Global Economy — 2026-05-04

China Activates Dormant Counter-Sanctions Law Ordering Entities to Defy US Iran Oil Restrictions

China's Ministry of Commerce on May 2 issued Announcement No. 21, a blocking order directing all Chinese citizens, companies, and organizations not to recognize, enforce, or comply with U.S. sanctions targeting Iranian crude oil trade, Al Jazeera reported. The order invokes China's 2021 Rules on Counteracting Unjustified Extra-Territorial Application of Foreign Legislation for the first time since their promulgation five years ago, activating a private right of action that allows designated entities to sue in Chinese courts for damages caused by foreign sanctions compliance, Fortune reported. The announcement responds to the U.S. Treasury Department's April 24 designation of five Chinese refineries, including Hengli Petrochemical (Dalian) and four independent processors in Shandong and Hebei provinces, for purchasing Iranian crude. According to Kpler data cited by Al Jazeera, China purchased more than 80 percent of Iran's oil exports in 2025.

Analysis
Beijing's activation of its dormant 2021 blocking statute, corroborated across three secondary outlets without primary MOFCOM documentation, places Chinese firms between competing legal mandates: comply with US secondary sanctions and face Chinese liability, or defy them and risk US designation. The timing, days before a Trump-Xi summit, suggests the announcement is primarily leverage to trade against tariff or technology concessions, with MOFCOM retaining discretion over scope. A major Chinese energy company publicly invoking the law within 90 days is unlikely. Corporate behavior in prior sanctions episodes has favored quiet non-compliance over named defiance. If Announcement No. 21 survives the summit cycle, it provides BRICS-aligned governments a replicable template for degrading secondary sanctions without any single high-profile act.

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