vis China, including the Specially Designated Nationals and Blocked Persons List administered by the Office of Foreign Assets Control and the Entity List administered by the Bureau of Industry and Security. Although recent diplomatic engagements leading up to and including the bilateral summit at the Asia Pacific Economic Cooperation Leaders’ Meeting in November 2023 prompted the removal of sanctions on one Chinese government institute, the United States has since imposed sanctions on additional Chinese officials for alleged human rights abuses and added three Chinese entities to the Uyghur Forced Labor Prevention Act Entity List.

Civil society and business at the ready

In June 2023, a report published by the Atlantic Council, a Washington D.C.-based think tank, and New York-based research firm Rhodium Group analyzed various hypothetical sanctions scenarios among G7 countries in response to geopolitical developments involving China. These included sanctions targeting China’s financial system, government officials, and industrial sectors. The report found that in the most extreme scenario involving sanctions on China’s major financial institutions, US$3 trillion in trade and financial flows could be disrupted. The second- and third-order costs would also be significant given China’s integration in the global economy.

As Principal Associate Deputy Attorney General Marshall Miller stated at a Global Investigations Conference in New York in September 2023, “companies in the private sector are on the front lines of national security challenges like never before.” Sanctions and export controls have become the tool of choice for U.S. policymakers and regulators, with enforcement activity also on the rise. Domestic politics and geopolitical events also have the potential to accelerate this trend and drive an expansion of existing regimes. As noted in a prior update from our U.S. team, global companies should reassess compliance priorities to anticipate and address the future landscape of U.S. and multilateral sanctions.

European Union

Measures currently limited

The EU previously suspended military collaboration with China in the 1980s and also imposed an arms embargo, which remains in place today. Implementation takes place on an administrative level by competent national authorities regularly not granting licenses for the export of relevant goods. The first sanctions by the EU on China followed decades later in 2020 and 2021, when the EU subjected a limited number of individuals and entities to an asset freeze and travel bans under the EU’s cyberattacks and human rights sanctions regimes, respectively. The sanctioning under the EU human rights regime caused an immediate reaction by China entailing sanctions against 10 EU nationals, including members of the EU Parliament, and four EU entities.

Most recently, the EU discussed sanctions against third countries and third-country entities for circumvention of the EU Russia sanctions regime, which also concerned China and sparked discussion on whether the EU will move towards so-called “secondary sanctions,” as they are referred to in the United States. Ultimately, no third countries or third-country entities were placed under sanctions. However, the EU introduced a mechanism to the EU Russia sanctions regime which would allow it as an “exceptional, last resort” measure to restrict the export of certain goods to listed third countries via which circumventive actions continue to take place. It is yet to be seen whether the EU makes use of this mechanism and whether this will also involve listing China.

Caution by EU officials 

Although contingency planning for a potential conflict with China and sanctions by the West have spiked in the last year or so, official comments by the EU or EU Member State governments on whether or not the EU would impose sanctions on China and, if so, what such sanctions might look like, are rare. It is apparent that the EU is currently still cautious to embark on a narrative of sanctions against China. At the same time, public comments by officials or other bodies actively opposing sanctions against China are rarer than views favoring them.

A survey last year by the think tank German Marshall Fund of the United States reflects the above: According to its Transatlantic Trends report, “pluralities in […] Germany, the Netherlands, Portugal, [and] Sweden […] say they want their country to join others in imposing sanctions against China” while citizens of many other EU countries were only in favor of diplomatic steps.

As it stands now, the EU is keen to operate on a diplomatic level rather than threatening sanctions. In any case, if the EU was to discuss sanctions against China in the future, it is expected that reaching consensus amongst the Member States will be even more difficult than in relation to the EU Russia sanctions regime.

China’s sanctions regime

China has in the past few years instituted a variety of (counter-)sanctions regimes, in part to respond to what it perceives as unjust Western sanctions encroaching on its national interest and security. Among these measures, China’s Ministry of Commerce (“MOFCOM”) issued two orders in September 2020 and January 2021, establishing the Unreliable Entity List (“UEL”) and the Rules on Counteracting Unjustified Extra-Territorial Application of Foreign Laws and Other Measures, respectively. China further promulgated the Anti-Foreign Sanctions Law (“AFSL”) in June 2021 and the Foreign Relations Law in June 2023, both authorizing the Chinese government to respond to foreign sanctions with countermeasures. 


The UEL is a list-based system blocking foreign entities that (1) harm the national sovereignty, security, or development interests of China, or (2) suspend normal business with or discriminate against a Chinese person or entity in violation of market principles. Penalties authorized under the UEL mechanism include:

  1. restricting or prohibiting the foreign entity from engaging in China-related import or export activities;
  2. restricting or prohibiting the foreign entity from investing in China;
  3. restricting or prohibiting the foreign entity’s relevant personnel or means of transportation from entering into China;
  4. restricting or revoking the relevant personnel’s work permit, status of stay or residency in China;
  5. imposing monetary penalties according to the severity of the circumstances; and
  6. other necessary measures.

The only designation on the UEL took place on 16 February 2023, when MOFCOM announced the additions of Lockheed Martin Corporation and Raytheon Missiles & Defense to the UEL in response to the two companies’ arms sales to Taiwan. 


The AFSL authorizes relevant departments of the PRC State Council to implement countermeasures if a foreign government, in violation of international law or principles of international relations, restricts and oppresses PRC citizens or organizations through “discriminatory restrictive measures . . . under any pretext and by any means,” with the aim of interfering in PRC’s internal affairs. Chinese authorities are also authorized to designate individuals or organizations that directly or indirectly participate in the devising, decision making, or implementation of the discriminatory restrictive measures on the Counter-control List. 

In practice, the Chinese Ministry of Foreign Affairs (the “MFA”) has been responsible for administering sanctions against foreign individuals and organizations, and in three cases adding sanctioned persons to China’s Counter-control List. To date, the main triggers of Chinese countermeasures under the AFSL (including some sanctions imposed by the MFA before the AFSL was implemented) include criticism or actions that challenge China’s stances toward minority governance and territorial integrity issues, most notably related to Taiwan. In September 2023 and January 2024, the MFA announced sanctions in accordance with the AFSL against two and five U.S. arms manufacturers,1 respectively, in accordance with the AFSL for their arms sales to Taiwan. 

Sanctioned individuals and organizations are subject to (1) a China travel ban (individuals only), (2) seizure, detainment or freezing of their assets within China, and (3) restriction on dealings with individuals and organizations in China. 


Although the appetite for new sanctions (including export controls) against China or Chinese organizations, companies or individuals remains mixed among and within different G7 countries, the coalition has become more adept at acting in concert vis-à-vis economic sanctions in response to local political, economic and geopolitical priorities and events. The imposition of more extensive sanctions against major Chinese entities would exact significant costs, but such measures remain as a possible tool to further certain policies and respond to the very fluid geopolitical landscape. Enforcement of China’s own sanctions regime is still nascent but increasingly active, adding to the potential for far-reaching costs should China feel the need to respond to potential sanctions against its major financial institutions and state-owned entities.

On this basis, multinational firms with touchpoints with China should assess where they may have exposure and consider how to address the risks that the imposition of further sanctions against China may pose. Areas to consider include: (i) supply chain risks associated with China, particularly in respect of export controls; (ii) their relationships with Chinese entities that may find themselves subject to asset-freeze sanctions measures or other targeted restrictions; and (iii) any subsidiaries, employees, suppliers or assets within China that may be subject to Chinese countermeasures. Equally, China-based entities should also consider these developments in the West and anticipate the potential for trade or other restrictions to affect cross-border transactions. The global Linklaters team is well positioned to assist with multi-jurisdictional diligence and compliance in these evolving areas and continues to help clients navigate the associated risks.

1 Lockheed Martin Corporation and Northrop Grumman in September 2023; BAE Systems Land and Armament, Alliant Techsystems Operation, AeroVironment, ViaSat and Data Link Solutions in January 2024.